8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K/A

Amendment No. 1 to Form 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) August 17, 2006

Interleukin Genetics, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

001-32715	94-3123681
(Commission File Number)	(IRS Employer Identification No.)
135 Beaver Street Waltham, MA	02452
(Address of Principal Executive Offices)	(Zip Code)

(781) 398-0700

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

As previously reported in a Current Report on Form 8-K filed on August 21, 2006 (the "Initial Filing"), on August 17, 2006, Interleukin Genetics, Inc. (the "Company" or “ILI”) acquired the assets and business of Alan James Group, LLC ("Alan James Group" or “AJG”). This Amendment No. 1 amends the Initial Filing to include the historical financial statements of the Alan James Group and the pro forma financial information required by Item 9.01 of Form 8-K.

ITEM 9.01  FINANCIAL STATEMENTS AND EXHIBITS.

(a)	Financial Statements of Alan James Group, LLC and Related Companies:
	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
	FINANCIAL STATEMENTS:
	Combined Balance Sheets as of June 30, 2006 (Unaudited) and December 31, 2005 and 2004 (Audited)
	Combined Statements of Income for the six months ended June 30, 2006 and 2005 (Unaudited) and for the years ended December 31, 2005 and 2004 (Audited)
	Combined Statements of Members’ Equity for the six months ended June 30, 2006 and 2005 (Unaudited) and for the years ended December 31, 2005 and 2004 (Audited)
	Combined Statements of Cash Flows for the six months ended June 30, 2006 and 2005 (Unaudited) and for the years ended December 31, 2005 and 2004 (Audited)
	Notes to Combined Financial Statements June 30, 2006 and 2005 (Unaudited) and December 31, 2005 and 2004 (Audited)
(b)	Unaudited Pro Forma Combined Consolidated Financial Statements:
	INTRODUCTION TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
	UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS:
	Unaudited Pro Forma Combined Consolidated Balance Sheet as of June 30, 2006
	Unaudited Pro Forma Combined Consolidated Statement of Operations for the six months ended June 30, 2006
	Unaudited Pro Forma Combined Consolidated Statement of Operations for the year ended December 31, 2005
	Notes to Unaudited Pro Forma Combined Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Members

Alan James Group, LLC and Related Companies

We have audited the accompanying combined balance sheets of Alan James Group, LLC and Related Companies, (the “Company”) as of December 31, 2005 and 2004, and the related combined statements of income, members’ equity and cash flows for the years then ended. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Alan James Group, LLC and Related Companies as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ MORRISON, BROWN, ARGIZ & FARRA, LLP

Miami, Florida

April 20, 2006

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

COMBINED BALANCE SHEETS

	June 30,		December 31,
	2006		2005		2004
	(Unaudited)		(Audited)
ASSETS
CURRENT ASSETS
Cash	$	228	$	69,618	$	43,520
Accounts receivable	1,296,957		1,269,587		1,363,063
Inventory	1,279,888		1,029,478		1,463,947
Prepaids and other current assets	238,366		247,320		106,097
TOTAL CURRENT ASSETS	2,815,439		2,616,003		2,976,627
PROPERTY AND EQUIPMENT, NET	181,880		193,336		339,535
OTHER ASSETS	68,828		18,469		70,000
TOTAL ASSETS	$	3,066,147	$	2,827,808	$	3,386,162
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,041,247	$	1,113,657	$	610,269
Due to seller under asset purchase agreement	—		—		1,034,819
Due to factor	—		299,319		675,325
Line of credit	937,836		—		—
TOTAL CURRENT LIABILITIES	1,979,083		1,412,976		2,320,413
ACCRUED PERFORMANCE FEE – Note 9	149,569		149,569		58,697
MEMBERS’ EQUITY	937,495		1,265,263		1,007,052
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	3,066,147	$	2,827,808	$	3,386,162

The accompanying notes are an integral part of these combined financial statements.

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ALAN JAMES GROUP, LLC AND RELATED COMPANIES

COMBINED STATEMENTS OF INCOME

	FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE YEARS ENDED DECEMBER 31,
	2006			2005			2005			2004
	(Unaudited)						(Audited)
GROSS REVENUES	$	6,096,437		$	5,025,048		$	10,773,447		$	3,480,237
LESS SALES RETURNS AND TRADE PROMOTIONS	1,094,740			417,189			1,121,963			5,842
NET REVENUES	5,001,697			4,607,859			9,651,484			3,474,395
COST OF GOODS SOLD	2,762,448			2,160,234			4,910,641			725,455
GROSS PROFIT	2,239,249			2,447,625			4,740,843			2,748,940
EXPENSES
Personnel	719,441			627,183			1,170,516			511,111
Selling, general and administrative	1,386,064			1,144,325			2,647,007			1,086,987
Performance fee expense — Note 9	—			109,346			149,569			58,697
Depreciation and amortization	35,168			30,656			62,243			17,538
TOTAL EXPENSES	2,140,673			1,911,510			4,029,335			1,674,333
INCOME FROM OPERATIONS	98,576			536,115			711,508			1,074,607
OTHER INCOME (EXPENSE)
Interest income	491			93			105			2,035
Other expenses, net	(46,219		)	(50,696		)	(93,402		)	(98,581		)
TOTAL OTHER EXPENSE	(45,728		)	(50,603		)	(93,297		)	(96,546		)
NET INCOME	$	52,848		$	485,512		$	618,211		$	978,061

The accompanying notes are an integral part of these combined financial statements.

3

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

COMBINED STATEMENTS OF MEMBERS’ EQUITY

	FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE YEARS ENDED DECEMBER 31,
	2006			2005			2005			2004
	(Unaudited)						(Audited)
MEMBERS’ EQUITY (DEFICIT) - BEGINNING	$	1,265,263		$	1,007,052		$	1,007,052		$	(709	)
MEMBERS’ CONTRIBUTIONS	—			—			—			90,000
NET INCOME	52,848			485,512			618,211			978,061
MEMBERS’ DISTRIBUTIONS	(380,616		)	(270,000		)	(360,000		)	(60,300		)
MEMBERS’ EQUITY - ENDING	$	937,495		$	1,222,564		$	1,265,263		$	1,007,052

The accompanying notes are an integral part of these combined financial statements.

4

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

COMBINED STATEMENTS OF CASH FLOWS

	FOR THE SIX MONTHS ENDED JUNE 30,						FOR THE YEARS ENDED DECEMBER 31,
	2006			2005			2005			2004
	(Unaudited)						(Audited)
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	52,848		$	485,512		$	618,211		978,061
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	35,168			30,656			62,243			17,538
Gain on sale of assets	—			(20,151		)	(20,151		)	—
Changes in assets and liabilities:
Accounts receivable	(27,370		)	164,471			93,476			(1,363,063		)
Inventory	(250,410		)	(16,060		)	434,469			613,794
Prepaids and other current assets	8,954			(275,788		)	(141,223		)	(31,986		)
Other assets	(51,917		)	128,295			51,531			(70,000		)
Accounts payable and accrued expenses	(72,410		)	1,013,730			594,260			657,755
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(305,137		)	1,510,665			1,692,816			802,099
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of product inventory under asset purchase agreement	—			(587,850		)	(1,034,819		)	(1,117,033		)
Purchases of property and equipment	(22,154		)	(14,191		)	(34,558		)	(357,073		)
Proceeds from sale of property and equipment	—			138,665			138,665			—
NET CASH USED IN INVESTING ACTIVITIES	(22,154		)	(463,376		)	(930,712		)	(1,474,106		)
CASH FLOW FROM FINANCING ACTIVITIES:
Contributions from members	—			—			—			90,000
Distributions to members	(380,616		)	(270,000		)	(360,000		)	(60,300		)
Loan repayment by member	—			—			—			7,124
(Decrease) increase in net advances from factor	(299,319		)	(675,219		)	(376,006		)	675,325
Increase in net advances from line of credit	937,836			—			—			—
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	257,901			(945,219		)	(736,006		)	712,149
NET (DECREASE) INCREASE IN CASH	(69,390		)	102,070			26,098			40,142
CASH AT BEGINNING OF PERIOD	69,618			43,520			43,520			3,378
CASH AT END OF PERIOD	$	228		$	145,590		$	69,618		$	43,520
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING:
Purchase of product inventory financed by seller under asset purchase agreement	$	—		$	—		$	—		$	1,034,819

The accompanying notes are an integral part of these combined financial statements.

5

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

NOTE 1.ORGANIZATION AND OPERATIONS

The combined financial statements include the operations of Alan James Group, LLC, a Florida corporation, incorporated in September, 2003 and four sister companies: AJG-Alt, LLC; AJG-BI Brands, LLC; AJG-GNC, LLC and AJG-NB, LLC (collectively, the combined entities are referred to herein as the “Company”). Membership interests in each of the LLC’s are held by two individuals who are also members of senior management.  In each of the entities, the members split profits and losses on a 50/50 basis.

The nature and scope of operations of each of the Companies is as follows:

Alan James Group, LLC: corporate overhead entity. Maintains customer relationships on behalf of sister companies.

AJG-Alt LLC: This entity entered into an agreement with Alticor, Inc., (the parent company of Amway Corp., a global leader in multi-level marketing), to assist Alticor, Inc. in divesting of certain non-strategic products. The Company recognized $0, $65,000 and $1,266,250 of consulting revenue for this contract in 2006, 2005 and 2004, respectively. This revenue stream is not expected to be recurring.

AJG-BI Brands LLC: formed to acquire a line of health supplement products in October 2004. This entity is seeking to grow sales of these products.  Refer to discussion below.

AJG-GNC LLC: sells a line of skincare products on an exclusive basis to General Nutrition Center, a retailer of health related products.

AJG-NB LLC: formed to internally develop and market new brands for the group.

The Company is a rapidly growing healthcare focused consumer products company targeting the growing market for self-medication and preventive healthcare products. On October 8, 2004, AJG-BI Brands acquired product inventory and related assets, as well as the exclusive distribution rights in the United States, pertaining to a line of herbal supplements (the “BI Purchase”). The acquired products included Ginsana, Ginsana Gold, Ginkoba, Venastat, and SAM-e, and the mass market distribution rights to Kyolic in the United States. Pursuant to the BI Purchase Agreement, the Company agreed to pay $2,146,365 to acquire all of the product inventory, as well as the rights to the related trade names and trade dress. Under the BI Purchase Agreement, the Seller agreed to perform certain transitional services including customer billing and shipping during the period from October 8, 2004 through December 31, 2004.

6

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

NOTE 2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Combination

The combined financial statements include the accounts of Alan James Group, LLC; AJG-Alt, LLC; AJG-BI Brands, LLC, AJG-GNC, LLC and AJG-NB, LLC. All significant intercompany accounts and transactions have been eliminated.

Industry Risk and Concentrations

The market for health supplement products is competitive and other companies sell similar products to those sold by the Company. The Company’s sales and margins may be influenced by competitor actions or other factors such as the cost of product, contract terms and general market conditions.

As of June 30, 2006 and for the six months then ended, approximately 32% and 34% of total revenue and total receivables, respectively, was from a single customer. For the six months ended June 30, 2005, approximately 42% of total revenues was from a single customer. As of December 31, 2005 and for the year then ended, approximately 38% and 41% of the total revenue and total receivable, respectively, was from a single customer. During 2004, three retailers accounted for 53% of the BI revenue during the period from October 8, 2004 through December 31, 2004. One of these retailers represented 36% of BI revenue. During 2004, approximately $1.27 million of revenue (36% of total revenue) was derived from a consulting arrangement with a single customer. Although some additional consulting revenue was earned in 2005, this revenue source is not expected to be recurring in the future.

During 2006 and 2005, the majority of BI’s products are sourced from three suppliers. The Company pays a contracted rate per completed unit for each product. The suppliers are responsible for procuring raw materials and packaging finished products. If the Company is unable to maintain the relationship with these suppliers, it will need to find an alternative. Management believes that suitable alternate suppliers are available.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest.  Management periodically reviews the detail of trade receivables and, if required, adjusts the allowance for doubtful accounts to management’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Historically, the Company has not incurred any material credit losses and management has determined that no allowance is needed as of June 30, 2006 and December 31, 2005 and 2004. Management will continue to review its receivables in the future and will record allowances for doubtful accounts as credit losses are deemed to have occurred.

7

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

Cash

Cash includes amounts on hand and on deposit at financial institutions.

Inventory

Inventory is stated at the lower of cost or market. Cost is determined using the first-in, first-out method.  Management periodically evaluates inventory to identify items which are slow moving or have excess quantities. Management also considers whether certain items are carried at values which exceed the ultimate sales price less selling costs. Where such items are identified, management adjusts the carrying value to lower of cost or market.

Revenue Recognition, Sales Return and Allowances and Cost of Goods Sold

Net revenues, cost of goods sold and gross profit for the six months ended June 30, 2006, were comprised of the following (Unaudited):

	AJG-BI		AJG-GNC		AJG-NB		TOTAL
Product Revenues	$	3,774,743	$	450,128	$	776,826	$	5,001,697
Consulting Revenues	—		—		—		—
Net Revenues	3,774,743		450,128		776,826		5,001,697
Cost of Goods Sold	1,909,075		354,875		498,498		2,762,448
Gross Profit	$	1,865,668	$	95,253	$	278,328	$	2,239,249

Net revenues, cost of goods sold and gross profit for the six months ended June 30, 2005 were comprised of the following (Unaudited):

	AJG-BI		AJG-GNC		AJG-ALT		AJG-NB		TOTAL
Product Revenues	$	4,273,317	$	238,210	$	—	$	31,332	$	4,542,859
Consulting Revenues	—		—		65,000		—		65,000
Net Revenues	4,273,317		238,210		65,000		31,332		4,607,859
Cost of Goods Sold	1,936,297		210,409		—		13,528		2,160,234
Gross Profit	$	2,337,020	$	27,801	$	65,000	$	17,804	$	2,447,625

Net revenues, cost of goods sold and gross profit for the year ended December 31, 2005, were comprised of the following (Audited):

	AJG-BI		AJG-GNC		AJG-ALT		AJG-NB		TOTAL
Product Revenues	$	8,493,640	$	592,974	$	—	$	499,870	$	9,586,484
Consulting Revenues	—		—		65,000		—		65,000
Net Revenues	8,493,640		592,974		65,000		499,870		9,651,484
Cost of Goods Sold	4,126,784		493,695		—		290,162		4,910,641
Gross Profit	$	4,366,856	$	99,279	$	65,000	$	209,708	$	4,740,843

Net revenues, cost of goods sold and gross profit for the year ended December 31, 2004, were comprised of the following (Audited):

	AJG-BI*		AJG-GNC		AJG-ALT		TOTAL
Product Revenues	$	2,121,720	$	86,425	$	—	$	2,208,145
Consulting Revenues	—		—		1,266,250		1,266,250
Net Revenues	2,121,720		86,425		1,266,250		3,474,395
Cost of Goods Sold	669,721		55,734		—		725,455
Gross Profit	$	1,451,999	$	30,691	$	1,266,250	$	2,748,940

* BI revenue and cost of sales is for the period from October 8, 2004 through December 31, 2004.

8

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

In accordance with Statement of Financial Accounting Standards (“SFAS”) 48, Revenue Recognition When Right of Return Exists, the Company recognizes revenue, net of estimated refunds and related costs, at the time of the sale. Sales returns are estimated based on historical experience. For the six months ended June 30, 2006 and 2005 and for the years ended December 31, 2005 and 2004, the Company had recorded sales returns of $488,220, $181,444, $483,111 and $5,842, which accounted for approximately 8%, 4%, 4% and less than 1%, respectively, of gross revenue. Returns are recorded in the year such returns are received and when returns are expected to be received in the near term. As of June 30, 2006, December 31, 2005 and 2004, the Company has accrued for future returns of $0, $95,000 and $0, which is included in accounts payable and accrued expenses in the combined balance sheets. In the ordinary course of business and due to future events and circumstances, actual sales returns could be above the estimated accrued amounts. However, management believes that amounts accrued as of June 30, 2006, December 31, 2005 and 2004, are sufficient to cover such sales returns.

Sales are recorded in the financial statements net of returns and trade discounts. Revenue is recognized when earned and realizable. The Company recognizes revenue from product sales upon shipment to the customer. Product revenue is deemed earned at time of shipment. Consulting revenue is deemed earned when the related services have been rendered.

Product revenues of AJG-BI in 2004 were primarily generated from sales of the inventory acquired under the BI Purchase Agreement and thus valued at the price paid to the seller. Beginning in 2005, the Company entered into agreements with certain suppliers to supply finished goods at contracted prices. The suppliers are responsible for procuring raw material, packaging components and manufacturing the finished product. Consequently, the cost of goods sold and gross profit are largely dependent on the contracted prices per the agreements with third-party suppliers.

Property and Equipment, Net

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the following estimated useful lives of the assets:

Computer and software	3 years
Automobiles	5 years
Furniture, fixtures and equipment	7 years
Real estate – condominium	27.5 years
Leasehold improvements	37.5 years

9

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

Limited Liability Company / Income Taxes

The financial statements include only those assets, liabilities and results of operations that relate to the businesses of the combined entities. The statements do not include any assets, liabilities, revenues or expenses attributable to the members’ individual activities.

The combined entities file their income tax returns as partnerships for federal income tax purposes. Consequently, the Company will not pay any federal income taxes as any income or loss will be included in the tax returns of the individual members of the combined entities.

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at June 30, 2006, December 31, 2005 and 2004 and revenues and expenses during the periods then ended. The actual outcome of the estimates could differ from the estimates made in the preparation of the combined financial statements.

Advertising Costs

The Company expenses advertising costs as incurred. Total advertising costs of approximately $661,000, $390,000, $698,000 and $14,000 for the six months ended June 30, 2006 and 2005 and for the years ended December 31, 2005 and 2004, respectively, are included in selling, general and administrative expenses.

Impairment of Long-Lived Assets

The carrying value of long-lived assets, such as property and equipment, are reviewed if the facts and circumstances, such as significant declines in revenues, earnings or cash flows or material adverse changes in the business climate, indicate that they may be impaired.  The Company performs its review by comparing the carrying amounts of long-lived assets to the estimated undiscounted cash flows relating to such assets.  If any impairment in the value of the long lived assets is indicated, the carrying value of the long-lived assets is adjusted to reflect such impairment based on the fair value of the impaired assets or an estimate of fair value based on discounted cash flows.

10

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

Recent Accounting Pronouncements

Consolidation of Variable Interest Entities

The Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 46 and 46R, Consolidation of Variable Interest Entities, effective December 29, 2002.  Interpretation 46, as revised in December 2003, changes the accounting model for consolidation from one based on control through voting interests to one based on control through economic interests. Whether to consolidate an entity now also considers whether that entity has sufficient equity at risk to enable it to operate without additional subordinated financial support, whether the equity owners in that entity lack the obligation to absorb expected losses or the right to receive residual returns of the entity, or whether voting rights in the entity are not proportional to the equity interest and substantially all the entity’s activities are conducted for an investor with few voting rights. This interpretation requires a company to consolidate variable interest entities (“VIEs”) if the enterprise is a primary beneficiary of the VIE and the VIE possesses specific characteristics. It also requires additional disclosures for parties involved with VIEs. The adoption of this statement did not have an impact on the Company’s combined results of operations or financial position because the Company does not invest or participate in any entities, which would be considered VIE under Interpretation 46.

Accounting for Changes and Error Corrections

In May 2005, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 154, Accounting Changes and Error Corrections. SFAS No. 154 establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to a newly adopted accounting principle.  This statement will be effective for the Company for all accounting changes and any error corrections occurring after January 1, 2006. The Company does not expect the adoption of SFAS No.154 to have a material impact on its combined results of operations and financial condition.

Reclassifications

Certain items in the 2004 financials have been reclassified to conform to 2005 presentation.

11

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

NOTE 3.ACCOUNTS RECEIVABLE

Accounts receivable consist entirely of trade accounts due from the sale of product inventory to customers. In connection with the BI Purchase Agreement, the seller agreed to perform certain transitional services on the Company’s behalf during the period from October 8, 2004 through December 31, 2004 (the “Transition Period”). Such services included taking customer orders, shipping product and invoicing and collecting from customers. As a result, approximately $22,000 and $1,271,000, respectively, of accounts receivable as of December 31, 2005 and 2004, were due from the seller from product sales during the Transition Period. The majority of these amounts, as well as other outstanding trade receivables, were collected after year end.

In connection with the Company’s factoring arrangement (Note 6), the factor has a security interest in accounts receivable generated from sales of products by AJG-BI Brands, LLC.

NOTE 4.INVENTORY

Inventory on hand primarily consists of the following at:

	June 30,		December 31
	2006		2005		2004
	(Unaudited)		(Audited)
Raw materials	99,619		$	109,028	$	972,628
Packaging components	12,874		—		92,805
Finished goods	1,167,395		920,450		398,514
	$	1,279,888	$	1,029,478	$	1,463,947

The inventory acquired through the BI Purchase Agreement in 2004 was initially recorded at fair value which was determined to be the price paid to the seller.

NOTE 5. PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following at:

	June 30,		December 31,
	2006		2005		2004
	(Unaudited)		(Audited)
Computer and software	108,177		$	100,763	$	80,220
Automobiles	105,364		105,364		105,364
Furniture, fixtures and equipment	79,129		64,389		50,374
Real estate — condominium	—		—		95,337
Leasehold improvements	—		—		25,778
	292,670		270,516		357,073
Less accumulated depreciation	110,790		77,180		17,538
	$	181,880	$	193,336	$	339,535

Depreciation expense was $35,168 and $30,656 for the six months ended June 30, 2006 and 2005, respectively, and $62,243 and $17,538 for the years ended December 31, 2005 and 2004, respectively.

12

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

NOTE 6.DUE TO FACTOR

During 2004, the Company entered into an arrangement to factor receivables on a recourse basis as a means to fund its interim working capital requirements. Under the arrangement, the factor advanced the Company 80% of the face amount of factored invoices.

In connection with the BI Purchase Agreement, the Company obtained from the factoring company an $804,000 letter of credit in favor of the seller to secure a payment due to the seller on December 31, 2004. On December 31, 2004, the seller drew on the letter of credit. As agreed by the parties, prior to the expiration date of the letter of credit, in addition to the 20% withholding on factored invoices, the factoring company withheld additional amounts as a reserve against the anticipated drawing on the letter of credit.

As of December 31, 2005 and 2004, the net amount due to the factor was $299,319 and $675,325 respectively. All amounts due to the factor were satisfied through the collection of customer receivables subsequent to December 31, 2005.

Other expenses, net in the accompanying combined statement of income includes factoring fees and fees related to the letter of credit.

NOTE 7.DUE TO SELLER UNDER ASSET PURCHASE AGREEMENT

As of December 31, 2004, $1,034,819 was due to the seller under the BI Purchase Agreement.  The amount was non-interest bearing and was repaid in 2005.

In connection with the BI Purchase Agreement, the seller agreed to perform certain transitional services during the Transition Period.  The Company agreed to pay the seller $34,896 per month for product shipping and storage services and $27,379 per month for order and payment processing services. As of December 31, 2004, $84,000 was due to the seller for such services. In addition, $127,400 was due to the seller for inventory purchased and freight charges incurred on the Company’s behalf during the Transition Period. These amounts are included in accounts payable and accrued expenses in the accompanying combined balance sheet as of December 31, 2004. No amounts were outstanding as of December 31, 2005. The parties agreed to offset approximately $500,000 against amounts due to the seller under the BI Purchase Agreement and amounts owed to the Company for product sales which resulted in a receivable of approximately $22,000 to the Company as described in NOTE 3.

NOTE 8.           LINE OF CREDIT

In February 2006, the Company entered into a revolving credit facility with Wachovia Bank, N.A., which provides for borrowings of up to $1.25 million, subject to a borrowing base.  In general, the borrowing base is equal to 80% of eligible accounts receivable, as defined, and 35% of eligible inventory, as defined, provided, however, that if the amount of eligible inventory exceeds 25% of the total borrowing base, then only such eligible inventory as would equal 25% of the borrowing base.

Borrowings under the facility bear interest at Prime plus 0.79% (8.25% as of June 30, 2006) and is secured by accounts receivable and inventory.  In addition, the Company must comply with covenant limitations, which include the level of indebtedness to EBITDA, the ratio of current assets to current liabilities, and total liabilities to total net worth.  The facility expires on the earlier of January 31, 2007, or the date on which the company terminates the agreement and the credit facilities provided.  At June 30, 2006, borrowings under the facility were approximately $940,000.

NOTE 9.COMMITMENTS AND CONTINGENCIES

Operating Leases

Effective March, 2004, the Company entered into a ten-month lease agreement with Guardian Life Insurance Company of America for its office space in Boca Raton, Florida. The monthly lease payments were $6,000. In February, 2005, the Company entered into an eighteen-month lease for the same office space. The monthly lease payments are $5,195 plus all property taxes, insurance and maintenance.

13

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

Minimum future lease payments under the operating lease as of June 30, 2006, are approximately $130,000.

Rent expense was approximately $55,000, $57,000, $110,000 and $69,000, for the six months ended June 30, 2006 and 2005 and for the years ended December 31, 2005 and 2004, respectively.

Product Liability Risk

Although the Company has not received any product liability claims to date, the Company could be subject to such claims in the future. The Company has purchased insurance to protect against such losses. The Company is subject to a deductible of $50,000 per claim.

Performance Fee Due to Consultant

In connection with the BI Purchase, the Company entered into a Consulting Services Agreement with a third party (“MPG”) to provided certain strategic, marketing, developmental and category management services. The terms of the consulting agreement (the “Agreement”) provided for a monthly payment of $8,333 to MPG beginning November 1, 2004. As of December 31, 2005, this fee terminated pursuant to the terms of the Agreement. Effective April 1, 2005, MPG will also receive an account management fee equal to 3% of net sales (as defined) to specified customers. Approximately $121,000 and $15,000 was paid to MPG for such services for the year ended December 31, 2005 and 2004, respectively.

In addition to the consulting and account management fees, MPG is entitled to a performance based bonus equal to 20% and 25% of the “Transaction Profits” (as defined) resulting from the BI business as of December 31, 2005 and 2004, respectively. Transaction profits include the annual operating profit of the BI business as well as any gain which may ultimately be realized upon a sale of the business. As of December 31, 2005, the Company recorded a performance bonus of $149,569. For the period from October 8, 2004 through December 31, 2004, the Company recorded a performance bonus of $58,697. The performance bonus is payable only when and if: (a) distributions are made to the members of AJG-BI Brands LLC, provided that no performance bonus shall be payable on distributions to the members intended solely to cover any taxes payable by the members or distributions to the members constituting returns of capital, (b) AJG-BI Brands LLC or all of its assets are sold, or (c) AJG-BI Brands LLC is dissolved and its assets are distributed to members. The amount due is unsecured and is reflected as a non-current liability in the accompanying combined balance sheet.  The MPG agreement will continue in force until termination by either party, giving ninety days notice to the other party or immediately upon occurrence of specified events.

14

ALAN JAMES GROUP, LLC AND RELATED COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS

JUNE 30, 2006 AND 2005 (UNAUDITED) AND DECEMBER 31, 2005 AND 2004 (AUDITED)

NOTE 10.EMPLOYEE BENEFIT PLAN

The Company maintains a defined contribution 401(k) plan that covers substantially all employees. Contributions to the plan are at the discretion of the Members. As of June 30, 2006 and December 31, 2005 and 2004, the Company has accrued contributions of approximately $100,000, $175,000 and $88,000, respectively.

NOTE 11.LITIGATION

The Company is exposed to various asserted and unasserted potential claims encountered in the normal course of business. In the opinion of management, the resolution of these matters will not have a material effect on the Company’s combined financial position or the results of its operations.

NOTE 12.SUBSEQUENT EVENT

On August 17, 2006, the Company entered into an Asset Purchase Agreement with Interleukin Genetics, Inc. (Interleukin) pursuant to which the Company sold the assets and business of the Alan James Group.  The Company received consideration at the closing of approximately $7,000,000 in cash and 88,055 shares of Interleukin’s common stock and will receive additional consideration of up to $1,500,000 in cash and up to 1,628,833 shares of Interleukin’s common stock over the next three years.  These contingent payments are subject to achievement of certain milestones by the business of the Alan James Group.

15

INTRODUCTION TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS

On August 17, 2006, Interleukin Genetics, Inc. (the “Company”, “Interleukin” of “ILI”) entered into a Stock Purchase Agreement with Pyxis Innovations Inc. (“Pyxis”).  Pursuant to the Stock Purchase Agreement, the Company issued and sold to Pyxis an aggregate of 2,750,037 shares of Common Stock for an aggregate purchase price of $15,615,537, or $5.6783 per share.

On August 17, 2006, the Company entered into an Asset Purchase Agreement with the Alan James Group, LLC and certain of its affiliates (“Alan James Group” or “AJG”), pursuant to which the Company acquired the assets and business of the Alan James Group.  The acquired business primarily develops, markets and sells “nutraceuticals” and “OTCeuticals” and related activities.  The Company has paid consideration at the closing consisting of approximately $7,000,000 in cash and 88,055 shares of Common Stock and will pay additional contingent consideration of up to $1,500,000 in cash and up to 1,628,833 shares of Common Stock over the next three years.  These contingent payments are subject to achievement of certain milestones by the acquired business.

On August 17, 2006, the Company entered into a three-year employment agreement with Timothy J. Richerson, its Chief Executive Officer, which provides for a minimum annual base salary of $300,000, an immediate grant of 12,500 fully-vested shares of our Common Stock, annual grants of an additional 12,500 fully-vested shares of our Common Stock, annual discretionary bonuses of up to 40% of base salary and a $600 per month automobile allowance.  This employment agreement is terminable by Mr. Richerson upon one month prior written notice and by us for cause. The agreement also provides that if he is terminated without cause or he terminates his employment for good reason, he shall have the right to receive severance benefits in the amount of his then current base salary and health insurance benefits until the earlier to occur of the expiration of the term of the agreement or eighteen months following the date of termination.  In the event of a change of control, all unvested shares of ILI’s Common Stock held by Mr. Richerson would automatically vest.  In addition, the agreement provides that he will be prohibited, for a period of twelve months following the date of termination of the employment agreement, from accepting employment, or otherwise becoming involved, in any manner, with one of our direct competitors, or from providing services to any person or entity that might conflict with our interests or the interests of our customers or clients.

On August 17, 2006, the Company entered into an employment agreement with David A. Finkelstein, its Chief Strategy Officer, expiring on December 31, 2007 which provides for a minimum annual base salary of $300,000, an immediate grant of 12,500 fully-vested shares of our Common Stock, annual grants of an additional 12,500 fully-vested shares of our Common Stock, annual discretionary bonuses of up to 40% of base salary and a $600 per month automobile allowance.  This employment agreement is terminable by Mr. Finkelstein upon one month prior written notice and by us for cause. The agreement also provides that if he is terminated without cause or he terminates his employment for good reason, he shall have the right to receive severance benefits in the amount of his then current base salary and health insurance benefits until

the earlier to occur of the expiration of the term of the agreement or twelve months following the date of termination.  In the event of a change of control, all unvested shares of ILI’s Common Stock held by Mr. Finkelstein would automatically vest.  In addition, the agreement provides that he will be prohibited, for a period of twelve months following the date of termination of the employment agreement, from accepting employment, or otherwise becoming involved, in any manner, with one of our direct competitors, or from providing services to any person or entity that might conflict with our interests or the interests of our customers or clients.

The following unaudited pro forma combined consolidated balance sheets as of June 30, 2006 and the unaudited pro forma combined consolidated statements of operations for the six months ended June 30, 2006 and for the year ended December 31, 2005 give effect to the acquisition described above accounted for under the purchase method of accounting. The unaudited pro forma combined consolidated financial statements are based on historical consolidated financial statements of Interleukin and the Alan James Group under the assumptions and adjustments set forth in the accompanying notes to the unaudited pro forma combined consolidated financial statements.

The unaudited pro forma combined consolidated balance sheet assumes that the acquisition was consummated on June 30, 2006 and the unaudited pro forma combined consolidated statements of operations for the six months ended June 30, 2006 and for the year ended December 31, 2005  assumes the acquisition was consummated on January 1, 2006 and January 1, 2005, respectively. For purposes of presenting the unaudited pro forma combined consolidated balance sheet, Alan James Group assets and liabilities have been recorded at their estimated fair values. These fair values are based on preliminary estimates. Upon completion of a detailed review of assets and liabilities, including intangibles, certain adjustments may be required to finalize the purchase accounting that could be material to Interleukin’s financial statements.

The unaudited pro forma combined consolidated financial statements may not be indicative of the results that actually would have occurred if the acquisition had been consummated on the dates indicated or which may be obtained in the future. The unaudited pro forma combined consolidated financial statements should be read in conjunction with the historical consolidated financial statements of Interleukin and the Alan James Group.

INTERLEUKIN GENETICS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED

CONSOLIDATED BALANCE SHEET

	As of June 30, 2006
	Interleukin			AJG, LLC		Pro Forma			Pro Forma
	Historical			Historical		Adjustments			Combined
ASSETS
Current assets:
Cash and cash equivalents	$	2,425,123		$	228	$	8,630,631	(A)(B)	$	11,055,982
Accounts receivable	444,149			1,296,957					1,741,106
Inventory	—			1,279,888		1,008,951		(C)	2,288,839
Prepaid expenses and other current assets	414,279			238,366		(175,136		)(B)	477,509
Total current assets	3,283,551			2,815,439		9,464,446			15,563,436
Fixed assets, net	939,787			181,880		(71,999		)(D)	1,049,668
Patents, net	428,063			—					428,063
Intangibles	—			68,828		9,731,172		(E)	9,800,000
Other assets	36,418			—					36,418
Total Assets	$	4,687,819		$	3,066,147	$	19,123,619		$	26,877,585
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	482,146		$	1,041,247	$—			$	1,523,393
Accrued expenses	343,499			—		—			343,499
Deferred revenue	137,964			—		—			137,964
Commitments for funded research and development projects	198,906			—		—			198,906
Line of credit	—			937,836		(937,836		)(F)	—
Due to Alan James Group, LLC	—			—		250,000		(G)	250,000
Total current liabilities	1,162,515			1,979,083		(687,836		)	2,453,762
Accrued performance fee	—			149,569		(149,569		)(F)	—
Contingent acquisition costs	—			—		4,835,832		(H)	4,835,832
Long term debt	1,902,525			—		—			1,902,525
Total liabilities	3,065,040			2,128,652		3,998,427			9,192,119
Stockholders’ equity:
Convertible preferred stock	5,000			—		—			5,000
Common stock	24,289			—		2,863		(I)	27,152
Additional paid-in capital	65,301,930			—		16,059,824		(I)	81,361,754
Accumulated deficit	(63,708,440		)	—		—			(63,708,440		)
Members’ equity				937,495		(937,495		)(J)	—
Other comprehensive income (loss)
Total stockholders’ equity	1,622,779			937,495		15,125,192			17,685,466
Total liabilities and stockholders’ equity	$	4,687,819		$	3,066,147	$	19,123,619		$	26,877,585

INTERLEUKIN GENETICS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED

CONSOLIDATED STATEMENT OF OPERATIONS

	For the Six Months Ended June 30, 2006
	Interleukin			AJG, LLC			Pro Forma			Pro Forma
	Historical			Historical			Adjustments			Combined
Revenue	$	1,576,914		$	5,001,697		$	—		$	6,578,611
Cost of revenue	605,934			2,762,448			—			3,368,382
Gross profit	970,980			2,239,249			—			3,210,229
Expenses:
Research and development	1,568,470			—			—			1,568,470
Selling, general and administrative	1,646,951			2,140,673			175,106		(D)(F)(K)	3,962,730
Amortization of acquired intangible assets	—			—			473,889		(E)	473,889
Total operating expenses	3,215,421			2,140,673			648,995			6,005,089
Loss from operations	(2,244,441		)	98,576			(648,995		)	(2,794,860		)
Other income (expense):
Interest income	72,193			491			—			72,684
Interest expense	(109,474		)	(46,219		)	46,219		(F)	(109,474		)
Amortization of note discount	(230,938		)	—			—			(230,938		)
Other income (expense)	—			—			—			—
Total other income	(268,219		)	(45,728		)	46,219			(267,728		)
Net loss	$	(2,512,660	)	$	52,848		$	(602,776	)	$	(3,062,588	)
Net loss per basic and diluted common share	$	(0.10	)							$	(0.11	)
Weighted average common shares outstanding	24,105,396						2,863,092			26,968,488

INTERLEUKIN GENETICS, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED

CONSOLIDATED STATEMENT OF OPERATIONS

	For the Year Ended December 31, 2005
	Interleukin			AJG, LLC			Pro Forma			Pro Forma
	Historical			Historical			Adjustments			Combined
Revenue	$	22,877		$	9,651,484		$	(65,000	)(L)	$	9,609,361
Cost of revenue	—			4,910,641			—			4,910,641
Gross profit	22,877			4,740,843			(65,000		)	4,698,720
Expenses:
Research and development	2,937,332			—			—			2,937,332
Selling, general and administrative	3,143,533			4,029,335			44,747		(D)(F)(K)	7,217,615
Amortization of acquired intangible assets	—			—			947,778		(E)	947,778
Total operating expenses	6,080,865			4,029,335			992,525			11,102,725
Loss from operations	(6,057,988		)	711,508			(1,057,525		)	(6,404,005		)
Other income (expense):
Interest income	131,656			105			—			131,761
Interest expense	(182,617		)	(122,969		)	122,969		(F)	(182,617		)
Amortization of note discount	(461,875		)	—			—			(461,875		)
Other income (expense)	—			29,567			—			29,567
Total other income	(512,836		)	(93,297		)	122,969			(483,164		)
Net loss	$	(6,570,824	)	$	618,211		$	(934,556	)	$	(6,887,169	)
Net loss per basic and diluted common share	$	(0.28	)							$	(0.26	)
Weighted average common shares outstanding	23,702,967						2,863,092			26,566,059

NOTES TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS

1.             Basis of Presentation

The unaudited pro forma combined consolidated balance sheet gives effect to the acquisition, which was accounted for under the purchase method of accounting, as if it had been consummated on June 30, 2006.

The unaudited pro forma combined consolidated statements of operations have been prepared to reflect the acquisition as if it occurred on January 1, 2006 and 2005, respectively. Pro forma net loss per share has been computed using the weighted average shares of common stock outstanding adjusted for the issuance of 2,863,092 shares issued in connection with the acquisition.

2.             Acquisition Financing

In connection with the acquisition, Alticor, Inc., which owns a majority interest in Interleukin, will provide $30 million in financing in the form of a $15.6 million private placement with Alticor, Inc., and a new $14.4 million credit facility. The amount available under the credit facility will be reduced by the amount of any proceeds received by Interleukin from a planned rights offering of $14.4 million of common stock to existing Interleukin common stockholders at a price of $5.68 per share, to be commenced as soon as practicable.

3.Purchase Price Allocation

The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The estimated fair value of the assets acquired and liabilities assumed exceeded the initial payments by $4.8 million resulting in negative goodwill. Pursuant to Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations (SFAS No. 141), the Company recorded as a liability, contingent consideration up to the amount of negative goodwill. If and when contingent payments become due, the Company will apply the contingent payments against the liability. Contingent payments in excess of $4.8 million, if any, will be recorded as goodwill. The allocation of the purchase price remains subject to potential adjustments, including contingent consideration and the estimated transaction costs.

The components of the preliminary purchase price allocation are as follows:

Purchase Prices:
Cash	$		7,281,257
Stock	500,000
Estimated transaction costs	550,000
	$		8,331,257
Allocation:
Accounts Receivable		$		1,479,837
Inventory		2,500,000
Other current assets		46,111
Property and equipment		109,881
Acquired intangible assets		9,800,000
Accounts payable		(768,740			)
Contingent acquisition costs		(4,835,832			)
		$		8,331,257

Differences between the above allocations and the June 30, 2006 unaudited pro forma combined consolidated balance sheet reflect changes in AJG’s balance sheet between June 30, 2006 and August 17, 2006.

Acquired intangible assets are as follows:

	Estimated
	Estimated		Remaining
Identified Intangible Assets	Fair Value*		Useful Life (Yrs)
Retailer Relationships	$	5,700,000	10
Indefinite Lived Trademarks	$	1,100,000	N/A
Definite Lived Trademarks	$	1,200,000	8
Non-Compete Agreements	$	200,000	4
OTCeutical Formulations	$	1,600,000	9
Total Fair Value of Intangible Assets	$	9,800,000

* Based on preliminary valuation analysis prepared by an independent valuation specialist

4.Pro Forma adjustments

The following is a summary of pro forma adjustmentS reflected in the unaudited pro forma combined consolidated financial statements based on preliminary estimates, which may change as additional information is obtained:

(A)To record the cash received from the acquisition financing, net of estimated transaction costs of $52,850

(B)To record the cash paid for the acquisition, including estimated transaction costs of $550,000 of which $175,136 has been prepaid as of June 30, 2006

(C)To adjust AJG’s inventory to fair value.  The cost of goods sold impact of the write-up of inventory has been excluded as it is a non-recurring item.

(D) To eliminate AJG’s automobiles not included in the asset purchase agreement, and the related depreciation expense of $10,536 and $21,073 for the six months ended June 30, 2006 and the year ended December 31, 2005, respectively

(E)To record the fair value of the acquired intangible assets, and the related amortization expense of $473,889 and $947,778 for the six months ended June 30, 2006 and the year ended December 31, 2005, respectively (See Note 3)

(F)To eliminate liabilities that were excluded from the asset purchase agreement, and the related selling, general and administrative expenses of $33,750 and $217,069 for the six months ended June 30, 2006 and the year ended December 31, 2005, respectively, and the interest expense of $46,219 and $122,969 for the six months ended June 30, 2006 and the year ended December 31, 2005, respectively.

(G)Represents the holdback amount per the asset purchase agreement

(H)  To record contingent consideration up to the amount of negative goodwill (See Note 3)

(I)To record the issuance of the shares of common stock in connection with the acquisition

(J)Represents the elimination of the members’ historical equity

(K)To record the expenses associated with the employment agreements entered into in conjunction with the purchase agreement of $220,950 and $263,150 for the six months ended June 30, 2006 and the year ended December 31, 2005, respectively

(L)To exclude the operating results of AJG-Alt LLC as it was not included in the asset purchase agreement

(d)           Exhibits.

10.1         Asset Purchase Agreement By and Among Alan James Group, LLC, AJG-NB, LLC, AJG-BI Brands, LLC, AJG-GNC, LLC, The Owners of Each of the Foregoing, AJG Brands Inc. and the Company dated August 17, 2006

10.2         Stock Purchase Agreement Between the Company and Pyxis Innovations Inc. dated August 17, 2006

10.3         Amendment No. 5 to Note Purchase Agreement between the Company and Pyxis Innovations Inc. dated March 3, 2003

10.4         Form of Promissory Note

10.5         Employment Agreement dated August 17, 2006 between the Company and Timothy J. Richerson

10.6         Employment Agreement dated August 17, 2006 between the Company and David A. Finkelstein

23.1         Consent of Morrison, Brown, Argiz & Farra, LLP

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Interleukin Genetics, Inc.
	(Registrant)
Date: October 31, 2006	/s/ Timothy J. Richerson
	Timothy J. Richerson
	Chief Executive Officer
	(Signature)

EX-10.1

EXHIBIT 10.1

ASSET PURCHASE AGREEMENT

BY AND AMONG

ALAN JAMES GROUP, LLC,

AJG-NB, LLC,

AJG-BI BRANDS, LLC,

AJG-GNC, LLC,

THE OWNERS OF EACH OF THE FOREGOING,

AJG BRANDS, INC.

AND

INTERLEUKIN GENETICS, INC.

August 17, 2006

TABLE OF CONTENTS

ARTICLE I	DEFINITIONS	2
ARTICLE II	PURCHASE AND SALE OF ASSETS; ASSUMED LIABILITIES	9
2.1	Purchased Assets	9
2.2	Excluded Assets	11
2.3	Assumed Liabilities	11
2.4	Excluded Liabilities	11
2.5	Collection of Receivables	12
ARTICLE III	PURCHASE PRICE OF ASSETS	12
3.1	Purchase Price	12
3.2	Payment of Purchase Price.	12
3.3	Net Working Capital Adjustment.	15
3.4	Closing	16
3.5	Purchase Price Allocation	16
3.6	Transfer Taxes	17
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF SELLERS AND OWNERS	17
4.1	Organization and Qualification; Subsidiaries.	17
4.2	Articles of Organization; Operating Agreement	17
4.3	Capitalization.	18
4.4	Authority of Seller; Enforceability	18
4.5	No Conflict; Required Filings and Consents.	19
4.6	Assigned Agreements.	20
4.7	Compliance	20
4.8	Financial Statements.	20
4.9	Absence of Certain Changes or Events	21
4.10	No Undisclosed Liabilities	23
4.11	Absence of Litigation	23
4.12	Employee Benefit Plans.	24
4.13	Employment and Labor Matters.	26
4.14	Certain Business Practices	27
4.15	Absence of Restrictions on Business Activities	27
4.16	Real Property.	27
4.17	Purchased Assets.	28
4.18	Taxes	29
4.19	Environmental Matters	31
4.20	Intellectual Property.	31
4.21	Insurance	33
4.22	Permits	34
4.23	Brokers	34
4.24	Interested Party Transactions.	34
4.25	Customers	36
4.26	Suppliers	36
4.27	Products	36

i

4.28	FDA Regulation	36
4.29	Purchase For Investment	37
4.30	Inventory	37
4.31	Disclosure of Material Information	37
ARTICLE V	REPRESENTATIONS AND WARRANTIES OF PURCHASER	38
5.1	Organization and Qualification	38
5.2	Capitalization	38
5.3	Authority; Enforceability	38
5.4	No Conflict; Required Filings and Consents.	39
5.5	Parent Reporting	39
5.6	Parent Financial Statements	40
5.7	Compliance	40
5.8	Absence of Litigation	40
5.9	Certain Business Practices	40
5.10	Brokers	40
ARTICLE VI	COVENANTS	41
6.1	Performance	41
6.2	Regulatory and Other Authorizations; Notices and Consents.	41
6.3	Conduct of the Business Prior to the Closing.	42
6.4	Access.	42
6.5	Notification.	43
6.6	Standstill	44
6.7	Bulk Transfer Laws	44
6.8	Change of Names	44
6.9	Consents	45
ARTICLE VII	EMPLOYEE MATTERS	45
7.1	Offer of Employment	45
7.2	Transfer and Assumption of the Employee Plans; Contributions for Periods Prior to Closing	45
ARTICLE VIII	CONDITIONS PRECEDENT TO CLOSING; TERMINATION	45
8.1	Conditions Precedent to Obligations of Parent and Purchaser	45
8.2	Conditions Precedent to the Obligations of Sellers and Owners	47
8.3	Termination.	49
ARTICLE IX	INDEMNIFICATION	50
9.1	Survival of Representations, Warranties and Covenants	50
9.2	Definitions	51
9.3	Indemnification Generally; Limitations.	52
9.4	Assertion of Claims	53
9.5	Notice and Defense of Third Party Claims	53
ARTICLE X	MISCELLANEOUS	55
10.1	Notices	55
10.2	Entire Agreement	56
10.3	Binding Effect	56
10.4	Assignment	56

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10.5	Modifications and Amendments	56
10.6	Waivers and Consents	56
10.7	No Third Party Beneficiary	57
10.8	Severability	57
10.9	Publicity	57
10.10	Governing Law	57
10.11	Jurisdiction	57
10.12	Counterparts	57
10.13	Headings	58
10.14	Expenses	58

EXHIBITS

EXHIBIT A	Form of Bill of Sale
EXHIBIT B	Form of Assignment and Assumption Agreement
EXHIBIT C	Form of Opinion of Counsel to Sellers and Owners
EXHIBIT D-1	Form of Seller Non-Competition and Non-Solicitation Agreement
EXHIBIT D-2	Form of Owner Non-Competition and Non-Solicitation Agreement
EXHIBIT E-1	Form of Employment Agreement (Richerson)
EXHIBIT E-2	Form of Employment Agreement (Finkelstein)
EXHIBIT F	Form of Consent to Assignment
EXHIBIT G	Form of Opinion of Counsel to Parent and Purchaser
SCHEDULE 2.2(e)	Excluded Assets
SCHEDULE 2.3(b)	Assumed Liabilities
SCHEDULE 7.2	Adopted Employee Plans
SCHEDULE 8.2	Parent Financing

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ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the “Agreement”) is entered into as of August 17, 2006 by and among Alan James Group, LLC, a Florida limited liability company (“AJG”), AJG-NB, LLC, a Florida limited liability company (“AJG-NB”), AJG-BI Brands, LLC, a Florida limited liability company (“AJG-BI”), AJG-GNC, LLC, a Florida limited liability company (“AJG-GNC” and, together with AJG, AJG-NB and AJG-BI, the “Sellers” and each a “Seller”), Timothy J. Richerson (“Richerson”) and David A. Finkelstein (“Finkelstein” and, together with Richerson, the “Owners” and each an “Owner”), the sole owners of membership interests of the Sellers, AJG Brands, Inc. a Delaware corporation (the “Purchaser”), and Interleukin Genetics, Inc., a Delaware corporation (the “Parent”).

WHEREAS, the Sellers are engaged in the business of developing, marketing and distributing healthcare focused consumer products (including, without limitation, nutraceuticals, so-called “OTCeuticals” and preventative healthcare products) and other activities related thereto (together with any other business activities engaged in by the Sellers prior to the Closing, the “Business”);

WHEREAS, Owners are the members of each Seller owning, in the aggregate, all of the issued and outstanding membership or other equity interests of each Seller;

WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to purchase from Sellers, substantially all of the assets of Sellers and Purchaser is willing to assume certain liabilities of Sellers relating to the Business, all upon the terms and conditions set forth herein;

WHEREAS, the managers of each Seller have approved, and declared it to be advisable and in the best interests of such Seller’s owners for such Seller to sell substantially all of the assets of such Seller to Purchaser upon the terms and subject to the conditions set forth herein;

WHEREAS, Owners have approved the sale of substantially all of the assets of each Seller to Purchaser upon the terms and subject to the conditions set forth herein; and

WHEREAS, as additional consideration, and a material inducement to each party to enter into this Agreement and to consummate the transactions contemplated hereby, Sellers and Owners, on the one hand, and Parent and Purchaser, on the other hand, desire to make certain representations, warranties, indemnities, covenants and agreements relating to the sale and purchase of the Purchased Assets (as defined below) and the other transactions contemplated hereby.

NOW, THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

In addition to terms defined elsewhere in this Agreement, the following terms when used in this Agreement shall have the respective meanings set forth below:

“Acquisition Proposal” has the meaning set forth in Section 6.6.

“Action” means any claim, demand, action, cause of action, chose in action, right of recovery, right of set-off, suit, arbitration, inquiry or proceeding, or any investigation by or before any Governmental Authority.

“Adopted Employee Plans” has the meaning set forth in Section 7.2.

“Affiliate” means, with respect to a specified Person, any other Person which, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes, with respect to the specified Person:  (a) any other Person which beneficially owns or holds 10% or more of the outstanding voting securities or other securities convertible into voting securities of such Person, (b) any other Person of which the specified Person beneficially owns or holds 10% or more of the outstanding voting securities or other securities convertible into voting securities, or (c) any director, officer or manager of such Person.

“Agreement” has the meaning set forth in the preamble.

“AJG” has the meaning set forth in the preamble.

“AJG-BI” has the meaning set forth in the preamble.

“AJG-GNC” has the meaning set forth in the preamble.

“AJG-NB” has the meaning set forth in the preamble.

“Ancillary Agreements” means the Bill of Sale, the Assumption Agreement, the Non-Competition Agreements and the Employment Agreements.

“Approvals” has the meaning specified in Section 4.1(a).

“Assigned Agreement” has the meaning set forth in Section 4.6(a).

“Associated Persons” has the meaning set forth in Section 4.24(e).

“Assumed Liabilities” has the meaning set forth in Section 2.3.

“Assumption Agreement” has the meaning set forth in Section 2.3.

“Base NWC” has the meaning specified in Section 3.3.

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“Bill of Sale” has the meaning set forth in Section 2.1.

“Business” has the meaning set forth in the recitals.

“Business Day” means any day other than a Saturday, Sunday or other day on which banks are required or authorized to be closed in the State of Delaware.

“Cash” means all cash and cash equivalents (including marketable securities and short-term investments) on hand or in banks or other depositories calculated in accordance with GAAP applied on a basis consistent with the preparation of the Financial Statements.

“Closing” has the meaning set forth in Section 3.4.

“Closing Certificate” has the meaning specified in Section 3.3.

“Closing Date” has the meaning set forth in Section 3.4

“Closing Date Statement” has the meaning specified in Section 3.3.

“Closing Payment” has the meaning specified in Section 3.2(b)(i).

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended through the date hereof and any regulations promulgated thereunder.

“COBRA Coverage” has the meaning set forth in Section 4.12(d).

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Confidentiality Agreement” means the Confidential Disclosure Agreement, dated as of April 11, 2006, between Parent and AJG.

“Consent” has the meaning set forth in Section 4.6(a).

“Contract” means any contract, plan, undertaking, understanding, agreement, license, lease, note, mortgage or other binding commitment, whether written or oral.

“Copyrights” mean all copyrights (registered or otherwise) and registrations and applications for registration thereof, and all rights therein provided by multinational treaties or conventions.

“Court” means any court or arbitration tribunal of the United States, any domestic state, or any foreign country, and any political subdivision thereof.

“Database” means all data and other information recorded, stored, transmitted and retrieved in electronic form.

“Disclosure Schedule” means a schedule dated the date hereof from Seller and delivered to Purchaser upon the execution hereof.  The Disclosure Schedule shall be arranged in sections

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and subsections corresponding to the numbered and lettered sections and subsections contained in Article IV.

“Documents” means this Agreement together with the Ancillary Agreements, the Schedules and Exhibits hereto and thereto, the Disclosure Schedule and the other agreements, documents and instruments executed in connection herewith.

“Employee Plans” has the meaning set forth in Section 4.12(a).

“Environmental Law” means any Law or Regulation pertaining to: (i) the protection of health, safety and the indoor or outdoor environment; (ii) the conservation, management or use of natural resources and wildlife; (iii) the protection or use of surface water and ground water; (iv) the management, manufacture, possession, presence, use, generation, transportation, treatment, storage, disposal, emission, discharge, release, threatened release, abatement, removal, remediation or handling of, or exposure to, any Hazardous Material; or (v) pollution (including any emission, discharge or release to air, land, surface water and ground water); and includes, without limitation, the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980, as amended, and the Regulations promulgated thereunder and the Solid Waste Disposal Act, as amended, 42 U.S.C. §§ 6901 et seq.

“Employment Agreements” has the meaning set forth in Section 8.1(i).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Estimated NWC” has the meaning specified in Section 3.3.

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Excluded Assets” has the meaning set forth in Section 2.2.

“Excluded Liabilities” has the meaning set forth in Section 2.4.

“Foreign Competition Laws” means any non-United States statutes, rules, Regulations, Orders, administrative and judicial directives, and other non-United States Laws, that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening of competition or restraint of trade.

“GAAP” means United States generally accepted accounting principles and practices in effect from time to time consistently applied.

“Governmental Authority” means any governmental or legislative agency or authority (other than a Court) of the United States, any state within the United States, or any country, and any political subdivision or agency thereof, and includes any authority having governmental or quasi-governmental powers, including any administrative agency or commission.

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“Hardware” means all mainframes, midrange computers, personal computers, notebooks, servers, switches, printers, modems, drives, peripherals and any component of any of the foregoing.

“Hazardous Substance” means any “Hazardous Substance” (as defined in CERCLA) and any other substance, chemical, compound, product, solid, gas, liquid, waste, by-product, pollutant, contaminant or material which is hazardous or toxic and is regulated under any Environmental Law, and includes without limitation, asbestos or any substance containing asbestos, polychlorinated biphenyls or petroleum (including crude oil or any fraction thereof);.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

“Indemnified Person” has the meaning set forth in Section 9.4.

“Indemnifying Person” has the meaning set forth in Section 9.4.

“Information System” means any combination of Hardware, Software and/or Database(s) employed primarily for the creation, manipulation, storage, retrieval, display and use of information in electronic form or media.

“Intellectual Property” means (a) inventions, whether or not patentable, whether or not reduced to practice or whether or not yet made the subject of a pending Patent application or applications, (b) ideas and conceptions of potentially patentable subject matter, including, without limitation, any patent disclosures, whether or not reduced to practice and whether or not yet made the subject of a pending Patent application or applications, (c) Patents, (d) Trademarks,  (e) Copyrights, (g) Software, (h) trade secrets and confidential, technical or business information (including ideas, formulas, compositions, inventions, and conceptions of inventions whether patentable or unpatentable and whether or not reduced to practice), (i) whether or not confidential, technology (including know-how and show-how), manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, (j) copies and tangible embodiments of all the foregoing, in whatever form or medium, (k) all rights to obtain and rights to apply for Patents, and to register Trademarks and Copyrights, (l) all rights under the License Agreements and any licenses, registered user agreements, technology or materials, transfer agreements, and other agreements or instruments with respect to items in (a) to (k) above; and (m) all rights to sue and recover and retain damages and costs and attorneys’ fees for present and past infringement of any of the Intellectual Property rights hereinabove set out.

“Inventories” means all inventories, including, without limitation, merchandise, raw materials, work-in-process, finished goods, replacement parts and office supplies related to the Business, maintained, held or stored by or for any Seller, at any location whatsoever and any prepaid deposits for any of the same.

“IRS” shall mean the United States Internal Revenue Service.

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“Knowledge” means (a) in the case of an individual, knowledge of a particular fact or other matter if (i) such individual is actually aware of such fact or other matter, or (ii) a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonable investigation concerning the existence of such fact or other matter, and (b) in the case of a Person (other than an individual), such Person will be deemed to have Knowledge of a particular fact or other matter if any individual who is serving, or has at any time served, as a director, officer, partner, member, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter.

“Law” means all laws, statutes, ordinances and Regulations of any Governmental Authority including all decisions of Courts having the effect of law in each such jurisdiction.

“Liabilities” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including, without limitation, those arising under any Law (including, without limitation, any Environmental Law), Action or Order, Liabilities for Taxes and those Liabilities arising under any Contract.

“License Agreements” has the meaning set forth in Section 4.20(c).

“Licensed Intellectual Property” means all Intellectual Property licensed or sublicensed by any Seller from a third party, including the License Agreements.

“Lien” means any mortgage, pledge, security interest, attachment, encumbrance, lien (statutory or otherwise), option, conditional sale agreement, right of first refusal, first offer, termination, participation or purchase or charge of any kind (including any agreement to give any of the foregoing); provided, however, that the term “Lien” shall not include (i) statutory liens for Taxes, which are not yet due and payable or are being contested in good faith by appropriate proceedings, (ii) statutory or common law liens to secure landlords, lessors or renters under leases or rental agreements confined to the premises rented, (iii) deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance, old age pension or other social security programs mandated under applicable Laws, and (iv) statutory or common law liens in favor of carriers, warehousemen, mechanics and materialmen, to secure claims for labor, materials or supplies and other like liens.

“Litigation” means any suit, action, arbitration, cause of action, claim, complaint, criminal prosecution, investigation, inquiry, demand letter, governmental or other administrative proceeding, whether at law or at equity, before or by any Court, Governmental Authority, arbitrator or other tribunal.

“Losses” has the meaning set forth in Section 9.2(a).

“Material Adverse Effect” means, with respect to any Person, any fact, event, change, circumstance or effect that is materially adverse to the business, condition (financial or otherwise), operations, results of operations, assets, liabilities or prospects of such Person.

“Multiemployer Plan” has the meaning set forth in Section 3(37) of ERISA.

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“Non-Competition Agreements” has the meaning set forth in Section 8.1(h).

“Objection Period” has the meaning specified in Section 3.3.

“Order” shall mean any judgment, order, writ, injunction, ruling, stipulation, determination, award or decree of or by, or any settlement under the jurisdiction of, any Court or Governmental Authority.

“Ordinary Course of Business” means the ordinary course of the Business consistent with the past practice of Sellers.

“Owned Intellectual Property” means all Intellectual Property in or to which any Seller has, or has a right to hold, right, title and interest.

“Owner” and “Owners” have the respective meanings set forth in the preamble.

“Parent” has the meaning set forth in the preamble.

“Purchaser Disclosure Schedule” means a schedule dated the date hereof from Purchaser and delivered to Sellers upon the execution hereof.  The Purchaser Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in Article V.

“Parent SEC Reports” has the meaning set forth in Section 5.4.

“Parent Shares” means shares of the common stock, $0.001 par value per share, of Parent.

“Patent” means all national (including the United States) and multinational statutory invention registrations, patents, patent registrations and patent applications, including all reissues, divisions, continuations, continuations-in-part, extensions and reexaminations, and all rights therein provided by multinational treaties or conventions and all improvements to the inventions disclosed in each such registration, patent or application.

“Person” means any natural person, corporation, limited liability company, unincorporated organization, partnership, association, joint stock company, joint venture, trust or any other entity.

“Products” has the meaning set forth in Section 4.27.

“Purchase Price” has the meaning set forth in Section 3.1.

“Purchased Assets” has the meaning set forth in Section 2.1.

“Purchaser” has the meaning set forth in the preamble.

“Purchaser Event of Indemnification” has the meaning set forth in Section 9.2(b).

“Purchaser Indemnified Person” has the meaning set forth in Section 9.2(c).

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“Purchaser Indemnifying Person” has the meaning set forth in Section 9.2(d).

“Receivables” means any and all accounts receivable, notes, book debts and other amounts due or accruing due to any Seller in connection with the Business, whether or not in the ordinary course, together with any unpaid financing charges accrued thereon and the benefit of all security for such accounts, notes and debts.

“Regulation” shall mean any rule or regulation of any Governmental Authority.

“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Seller” and “Sellers” have the respective meanings set forth in the preamble.

“Seller Event of Indemnification” has the meaning set forth in Section 9.2(e).

“Seller Fees” means the costs and expenses of Sellers and Owners (including fees and expenses of any broker, investment banker, financial advisor, legal advisor or accountant), whether incurred by them or on their behalf, in connection with this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby;

“Seller Financial Statements” has the meaning set forth in Section 4.8.

“Seller Indemnified Person” has the meaning set forth in Section 9.2(f).

“Seller Indemnifying Person” has the meaning set forth in Section 9.2(g).

“Seller Organizational Documents” has the meaning set forth in Section 4.2.

“Software” means any and all (a) computer programs, including any and all software implementations of algorithms, models and methodologies, whether in source code or object code, (b) databases and compilations, including any and all data and collections of data, whether machine readable or otherwise, (c) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, (d) the technology supporting any Internet site(s) operated by or on behalf of Sellers and (e) all documentation, including user manuals and training materials, relating to any of the foregoing.

“Subsidiary” or “Subsidiaries” of a specified Person means any other Person in which such Person owns, directly or indirectly, more than 50% of the outstanding voting securities or other securities convertible into voting securities, or which may effectively be controlled, directly or indirectly, by such Person.

“Survival Date” has the meaning set forth in Section 9.1.

“Tax” or “Taxes” means any and all United States federal, state and local, or non-United States, taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority or other taxing authority, including, without

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limitation: taxes or other charges on or with respect to income, franchises, windfall or other profits, business, occupation, gross receipts, property, sales, use, capital stock, payroll, employment, disability, social security, workers’ compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and customs’ duties, tariffs, and similar charges, whether computed on a separate or consolidated, unitary or combined basis or in any other manner, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

“Tax Returns” means returns, reports and information statements, including any schedule or attachment thereto, with respect to Taxes required to be filed with the IRS or any other Governmental Authority or other taxing authority or agency, wherever located throughout the world, including consolidated, combined and unitary tax returns.

“Third Party Claim” has the meaning set forth in Section 9.5.

“Trademarks” mean all trademarks, service marks, trade dress, logos, trade names and corporate names, whether or not registered, including all common law rights, and registrations and applications for registration thereof, including, but not limited to, all marks registered in the United States Patent and Trademark Office, the trademark offices of the states and territories of the United States of America, and the trademark offices of other nations throughout the world, and all rights therein provided by multinational treaties or conventions.

ARTICLE II

PURCHASE AND SALE OF ASSETS; ASSUMED LIABILITIES

2.1Purchased Assets.  Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Sellers agree to sell, assign, transfer, convey and deliver to Purchaser pursuant to a Bill of Sale (the “Bill of Sale”) in substantially the form of Exhibit A attached hereto, and Purchaser agrees to purchase from Sellers, free and clear of all Liens, all of the assets and property used in connection with or otherwise relating to the Business (other than the Excluded Assets), whether real or personal, tangible or intangible, of every kind and description and wherever situated (collectively, the “Purchased Assets”), all with the intention that the Business shall be transferred to Purchaser as a going concern, including without limitation, the following:

(a)Leases of Real Property.  All rights of any Seller (whether as lessor or lessee) under leases of real property, together with all leasehold improvements relating thereto, under the leases listed in Section 4.16 of the Disclosure Schedule;

(b)Machinery, Equipment and Furniture.  All furniture, fixtures, equipment, machinery and other tangible personal property used or held for use by any Seller at the locations at which the Business is conducted, or otherwise owned or held by any Seller at the Closing Date for use in the conduct of the Business;

(c)Inventories.  All Inventories;

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(d)Accounts Receivable.  All Receivables;

(e)Books and Records.  All books and records relating to the Business or the Purchased Assets (other than those required by law to be retained by Sellers, copies of which will be provided to Purchaser) including, without limitation, customer lists, sales records, price lists and catalogues, sales literature, advertising material, manufacturing data, production records, employee manuals, personnel records, supply records, inventory records and correspondence files (together with, in the case of any such information which is stored electronically, the media on which the same is stored);

(f)Goodwill.  The goodwill of Sellers relating to the Business together with the exclusive right for Purchaser to represent itself as carrying on the Business in succession to Sellers and the right to use any words indicating that the Business is so carried on;

(g)Intellectual Property.  All Sellers’ right, title and interest in, to and under the Licensed Intellectual Property and the Owned Intellectual Property;

(h)Claims and Causes of Action.  All Actions of any kind (including rights to insurance proceeds and rights under and pursuant to all warranties, representations and guarantees made by suppliers of products, materials or equipment, or components thereof) pertaining to or arising out of the Business, and inuring to the benefit of any Seller, together with any and all Liens granted or otherwise available to any Seller as security for collection of any of the foregoing;

(i)Prepaid Expenses.  All prepaid expenses of each Seller;

(j)Contracts.  All rights under the Contracts of or relating to the Business that are listed in Section 4.6(a) of the Disclosure Schedule together with all of Sellers’ claims or rights of action now existing or hereafter arising thereunder;

(k)Securities.  All securities owned legally or beneficially by any Seller;

(l)Hardware and Software.  All of Sellers’ Information Systems and other Hardware, Software and Databases, including, without limitation, all rights under licenses and other agreements or instruments related thereto;

(m)Permits.  To the extent transferable, all Approvals held or used by any Seller in connection with, or required for or useful for, the Business;

(n)Adopted Employee Plans.  All rights in and with respect to the assets associated with the Adopted Employee Plans;

(o)URLs.  All of each Seller’s right, title and interest in, to and under any domain name registrations and URLs used in connection with any aspect of the Business; and

(p)Phone/Fax Numbers.  All telephone and facsimile numbers used in connection with the Business.

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2.2Excluded Assets.  Notwithstanding the provisions of Section 2.1, the Purchased Assets shall not include any of the following property or assets of Sellers (collectively, the “Excluded Assets”):

(a)Cash.  All Cash;

(b)Inter-Seller Debt.  All indebtedness of any Owner or any of their Affiliates to Seller;

(c)Income Taxes.  All income tax installments paid by Sellers and the right to receive any refund of income taxes paid by Sellers;

(d)Corporate Records.  All corporate records, including, but not limited to, Sellers’ minute books and stock record books (but not including records of the Business relating to operation of the Business described in Section 2.1(f)); and

(e)Certain Other Assets.  The specific assets listed on Schedule 2.2(e) attached hereto.

2.3Assumed Liabilities.  At the Closing, Purchaser shall execute and deliver the Assignment and Assumption Agreement substantially in the form of Exhibit B attached hereto (the “Assumption Agreement”), pursuant to which, subject to the provisions of Section 2.4, it shall assume and agree to pay, perform and discharge only the following Liabilities of Sellers (the “Assumed Liabilities”):

(a)Liabilities arising under the Contracts included in the Purchased Assets from and after the Closing Date (other than liabilities or obligations attributable to any failure by any Seller to comply with the terms thereof); and

(b)The specific Liabilities set forth on Schedule 2.3(b) attached hereto.

2.4Excluded Liabilities.  Sellers shall retain, and shall be jointly and severally responsible for paying, performing and discharging when due, and Purchaser shall not assume or have any responsibility for, any and all Liabilities of any Seller other than the Assumed Liabilities (the “Excluded Liabilities”).  Without limiting the generality of the foregoing, none of the following shall be Assumed Liabilities and each shall be an Excluded Liability for the purposes of this Agreement:

(a)any Liabilities of any Seller for Taxes (including any Taxes that arise as a result of the transactions contemplated by this Agreement);

(b)except to the extent expressly provided in Section 2.3(b), any Liabilities relating to employee benefits or compensation arrangements existing as of the end of the day on the day immediately preceding the Closing Date, including, without limitation, (i) any Liabilities under any of any Seller’s employee benefit agreements, plans or other arrangements listed on Schedule 7.2 and (ii) any “stay” or “retention” bonus or payment obligations;

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(c)any Liabilities for any damages or injuries to persons or property or for any tort or strict liability arising from events, actions or inactions or the operation of the Business through the Closing Date, including without limitation the sale or use of any Product;

(d)any Liability arising out of any pending or threatened Litigation;

(e)any Liabilities arising under Environmental Laws or relating to Hazardous Substances;

(f)any Liabilities arising under (x) the MPG Consulting Agreement, the Wachovia Loan and the Glocap Agreement (each as defined in Section 4.9 of the Disclosure Schedule), and (y) the Agreement for Philanthropic Support between AJG and AJG-BI (as successors to Boehringher Ingelheim Pharmaceuticals, Inc.) and Harvard Medical School Osher Institute and Division for Research and Education in Complementary Integrative Medical Therapies;

(g)any Liabilities relating to an Excluded Asset; and

(h)any Seller Fees and any indebtedness of any Seller to any Owner or any Affiliate of any Owner.

2.5Collection of Receivables.  Each Seller agrees that, from and after the Closing Date, Purchaser shall have the right and authority to collect for its own account the Receivables, subject to the provisions hereof, and to endorse with the name of such Seller all checks received on account of the Receivables.  Each Seller agrees that it will, within five Business Days of its receipt thereof, transfer, assign and deliver to Purchaser all cash and other property which it may receive with respect to any Receivable from and after the Closing Date, and pending any such delivery to Purchaser of any such property, such Seller shall hold any such property in trust for the benefit of Purchaser.

ARTICLE III

PURCHASE PRICE OF ASSETS

3.1Purchase Price.  As consideration for the purchase of the Purchased Assets, upon the terms and subject to the conditions set forth in this Agreement, Purchaser will (i) pay to Sellers the aggregate purchase price in accordance with Section 3.2 below and subject to adjustment in accordance with the terms and conditions of this Agreement (the “Purchase Price”) and (ii) assume the Assumed Liabilities.

3.2Payment of Purchase Price.

(a)Purchaser shall pay Sellers the Purchase Price as follows:

(i)Closing Consideration: delivery at the Closing of the Closing Payment in cash by wire transfer of immediately available funds and delivery, within ten (10) business days following the earlier of (x) the date of completion of Parent’s independent auditors’ audit of Parent’s consolidated financial statements

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as at and for the year ended December 31, 2007 or (y) March 31, 2008 of (A) the Holdback Cash in cash by wire transfer of immediately available funds and (B) the Holdback Shares;

(ii)First Earn-Out: delivery, within ten (10) business days following the earlier of (x) the date of completion of Parent’s independent auditors’ audit of Parent’s consolidated financial statements as at and for the year ended December 31, 2007 or (y) March 31, 2008, of (A) an amount equal to 27.91% of the Earn-Out Amount for such Earn-Out Period in cash by wire transfer of immediately available funds and (B) a number of Parent Shares equal to the result (rounded to the nearest whole number) obtained by dividing 72.09% of the Earn-Out Amount for such Earn-Out Period by the Closing Parent Share Price; and

(iii)Second Earn-Out: delivery, within ten (10) business days following the earlier of (x) the date of completion of Parent’s independent auditors’ audit of Parent’s consolidated financial statements as at and for the year ended December 31, 2008 or (y) March 31, 2009, of (A) an amount equal to 13.95% of the Earn-Out Amount for such Earn-Out Period in cash by wire transfer of immediately available funds and (B) a number of Parent Shares equal to the result (rounded to the nearest whole number) obtained by dividing 86.05% of the Earn-Out Amount for such Earn-Out Period by the Closing Parent Share Price;

(iv)Third Earn-Out: delivery, within ten (10) business days following the earlier of (x) the date of completion of Parent’s independent auditors’ audit of Parent’s consolidated financial statements as at and for the year ended December 31, 2009 or (y) March 31, 2010, of a number of Parent Shares equal to the result (rounded to the nearest whole number) obtained by dividing the Earn-Out Amount for such Earn-Out Period by the Closing Parent Share Price; and

(v)Earn-Out Make-Up: If the sum of EBITDA for all of the Earn-Out Periods exceeds the Cumulative EBITDA Target, then the delivery, within ten (10) business days following the earlier of (x) the date of completion of Parent’s independent auditors’ audit of Parent’s consolidated financial statements as at and for the year ended December 31, 2009 or (y) March 31, 2010, of an amount equal to the amount, if any, by which the sum of the Maximum Earn-Out Amounts for each of the Earn-Out Periods exceeds the sum of the Earn-Out Amounts for each of the Earn-Out Periods, payable in a combination of cash (by wire transfer of immediately available funds) and Parent Shares (valued at the Closing Parent Share Price) that, when taken together with payments required pursuant to clauses (iii), (iv) and (v) of this Section 3.2(b), as nearly as practicable approximates the combination that would have been required pursuant to clauses (iii), (iv) and (v) of this Section 3.2(b) had the Maximum Earn-Out Amount been earned in each of the Earn-Out Periods.

(b)Certain Definitions.  For purposes of this Section 3.2 and except as expressly provided otherwise herein, all financial measurements shall be determined in

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accordance with GAAP, as applied to Purchaser’s and Parent’s consolidated financial statements.  When used herein, the terms:

(i)“Closing Payment” means $7,000,000, less (A) the amount of the Holdback Cash, (B) less the amount, if any, by which the Base NWC exceeds the Estimated NWC (as reported on the Closing Certificate), and (C) plus the amount, if any, by which the Estimated NWC exceeds the Base NWC (as reported on the Closing Certificate);

(ii)“Closing Parent Share Price” means $5.6783, as adjusted from time to time after the date hereof for any stock dividend, stock split, combination, reorganization, recapitalization, reclassification, or other similar event involving a change in the capital structure of the Parent Shares;

(iii)“Cumulative EBITDA Target” means $17,250,000;

(iv)“Earn-Out Amount” means, for each Earn-Out Period: (A) if EBITDA for such Earn-Out Period is greater than or equal to the EBITDA Target for such Earn-Out Period, then the Maximum Earn-Out Amount, (B) if EBITDA for such Earn-Out Period is less than the EBITDA Target for such Earn-Out Period and greater than fifty percent (50%) of the EBITDA Target for such Earn-Out Period, then the Maximum Earn-Out Amount multiplied by a fraction, the numerator of which is equal to the amount by which EBITDA for such Earn-Out Period exceeds fifty percent (50%) of the EBITDA Target for such Earn-Out Period and the denominator of which is equal to fifty percent (50%) of the EBITDA Target for such Earn-Out Period, and (C) if EBITDA for such Earn-Out Period is not greater than fifty percent (50%) of the EBITDA Target for such Earn-Out Period, then zero;

(v)“Earn-out Periods” means: (A) the one year period beginning on January 1, 2007 and ending on December 31, 2007 (the “First Earn-Out Period”), (B) the one year period beginning January 1, 2008 and ending on December 31, 2008 (the “Second Earn-Out Period”), and (C) the one year period beginning January 1, 2009 and ending on December 31, 2009 (the “Third Earn-Out Period”); and “Earn-Out Period” means each of the Earn-Out Periods;

(vi)“EBITDA” means, for any period, earnings before interest, taxes, depreciation and amortization for the Business, as conducted by the Purchaser during such period and exclusive of the effect of the results of any other business acquired following the Closing Date, with only such adjustments as may be mutually agreed by the Parent and the Sellers and, in addition to any such agreed upon adjustments, for purposes of calculating EBITDA hereunder, (A) compensation expense in respect of the employment of the Owners shall be reflected only in an amount equal to fifty percent (50%) of their actual compensation, and (B) there shall be no allocation to the Business of general and administrative expenses of Parent;

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(vii)“EBITDA Target” means: (x) for the First Earn-Out Period, $2,250,000, (y) for the Second Earn-Out Period, $6,000,000, and (x) for the Third Earn-Out Period, $9,000,000;

(viii)“Holdback Cash” means $250,000;

(ix)“Holdback Shares” means a number of Parent Shares equal to the result (rounded to the nearest whole number) obtained by dividing $500,000 by the Closing Parent Share Price; and

(x)“Maximum Earn-Out Amount” means, for each Earn-Out Period, $3,583,000.

(c)Deferral of Payments if Indemnification Claims Outstanding; Method of Payment.  If, at any time that Purchaser is obligated to make any payment or delivery of Purchase Price hereunder, there are one or more outstanding claims for indemnification under Article IX, then Purchaser shall be entitled to withhold that portion first, of the Holdback Cash and the Holdback Shares, pro rata, and second, the Earn-Out Amount for the First Earn-Out Period and any subsequent Earn-Out Period, as necessary, equal to the amount of the asserted claim(s).  Any Parent Shares so withheld shall be valued at the Closing Parent Share Price for such payment.  Upon final resolution of all such indemnification claim(s), any portion of the withheld payment not offset by allowed indemnification claim(s) shall be promptly paid by Purchaser, as applicable, in accordance with this Section 3.2.

(d)Revision of Earn-Out Targets.  In the event that prior to the end of any Earn-Out Period the Parent or the Purchaser (i) sells, assigns or otherwise transfers for value any material portion of the Business or (ii) materially reduces the capital resources made available to the Business other than in response to the failure of the Business to perform according to projections, then in such event the Parent and the Sellers agree to negotiate in good faith such revisions to the provisions of this Section 3.2 (as the same apply to Earn-Out Periods ending after the date of such event) as the parties shall agree are appropriate to reflect the changed circumstances; provided, however, that in no event shall the aggregate Maximum Earn-Out Amounts for the remaining Earn-Out Periods be increased.

3.3Net Working Capital Adjustment.

(a)The parties acknowledge and agree that the aggregate amount of the Purchase Price has been established in part with reference to the net working capital of Sellers (calculated with reference only to Purchased Assets and Assumed Liabilities) in the amount of $1,967,000 (the “Base NWC”).  At the Closing, Sellers shall deliver to Purchaser a certificate (the “Closing Certificate”) detailing the calculation of the estimated net working capital of Sellers as of July 31, 2006 (the “Estimated NWC”) which estimate shall be prepared by Sellers in accordance with GAAP applied consistently with the Seller Financial Statements (calculated with reference only to Purchased Assets and Assumed Liabilities).  As promptly as practicable, but in any event within ninety (90) days after the Closing Date, Purchaser shall deliver to Sellers a statement of the net working capital of Sellers as of the Closing Date (the “Closing Date Statement”), which shall be prepared by Purchaser in accordance with GAAP (calculated with

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reference only to Purchased Assets and Assumed Liabilities).  The Closing Date Statement shall be conclusive and binding upon the parties hereto, unless Sellers object in writing to any item or items shown on the Closing Date Statement within twenty (20) days after delivery to Sellers of the Closing Date Statement (the “Objection Period”).  During the Objection Period, Sellers shall have reasonable access during normal business hours to all work papers of Purchaser’s accountant that were used in the preparation of the Closing Date Statement.  If Purchaser and Sellers shall be unable to resolve any dispute with respect to the Closing Date Statement within twenty (20) days after delivery of Sellers’ written objections, the matter or matters in dispute shall be submitted (at the equal expense of Purchaser and Sellers) to such firm of independent certified public accountants as Purchaser and Sellers may mutually agree.  The decision of such firm of independent certified public accountants shall be conclusive and binding upon Purchaser and Sellers.  The net working capital of Sellers as of the Closing Date conclusively determined as aforesaid is sometimes referred to herein as the “Closing NWC”.

(b)Promptly following the conclusive determination of Closing NWC, the Purchase Price shall be adjusted as follows:

(i)In the event that the Estimated NWC exceeds the Closing NWC, then the Purchase Price shall be adjusted downward in an amount equal to such excess, and Sellers shall promptly pay to Purchaser, by wire transfer of immediately available funds to an account designated by Purchaser, an amount equal to such excess; and

(ii)In the event that Closing NWC exceeds the Estimated NWC, then the Purchase Price shall be adjusted upward in an amount equal to such excess and the Purchaser shall promptly pay to Sellers by wire transfer of immediately available funds to an account designated by Sellers, an amount equal to such excess.

3.4Closing.  Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts at 10:00 a.m. Boston, Massachusetts time, on the later of (i) August 17, 2006 and (ii) the fifth Business Day following the later to occur of (A) the expiration or termination of all applicable waiting periods under the HSR Act and any applicable Foreign Competition Laws, and (B) the satisfaction or waiver of all other conditions to the obligations of the parties set forth in Article VIII, or at such other place or time or on such other date as Sellers and Purchaser may mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date”).

3.5Purchase Price Allocation.  Purchaser shall prepare an allocation of the Purchase Price, the Assumed Liabilities and all other capitalized costs among the Purchased Assets and the Non-Competition Agreements in accordance with Code §1060 and the Treasury regulations thereunder (and any similar provision of state, local or foreign law, as appropriate).  Purchaser shall deliver such allocation to Sellers within sixty (60) days after the Closing Date.  Such allocation shall be binding upon Seller and Purchaser subject to Sellers’ consent which shall not be unreasonably withheld or delayed.  Owners and Purchaser and their respective Affiliates shall

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report and file Tax Returns (including, but not limited to Internal Revenue Service Form 8594), and shall act, in all respects and for all purposes consistent with such allocation.  Sellers and the Owners shall timely and properly prepare, execute, file and deliver all such documents, forms and other information as Purchaser may reasonably request to give effect to such allocation.  Neither Sellers, the Owners nor Purchaser shall take any position (whether in audits, Tax Returns or otherwise) which is inconsistent with such allocation unless required to do so by applicable Law.

3.6Transfer Taxes.  Sellers shall be liable for and shall pay all federal and state sales Taxes (including any retail sales Taxes and land transfer Taxes) and all other Taxes, duties, fees or other like charges of any jurisdiction properly payable in connection with the transfer of the Purchased Assets by Sellers to Purchaser.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLERS AND OWNERS

As an inducement to Purchaser to enter into this Agreement and to consummate the transactions contemplated hereby, Sellers and the Owners, jointly and severally, represent and warrant to Purchaser as follows:

4.1Organization and Qualification; Subsidiaries.

(a)Each Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida and has all the requisite power and authority, and is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, waivers, qualifications, certificates, and approvals (collectively, “Approvals”) necessary to own, lease and operate its properties and to carry on its business as it is now being conducted.  Each Seller is duly qualified or licensed as a foreign limited liability company to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except where the failure to be so qualified could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Sellers taken as a whole or on the Business.

(b)Each Seller does not (i) own of record or beneficially, directly or indirectly, (A) any shares of capital stock or securities convertible into capital stock of any other corporation or (B) any participating interest in any partnership, joint venture or other non-corporate business enterprise or (ii) control, directly or indirectly, any other entity.

4.2Articles of Organization; Operating Agreement.  True, correct and complete copies of each of (a) the Articles of Organization, operating agreement, and any other similar organizational documents of each Seller, each as amended and in effect on the date hereof (collectively, the “Seller Organizational Documents”), and (b) the minute books of each Seller have been previously delivered to Purchaser.  Such minute books contain complete and accurate records of all meetings and other corporate actions of the managers and members of each Seller

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from the date of its organization to the date hereof and have been maintained in a manner consistent with good business practices.

4.3Capitalization.

(a)Section 4.3(a) of the Disclosure Schedule sets forth a true, complete and correct detailed list of all membership interests of each Seller that are authorized, issued, reserved for issuance or outstanding (collectively, the “Seller Membership Interests”) and the identity of the holder thereof.  Except as set forth in the Seller Organizational Documents, no Seller Membership Interests are subject to, nor were they issued in violation of, any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right.  All outstanding Seller Membership Interests are duly authorized, validly issued, fully paid and nonassessable and not subject to any kind of preemptive (or similar) rights, except as set forth in the Seller Organizational Documents.  There are no bonds, debentures, notes or other indebtedness of any Seller with voting rights (or convertible into, or exchangeable for, securities with voting rights) on any matters on which members of any Seller may vote.  All of the issued and outstanding Seller Membership Interests were issued in compliance with applicable federal and state securities laws.

(b)There are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind (contingent or otherwise) to which any Seller is a party or by which any Seller is bound obligating any Seller to issue, deliver or sell, or cause to be issued, delivered or sold, additional membership interests of any Seller or obligating any Seller to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking, except as set forth in the Seller Organizational Documents.  There are no outstanding contractual obligations of any Seller to repurchase, redeem or otherwise acquire any membership interests (or options to acquire any such membership interests) or other security or equity interest of any Seller.  There no stock-appreciation rights, security-based performance units, “phantom” stock or other security rights or other agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which any Person is or may be entitled to receive any payment or other value based on the revenues, earnings or financial performance, security price performance or other attribute of any Seller or assets or calculated in accordance therewith or to cause any Seller to file a registration statement under the Securities Act, or which otherwise relate to the registration of any securities of any Seller.

(c)There are no voting trusts, proxies or other agreements, commitments or understandings of any character to which any Seller or any of the members of any Seller, is a party or by which any of them is bound with respect to the issuance, holding, acquisition, voting or disposition of any securities, membership interests or other equity interests of any Seller.

4.4Authority of Seller; Enforceability.  Each Seller has all necessary power and authority to execute and deliver this Agreement, each Ancillary Agreement to which it is a party and each instrument required to be executed and delivered by it at the Closing, and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by each Seller of this Agreement and each Ancillary Agreement to which it is a party, the performance of its obligations hereunder and thereunder,

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and the consummation by each Seller of the transactions contemplated hereby and thereby, have been duly and validly authorized and approved by all necessary action and no other proceedings on the part of any Seller or Owner are necessary to authorize this Agreement or any Ancillary Agreement to which any Seller or Owner is a party or to consummate the transactions contemplated herein and therein.  This Agreement and each of the Ancillary Agreements to which any Seller or Owner is a party have been duly and validly executed and delivered by each Seller and Owner party thereto and, assuming the due authorization, execution and delivery thereof by Purchaser, constitutes the legal, valid and binding obligation of each Seller and Owner party thereto, enforceable in accordance with its terms, except that the enforcement thereof may be limited by (A) bankruptcy, insolvency, reorganization, moratorium or other similar law now or hereafter in effect relating to creditors’ rights generally and (B) general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

4.5No Conflict; Required Filings and Consents.

(a)The execution and delivery by each Seller and each Owner of this Agreement, the Ancillary Agreements to which they are a party and any instrument required by this Agreement to be executed and delivered by any Seller or any Owner at the Closing do not, the performance of this Agreement, the Ancillary Agreements to which they are a party or any instrument required by this Agreement to be executed and delivered by any Seller or any Owner at the Closing will not, and the consummation of the transactions contemplated hereby will not, (i) conflict with or violate the Seller Organizational Documents, (ii) conflict with or violate any Law or Order in each case applicable to any Seller or any Owner or by which their properties are bound or affected, or (iii) result in any breach or violation of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair any Seller’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties or assets of any Seller pursuant to, any note, bond, mortgage, indenture, Contract, agreement, lease, license, permit, franchise or other instrument or obligation to which any Seller is a party or by which any Seller or its or any of its properties are bound or affected, except as set forth in Section 4.5(a) of the Disclosure Schedule.

(b)The execution and delivery by each Seller and each Owner of this Agreement, the Ancillary Agreements to which they are a party or any instrument required by this Agreement to be executed and delivered by any Seller or any Owner at the Closing do not, and the performance of this Agreement, the Ancillary Agreements to which they are a party and any instrument required by this Agreement to be executed and delivered by any Seller or any Owner at the Closing, shall not, require any Seller or any Owner to, except as set forth in Section 4.5(b) of the Disclosure Schedule, obtain any Approval of any Person or Approval of, observe any waiting period imposed by, or make any filing with or notification to, any Governmental Authority, domestic or foreign, except for (A) compliance with the pre-Merger notification requirements of the HSR Act, or any Foreign Competition Laws, or (B) where the failure to obtain such Approvals, or to make such filings or notifications, could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Sellers taken as a whole or on the Business.

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4.6Assigned Agreements.

(a)Section 4.6(a) of the Disclosure Schedule sets forth a true and complete list, and, if oral, an accurate and complete summary, of all Contracts to which any Seller is a party or by which it or any of its properties or assets may be (collectively, the “Assigned Agreements”).  True and complete copies of all written Assigned Agreements have been delivered to Purchaser by Sellers and Section 4.6(a) of the Disclosure Schedule contains an accurate summary of all Assigned Agreements which are not in writing.  Except as set forth on Section 4.6(a) of the Disclosure Schedule, each Assigned Agreement is freely and fully assignable to Purchaser without penalty or other adverse consequences and no consent of or notice to any third party (a “Consent”) is required in order to validly assign and transfer the Assigned Agreements to Purchaser.

(b)Each Assigned Agreement is in full force and effect, is a valid and binding obligation of each Seller party thereto and, to the Sellers’ Knowledge, of each other party thereto and is enforceable against such Seller in accordance with its terms and, to the Sellers’ Knowledge, is enforceable against each other party thereto, in each case except that the enforcement thereof may be limited by (i) the effects of bankruptcy, insolvency, reorganization, moratorium or other similar law now or hereafter in effect relating to creditors’ rights generally and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law), and such Assigned Agreements will continue to be valid, binding and enforceable in accordance with their respective terms and in full force and effect immediately following the consummation of the transactions contemplated hereby with no material alteration or acceleration or increase in fees or liabilities.  No Seller is or has been alleged to be and, to the Sellers’ Knowledge, no other party is or is alleged to be in default under, or in breach or violation of, any Assigned Agreement and, to the Sellers’ Knowledge, no event has occurred which (whether with or without notice or lapse of time or both) would constitute such a default, breach or violation.

4.7Compliance.  Each Seller is in compliance with, and is not in default or violation of, (i) Seller Organizational Documents, (ii) any Law or Order by which any of its assets or properties are bound or affected, or (iii) any note, bond, mortgage, indenture, Contract, permit, franchise or other instruments or obligations to which it is a party or by which it or any of its assets or properties are bound or affected, except, as to clauses (ii) and (iii) above, where such noncompliance, default or violation would not have a Material Adverse Effect on Sellers taken as a whole or on the Business.  Each Seller is in compliance in all material respects with the terms of all Approvals.  No Seller has received notice of any revocation or modification of any Approval of any federal, state, local or foreign Governmental Authority that is material to any Seller.

4.8Financial Statements.

(a)Attached to Section 4.8(a) of the Disclosure Schedule are the (i) audited combined Balance Sheet of Sellers as of December 31, 2005 and 2004 and the footnotes attached thereto, Income Statement of Sellers for the years ended December 31, 2005 and 2004, and the Statement of Cash Flows of Sellers for the years ended December 31, 2005 and 2004 and (ii) unaudited combined Balance Sheet of Sellers as of July 31, 2006, Income Statement of Seller for

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the seven months ended July 31, 2006, and the Statement of Cash Flows of Seller for the seven months ended July 31, 2006 (together, the “Seller Financial Statements”), together with all related compilations, reviews and other reports issued by Sellers’ independent certified public accountants with respect thereto, all of which statements (including the notes thereto) are complete and correct in all material respects and (i) were prepared in accordance with the books of account and other financial records of Sellers, (ii) were prepared in accordance with GAAP (except as may otherwise be indicated in the notes thereto), and (iii) present fairly the assets, liabilities and financial position of Sellers on the date of such statements, and the results of operations and changes in the financial condition of Sellers for the periods covered thereby, subject, in the case of unaudited financial statements, to normal recurring year-end adjustments (the effect of which shall not, individually or in the aggregate, have a Material Adverse Effect on Sellers taken as a whole or the Business) and the absence of notes that, if presented, would not differ materially from those included in the audited combined Balance Sheet of Sellers for the year ended December 31, 2005.

(b)Section 4.8(b) of the Disclosure Schedule contains an aged list of the Receivables as of June 30, 2006.  Except as set forth on Section 4.8(b) of the Disclosure Schedule, all Receivables reflected on the Seller Financial Statements arose from, and the Receivables existing on the Closing Date will have arisen from, the delivery of products in the Ordinary Course of Business, consistent with past practice, to Persons not affiliated with any Seller and, except as reserved against on the Balance Sheet, constitute or will constitute, as the case may be, only valid, undisputed claims of Seller not subject to valid claims of set-off or other defenses or counterclaims.  All Receivables reflected on the Seller Financial Statements or arising from the date thereof until the Closing (subject to the reserve for bad debts, if any, reflected on the Seller Financial Statements) are owned by Sellers free and clear of any Liens and, to Seller’s Knowledge, are or will be good and have been collected or will be collectible in the aggregate face amounts thereof, without resort to litigation or extraordinary collection activity, within ninety (90) days of the Closing Date.

(c)Each Seller maintains, or causes another Seller to maintain on its behalf, a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general and specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

4.9Absence of Certain Changes or Events.  Except for the transactions expressly contemplated hereby or disclosed on Section 4.9 of the Disclosure Schedule, since December 31, 2005, the Sellers have not:

(a)issued, sold, redeemed or repurchased any membership interests, bonds or other securities (including without limitation convertible securities) or any rights, options or warrants with respect thereto, or amended any of the terms (including without limitation the vesting of) any such securities, rights, options or warrants;

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(b)split, combined or reclassified any of its membership interests, or declared, set aside or paid any dividend or other distribution with respect to any membership interests of Seller, whether in cash, securities or property, or any combination thereof;

(c)made any loan, advance or capital contribution to or investment in any person;

(d)borrowed any amount or incurred or become subject to any liabilities (absolute or contingent) except current liabilities incurred in the Ordinary Course of Business;

(e)discharged or satisfied any claim or encumbrance or paid any obligation or liability (absolute or contingent), other than current liabilities paid in the Ordinary Course of Business;

(f)amended any of the Seller Organizational Documents;

(g)instituted or settled any Litigation;

(h)mortgaged or pledged any of its assets, tangible or intangible, or subjected itself or any portion of its assets, tangible or intangible, to any claim, except claims for current property taxes not yet due and payable;

(i)acquired or sold, assigned, transferred or otherwise disposed of any amount of tangible assets, except the sale of Inventory to unaffiliated third parties in the Ordinary Course of Business, or canceled any debts or claims;

(j)sold, assigned, licensed, sublicensed or transferred any intangible asset or intellectual property right, or disclosed any proprietary or confidential information to any person or entity not associated with the Sellers, unless such person or entity, prior to such disclosure executed and delivered a non-disclosure agreement in favor of the Sellers;

(k)suffered any non-operating loss in excess of $10,000, or aggregate non-operating losses in excess of $20,000, in either case regardless of whether in the Ordinary Course of Business or covered by insurance;

(l)waived any right of value in excess of $10,000, or aggregate rights in excess of $20,000 (including any insurance policy naming it as a beneficiary or a loss payable payee);

(m)suffered any labor trouble, or any event or condition of any character, having a Material Adverse Effect on the business or plans of any Seller;

(n)materially decreased expenditures with respect to maintenance and repairs;

(o)made any single capital expenditure or commitment therefor in excess of $10,000, or aggregate capital expenditures or commitments therefor in excess of $20,000;

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(p)done any of the following: (A) entered into, adopted or amended any employee benefit plan, (B) made any grant of any severance or termination pay to any director, officer, employee or individual providing services to any Seller, (C) entered into any employment, deferred compensation, change in control or other similar agreement (or any amendment to any such existing agreement) with any director, officer, employee or individual providing services to any Seller, (D) increased benefits payable under any existing severance or termination pay policies or employment agreements, or (E) increased compensation, bonus or other benefits payable to directors, officers, employees or individuals providing services to any Seller or any of their Affiliates, other than, in the case of clause (B), with respect to non-executive employees, and in the case of clause (E), in the Ordinary Course of Business;

(q)entered into any joint venture, partnership or similar arrangement;

(r)amended, modified or terminated any Contract, understanding, commitment or agreement referred to in or required to be set forth in Section 4.6(a) of the Disclosure Schedule, other than in the Ordinary Course of Business, except for any such item that terminated in accordance with its terms, or taken any action that would constitute a violation of or default under any material Contract;

(s)changed its accounting methods, principles or practices, or revalued any of its assets (including without limitation the writing down of the value of inventory or the writing off of notes or accounts receivable other than in the Ordinary Course of Business);

(t)taken any action that would have required the consent of Purchaser pursuant to Section 6.3 had such action or event occurred after the date hereof and prior to the Closing;

(u)taken, or failed to take, any action which could reasonably be expected to prevent, hinder or materially delay the ability of Sellers to consummate the transactions contemplated by this Agreement or the Ancillary Agreements to which it is a party;

(v)entered into any other transaction other than in the Ordinary Course of Business or entered into any other material transaction, whether or not in the Ordinary Course of Business; or

(w)agreed in writing or otherwise to take any of the foregoing actions.

4.10No Undisclosed Liabilities.  No Seller has any liabilities or obligations of any nature (whether known, unknown, asserted, unasserted, accrued, unaccrued, absolute, fixed, contingent, liquidated, unliquidated, due, to become due, or otherwise), and there is no existing fact, condition or circumstance which could reasonably be expected to result in such liabilities or obligations, except liabilities or obligations reflected in the Seller Financial Statements to the extent so reflected.

4.11Absence of Litigation.  There is no Litigation or investigation pending or, to the Knowledge of any Seller, threatened against or otherwise adversely affecting any Seller or any of their respective properties, assets or rights, before or subject to any Court or Governmental Authority, nor does there exist any reasonable basis for any such Litigation.  No Seller is subject

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to any outstanding Litigation or Order which, individually or in the aggregate, would prevent, hinder or delay any Seller from consummating the transactions contemplated by this Agreement.  There is no Litigation pending or, to the Knowledge of any Seller, threatened that might call into question the validity of this Agreement or any action taken or to be taken pursuant hereto, nor does there exist any reasonable basis for any such Litigation.

4.12Employee Benefit Plans.

(a)All “employee benefit plans” (as defined in Section 3(3) of ERISA) and all bonus, stock or other security option, stock or other security purchase, stock or other security appreciation rights, incentive, deferred compensation, retirement or supplemental retirement, severance, golden parachute, vacation, cafeteria, dependent care, medical care, employee assistance program, education or tuition assistance programs, insurance and other similar fringe or employee benefit plans, programs or arrangements, and any employment or executive compensation or severance agreements, written or otherwise, which are sponsored or maintained by any Seller, or any trade or business (whether or not incorporated) which is a member of a controlled group or which is under common control with any Seller, within the meaning of Section 414 of the Code (an “ERISA Affiliate”), on the date hereof are listed in Section 4.12(a) of the Disclosure Schedule (together, the “Employee Plans”).  With respect to an Employee Plan that is a “group health plan” (within the meaning of Code Section 5000(b)(1)), Sellers have provided to Purchaser correct and complete copies of (where and if applicable) (1) the most recent plan document, summary plan description, summary of material modifications and amendments related to such plans, (2) the two most recent Form 5500 Annual Reports and summary annual reports and (3) the most recent agreement or insurance contract which implement each such Employee Plan.

(b)To Sellers’ Knowledge, (1) there has been no “prohibited transaction,” as such term is defined in Section 406 of ERISA and Section 4975 of the Code, with respect to any Employee Plan; (2) there are no claims pending (other than routine claims for benefits) or threatened against any Employee Plan or against the assets of any Employee Plan, nor are there any current or threatened Liens on the assets of any Employee Plan; (3) all Employee Plans conform to, and in their operation and administration are in all material respects in compliance with the terms thereof and requirements prescribed by any and all statutes (including ERISA and the Code), orders, or governmental rules and regulations currently in effect with respect thereto (including without limitation all applicable requirements for notification, reporting and disclosure to participants or the Department of Labor, IRS or Secretary of the Treasury), and each Seller and their ERISA Affiliates, if any, have performed all obligations required to be performed by them under, are not in default under or violation of, and have no knowledge of any default or violation by any other party with respect to, any of the Employee Plans; and (4) each Employee Plan intended to qualify under Section 401(a) of the Code and each corresponding trust exempt under Section 501 of the Code has received or is the subject of a favorable determination or opinion letter from the IRS, and nothing has occurred which may be expected to cause the loss of such qualification or exemption.  The transactions contemplated herein will not directly or indirectly result in an increase of benefits, acceleration of vesting or acceleration of timing for payment of any benefit to any participant or beneficiary under any Employee Plan.

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(c)Seller has no liability with respect to, and has never sponsored, maintained, made or been required to make contribution to any “multi-employer plan” as such term is defined in Section 3(37) of ERISA).

(d)Each Employee Plan that is a “group health plan” (within the meaning of Code Section 5000(b)(1)) has been operated in material compliance with all laws applicable to such plan, its terms, and with the group health plan continuation coverage requirements of Section 4980B of the Code and Sections 601 through 608 of ERISA (“COBRA Coverage”), Section 4980D of the Code and Sections 701 through 707 of ERISA, and such plan’s terms.  No Employee Plan or written or oral agreement exists which obligates any Seller or any of their ERISA Affiliates, if any, to provide health care coverage, medical, surgical, hospitalization, death or similar benefits (whether or not insured) to any employee, former employee or director of any Seller or any of their ERISA Affiliates, if any, following such employee’s, former employee’s or director’s termination of employment with any Seller or any of their ERISA Affiliates, if any, other than COBRA Coverage.

(e)Section 4.12(e) of the Disclosure Schedule sets forth a true and complete list of each current or former employee, officer, director or investor of any Seller who holds, as of the date hereof, any option, warrant or other right to purchase membership interests of any Seller, if any, together with the number of membership interests, if any, subject to such option, warrant or right, the date of grant or issuance of such option, warrant or right, the extent to which such option, warrant or right is vested and/or exercisable, the exercise price of such option, warrant or right, whether such option is intended to qualify as an incentive stock option within the meaning of Section 422(b) of the Code, and the expiration date of each such option, warrant and right.  Section 4.12(e) of the Disclosure Schedule also sets forth the total number of such options, warrants and rights.  True and complete copies of each agreement (including all amendments and modifications thereto) between any Seller and each holder of such options, warrants and rights relating to the same have been furnished to Purchaser and are listed in Section 4.3(c) of the Disclosure Schedule.

(f)All contributions due and payable on or before the Closing Date in respect of any Employee Plan have been made in full and proper form and adequate accruals in accordance with generally accepted accounting principles have been provided for in the Seller Financial Statements for all other contributions or amounts in respect of the Employee Plans for periods ending on the Closing Date.

(g)Except as set forth on Section 4.12(g) of the Disclosure Schedule, no Employee Plan, with the exception of a retirement plan qualified under Section 401(a) of the Code with respect to a trust, and a health flexible spending account or dependent care flexible spending account with respect to self-funding, is funded by a trust, voluntary employees’ beneficiary association or other self-funded arrangement.

(h)To Sellers’ Knowledge, the consummation of the transactions contemplated by this Agreement will not: (A) entitle any individual to severance or separation pay, or (B) accelerate the time of payment or vesting, or increase the amount, of compensation due to any individual.  No payment made or contemplated under any Employee Plan or other

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compensation or benefit arrangement constitutes an “excess parachute payment” within the meaning of Section 280G of the Code.

(i)To Sellers’ Knowledge, all Employee Plans and compensation or benefit arrangements which provide nonqualified deferred compensation covered by Section 409A of the Code are in “good faith” compliance with Section 409A of the Code and the guidance issued pursuant to Section 409A of the Code including, but not limited to, United States Treasury Notice 2005-1.

4.13Employment and Labor Matters.

(a)Section 4.13(a) of the Disclosure Schedule identifies all employees and consultants employed or engaged by any Seller and sets forth each such individual’s rate of pay or annual compensation, job title and date of hire.  Except as set forth in Section 4.13(a) of the Disclosure Schedule, there are no employment, consulting, severance pay, continuation pay, termination or indemnification agreements or other similar agreements of any nature (whether in writing or not) between any Seller and any current or former shareholder, officer, director, employee, or any consultant.  Except as set forth in Section 4.13(a) of the Disclosure Schedule, no individual will accrue or receive additional benefits, service or accelerated rights to payments under any Employee Plan or any of the agreements set forth in Section 4.13(a) of the Disclosure Schedule, including the right to receive any parachute payment, as defined in Section 280G of the Code, or become entitled to severance, termination allowance or similar payments as a result of the transactions contemplated herein that could result in the payment of any such benefits or payments.  Each Seller is not delinquent in payments to any of its employees or consultants for any wages, salaries, commissions, bonuses or other compensation for any services.  None of any Seller’s employment policies or practices is currently being audited or investigated by any Governmental Authority.  There are no pending or, to the Knowledge of any Seller, threatened Actions alleging claims against any Seller brought by or on behalf of any employee or other individual or any Governmental Authority with respect to employment practices.

(b)Except as set forth in Section 4.13(b) of the Disclosure Schedule, there are no controversies pending or, to the Knowledge of any Seller, threatened, between any Seller and any of its employees; each Seller is not a party to any collective bargaining agreement or other labor union contract applicable to persons employed by such Seller nor are there any activities or proceedings of any labor union to organize any such employees of such Seller.  Since the date of each Seller’s organization, there have been no strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to any employees of such Seller.  No Seller has and at the Closing no Seller will have any obligation under the Worker Adjustment and Retraining Notification Act.  Each Seller is in material compliance with all applicable state, local, federal and foreign employment, wage and hour, labor, occupational safety and other applicable laws.

(c)Each Seller is in compliance in all material respects with all applicable foreign, federal, state and local laws, rules, directives and regulations relating to the employment authorization of its employees (including, without limitation, the Immigration Reform and Control Act of 1986, as amended and supplemented, and Section 212(n) and 274A of the Immigration and Nationality Act, as amended and supplemented, and all implementing regulations relating thereto), and no Seller has employed or is currently employing any

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unauthorized aliens (as such term is defined under 8 CFR 274a.1(a)).  No Seller has received any notice from the United States Immigration and Naturalization Service (the “INS”) or the U.S. Department of Labor (the “DOL”) of the disapproval or denial of any visa petition pending before the INS or labor certification pending before the DOL on behalf of any employee or prospective employee of any Seller.  Section 4.13(c) of the Disclosure Schedule contains a true, complete and accurate list of all non-immigrant or immigrant visa petitions pending before the INS and labor certifications pending before the DOL on behalf of any of the employees or prospective employees of any Seller.  Since the approval of each of their respective visa petitions, there has been no material change in the terms and conditions of employment of any employees of any Seller, provided that it is acknowledged that certain employees may from time to time unilaterally breach the terms of their employment with Sellers.

4.14Certain Business Practices.  As of the date hereof, neither any Seller nor any director, officer, employee or agent of any Seller has (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful payments relating to political activity, (b) made any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (c) made any other unlawful payment.

4.15Absence of Restrictions on Business Activities.   Except as set forth in Section 4.15 of the Disclosure Schedule, there is no Assigned Agreement, Order or other arrangement binding upon any Seller or any of its properties which has had or could reasonably be expected to have the effect of prohibiting or materially impairing any business practice of any Seller or the conduct of business by any Seller as currently conducted or as proposed to be conducted by such Seller.  Except as set forth in Section 4.15 of the Disclosure Schedule, no Seller is subject to any non-competition or similar restriction on its businesses.

4.16Real Property.

(a)No Seller owns any real property.

(b)Section 4.16 of Disclosure Statement sets forth (i) a true and complete list of all real property leased by any Seller, (ii) the expiration date of each such lease; (iii) the aggregate monthly rental or other fee payable under each such lease, and (iv) a description of each contract for the purchase, sale, or development of real estate to which any Seller is a party.

(c)Except as described in Section 4.16 of the Disclosure Schedule, Sellers have good and defensible title to the properties and assets listed on Section 4.16 of the Disclosure Schedule, free and clear of all Liens, charges and encumbrances, except statutory Liens for Taxes (as defined below) and securing payments not yet due and payable which Liens or other imperfections of title, if any, as do not materially detract from the value of or interfere with the present use of the property affected thereby or otherwise impair business operations with respect to such properties and assets.

(d)Sellers have delivered to Purchaser complete and accurate copies of the leases and subleases (as amended to date) listed in Section 4.16 of the Disclosure Schedule.  With respect to each lease and sublease listed in Section 4.16 of the Disclosure Schedule:

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(i)the lease or sublease is legal, valid, binding, enforceable against each Seller that is a party thereto and, to the Sellers’ Knowledge, against the other parties thereto and in full force and effect;

(ii)the lease or sublease will continue to be legal, valid, binding, enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing;

(iii)neither any Seller nor, to the Knowledge of any Seller, any other party is in breach or violation of, or default under, any such lease or sublease, and no event has occurred, is pending or is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default by any Seller or any other party under such lease or sublease;

(iv)No Seller has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold;

(v)No Seller has any Knowledge of any Lien, easement, covenant or other restriction applicable to the real property subject to such lease, except for recorded easements covenants and other restrictions which do not materially impair the current uses or the occupancy by any Seller of the property subject thereto; and

(vi)No Seller has received notice or otherwise has Knowledge of any pending, threatened or contemplated condemnation proceeding affecting any premises owned or leased by any Seller or any part thereof or of any sale or other disposition of any such owned or leased premises or any part thereof in lieu of condemnation.  There are no Laws, conditions of record, or, to the Knowledge of  any Seller, other impediments which interfere with the intended use by any Seller of any of the property owned, leased, or occupied by them effective in accordance with their respective terms, and there is not, under any of such leases, any existing material default or event of material default (or event which with notice or lapse of time, or both, would constitute a material default and in respect of which Sellers have not taken adequate steps to prevent such a default from occurring) by any Seller or, to the Sellers’ Knowledge, by any other party thereto.

4.17Purchased Assets.

(a)Section 4.17(a) of the Disclosure Schedule lists all items of each Seller’s tangible personal property and equipment.  Except as set forth in Section 4.17(a) of the Disclosure Schedule, each Seller (i) owns, leases or has the legal right to use all the properties and assets used or intended to be used by it in the conduct of the Business, and (ii) with respect to contractual rights, is a party to and enjoys the right to the benefits of such of the Assigned Agreements as are used by it in the conduct of the Business, all of which properties, assets and rights constitute Purchased Assets.  Except as set forth in Section 4.17(a) of the Disclosure Schedule, Sellers have good and marketable title to, or, in the case of leased or subleased

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Purchased Assets, valid and subsisting leasehold interests in, all the Purchased Assets, free and clear of all Liens.

(b)The Purchased Assets constitute (i) all of the properties, assets and rights, used, held or intended to be used in the Business, and (ii) all such properties, assets and rights as are necessary or useful in the conduct of the Business.  At all times, Sellers have caused the Purchased Assets to be maintained, in all material respects, in accordance with good business practice, and all the Purchased Assets are in good operating condition and repair, ordinary wear and tear excepted, and are suitable for the purposes for which they are used and intended to be used.

(c)Except as set forth in Section 4.17(c) of the Disclosure Schedule, Sellers have the complete and unrestricted power and unqualified right to sell, assign, transfer, convey and deliver the Purchased Assets to Purchaser without penalty or other adverse consequences.  Following the consummation of the transactions contemplated by this Agreement and the execution of the instruments of transfer contemplated by this Agreement, Purchaser will own, with good, valid and marketable title, or lease, under valid and subsisting leases, or otherwise acquire the interests of each Seller in the Purchased Assets, free and clear of all Liens, and without incurring any penalty or other adverse consequence, including, without limitation, any increase in rentals, royalties, or license or other fees imposed as a result of, or arising from, the consummation of the transactions contemplated by this Agreement.

(d)Except as set forth in Section 4.17(d) of the Disclosure Schedule, (i) there are no financing statements under the Uniform Commercial Code which name any Seller as debtor or lessee filed in any state, and (ii) except for those no longer in effect, no Seller has signed any financing statement or any security agreement under which a secured party thereunder may file any such financing statement.

4.18Taxes.   Except as set forth in Section 4.18 of the Disclosure Schedule:

(a)All federal, state, local and foreign Tax Returns required to be filed (taking into account extensions) by or on behalf of any Seller and each affiliated, combined, consolidated or unitary group of which any Seller is or has been a member have been timely filed, and all such Tax Returns are true, complete and correct. Sellers have delivered to Purchaser true and complete copies of (i) all federal income Tax Returns of Sellers for the taxable years ended December 31, 2003, 2004 and 2005, and (ii) any audit report issued within the last three (3) years (or otherwise with respect to any audit or proceeding in progress) relating to federal income Taxes of any Seller.

(b)All Taxes payable by or with respect to any Seller have been timely paid, or are adequately reserved for (other than a reserve for deferred Taxes established to reflect timing differences between book and Tax treatment) in accordance with GAAP on the Seller Financial Statements, other than such Taxes that are currently payable without penalty or interest.  No deficiency for any Taxes has been proposed, asserted or assessed either orally or in writing against any Seller that is not adequately reserved for in accordance with GAAP on the Seller Financial Statements, nor are there any outstanding Tax audits or inquiries.  All

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assessments for Taxes due and owing by or with respect to any Seller with respect to completed and settled examinations or concluded litigation have been fully paid.

(c)No claim has been made by a taxing authority in a jurisdiction where any Seller does not file income or franchise Tax Returns that such Seller is or may be subject to income or franchise taxation in that jurisdiction.

(d)No Seller has requested, or been granted, any waiver of any federal, state, local or foreign statute of limitations with respect to, or any extension of a period for the assessment of, any Tax.  No extension or waiver of time within which to file any Tax Return of, or applicable to, any Seller has been granted or requested which has not since expired.

(e)No Seller is or has ever been (nor does any Seller have any liability for unpaid Taxes because it once was) a member of an affiliated, consolidated, combined or unitary group, and no Seller is a party to any Tax allocation or sharing agreement or is liable for the Taxes of any other party, as transferee or successor, by contract, by operation of law, or otherwise.

(f)There are no agreements in effect to extend the period of limitations for the assessment or collection of any Tax for which any Seller may be liable.  Prior to the date hereof, Sellers have provided Purchaser with written schedules setting forth the taxable years of each Seller for which the statutes of limitations with respect to foreign, federal and material state income Taxes have not expired and with respect to foreign, federal and material state income Taxes, those years for which examinations have been completed and those years for which examinations are currently being conducted.

(g)No unsatisfied deficiency, delinquency or default for any Tax has been claimed, proposed or assessed against or with respect to any Seller, nor has any Seller received notice of any such deficiency, delinquency or default, and there is no administrative or court proceeding or, to any Seller’s Knowledge, any audit or investigation pending with respect to any liability of any Seller for Taxes.

(h)Each Seller has complied with all applicable Laws relating to the payment and withholding of Taxes (including, but not limited to, withholding of Taxes pursuant to Sections 1441, 1442 and 3406 of the Code or similar provisions under any foreign Laws) and have, within the time and in the manner required by Law, withheld from employee wages and paid over to the proper Governmental Authorities all amounts required to be so withheld and paid over under all applicable Laws.

(i)No Seller has executed or entered into any closing agreement under Section 7121 of the Code (or any similar provision of state, local or foreign law) or has agreed to make any adjustment to its income or deductions pursuant to Section 481(a) of the Code (or similar provision of state, local or foreign law), in either case that could affect the Tax liability after the Closing Date to any material extent.

(j)No Seller has agreed to, or is required to, make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise.

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(k)There are no Liens with respect to Taxes upon any of the assets, properties or business of any Seller, other than with respect to Taxes arising in the Ordinary Course of Business and not yet due and payable.

4.19Environmental Matters.  Except as described in Section 4.19 of the Disclosure Schedule, (i) each Seller has obtained all applicable permits, licenses and other authorization which are required under foreign, federal, state or local Laws relating to pollution or protection of the environment or public health or safety, including laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, or hazardous or toxic materials or wastes into ambient air, surface water, ground water or land or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants or hazardous or toxic materials or wastes required to be obtained by such Seller or its agents; (ii) each Seller is in full compliance with all terms and conditions of such required permits, licenses and authorizations, and also are in compliance with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in such Laws or contained in any Regulation, code, plan, Order, notice or demand letter issued, entered, promulgated or approved thereunder; and (iii) as of the date hereof there has not been any event, condition, circumstance, activity, practice, incident, action or plan which is reasonably likely to interfere with or prevent continued compliance with the terms of such permits, licenses and authorizations or which would give rise to any common law or statutory liability, or otherwise form the basis of any claim, action, suit or proceeding, based on or resulting from any Seller’s (or any of its agent’s) manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, or release into the environment, of any pollutant, contaminant or hazardous or toxic material or waste; and  have taken all actions necessary under applicable requirements of federal, state or local laws, rules or regulations to register any products or materials required to be registered by any Seller  (or any of its agents) thereunder.  Except as set forth in Section 4.19 of the Disclosure Schedule, there is no civil, criminal or administrative action, suit, demand, claim, hearing, notice of violation, investigation, proceeding, notice or demand letter pending or, to the Knowledge of any Seller, threatened against any Seller relating in any way to the Environmental Laws or any Regulation, code, plan, Order, notice or demand letter issued, entered, promulgated or approved thereunder.

4.20Intellectual Property.

(a)Section 4.20(a) of the Disclosure Schedule sets forth, for the Intellectual Property owned by each Seller, a complete and accurate list of all United States and foreign (a) patents and patent applications; (b) registered and unregistered trademarks and pending trademark registration applications; (c) domain name registrations; and (d) registered copyrights indicating for each, the applicable jurisdiction, registration number (or application number), and date issued (or date filed).

(b)All Patents owned by any Seller are currently in compliance with all legal requirements (including the payment of filing, examination and maintenance fees and proof of working or use with respect to such Patents), are valid and enforceable, and are not subject to any maintenance fees or actions falling due within ninety (90) days after the Effective Time.  No Patent or patent application owned by any Seller is currently involved in any interference,

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reissue, re-examination or opposition proceeding and no such action has been threatened with respect to any patent or patent application.  To the Knowledge of Sellers, there are no potentially conflicting Trademarks or potentially interfering Patents or patent applications of any third party.

(c)Section 4.20(c) of the Disclosure Schedule sets forth a complete and accurate list of all license agreements granting any right to use or practice any rights under any Intellectual Property (other than software available commercially “off the shelf” and having an acquisition price of less than $5,000), whether any Seller is the licensee or licensor thereunder, and any assignments, consents, term, forbearances to sue, judgments, Orders, settlements or similar obligations relating to any Intellectual Property to which any Seller is a party or otherwise bound (collectively, the “License Agreements”), indicating for each the title, the parties, date executed, whether or not it is exclusive and the Intellectual Property covered thereby.  The License Agreements are valid and binding obligations of the Seller party thereto, enforceable in accordance with their terms, and there exists no event or condition which will result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default by any Seller under any such License Agreement.

(d)The Intellectual Property owned by or licensed to Sellers constitutes all of the Intellectual Property used in or necessary for the conduct of Sellers’ business as currently conducted and as currently contemplated to be conducted.

(e)No royalties, honoraria or other fees are payable to any third parties for the use of or right to use any Intellectual Property except pursuant to the License Agreements set forth in Section 4.20(e) of the Disclosure Schedule.

(f)Except as set forth in Section 4.20(f) of the Disclosure Schedule, Sellers exclusively own, free and clear of all Liens and obligations to license, all owned Intellectual Property (including Trade Secrets), and have a valid, enforceable and transferable right to use all of the licensed Intellectual Property, except as set forth on Section 4.20(f) of the Disclosure Schedule.

(g)Each Seller has taken all necessary steps to protect the Intellectual Property which it owns.  To the Knowledge of each Seller, all of its Intellectual Property is valid and enforceable and no third party has challenged the ownership, use, validity or enforceability of any of the Intellectual Property of such Seller.

(h)The conduct of each Seller’s businesses (including the Business) as currently conducted does not, and to the Knowledge of the Sellers as currently planned to be conducted will not, infringe upon any Intellectual Property rights of any third party.

(i)There is no Litigation pending to the Knowledge of any Seller, threatened or may be threatened alleging that any Seller’s activities or the conduct of its businesses infringes upon, violates, or constitutes the unauthorized use of the Intellectual Property rights of any third party nor has any third party brought or threatened any Litigation challenging the ownership, use, validity or enforceability of any Intellectual Property of any Seller.

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(j)To the Knowledge of each Seller, no third party is misappropriating, infringing, diluting, or violating any Intellectual Property owned by such Seller and no such claims have been brought against any third party by any Seller.

(k)The consummation of the transactions contemplated hereby will not result in the loss or impairment of any Seller’s right to own or use any of the Intellectual Property, nor will they require the consent of any Governmental Authority or third party in respect of any such Intellectual Property.

(l)Section 4.20(l)(i) of the Disclosure Schedule lists all Software (other than generally available, commercial, off-the-shelf Software used internally by any Seller in accordance with the applicable license agreements and having an acquisition price of less than $5,000) which is owned, licensed to or by any Seller, leased to or by any Seller, or otherwise used by any Seller, and identifies which Software is owned, licensed, leased or otherwise used, as the case may be.  Section 4.20(l)(ii) of the Disclosure Schedule lists all Software sold, licensed, leased or otherwise distributed by any Seller to any third party, and identifies which Software is sold, licensed, leased, or otherwise distributed as the case may be.  The Software set forth in Sections 4.20(l)(i) and Section 4.20(l)(ii) of the Disclosure Schedule which Sellers purport to own was either developed (i) by employees of a Seller within the scope of their employment; or (ii) by independent contractors who have assigned their rights to a Seller pursuant to enforceable written agreements.

(m)All Software owned by any Seller, and all Software licensed from third parties by any Seller, is free from any significant software defect or programming or documentation error, operates and runs in a reasonable and efficient business manner, conforms to the specifications thereof, if applicable, and, with respect to the Software owned by any Seller, the applications can be compiled from their associated source code without undue burden if the failure to be able to do any one of which could reasonably be expected to have a Material Adverse Effect on any Seller.  Sellers have furnished Purchaser with all required documentation relating to use, maintenance and operation of the Software.

(n)Sellers have valid registrations for each of the URLs set forth in Section 4.20(a) of the Disclosure Schedule.  Sellers’ registration of each of such URLs is free and clear of any liens, claims or encumbrances and is in full force and effect.  Sellers have paid all fees required to maintain each registration.  Neither any Seller’s registration nor use of any of such URLs has been disturbed or placed “on hold” and no claim (oral or written) has been asserted against any Seller adverse to its rights to such URLs.

(o)Each item of Software is either: (i) owned by a Seller, (ii) currently in the public domain or otherwise available for use, modification and distribution by each Seller without a license from or the approval or consent of any third party, or (iii) licensed or otherwise used by a Seller pursuant to a License Agreement.

4.21Insurance.  Section 4.21 of the Disclosure Schedule sets forth a true and complete list of all material insurance policies and fidelity bonds (including fire, theft, casualty, general liability, workers compensation, business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) covering the assets,

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business, equipment, properties, operations, employees, officers and directors of each Seller, the name of the insurer, the policy number, the type of policy and any coverage limits or applicable deductibles.  As of the date hereof, no Seller has received any notice of cancellation or amendment of any such policy or bond or is in default under any such policy or bond.  There is no claim by any Seller pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. Except to the extent adequately accrued on the Seller Financial Statements, no Seller has any obligation (contingent or otherwise) to pay in connection with any insurance policies any retroactive premiums, “retro-premiums,” or similar payments.  All premiums due and payable under all such policies and bonds have been paid and each Seller is otherwise in full compliance with the terms of such policies and bonds (or other policies and bonds providing substantially similar insurance coverage), and Sellers shall maintain in full force and effect all such insurance during the period from the date hereof through the Closing Date. To the Knowledge of Sellers as of the date hereof, there is not any threatened termination of or material premium increase with respect to any of such policies or bonds.  To the Knowledge of Sellers, each such policy will continue to be enforceable and in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing.

4.22Permits.  Sellers have furnished or made available to Purchaser true and complete copies of all Approvals used in or otherwise necessary for the conduct of the Business.  Except as set forth in Schedule 4.22 of the Disclosure Schedule, each of such Approvals will be duly and validly transferred to Purchaser in connection with the consummation of the transactions contemplated herein. Each Seller is, and at all times has been, in compliance in all material respects with all conditions and requirements imposed by the Approvals and no Seller has received any notice, or has any reason to believe, that any appropriate authority intends to cancel or terminate any of the Approvals or that valid grounds for such cancellation or termination exist. Each Seller owns or has the right to use the Approvals in accordance with the terms thereof without any conflict or alleged conflict or infringement with the rights of any other Person. To the Knowledge of Sellers, each of the Approvals is valid and in full force and effect.  Except as set forth in Schedule 4.22 of the Disclosure Schedule, none of the Approvals will be terminated or adversely affected by the transactions contemplated hereby.

4.23Brokers.  Except as disclosed in Section 4.23 of the Disclosure Schedule, no broker, financial advisor, finder or investment banker or other Person is entitled to any broker’s, financial advisor’s, finder’s or other fee, commission or expense reimbursement in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of any Seller or any of its Affiliates and, except as disclosed in Section 4.23 of the Disclosure Schedule, none of the Sellers or any of their Affiliates has incurred, nor will they incur, directly or indirectly, any liability for any such fees, commission or expenses in connection with the transaction contemplated by this Agreement.

4.24Interested Party Transactions.

(a)Except as disclosed in Section 4.24 of the Disclosure Schedule, no Seller is indebted to any director, officer, employee or agent or any Associated Person (as defined below) of any Seller (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses), and no such Person is indebted to any Seller.

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(b)Except as disclosed in Section 4.24 of the Disclosure Schedule, all loans presently on the books of any Seller to present or former directors or executive officers of any Seller, or their associates, or any members of their immediate families, have been made in the Ordinary Course of Business and on the same terms and interest rates as those prevailing for comparable transactions with other and do not involve more than the normal risk of repayment or present other unfavorable features.

(c)Except as set forth and described in Section 4.24 of the Disclosure Schedule, no present or former officer, director, employee or member of any Seller or any Associated Person (as defined below):

(i)has any interest in (A) any property, real or personal, tangible or intangible, used in or pertaining to the business of any Seller except for the normal rights of a member; (B) any current competitor, customer, supplier or agent of any Seller or (C) any person which is currently a party to any material contract or agreement with any Seller;

(ii)has an agreement, understanding, contract, commitment or pending transaction relating to the purchase, sale or lease of real or personal property, goods, materials, supplies or services, whether or not in the Ordinary Course of Business, with any Seller;

(iii)has received from any Seller any commitment, whether written or oral, to lend any funds to any such person;

(iv)is owed any amounts by any Seller except for deposits taken in the Ordinary Course of Business and amounts due for normal compensation or reimbursement of expenses incurred in furtherance of the business of such person’s employer and reimbursable according to a policy of such Seller or such Associated Person, as appropriate, as in effect immediately prior to the date hereof ; and

(v)is a party to any transaction or relationship with any Seller.

(d)The consummation of the transactions contemplated hereby will not (either alone, or upon the occurrence of any act or event, the lapse of time, or the giving of notice and failure to cure) result in any payment (severance or other) or provision of a benefit becoming due from any Seller or any successor or assign thereof to any director, officer or employee of any Seller, other than payments and benefits due under the contracts and agreements set forth in Section 4.24 the Disclosure Schedule.

(e)“Associated Person” means (i) any holder of 10% or more of the outstanding membership interests of any Seller, (ii) any associate (as “associate” is defined at Rule 14a-1(a) under the Exchange Act or relative (“relative” for purposes of this Section 4.24 is defined as any person having a family relationship with the subject person, as family relationship is defined in the Instruction to Paragraph 401(d) of Regulation S-K of a present or former director or executive officer of any Seller, (iii) any entity controlled, directly, or indirectly, individually or in the aggregate, by any present or former director or executive officer of any

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Seller or any relative or associate of any of such persons and (iv) any entity 25% or more or the equity interests of which are owned individually or in the aggregate by any present or former director or executive officer of any Seller or any relative or associate of any of such persons.

4.25Customers.  Listed in Section 4.25 of the Disclosure Schedule are the names and addresses of the ten most significant customers (by revenue) of the Business for each of the year ended December 31, 2005 and the six month period ended June 30, 2006 and the amount for which each such customer was invoiced during such period.  Except as set forth in Section 4.25 of the Disclosure Schedule, no Seller has within the past twelve (12) months received any notice or has any reason to believe that any significant customer of any Seller has ceased or will cease, to use or resell the products or goods of any Seller or has substantially reduced, or will substantially reduce, the use or resale of such products or goods at any time.

4.26Suppliers.  Listed in Section 4.26 of the Disclosure Schedule are the names and addresses of the ten most significant suppliers (by gross payments made) of the Business for each of the year ended December 31, 2005 and the six month period ended June 30, 2006 and the amount of payments made to such supplier during such period.  Except as set forth in Section 4.26 of the Disclosure Schedule, there has not, to the Knowledge of any Seller, been any material change in any Seller’s business relationship with any of such suppliers and no Seller has since January 1, 2005 received notice from any of such suppliers that said supplier intends to terminate or materially change its business relationship with any Seller.  Except as set forth in Section 4.26 of the Disclosure Schedule, no supplier to any Seller is the sole source for any of the products or materials supplied to such Seller by such supplier.

4.27Products.  Each of the products produced or sold by any Seller (“Products”) (a) is, and at all times has been, in compliance in all material respects with all applicable Laws and (b) is, and at all relevant times has been, fit for the ordinary purposes for which it is intended to be used and conforms to any promises or affirmations of fact made on the container or label for such Product or in connection with its sale.  To the Knowledge of Sellers, there is no design defect with respect to any Products and each of such Products contains adequate warnings, presented in a reasonably prominent manner, in accordance with applicable Laws and current industry practice with respect to its contents and use.  No Seller has Products placed with its customers under an understanding permitting their return to any Seller other than pursuant to a breach of warranty.  Copies of all correspondence relating to Products received or sent by or on behalf of any Seller during the past five (5) years, from or to any Governmental Authority have been previously delivered to Purchaser.

4.28FDA Regulation.  Except as described in Section 4.28 of the Disclosure Schedule, each Seller possesses and has performed its obligations with respect to all Approvals required by the United States Food and Drug Administration (the “FDA”) and any other federal, state or foreign agencies or bodies engaged in the regulation of the Business.  No Seller has received notification of any proceeding relating to revocation or modification of any such Approval or has any reason to believe that any such Approval will not be renewed or that it is not in compliance with the Federal Food, Drug and Cosmetic Act, related Regulations and guidance documents issued by the FDA or the Laws and guidance documents issued by similar Governmental Authorities.

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4.29Purchase For Investment.  Each Seller (and the Owners beneficially) are acquiring the Parent Shares for investment for their own account and not with a view to the distribution or public offering thereof within the meaning of the Securities Act.  Each Seller and the Owners understand that the Parent Shares have not been registered under the Securities Act and may not be sold or transferred without such registration or an exemption therefrom.  Each Seller and the Owners are sufficiently experienced in financial and business matters to be capable of evaluating the risk of investment in the Parent Shares and to make an informed decision relating thereto.  Each Seller and the Owners have the financial capability for making the investment in the Parent Shares, can afford a complete loss of such investment, and such investment is a suitable one for Sellers and the Owners.  Each Seller and each Owner is an “Accredited Investor” as defined in Regulation D under the Securities Act.  Prior to the execution and delivery of this Agreement, each Seller and each Owner has had the opportunity to ask questions of and receive answers from representatives of Parent.

4.30Inventory.  The Inventory consists only of items of a quality and quantity usable or saleable by the Business in the ordinary course of business, and within a reasonable period of time, as first quality goods. Subject to amounts reserved therefor on the Seller Financial Statements, all Inventory is valued on the Seller Financial Statements at the lower of cost, determined by the first in first-out method of accounting, or market value, in accordance with GAAP.  The Seller has good and marketable title to the Inventory, free and clear of all Liens, except as set forth in Section 4.30 of the Disclosure Schedule. The Inventory does not consist of, in any material amount, items that are obsolete or damaged. The Inventory does not include any items held on consignment. The Inventory is on the date hereof, and will be on the Closing Date, at normal and adequate levels for the continuation of the Business in the ordinary course of business.  To the Knowledge of the Sellers, the Sellers are not under any obligation or liability with respect to accepting returns of items of Inventory or merchandise in the possession of its customers other than in the ordinary course of business consistent with past practice.

4.31Disclosure of Material Information.  The Sellers have not failed to disclose to Purchaser any facts which are material to the business, results of operations, assets, liabilities, condition (financial or other) of any Seller.  No representation or warranty contained in this Agreement, and no statement contained in the Disclosure Schedule, the Confidential Information Memorandum dated May 2006 (including any such updated projections subsequently delivered by Sellers to Purchaser prior to the date hereof), or in any certificate, list or other writing furnished to Purchaser pursuant to any provision of this Agreement or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained herein and therein, in light of the circumstances in which they were made, not misleading.  The projections of Seller’s combined future operations included within the aforementioned Confidential Information Memorandum (as updated prior to the date hereof and provided to Purchaser by any Seller), were prepared by the Sellers in good faith based on the best Knowledge of the Sellers and the Owners.  The basis on which such projections were made were reasonable when made, and since the date when made there have been no occurrences, developments or facts which would cause any Seller or any Owner to believe either that such projections are not reasonable or that the assumptions on which they are based are incorrect.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

As an inducement to Sellers and Owners to enter into this Agreement and to consummate the transactions contemplated hereby, Purchaser and Parent represent and warrant, jointly and severally, to Sellers and Owners as follows:

5.1Organization and Qualification.  Each of Purchaser and Parent is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware.  Each of Purchaser and Parent has all the requisite corporate power and authority, and is in possession of all Approvals necessary to carry on its businesses as they are now being conducted, except where the failure to be so qualified, existing and in good standing or to have such power, authority and Approvals could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.

5.2Capitalization.  Section 5.2 of the Purchaser Disclosure Schedule sets forth as of the date hereof: (a) the authorized capital stock of Parent; (b) the number of shares of capital stock of Parent issued and outstanding; (c) the number of shares of capital stock issuable pursuant to Parent’s equity incentive plans; and (d) the number of shares of capital stock issuable and reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for any shares of capital stock of Parent.  All of the issued and outstanding shares of Parent’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of statutory or contractual preemptive rights.  Parent is the sole owner of all of the issued and outstanding capital stock of Purchaser.  Except as set forth on Section 5.2 of the Purchaser Disclosure Schedule, there are no outstanding warrants, options, convertible securities or other rights, agreements, or arrangements of any character under which Parent or any of its Subsidiaries (including Purchaser) is or may be obligated to issue any equity securities of any kind.

5.3Authority; Enforceability.  Each of Purchaser and Parent has all requisite corporate power and authority to execute and deliver this Agreement, the Ancillary Agreements to which it is a party and each instrument required hereby to be executed and delivered by it at the Closing, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by each of Purchaser and Parent of this Agreement, each of the Ancillary Agreements to which it is a party and each instrument required hereby to be executed and delivered by it at the Closing and the performance of its obligations hereunder and thereunder have been duly and validly authorized by their respective Boards of Directors and, to the extent required under the Delaware General Corporation Law, by Parent as the sole stockholder of Purchaser.  The Parent Shares issuable pursuant to Section 3.2 hereof have been duly authorized and, when issued in accordance with the terms hereof, will be validly issued, fully-paid and non-assessable and will be free and clear of all Liens.  No other proceedings on the part of Purchaser or Parent are necessary to authorize the consummation of the transactions contemplated hereby.  This Agreement and each of the Ancillary Agreements executed and delivered by Purchaser or Parent at the Closing have been duly executed and delivered by Purchaser and Parent, as applicable, and, assuming due authorization, execution and delivery hereof by each Seller and each Owner, constitutes a legal,

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valid and binding obligation of such Purchaser and Parent, enforceable against it in accordance with its terms, in each case except that the enforcement thereof may be limited by (A) bankruptcy, insolvency, reorganization, moratorium or other similar law now or hereafter in effect relating to creditors’ rights generally and (B) general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

5.4No Conflict; Required Filings and Consents.

(a)Except as set forth in Section 5.4 of the Purchaser Disclosure Schedule, the execution and delivery by each of Purchaser and Parent of this Agreement, the Ancillary Agreements to which they are a party and any instrument required by this Agreement to be executed and delivered by either of them do not, the performance by each of Purchaser and Parent of this Agreement and each of the Ancillary Agreements executed and delivered by them will not, and the consummation of the transactions contemplated hereby will not, (i) conflict with or violate their respective certificates of incorporation or by-laws, (ii) conflict with or violate any Law or Order in each case applicable to Purchaser or Parent, or (iii) result in any breach or violation of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair Purchaser’s or Parent’s rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties or assets of Purchaser or Parent pursuant to, any note, bond, mortgage, indenture, Contract, agreement, lease, license, permit, franchise or other instrument or obligation to which any Purchaser or Parent is a party or by which Purchaser or Parent or any of their respective properties are bound or affected.

(b)Except as set forth in Section 5.4 of the Purchaser Disclosure Schedule, the execution and delivery by each of Purchaser and Parent of this Agreement and each of the Ancillary Agreements to which they are a party or any instrument required by this Agreement to be executed and delivered by them at the Closing do not, and the performance by each of Purchaser and Parent of this Agreement, the Ancillary Agreements to which they are a party and any instrument required by this Agreement to be executed and delivered by them at the Closing will not, require Purchaser or Parent to obtain any Approval of any Person or Approval of, observe any waiting period imposed by, or require any filing with or notification to, any Governmental Authority, domestic or foreign, except where the failure to obtain such Approvals, or to make such filings or notifications, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Parent.

5.5Parent Reporting.  Parent has timely filed all forms, reports and documents required to be filed by Parent with the SEC since January 1, 2006, including, without limitation, all exhibits required to be filed therewith, and has made available to Sellers or their counsel true, complete and correct copies of all of the same so filed (including any forms, reports and documents filed after the date hereof and prior to the Closing, the “Parent SEC Reports”), other than the unredacted version of documents for which confidential treatment has been granted by the SEC or for which such treatment has been applied for and is pending.  The Parent SEC Reports: (i) at the time filed complied (or will comply when filed, as the case may be) in all material respects with the applicable requirements of the Securities Act and/or the Exchange Act; and (ii) did not at the time they were filed (or, if later filed, amended or superseded, then on the date of such later filing) contain any untrue statement of a material fact or omit to state a material

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fact required to be stated therein or necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading.  To the Knowledge of Parent and Purchaser, Parent is in compliance with all applicable (i) provisions of the Sarbanes-Oxley Act of 2002, as amended, and (ii) listing and maintenance requirements of the American Stock Exchange.

5.6Parent Financial Statements.  Each of the consolidated financial statements (including, in each case, any related notes thereto) contained in the Parent SEC Reports, complied or will comply, as the case may be, as to form in all material respects with the applicable published rules and regulations of the SEC with respect thereto, was or will be prepared in accordance with GAAP applied on a consistent basis throughout the periods involved except as may otherwise be indicated in the notes thereto or, in the case of unaudited interim financial statements, as permitted by Form 10-Q promulgated by the SEC, and fairly presented or will fairly present, as the case may be, in all material respects, the consolidated financial position of Parent and its Subsidiary as at the respective dates and the consolidated results of operations and cash flows for the periods therein indicated, except, in the case of the unaudited interim financial statements, for the absence of footnotes and normal year-end adjustments which were not and will not be material in amount.  The appropriate officers of Parent have made the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and the Regulations of the SEC promulgated thereunder with respect to the Parent SEC Reports.

5.7Compliance.  Each of Purchaser and Parent is in compliance with, and is not in default or violation of, (i) its Certificate of Incorporation and By-laws, or (ii) any Law or Order by which any of its assets or properties are bound or affected and where such noncompliance, default or violation would not have a Material Adverse Effect on Purchaser and Parent taken as a whole.

5.8Absence of Litigation.  There is no Litigation or investigation pending or, to the Knowledge of Parent, threatened against or otherwise adversely affecting Purchaser or Parent or any of their respective properties, assets or rights, before or subject to any Court or Governmental Authority, nor does there exist any reasonable basis for any such Litigation.  Neither Parent nor Purchaser is subject to any outstanding Litigation or Order which, individually or in the aggregate, would prevent, hinder or delay Parent or Purchaser from consummating the transactions contemplated by this Agreement.  There is no Litigation pending or, to the Knowledge of Parent nor Purchaser, threatened that might call into question the validity of this Agreement or any action taken or to be taken pursuant hereto, nor does there exist any reasonable basis for any such Litigation.

5.9Certain Business Practices.  As of the date hereof, neither Parent or Purchaser nor any director, officer, employee or agent of Parent or Purchaser has (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful payments relating to political activity, (b) made any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, or (c) made any other unlawful payment.

5.10Brokers.  Except as disclosed in Section 5.10 of the Purchaser Disclosure Schedule, no broker, financial advisor, finder or investment banker or other Person is entitled to

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any broker’s, financial advisor’s, finder’s or other fee, commission or expense reimbursement in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Purchaser or any of their Affiliates and, except as disclosed in Section 5.10 of the Purchaser Disclosure Schedule, none of Parent or Purchaser or any of their Affiliates has incurred, nor will they incur, directly or indirectly, any liability for any such fees, commission or expenses in connection with the transaction contemplated by this Agreement.

ARTICLE VI

COVENANTS

6.1Performance.  Subject to the terms and conditions provided in this Agreement, each of the parties to this Agreement shall use its respective best efforts in good faith to take or cause to be taken as promptly as practicable all reasonable actions that are within its power to cause to be performed and fulfilled those of the conditions precedent to its obligations to consummate the transactions contemplated by this Agreement that are dependent upon its actions, including obtaining all necessary approvals, to the end that the transactions contemplated hereby will be fully and timely consummated.

6.2Regulatory and Other Authorizations; Notices and Consents.

(a)Each Seller and each Owner will use their best efforts to obtain all authorizations, consents, orders and approvals of all Governmental Authorities and officials that may be or become necessary for its execution and delivery of, and the performance of its obligations pursuant to, this Agreement and the other Documents and will cooperate fully with Purchaser in promptly seeking to obtain all such authorizations, consents, orders and approvals.

(b)Each Seller shall promptly give such notices to third parties and use its best efforts to obtain such third party consents and estoppel certificates as Purchaser may in its reasonable discretion deem necessary or desirable in connection with the consummation of the transactions contemplated by this Agreement and the other Documents, including, without limitation, all Consents described in Section 4.6(a) of the Disclosure Schedule and all consents required to transfer to Purchaser all of the Licensed Intellectual property.  Purchaser shall cooperate and use its commercially reasonable efforts to assist Sellers in giving such notices and obtaining such consents and estoppel certificates; provided, however, that Purchaser shall have no obligation to give any guarantee or other consideration of any nature in connection with any such notice, consent or estoppel certificate or to consent to any change in the terms of any Assigned Agreement which Purchaser in its reasonable discretion may deem adverse to the interests of Purchaser or the Business.

(c)Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Purchased Asset or any claim or right or any benefit arising thereunder or resulting therefrom if an attempted assignment thereof, without the consent of a third party thereto, would constitute a breach or other contravention thereof or in any way adversely affect the rights of Purchaser or any Seller thereunder.  Each Seller will use its best efforts to obtain the consent of the other parties to any such Purchased Asset or any claim or right or any benefit arising thereunder for the assignment thereof to

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Purchaser as Purchaser may reasonably request.  If such consent is not obtained, or if an attempted assignment thereof would be ineffective or would adversely affect the rights of any Seller thereunder so that Purchaser would not in fact receive all such rights, each Seller and Purchaser will cooperate in a mutually agreeable arrangement under which Purchaser would obtain the benefits and assume the obligations thereunder in accordance with this Agreement, including subcontracting, sub-licensing, or sub-leasing to Purchaser, or under which each Seller would enforce for the benefit of Purchaser, with Purchaser assuming such Seller’s obligations, any and all rights of each Seller against a third party thereto.  Each Seller will promptly pay to Purchaser when received all monies received by such Seller under any Purchased Asset or any claim or right or any benefit arising thereunder, except to the extent the same represents an Excluded Asset.  In such event, each Seller and Purchaser shall, to the extent the benefits and obligations of any Purchased Asset have not been provided to Purchaser by alternative arrangements satisfactory to Purchaser, negotiate in good faith a reduction in the Purchase Price.

6.3Conduct of the Business Prior to the Closing.

(a)Each Seller covenants and agrees that, between the date hereof and the Closing, except as expressly required or permitted by this Agreement or unless Purchaser shall otherwise agree in writing, each Seller shall conduct the Business only in the Ordinary Course of Business consistent with past practice. By way of elaboration, and without in any way limiting, the preceding sentence, each Seller shall:  (i) preserve intact the business organization of such Seller and the business organization, properties, assets and rights of the Business; (ii) operate the Business according to plans and budgets provided to Purchaser; (iii) keep available the services of the present officers, employees and consultants of such Seller; (iv) maintain in effect all Assigned Agreements and to preserve the present relationships of such Seller with advertisers, sponsors, customers, licensees, suppliers and other Persons with which such Seller has business relations; (v) maintain, with financially sound and reputable insurers, insurance for the Purchased Assets and the Business against such casualties and contingencies and of such types and in such amounts as is customary for companies similarly situated, (vi) exercise any rights of renewal pursuant to the terms of any of lease which by its terms would otherwise expire; and (vii) not engage in any practice, take any action, fail to take any action or enter into any transaction which could cause any representation or warranty of any Seller to be untrue or result in a breach of any covenant made by Seller in this Agreement.

(b)Each Seller will pay and discharge the Excluded Liabilities as and when the same become due and payable.

(c)Each Seller shall cause to be prepared and timely filed, at its sole expense, all of its required Tax Returns for all periods up to and including the Closing Date.  Each Seller shall be responsible for the payment of all Taxes due or assessed which related to the operations of the Business for all periods up to and including the Closing Date.

6.4Access.

(a)From the date hereof until the Closing, upon reasonable notice, each Seller shall and shall cause each of such Seller’s officers, managers, employees, agents, accountants and counsel to: (i) afford the officers, employees and authorized agents, accountants, counsel,

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financing sources and representatives of Purchaser reasonable access, during normal business hours, to the offices, properties, plants, other facilities, books and records of each Seller and to those officers, directors, employees, agents, accountants and counsel of each Seller who have any knowledge relating to any Seller or the Business and (ii) furnish to the officers, employees and authorized agents, accountants, counsel, financing sources and representatives of Purchaser such additional financial and operating data and other information regarding the Business and the assets, properties and goodwill of each Seller as Purchaser may from time to time reasonably request.

(b)In order to facilitate the resolution of any claims made by or against or incurred by Purchaser after the Closing or for any other reasonable purpose, for a period of seven years following the Closing, each Seller shall (i) retain all books and records of such Seller which are not transferred to Purchaser pursuant to this Agreement and which relate to such Seller, its operations or the Business for periods prior to the Closing and which shall not otherwise have been delivered to Purchaser; and (ii) upon reasonable notice, afford the officers, employees and authorized agents and representatives of Purchaser, reasonable access (including the right to make photocopies at the expense of Purchaser), during normal business hours, to such books and records.

(c)Purchaser shall keep all information obtained pursuant to Section 6.4(a) confidential in accordance with the terms and conditions of the Confidentiality Agreement.

6.5Notification.

(a)From the date hereof until the Closing, each Seller and each Owner shall promptly notify Purchaser in writing of the occurrence, or pending or (to the Knowledge of any Seller or Owner) threatened occurrence, of (a) any event that would constitute a breach or violation of this Agreement by any Seller or any Owner or that could reasonably be anticipated to cause any representation or warranty made by any Seller or any Owner in this Agreement to be false or misleading in any material respect (including without limitation, any event or circumstance which would have been required to be disclosed on the Disclosure Schedule if such event or circumstance occurred or existed on or prior to the date of this Agreement), and (b) all other material developments affecting the assets, liabilities, business, financial condition, operations, results of operations, customer or supplier relations, employee relations, projections or prospects of any Seller or the Business.  Any such notification shall not limit or alter any of the representations, warranties or covenants of the parties set forth in this Agreement nor any rights or remedies a party may have with respect to a breach of any representation, warranty or covenant.

(b)From the date hereof until the Closing, Parent and Purchaser shall promptly notify Sellers in writing of the occurrence, or pending or (to the Knowledge of Parent or Purchaser) threatened occurrence, of (a) any event that would constitute a breach or violation of this Agreement by Parent or Purchaser or that could reasonably be anticipated to cause any representation or warranty made by Parent or Purchaser in this Agreement to be false or misleading in any material respect (including without limitation, any event or circumstance which would have been required to be disclosed on the Disclosure Schedule if such event or circumstance occurred or existed on or prior to the date of this Agreement), and (b) all other

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material developments affecting the assets, liabilities, business, financial condition, operations, results of operations, customer or supplier relations, employee relations, projections or prospects of Parent or Purchaser.  Any such notification shall not limit or alter any of the representations, warranties or covenants of the parties set forth in this Agreement nor any rights or remedies a party may have with respect to a breach of any representation, warranty or covenant.

6.6Standstill.  From the date hereof until the earlier of the Closing or the termination of this Agreement in accordance with its terms, the Sellers and the Owners shall not, nor shall they permit any of their Affiliates to, nor shall they authorize or permit any of their, officers, directors, employees, representatives or agents (collectively, the “Seller Representatives”), directly or indirectly, to (a) solicit, facilitate, initiate, entertain, encourage or take any action to solicit, facilitate, initiate, entertain or encourage, any inquiries or communications or the making of any proposal or offer that constitutes or may constitute an Acquisition Proposal (as defined herein), or (b) participate or engage in any discussions or negotiations with, or provide any information to or take any other action with the intent to facilitate the efforts of, any Person concerning any possible Acquisition Proposal or any inquiry or communication which might reasonably be expected to result in an Acquisition Proposal.  For purposes of this Agreement, the term “Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than Purchaser or any of its Affiliates) relating to any merger, consolidation, recapitalization, liquidation or other direct or indirect business combination or reorganization involving any Seller, the sale, transfer, lease, exchange, license or other disposition of any of the Purchased Assets, other than sales of Inventory in the Ordinary Course of Business, or any other transaction, the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the consummation of the transactions contemplated by this Agreement or which would reasonably be expected to diminish significantly the benefits to Purchaser or Parent of the transactions contemplated hereby.  The Sellers and the Owners shall immediately cease and cause to be terminated, and shall cause all Seller Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could reasonably be expected to lead to, an Acquisition Proposal.  The Sellers shall promptly notify each Seller Representative of its obligations under this Section 6.6.  Without limiting the foregoing, it is agreed that any violation of the restrictions set forth above by any Seller Representative or any Affiliate of any Seller or any Owner, whether or not such Person is purporting to act on behalf of any Seller or any Owner, shall be deemed to be a breach of this Section 6.6 by each Seller.

6.7Bulk Transfer Laws.  Prior to Closing, each Seller shall comply with the requirements of all applicable bulk sale, bulk transfer or similar laws in all jurisdictions.

6.8Change of Names.  Immediately following the Closing, Sellers shall make amendments to the Seller Organizational Documents and make all filings and take all other steps required in any applicable jurisdiction in order to change the name of each Seller to a name which does not include the words “Alan,” “James,” “Group,” “AJG” or any combination or derivation of any of the foregoing.  Sellers shall deliver evidence of such filings to Purchaser within five business days following the Closing.  In addition Sellers shall cooperate as reasonably requested by Purchaser in connection with Purchaser’s qualification to conduct business as a foreign corporation in any of such jurisdictions.

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6.9Consents.  As soon as reasonably practicable following the Closing, and in any event not later than December 31, 2006, Sellers shall obtain and deliver to Purchaser the Consents listed on Schedule 4.6(a) of the Disclosure Schedule with respect to Assigned Agreements in substantially the form attached as Exhibit F hereto.

ARTICLE VII

EMPLOYEE MATTERS

7.1Offer of Employment.  As of the Closing Date, Purchaser may offer employment to any or all of the then current employees of any Seller.

7.2Transfer and Assumption of the Employee Plans; Contributions for Periods Prior to Closing.  On the Closing Date, Purchaser shall adopt the Employee Plans, if any, listed on Schedule 7.2 (together, the “Adopted Employee Plans”) and the related trusts and contracts, and Seller shall cause all right, title, interest, duties and authorities of Sellers in, to and under the Adopted Employee Plans and the related trusts to be transferred to Purchaser in accordance with applicable Law.  At the Closing, the parties shall execute and deliver such documents and instruments as may be required to effect such an assumption and transfer and to reflect the parties’ intent that the Adopted Employee Plans not be deemed to be terminated, or partially terminated, as a result of this Agreement or the transactions contemplated herein and that all assets of the Adopted Employee Plans, as the same exist immediately prior to the Closing Date, shall be transferred with the Adopted Employee Plans as provided in this Section 7.2.  Prior to the Closing Date, Sellers shall cause each employer under the Adopted Employee Plans to make a pro rata contribution to the Adopted Employee Plans for the portion of the current plan year which will be completed as of the Closing Date.

ARTICLE VIII

CONDITIONS PRECEDENT TO CLOSING; TERMINATION

8.1Conditions Precedent to Obligations of Parent and Purchaser.  The obligation of Parent and Purchaser to consummate the transactions described in this Agreement and any and all liability of Purchaser to Sellers or Owners shall be subject to the fulfillment on or before the Closing of the following conditions precedent, each of which may be waived by Purchaser in its sole discretion:

(a)Representations, Warranties and Covenants.  The representations and warranties of Sellers and Owners contained in this Agreement shall have been true and correct when made and shall be true and correct in all material respects as of the Closing (other than such representations and warranties that are qualified by materiality, which shall be true and correct as of the Closing), with the same force and effect as if made as of the Closing Date, other than such representations and warranties that are expressly made as of another date, which shall have been true and correct as of that date, and the covenants and agreements contained in this Agreement to be complied with by any Seller or any Owner on or before the Closing shall have been complied with, and Purchaser shall have received a certificate from each Seller to such effect signed by a duly authorized officer thereof.

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(b)No Adverse Change.  No events or conditions shall have occurred which individually or in the aggregate, have had, or may reasonably be anticipated by Purchaser to give rise to, any Material Adverse Effect on Sellers, taken as a whole, or the Business.

(c)Governmental Approvals.  All approvals from Governmental Authorities required for the lawful consummation of the transactions contemplated by this Agreement and the other Documents shall have been obtained.

(d)Opinion of Counsel.  Purchaser shall have received from Broad and Cassel, counsel to Sellers and the Owners, an opinion dated the Closing Date, in substantially the form attached hereto as Exhibit C hereto.

(e)No Actions, Suits or Proceedings.  No Order of any Court or Governmental Authority shall have been issued restraining, prohibiting, restricting or delaying, the consummation of the transactions contemplated by this Agreement and the other Documents.  No Litigation shall be pending or, to the Knowledge of the parties to this Agreement, threatened, before any Court or Governmental Authority (i) to restrain, prohibit, restrict or delay, or to obtain damages or a discovery order in respect of this Agreement or the consummation of the transactions contemplated hereby, or (ii) which has had or may reasonably be expected to have a Material Adverse Effect on Sellers, taken as a whole, or the Business.  No insolvency proceeding of any character including, without limitation, bankruptcy, receivership, reorganization, dissolution or arrangement with creditors, voluntary or involuntary, affecting any Seller shall be pending, and no Seller shall have taken any action in contemplation of, or which would constitute the basis for, the institution of any such proceedings.

(f)Delivery of Purchased Assets.  Sellers shall have delivered possession of the Purchased Assets to Purchaser, and shall have made all intangible Purchased Assets available to Purchaser.

(g)Closing Documents.  Each Seller and each Owner shall have delivered to Purchaser the resolutions, certificates, documents and instruments set forth below:

(i)each of the Ancillary Agreements to which it is a party;

(ii)a copy of the resolutions duly and validly adopted by the manager and members of each Seller certified by such Seller’s Secretary, authorizing and approving the execution and delivery and performance of this Agreement, the Ancillary Agreements and the other Documents and the transactions contemplated hereby and thereby and the acts of the officers and employees of Seller in carrying out the terms and provisions hereof;

(iii)all of the books, data, documents, instruments and other records relating to the Business of each Seller described in Section 2.1(f) that have not been provided prior to the Closing Date;

(iv)certificates issued by the Secretary of State or other similar appropriate governmental department, as of a reasonable date prior to the Closing, as to the good standing of each Seller in its jurisdiction of incorporation and in

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each other jurisdiction in which it is qualified to do business, and, as to its jurisdiction of incorporation, certifying its Articles of Incorporation;

(v)a certificate of the Secretary or an Assistant Secretary of each Seller certifying the names and signatures of the officers of Seller authorized to sign this Agreement and the Documents;

(vi)the certificate of each Seller referred to in Section 8.1(a); and

(vii)such other documents and instruments as Purchaser or its counsel may reasonably request.

(h)Non-Competition Agreements.  Each Seller and each Owner shall have delivered to Purchaser an executed non-competition and non-solicitation agreement in the respective forms attached hereto as Exhibit D-1 and Exhibit D-2 (the “Non-Competition Agreements”) which agreements shall not have been anticipatorily breached or repudiated by such parties.

(i)Employment Agreements.  The Owners shall have delivered to Purchaser executed employment agreements in the respective forms attached hereto as Exhibit E-1 and Exhibit E-2 (the “Employment Agreements”) which agreements shall not have been anticipatorily breached or repudiated by such employees.

(j)Consents.  The Consents listed on Schedule 8.1(j) hereto with respect to Assigned Agreements shall have been obtained in substantially the form attached as Exhibit F hereto.

(k)Release of Liens.  The Sellers shall have caused all obligations under the Wachovia Loan (as defined in Section 4.9 of the Disclosure Schedule) to have been paid in full at the Closing and all corresponding liens on the Purchased Assets released to the satisfaction of Purchaser.

8.2Conditions Precedent to the Obligations of Sellers and Owners.  The obligation of Sellers and Owners to consummate the transactions described in this Agreement and any and all liability of Sellers and Owners to Purchaser shall be subject to the fulfillment on or before the Closing Date of the following conditions precedent, each of which may be waived by Sellers in their sole discretion:

(a)Representations, Warranties and Covenants.  The representations and warranties of Purchaser and Parent contained in this Agreement shall have been true and correct when made and shall be true and correct in all material respects as of the Closing (other than such representations and warranties that are qualified by materiality, which shall be true and correct as of the Closing), with the same force and effect as if made as of the Closing Date, other than such representations and warranties that are expressly made as of another date, which shall be true and correct as of that date, and the covenants and agreements contained in this Agreement to be complied with by Purchaser or Parent on or before the Closing shall have been complied with, and Sellers shall have received a certificate from Purchaser to such effect signed by a duly authorized officer thereof.

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(b)Governmental Approvals.  All approvals from Governmental Authorities required for the lawful consummation of the transactions contemplated by this Agreement and the other Documents shall have been obtained.

(c)Opinion of Counsel.  Sellers shall have received from Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to Parent and Purchaser, an opinion dated the Closing Date, in substantially the form attached hereto as Exhibit G hereto.

(d)No Actions, Suits or Proceedings.  No Order of any Court or Governmental Authority shall have been issued restraining, prohibiting, restricting or delaying, the consummation of the transactions contemplated by this Agreement and the other Documents.  No Litigation shall be pending or, to the Knowledge of the parties to this Agreement, threatened, before any Court or Governmental Authority (i) to restrain, prohibit, restrict or delay, or to obtain damages or a discovery order in respect of this Agreement or the consummation of the transactions contemplated hereby, or (ii) which has had or may reasonably be expected to have a Material Adverse Effect on Parent and Purchaser, taken as a whole.  No insolvency proceeding of any character including without limitation, bankruptcy, receivership, reorganization, dissolution or arrangement with creditors, voluntary or involuntary, affecting Purchaser or Parent shall be pending, and neither Purchaser nor Parent shall have taken any action in contemplation of, or which would constitute the basis for, the institution of any such proceedings.

(e)Closing Payment.  Purchaser shall have delivered, or caused to be delivered, the Closing Payment to be delivered at the Closing as provided in Section 3.2.

(f)Closing Documents.  Parent and Purchaser shall have delivered to Sellers the resolutions, certificates, documents and instruments set forth below:

(i)each of the Ancillary Agreements to which it is a party;

(ii)a copy of the resolutions duly and validly adopted by the Board of Directors of Parent and the Board of Directors and stockholder of Purchaser, certified by their respective Secretary, authorizing and approving the execution and delivery and performance of this Agreement, the Ancillary Agreements and the other Documents and the transactions contemplated hereby and thereby and the acts of the officers and employees of Purchaser and Parent in carrying out the terms and provisions hereof;

(iii)certificates issued by the Secretary of State or other similar appropriate governmental department, as of a reasonable date prior to the Closing, as to the good standing of each of Purchaser and Parent in its jurisdiction of incorporation and in each other jurisdiction in which it is qualified to do business, and, as to its jurisdiction of incorporation, certifying its Certificate of Incorporation;

(iv)a certificate of the Secretary or an Assistant Secretary of each of Purchaser and Parent certifying the names and signatures of the officers of Purchaser and Parent authorized to sign this Agreement and the Documents;

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(v)the certificate of Purchaser and Parent referred to in Section 8.2(a); and

(vi)such other documents and instruments as Sellers or their counsel may reasonably request.

(g)Employment Agreements.  Parent shall have delivered to each Owner his executed Employment Agreement, which agreements shall not have been anticipatorily breached or repudiated by Parent or Purchaser.

(h)Financing.  Parent shall have consummated the financing described on Schedule 8.2(h) hereto.

8.3Termination.

(a)Right to Terminate.  This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows:

(i)by mutual written consent duly authorized by the parties hereto;

(ii)by either Purchaser or Sellers if the Closing shall not have occurred on or before August 31, 2006, provided, however, that the right to terminate this Agreement under this Section 8.3(a)(ii) shall not be available to any party whose failure (or whose Affiliate’s failure) to fulfill any material obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to have occurred on or before such date;

(iii)by either Purchaser or Sellers, if a Court or Governmental Authority shall have issued an Order or taken any other action, in each case, which has become final and non-appealable and which restrains, enjoins or otherwise prohibits the consummation of the transactions contemplated by this Agreement;

(iv)by Purchaser, if Purchaser is not in material breach of its obligations under this Agreement, if (A) at any time any of the representations and warranties of any Seller or any Owner herein are or become untrue or inaccurate such that Section 8.1(a) would not be satisfied (treating such time as if it were the Closing for purposes of this Section 8.3(a)(iv) or (B) there has been a breach on the part of any Seller or any Owner of any of their covenants or agreements contained in this Agreement such that Section 8.1(a) would not be satisfied (treating such time as if it were the Closing for purposes of this Section 8.3(a)(iv)), and, in both case (A) and case (B), such breach (if curable) has not been cured within 15 days after written notice to Sellers;

(v)by Sellers, if Sellers are not in material breach of their obligations under this Agreement, and if (A) at any time the representations and warranties of Parent or Purchaser herein become untrue or inaccurate such that Section 8.2(a) would not be satisfied (treating such time as if it were the Closing for purposes of

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this Section 8.3(a)(v)), or (B) there has been a breach on the part of Parent or Purchaser of any of its covenants or agreements contained in this Agreement such that Section 8.2(a) would not be satisfied (treating such time as if it were the Closing for purposes of this Section 8.3(a)(v)), and, in both case (A) and case (B), such breach (if curable) has not been cured within 15 days after written notice to Parent or Purchaser;

(vi)by Purchaser if, between the date hereof and the time scheduled for the Closing: (A) an event or condition occurs that has resulted in or that may be expected to result in a Material Adverse Effect on any Seller; or (B) any Seller makes a general assignment for the benefit of creditors, or any proceeding shall be instituted by or against Seller seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up or reorganization, arrangement, adjustment, protection, relief or composition of its debts under any Law relating to bankruptcy, insolvency or reorganization; or

(vii)by Sellers if, between the date hereof and the time scheduled for the Closing: (A) an event or condition occurs that has resulted in or that may be expected to result in a Material Adverse Effect on either or Parent or Purchaser; or (B) either Parent or Purchaser makes a general assignment for the benefit of creditors, or any proceeding shall be instituted by or against Parent or Purchaser seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up or reorganization, arrangement, adjustment, protection, relief or composition of its debts under any Law relating to bankruptcy, insolvency or reorganization.

(b)Effect of Termination.  Except as provided in this Section 8.3(b), in the event of the termination of this Agreement pursuant to Section 8.3(a), this Agreement (other than this Section 8.3(b), Article IX and Article X, which shall survive such termination) will forthwith become void, and there will be no liability on the part of Purchaser, on the other hand, or Sellers and the Owners, on the other hand, or any of their respective officers, managers or directors (as the case may be), to the other parties, and all rights and obligations of any party hereto will cease, provided, that nothing herein will relieve any party from liability for any breach of any representation, warranty, covenant or agreement contained in this Agreement which occurred prior to termination of this Agreement in accordance with its terms.  No termination of this Agreement shall affect the obligations of the parties contained in the Confidentiality Agreement, which shall survive the termination of this Agreement.

ARTICLE IX

INDEMNIFICATION

9.1Survival of Representations, Warranties and Covenants.  The representations and warranties contained in this Agreement and the other Documents, shall survive the Closing and any investigation at any time made by or on behalf of any party until the earlier of (x) the date of the completion of Parent’s independent auditors’ audit of Parent’s consolidated financial statements for the First Earn-Out Period or (y) March 31, 2008; provided, however, that notwithstanding the foregoing, the applicable statute of limitations, including any valid

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extensions thereof, shall be the survival period for any matter relating to (each of the following an “Exceptional Claim”): (a) claims of fraud, willful, intentional or reckless misrepresentation or willful omission of a material fact in connection with this Agreement and the transactions contemplated hereby, (b) any liability relating to personal injury, (c) any alleged or actual violation of the representations and warranties made in Sections 4.4, 4.5, 4.8, 4.15, 4.19, 4.23, 4.24, 5.2, 5.3, 5.5 or 5.6 of this Agreement, or (d) any matter disclosed or referenced in Section 4.11, Section 4.18 or Section 4.19 of the Disclosure Schedule.  Any claims for indemnification asserted in writing as provided for in this Article IX prior to the expiration date applicable to the representation or warranty with respect to which such claim for indemnification is made shall survive until finally resolved and satisfied in full. For convenience of reference, the date upon which any representation and warranty contained herein shall terminate is referred to herein as the “Survival Date.”  No third party other than the Indemnified Persons shall be a third party or other beneficiary of such representations and warranties and no such third party shall have any rights of contribution with respect to such representations or warranties or any matter subject to or resulting in indemnification under this Article IX or otherwise.  All covenants and agreements contained in this Agreement (and in the corresponding covenants and agreements set forth in any of the Documents) shall survive the Closing and continue in full force until fully performed in accordance with their terms.

9.2Definitions.  As used in this Agreement, the following terms shall have the following meanings:

(a)“Losses” shall mean any and all losses, claims, damages, liabilities, expenses (including reasonable attorneys’ and accountants’ fees), assessments, or Taxes (including interest or penalties thereon) sustained, suffered or incurred by any Indemnified Person arising from or in connection with any such matter that is the subject of indemnification under Section 9.3 hereof.

(b)“Purchaser Event of Indemnification” shall mean the following:

(i)the untruth, inaccuracy or breach by any Seller or any Owner of any representation or warranty by such party contained in this Agreement or in any of the other Documents;

(ii)the breach by any Seller or any Owner of any agreement or covenant by such party contained in this Agreement or in any of the other Documents; or

(iii)any Liability of any nature whatsoever relating to (A) any Seller, (B) the Business or the Purchased Assets prior to the Closing Date, other than the Assumed Liabilities, or (C) the Excluded Liabilities.

(c)“Purchaser Indemnified Persons” shall mean and include Purchaser, Parent and their respective Affiliates, successors and permitted assigns, and the respective officers, directors, agents and employees of each of the foregoing.

(d)“Purchaser Indemnifying Persons” shall mean and include Purchaser and Parent, jointly and severally, and their respective successors and assigns.

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(e)“Seller Event of Indemnification” shall mean the following:

(i)the untruth, inaccuracy or breach by Purchaser or Parent of any representation or warranty by such party contained in this Agreement or in any of the other Documents;

(ii)the breach by Purchaser or Parent of any agreement or covenant by such party contained in this Agreement or in any of the other Documents; or

(iii)any Liability of any nature whatsoever relating to (A) the Business or the Purchased Assets from and after the Closing Date, or (B) the Assumed Liabilities from and after the Closing Date.

(f)“Seller Indemnified Persons” shall mean and include Sellers and Owners, and their respective Affiliates, successors and permitted assigns and the respective officers, members, managers, agents and employees of each of the foregoing.

(g)“Seller Indemnifying Persons” shall mean and include each Seller, each Owner and their respective successors and assigns.

9.3Indemnification Generally; Limitations.

(a)Indemnification of Purchaser Indemnified Persons.  Seller Indemnifying Persons shall jointly and severally indemnify Purchaser Indemnified Persons from and against any and all Losses arising from or in connection with any Purchaser Event of Indemnification with respect to Purchaser Indemnified Persons, which shall be paid promptly by Seller Indemnifying Persons; provided, however, that except with respect to Exceptional Claims, Seller Indemnifying Persons will have no liability hereunder for indemnification with respect to Losses arising under clause (i) of the definition of Purchaser Event of Indemnification (i) until the aggregate amount of all such Losses exceeds $50,000.00 and then only for the amount by which the aggregate amount of all such Losses exceeds $50,000.00 or (ii) in an aggregate amount in excess of $1,500,000.  The provisions of this Section 9.3(a) shall be the sole remedy of the Purchaser Indemnified Persons for a Purchaser Event of Indemnification.  Notwithstanding the foregoing, nothing contained in this Section 9.3 shall in any way limit, impair, modify or otherwise affect the rights of Purchaser Indemnified Persons, nor shall there be any limitation of liability of Seller Indemnifying Persons in connection with any of such rights of Purchaser Indemnified Persons (A) to bring any claim, demand, suit or cause of action otherwise available to Purchaser Indemnified Persons based upon an allegation or allegations that Seller Indemnifying Persons, or any of them, had an intent to defraud or made a willful, intentional or reckless material misrepresentation or willful omission of a material fact in connection with this Agreement and the transactions contemplated hereby or (B) to enforce any judgment of a court of competent jurisdiction which finds or determines (by final, non-appealable order) that Seller Indemnifying Persons, or any of them, had an intent to defraud or made a willful material misrepresentation or omission of a material fact in connection with this Agreement and the transactions contemplated hereby.

(b)Indemnification of Seller Indemnified Persons.  Purchaser Indemnifying Persons shall jointly and severally indemnify Seller Indemnified Persons from and against any

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and all Losses arising from or in connection with any Seller Event of Indemnification with respect to Seller Indemnified Persons, which shall be paid promptly by Purchaser Indemnifying Persons; provided, however, that except with respect to Exceptional Claims, Purchaser Indemnifying Persons will have no liability hereunder for indemnification with respect to Losses arising under clause (i) of the definition of Seller Event of Indemnification (i) until the aggregate amount of all such Losses exceeds $50,000.00 and then only for the amount by which the aggregate amount of all such Losses exceeds $50,000.00 or (ii) in an aggregate amount in excess of $1,500,000.  The provisions of this Section 9.3(b) shall be the sole remedy of the Seller Indemnified Persons for a Seller Event of Indemnification.  Notwithstanding the foregoing, nothing contained in this Section 9.3 shall in any way limit, impair, modify or otherwise affect the rights of Seller Indemnified Persons, nor shall there be any limitation of liability of Purchaser Indemnifying Persons in connection with any of such rights of Seller Indemnified Persons (A) to bring any claim, demand, suit or cause of action otherwise available to Seller Indemnified Persons based upon an allegation or allegations that Purchaser Indemnifying Persons, or any of them, had an intent to defraud or made a willful, intentional or reckless material misrepresentation or willful omission of a material fact in connection with this Agreement and the transactions contemplated hereby or (B) to enforce any judgment of a court of competent jurisdiction which finds or determines (by final, non-appealable order) that Purchaser Indemnifying Persons, or any of them, had an intent to defraud or made a willful material misrepresentation or omission of a material fact in connection with this Agreement and the transactions contemplated hereby.

(c)For purposes of this Article IX, in determining whether or not a representation or warranty has been breach and the amount of Losses resulting therefrom, any qualification in such representation or warranty as to “materially” or “material” or “Material Adverse Effect” shall be disregarded.

9.4Assertion of Claims.  No claim shall be brought under Section 9.3 hereof unless the party seeking indemnification (the “Indemnified Persons”), at any time prior to the applicable Survival Date, gives the party or parties from whom indemnification is sought (the “Indemnifying Persons”) (a) written notice of the existence of any such claim, specifying the nature and basis of such claim and the amount thereof, to the extent known, or (b) written notice pursuant to Section 9.5 of any Third Party Claim, the existence of which might give rise to such a claim; but the failure so to provide such notice to the Indemnifying Persons will not relieve the Indemnifying Persons from any liability which they may have to the Indemnified Persons under this Agreement or otherwise (unless and only to the extent that such failure results in the loss or compromise of any rights or defenses of the Indemnifying Persons and the Indemnifying Persons did not have Knowledge of such action or claim).  Upon the giving of such written notice as aforesaid, the Indemnified Persons, or any of them, shall have the right to commence legal proceedings prior or subsequent to (subject to applicable statutes of limitations) the Survival Date for the enforcement of their rights under Section 9.3 hereof.

9.5Notice and Defense of Third Party Claims.  Losses resulting from the assertion of liability by third parties (each, a “Third Party Claim”) shall be subject to the following terms and conditions:

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(a)The Indemnified Persons shall promptly give written notice to the Indemnifying Persons of any Third Party Claim that might give rise to any Loss by the Indemnified Persons, stating the nature and basis of such Third Party Claim, and the amount thereof to the extent known.  Such notice shall be accompanied by copies of all relevant documentation with respect to such Third Party Claim, including, without limitation, any summons, complaint or other pleading that may have been served, any written demand or any other document or instrument.  Notwithstanding the foregoing, the failure to provide notice as aforesaid to the Indemnifying Persons will not relieve the Indemnifying Persons from any liability which they may have to the Indemnified Persons under this Agreement or otherwise (unless and only to the extent that such failure directly results in the loss or compromise of any rights or defenses of the Indemnifying Persons and the Indemnifying Persons did not have Knowledge of such action or claim).

(b)The Indemnifying Persons shall have the right to assume the defense of any such Third Party Claim.  Notwithstanding the foregoing, the Indemnifying Persons may not assume the defense of any such Third Party Claim if the claim (i) is reasonably likely to result in imprisonment of the Indemnified Persons, (ii) is reasonably likely to result in a criminal penalty or fine against the Indemnified Persons, the consequences of which would be reasonably likely to have a Material Adverse Effect on the Indemnified Persons unrelated to the size of such penalty or fine, or (iii) is reasonably likely to result in an equitable remedy which would be reasonably likely to have a Material Adverse Effect on the Indemnified Persons.  If Indemnifying Persons assume the defense of such Third Party Claim, such Indemnifying Persons shall conduct such defense diligently, shall have full and complete control over the conduct of such proceeding on behalf of the Indemnified Persons and shall, in their sole discretion, have the right to decide all matters of procedure, strategy, substance and settlement relating to such proceeding, provided, however, that (A) any counsel chosen by such Indemnifying Persons to conduct such defense shall be reasonably satisfactory to the Indemnified Persons and (B) the Indemnifying Persons will not, without the written consent of the Indemnified Persons, consent to the entry of any judgment or enter into any settlement with respect to the matter which does not include a provision whereby the plaintiff or the claimant in the matter releases the Indemnified Persons from all liability with respect thereto.  The Indemnified Persons may participate in such proceeding and retain separate co-counsel at their sole cost and expense, provided, however, that the Indemnifying Persons shall be responsible for the fees and expenses of one separate co-counsel for the Indemnified Persons to the extent the Indemnified Persons are advised by counsel that either (1) the counsel the Indemnifying Persons have selected has a conflict of interest or (2) there are legal defenses available to the Indemnified Persons that are different from or additional to those available to the Indemnifying Persons.  The failure of the Indemnifying Persons to notify the Indemnified Persons of their election to defend any such Third Party Claim within 30 calendar days after written notice of the Third Party Claim shall have been given to such Indemnifying Persons by the Indemnified Persons shall be deemed a waiver by such Indemnifying Persons of their right to defend such claim or action.

(c)If no Indemnifying Persons are permitted to, or elect to, assume or pursue the defense of, a Third Party Claim, the Indemnified Persons shall diligently defend against such Third Party Claim in such manner as they may deem appropriate and, in such event, the Indemnifying Persons shall promptly reimburse the Indemnified Persons for all reasonable out-of-pocket costs and expenses, legal or otherwise, incurred by the Indemnified Persons in

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connection with the defense against such Third Party Claim, as such costs and expenses are incurred; provided, however, that the Indemnified Persons will not, without the written consent of the Indemnifying Persons, consent to the entry of any judgment or enter into any settlement with respect to the matter, which consent shall not be unreasonably withheld.  Any counsel chosen by such Indemnified Persons to conduct such defense must be reasonably satisfactory to the Indemnifying Persons and only one counsel shall be retained to represent all Indemnified Persons in an action (except that if litigation is pending in more than one jurisdiction with respect to an action, one such counsel may be retained in each jurisdiction in which such litigation is pending).

ARTICLE X

MISCELLANEOUS

10.1Notices.  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) made by facsimile transmission, (iii) sent by recognized overnight courier, or (iv) sent by certified mail, return receipt requested, postage prepaid.

If to Parent or
Purchaser, to:	Interleukin Genetics, Inc.
	135 Beaver Street
	Waltham, MA 02452
	Telephone: (781) 398-0700
	Telecopier: (781) 398-0720
	Attention: Chief Executive Officer
With a copy to:	Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
	One Financial Center
	Boston, Massachusetts  02111
	Attention:  Daniel H. Follansbee, Esq.
	Telephone:  (617) 542-6000
	Telecopier:  (617) 542-2241
If to the Sellers or
the Owners, to:	Alan James Group, LLC
	2101 NW Corporate Blvd.; Suite 410
	Boca Raton, FL  33431-7306
	Attention:  Manager
	Telephone:  (561) 939-2500
	Telecopier:  (561) 939-2501
With a copy to:	Broad and Cassel
	7777 Glades Road; Suite 300
	Boca Raton, Florida  33434

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Attention:  Nina S. Gordon, P.A.

Telephone:  (561) 218-8856

Telecopier:  (561) 218-8978

All notices, requests, consents and other communications hereunder shall be deemed to have been (a) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (b) if sent by facsimile transmission, at the time receipt has been acknowledged by electronic confirmation or otherwise, (c) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (d) if sent by certified mail, on the fifth business day following the day such mailing is deposited in the United States mail.

10.2Entire Agreement.  The Documents and the Confidentiality Agreement embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof, including without limitation the letter agreement between the Buyer, Seller and the Owners dated as of June 14, 2006.  No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in the Documents shall affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement.

10.3Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, personal representatives, legal representatives, and permitted assigns.

10.4Assignment.  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.

10.5Modifications and Amendments.  The terms and provisions of this Agreement may be modified or amended only by written agreement executed by all parties hereto.

10.6Waivers and Consents.  The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions.  No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar.  Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.  No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of the party.  No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.  The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies.  No notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a

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waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand.

10.7No Third Party Beneficiary.  Except as provided in Section 9.3, nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any Person other than the parties hereto and their respective successors and permitted assigns, any rights or remedies under or by reason of this Agreement.

10.8Severability.  If any term or other provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

10.9Publicity.  No party to this Agreement shall make, or cause to be made, any press release or public announcement in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other parties, except as may be required by Law, in which case the party proposing to issue such press release or make such public announcement shall use reasonable efforts to consult in good faith with the other party before issuing any such press release or making any such public announcement. The parties shall cooperate as to the timing and contents of any such press release or public announcement.

10.10Governing Law.  This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the Law of the State of Delaware without giving effect to the conflict of law principles thereof.

10.11Jurisdiction.  Any legal action or proceeding with respect to this Agreement shall be brought in the courts of the State of Delaware and, more particularly, to the fullest extent such Court shall have subject matter jurisdiction over the matter, the Court of Chancery of the State of Delaware, or of the United States of America located in the State of Delaware.  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 for purposes of matters arising under or pursuant to this Agreement.  The parties hereby irrevocably waive an objection or defense that they now or hereafter have to the assertion of personal jurisdiction by any court in any such action or to the laying of the venue of any such action in any such court, and hereby waive, to the extent not prohibited by law, and agree not to assert, by way of motion, as a defense, or otherwise, in any such proceeding, any claim that it is not subject to the jurisdiction of the above-named courts for such proceedings.

10.12Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement.

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10.13Headings.  The descriptive headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

10.14Expenses.  Except as otherwise specified in this Agreement, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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

SELLERS:	ALAN JAMES GROUP, LLC
	By:	/s/ Timothy J. Richerson
	Name: Timothy J. Richerson
	Title: Manager and President
	AJG-NB, LLC
	By:	/s/ Timothy J. Richerson
	Name: Timothy J. Richerson
	Title: Manager and President
	AJG-GNC, LLC
	By:	/s/ Timothy J. Richerson
	Name: Timothy J. Richerson
	Title: Manager and President
	AJG-BI BRANDS, LLC
	By:	/s/ Timothy J. Richerson
	Name: Timothy J. Richerson
	Title: Manager and President
OWNERS:
	/s/ Timothy J. Richerson
	Name: Timothy J. Richerson
	Address:
	/s/ David A. Finkelstein
	Name: David A. Finkelstein
	Address:

PARENT:	INTERLEUKIN GENETICS, INC.
	By:	/s/ Kenneth S. Kornman
	Name: Kenneth S. Kornman
	Title: President and Chief Executive Officer
PURCHASER:	AJG BRANDS, INC.
	By:	/s/ Kenneth S. Kornman
	Name: Kenneth S. Kornman
	Title: President and Chief Executive Officer

EX-10.2

EXHIBIT 10.2

STOCK PURCHASE AGREEMENT

BETWEEN

INTERLEUKIN GENETICS, INC.

AND

PYXIS INNOVATIONS INC.

Dated as of August 17, 2006

TABLE OF CONTENTS

ARTICLE 1. DEFINITIONS		1
ARTICLE 2. PURCHASE AND SALE; CLOSING		2
2.1	Authorization	2
2.2	Sale	2
2.3	Closing	2
2.4	Registration Rights	2
2.5	Working Capital Loans	3
	2.5.1     Strategic Relationships	3
	2.5.2     Note Purchase Agreement	3
2.5.3	Reductions in Available Credit	3
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY		3
3.1	Organization, Good Standing and Qualification	3
3.2	Authorization; Enforceability	3
3.3	Capitalization	4
3.4	Consents	4
3.5	Delivery of SEC Filings; Business	4
3.6	No Material Adverse Change	5
3.7	SEC Filings; Private Placements	5
	3.7.1     1934 Act Filings	5
	3.7.2     1933 Act Filings	5
	3.7.3     Sarbanes-Oxley	5
	3.7.4     Private Placements	6
3.8.	No Conflict, Breach, Violation or Default	6
3.9.	Tax Matters	6
3.10	Title to Properties	6
3.11	Certificates, Authorities and Permits	6
3.12	No Labor Disputes	6
3.13	Environmental Matters	6
3.14	Litigation	7
3.15	Financial Statements	7
3.16	Insurance Coverage	7
3.17	Brokers and Finders	7
3.18	Exemption	7
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF INVESTOR		7
4.1	Organization and Existence	7
4.2	Authorization	8
4.3	Purchase Entirely for Own Account	8
4.4	Investment Experience	8
4.5	Disclosure of Information	8
4.6	Restricted Securities	8
4.7	Legends	8
4.8	Regulation D	9
4.9	Brokers and Finders	9

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ARTICLE 5. COVENANTS		9
5.1	Restrictions on Transfer	9
5.2	Fiduciary Duties	9
5.3	Expenses	9
5.4	Press Releases	9
5.5	No Conflicting Agreements	9
5.6	Closing Conditions	9
5.7	Stock Purchase Agreement Amendment	10
ARTICLE 6. CLOSING CONDITIONS		10
6.1	Company Conditions	10
	6.1.1     Agreements	10
	6.1.2     Opinion of Company Counsel	10
	6.1.3     Secretary Certificate	10
	6.1.4     Corporate Proceedings	10
	6.1.5     Other Documents	10
	6.1.6     Due Diligence Investigation of Alan James Group LLC	10
	6.1.7     Acquisition of the Assets of Alan James Group LLC	10
6.2	Investor Conditions	11
	6.2.1     Agreements	11
	6.2.2     Payment	11
	6.2.3     Pyxis Secretary Certificates	11
	6.2.4     Other Documents	11
ARTICLE 7. GENERAL		11
7.1	Survival	11
7.2	Successors and Assigns	11
7.3	Counterparts	12
7.4	Notices	12
7.5	Amendments and Waivers	12
7.6	Severability	12
7.7	Entire Agreement	12
7.8	Further Assurances	13
7.9	Applicable Law	13

Exhibits

A             -               Amendment No. 5 to Note Purchase Agreement

B             -               Form of Promissory Notes

C             -               Opinion of Counsel to the Company

Disclosure Schedules

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STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (“Agreement”) is made as of the 17th day of August, 2006 by and between INTERLEUKIN GENETICS, INC., a Delaware corporation (the “Company”), and Pyxis Innovations Inc., a Delaware corporation (“Investor”).

RECITALS

A.The Company wishes to raise an aggregate of approximately $30,000,000 from the issuance of equity securities, debt securities or a combination of the foregoing in order to provide working capital for the Company (the “Proposed Financing”);

B.Investor has a right to participate pro rata in the Proposed Financing (subject to certain limitations) under the Stock Purchase Agreement dated March 5, 2003 between the Company and Investor (the “2003 Purchase Agreement”);

C.Investor desires to purchase, and the Company wishes to sell and issue to Investor, upon the terms and conditions stated in this Agreement, the Common Shares (as defined below), representing Investor’s pro rata potion of the Proposed Financing;

D.As a condition to Investor’s willingness to enter into the transactions contemplated hereby, Investor requires, and the Company desires, that the Company offer to its existing stockholders (other than Investor) the opportunity to acquire shares of Common Stock pursuant to a “rights offering” at the same price per share that Investor is acquiring the Common Shares (the “Rights Offering”);

E.Investor desires to extend certain credit facilities to the Company to provide the balance of the Proposed Financing subject to reduction by the amount raised in the Rights Offering; and

F.The Company and Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(2) of the 1933 Act (as defined below).

The parties agree as follows:

ARTICLE 1.  DEFINITIONS

In addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms shall have the meanings here set forth:

1.1“Acquisition” means the Company’s acquisition of all or substantially all of the assets of Alan James Group LLC and its affiliates.

1.2“Affiliate” means, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with, such Person.

1.3“Agreements” means this Agreement and Amendment No. 5.

1.4“Amendment No. 5” means Amendment No. 5 to the Note Purchase Agreement in the form attached as Exhibit A.

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1.5“Contemplated Transactions” means those transactions and actions contemplated by the Agreements, including the issuance of the Common Shares and the Conversion Shares.

1.6“Common Stock” means the Company’s common stock, $0.001 par value per share.

1.7“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

1.8“Conversion Shares” means Common Stock of the Company to be issued upon conversion of any notes issued under Section 2.5 of this Agreement.

1.9“Material Adverse Effect” means a material adverse effect on the condition (financial or otherwise), business, assets, prospects, or results of operations of the Company as a whole.

1.10“Note Purchase Agreement” means the Note Purchase Agreement, dated October 23, 2002, between the Company and Investor, as amended.

1.11“Notes” means any promissory notes issued evidencing loans made under the Loan Commitment.

1.12“Person” means an individual, corporation, partnership, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

1.13“Securities” means the Common Shares, the Notes, and the Conversion Shares.

1.14“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

1.15“1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

ARTICLE 2.  PURCHASE AND SALE; CLOSING

2.1Authorization.  The Company has authorized the sale and issuance to the Investor of the Common Shares.

2.2Sale.  Subject to the terms and conditions of this Agreement, Investor agrees to purchase at the Closing, and the Company agrees to sell and issue to Investor at the Closing, 2,750,037 shares of Common Stock (the “Common Shares”) for the aggregate purchase price of $15,615,537 ($5.6783 per share) (the “Purchase Price”).

2.3Closing.  The purchase and sale of the Common Shares (the “Closing”) shall take place at the same place and time as the closing of the Acquisition, or at such other time and place as the Company and Investor mutually agree (the “Closing Date”).  The Closing shall be conditioned on and concurrent with the closing of the Acquisition.  At the Closing, the Company shall deliver to Investor a certificate representing the Common Shares against payment of the Purchase Price by wire transfer.

2.4Registration Rights.  The Company and the Investor agree that the Common Shares and any Conversion Shares shall be additional “Registrable Securities” subject to the Registration Rights

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Agreement dated March 5, 2003 between the Company and Investor (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act and applicable state securities laws; provided, however, that Investor agrees that the Company shall have no obligation to register any of the Common Shares or Conversion Shares under the Registration Rights Agreement for a period of one year following the Closing.

2.5Credit Facility.

2.5.1Available Financing.  At any time prior to the second anniversary of the date of this Agreement, upon the request of the Company, Investor shall loan to the Company up to $14,384,463 (in the aggregate), subject to adjustment under Section 2.5.3 (the “Loan Commitment”).  Loan requests shall be made in increments of not less than $1,000,000.

2.5.2Note Purchase Agreement.  Any loan made pursuant to Section 2.5 of this Agreement shall be made as an additional loan under, and subject to the terms and conditions, including interest rate and maturity, of, the Note Purchase Agreement, as amended.  Accordingly, at the Closing, each party will execute and deliver Amendment No. 5 to the Note Purchase Agreement in the form attached as Exhibit A.

2.5.3Reductions in Available Credit.  The aggregate amount of the credit available under Section 2.5.1 of this Agreement shall be reduced dollar-for-dollar by the sum of:

(a)The proceeds of the sale of shares by the Company in the Rights Offering; and

(b)The dollar amount of any loans previously made by Investor under the Loan Commitment.

ARTICLE 3.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Investor that, except as set forth on the Disclosure Schedules to this Agreement:

3.1Organization, Good Standing and Qualification.  Each of the Company and its subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and own its properties.  Each of the Company and its subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or licensing necessary unless the failure to so qualify could not reasonably be expected to have a Material Adverse Effect on the Company.  The Company’s subsidiaries, all of which are wholly owned, are reflected on Schedule 3.1.  Except as set forth on Schedule 3.1, the Company does not own or control, directly or indirectly, any equity interest in any other Person.

3.2Authorization; Enforceability.  The Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (a) the authorization, execution and delivery of the Agreements, (b) authorization of the performance of all obligations of the Company under the Agreements, and (c) the authorization, issuance, and delivery of the Common Shares and Conversion Shares.  On or before the date of this Agreement, the Company’s board of directors, at a meeting duly called and held, has (a) determined that the Agreements and the Contemplated Transactions are fair to, advisable and in the best interests of the Company and the

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stockholders of the Company, (b) approved the Agreements and Contemplated Transactions, and (c) acted with due care and satisfied its fiduciary duties to the Company.  Section 203 of the Delaware General Corporate Law does not apply to this Agreement or the Contemplated Transactions. No other state takeover, antitakeover, moratorium, fair price, interested stockholder, business combination or similar statute or rule is applicable to the Contemplated Transactions.  The Agreements constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms.  The Company has duly and validly authorized and reserved 2,533,234Conversion Shares for issuance upon conversion of the Notes, which number is sufficient to permit the conversion of all of such Notes, and such shares will, upon such conversion and issuance, be validly issued, fully paid and non-assessable.

3.3Capitalization.  Set forth on Schedule 3.3 is (a) the amount of the authorized capital stock of the Company; (b) the number of shares of capital stock issued and outstanding; (c) the number of shares of capital stock issuable pursuant to the Company’s stock plans; (d) the number of shares of capital stock issuable and reserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for any shares of Preferred Stock, Common Stock, Notes, or other securities; and (e) the name of each holder of options and warrants for capital stock, the term of such agreement or instrument, the number of shares for which such options and warrants are exercisable with respect to each holder, along with the applicable vesting schedule, if any, and the exercise price.  All of the issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.  There are no contractual or statutory preemptive rights, rights of first refusal, put or call rights or obligations or anti-dilution rights with respect to the issuance, sale or redemption of the Company’s capital stock, other than rights set forth herein or in the Registration Rights Agreement or the 2003 Purchase Agreement.  The Company has no obligation to purchase, redeem, or otherwise acquire any of its capital stock or any interests therein.  Except as set forth on Schedule 3.3 or as contemplated by this Agreement, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of any character under which the Company or any of its subsidiaries is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement, neither the Company nor any of its subsidiaries is currently in negotiations for the issuance of any equity securities of any kind.  Except as set forth on Schedule 3.3, 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.  Except as set forth on Schedule 3.3 (which Schedule shall set forth the holders and number of shares for which the Company remains obligated to such registration rights), the Company has not granted any Person other than Investor the right to require the Company to register any securities of the Company under the 1933 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.

3.4Consents.  The execution, delivery and performance by the Company of the Agreements and the offer, issuance and sale of the Common Shares and the Conversion Shares require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws, which the Company undertakes to file within the applicable time periods.

3.5Delivery of SEC Filings; Business.  The Company has provided Investor with copies of the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and all other reports filed by the Company pursuant to the 1934 Act since the filing of the Annual Report on Form 10-K and prior to the date hereof (collectively, the “SEC Filings”); which are all of the filings required of the Company pursuant to the 1934 Act for such period.  The Company is engaged only in the

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business described in the SEC Filings and the SEC Filings contain a complete and accurate description of the business of the Company.

3.6No Material Adverse Change.  Since the filing of the Company’s most recent Annual Report on Form 10-K or as otherwise identified and described in subsequent reports filed by the Company pursuant to the 1934 Act there has not been:  (a) any change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial statements included in the Company’s most recent Quarterly Report on Form 10-Q, except changes in the ordinary course of business which have not had, in the aggregate, a Material Adverse Effect; (b) any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or any redemption or repurchase of any securities of the Company; (c) any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company; (d) any waiver by the Company of a valuable right or of a material debt owed to it not in the ordinary course of business; (e) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and which is not material to the assets, properties, financial condition, prospects, operating results or business of the Company taken as a whole (as such business is presently conducted and as it is proposed to be conducted); (f) 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; (g) any material labor difficulties or labor union organizing activities with respect to employees of the Company; (h) any transaction entered into by the Company other than in the ordinary course of business; or (i) any other event or condition of any character that might have a Material Adverse Effect.

3.7SEC Filings; Private Placements.

3.7.11934 Act Filings.  As of their respective dates, the SEC Filings complied as to form in all material respects with the requirements of the 1934 Act and did not contain at the time they were filed any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

3.7.21933 Act Filings.  During the preceding one year, each registration statement and any amendment thereto filed by the Company pursuant to the 1933 Act and the rules and regulations thereunder, as of the date such statement or amendment became effective, complied as to form in all material respects with the 1933 Act and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; and each prospectus filed pursuant to Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of any sale of securities pursuant thereto did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

3.7.3Sarbanes-Oxley.  The Chief Executive Officer and the Chief Accounting Officer of the Company have signed, and the Company has furnished to the SEC, all certifications required by the Sarbanes-Oxley Act of 2002; such certifications contain no qualifications or exceptions to the matters certified therein, except as to knowledge, and have not been modified or withdrawn; and neither the Company nor any of it 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.

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3.7.4Private Placements.  During the preceding one year, the Company has not furnished any private placement memorandum or similar offering document to offerees of the Company’s securities.

3.8No Conflict, Breach, Violation or Default.  The execution, delivery and performance of the Agreements by the Company and the issuance and sale of the Common Shares and Conversion Shares will not conflict with or result in a breach or violation of, or trigger the vesting or acceleration of, any of the terms and provisions of, or constitute a default under:  (a) the Company’s Certificate of Incorporation or the Company’s Bylaws, both as in effect on the date hereof, (b) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its properties, or (c) any material agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the properties of the Company is subject.

3.9Tax Matters.  The Company has timely prepared and filed all tax returns required to have been filed by the Company with all appropriate governmental agencies and timely paid all taxes owed by it.  The charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company nor, to the knowledge of the Company, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except such as which are not material.  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 governmental entity or third party when due.  There are no tax liens or claims pending or threatened against the Company or any of its respective assets or property.  There are no outstanding tax sharing agreements or other such arrangements between the Company and any other Person.

3.10Title to Properties.  Except with respect to Investor, the Company has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and the Company holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them.

3.11Certificates, Authorities and Permits.  The Company possesses adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it and has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company, would individually or in the aggregate have a Material Adverse Effect.

3.12No Labor Disputes.  No material labor dispute with the employees of the Company exists or, to the knowledge of the Company, is imminent.

3.13Environmental Matters.  The Company is not in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), does not own or operate any real property contaminated with any substance that is subject to any Environmental Laws, is not liable for any off-site disposal or contamination pursuant to any Environmental Laws, and is not subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim would individually or in the aggregate have a Material Adverse Effect; and the Company is not aware of any pending investigation that might lead to such a claim.  For the purposes of this Section, the “Company” includes the Company and its subsidiaries.

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3.14Litigation.  Schedule 3.15 sets forth a list of all litigation involving or (to the Company’s knowledge) threatened by or against the Company in the past five years, along with the resolution of such matter.  There are no pending actions, suits or proceedings against or affecting the Company, its subsidiaries or any of its or their properties and to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated.

3.15Financial Statements.  The financial statements and related notes included in each SEC Filing present fairly and accurately in all material respects the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis, except (i) that the unaudited interim financial statements were or are subject to normal and recurring year-end audit adjustments, (ii) as may be otherwise indicated in the notes to the financial statements or (iii) in the case of the unaudited statements as may be permitted by the SEC on Form 10-Q under the Exchange Act.  Except (a) as set forth in the financial statements of the Company included in the SEC Filings, and (b) for liabilities and obligations (absolute, accrued, contingent or otherwise) incurred in the ordinary course of business and consistent with past practice since the date of such SEC Filing, 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.

3.16Insurance Coverage.  The Company maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company, and the Company reasonably believes such insurance coverage to be adequate against all liabilities, claims and risks against which it is customary for comparably situated companies to insure.

3.17Brokers and Finders.  The Company has no commitment or agreement for payment of any commissions,  finders’ fees, or other similar fees to any Person in connection with the Contemplated Transactions.

3.18Exemption. The offer, issuance, sale and delivery of the Common Shares is, and the issuance of the Conversion Shares in accordance with the terms of the Notes contemplated in Amendment No. 5 will be, exempt from the registration requirements of the 1933 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 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) for the exemption from registration for the Contemplated Transactions or would require registration of the Common Shares or the Conversion Shares under the 1933 Act.

ARTICLE 4.  REPRESENTATIONS AND WARRANTIES OF INVESTOR

Investor hereby represents and warrants to the Company that:

4.1Organization and Existence.  Investor is a validly existing corporation and has all requisite corporate power and authority to invest in the Securities pursuant to this Agreement and any Affiliate of Investor signing one or more of the Agreements (each an “Affiliate Party”) is a validly

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existing corporation and has all requisite corporate power and authority to execute and perform the agreement that it is signing.

4.2Authorization.  The execution, delivery and performance by Investor and each Affiliate Party of the Agreements have been duly authorized and the Agreements each constitute the valid and legally binding obligation of Investor and each Affiliate Party, enforceable against Investor and each Affiliate Party in accordance with their terms.

4.3Purchase Entirely for Own Account.  The Securities to be received by Investor hereunder will be acquired for Investor’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof, and Investor has no present intention of selling, granting any participation in, or otherwise distributing the same.  The Investor is not a registered broker dealer or an entity engaged in the business of being a broker dealer.

4.4Investment Experience.  Investor acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby.

4.5Disclosure of Information.  Investor has had an opportunity to receive documents related to the Company and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Securities.  Investor acknowledges receipt of the SEC Filings and any other filings which it requested be made by the Company with the SEC.  Neither such inquiries nor any other due diligence investigation conducted by Investor shall modify, amend or affect Investor’s right to rely on the Company’s representations and warranties contained in this Agreement.

4.6Restricted Securities.  Investor understands that the Securities are characterized as “restricted securities” under the U.S.  federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may not be resold without registration under the 1933 Act except in certain limited circumstances.

4.7Legends.  It is understood that, until any sale of Common Shares or Conversion Shares pursuant to an effective registration statement under the 1933 Act, or such time as such shares become eligible for resale under Rule 144(k), certificates evidencing the Common Shares and Conversion Shares, as the case may be, will bear one or more restrictive legends, substantially as follows:

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and may not be transferred (i) without the opinion of counsel satisfactory to the corporation that such transfer may lawfully be made without registration under the Securities Act or (ii) pursuant to an effective registration statement under the Securities Act, in each case in accordance with applicable securities laws of any state of the United States.”

“The Corporation is authorized to issue more than one class or series of stock.  The Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.”

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“The shares represented by this Certificate are subject to restrictions on transfer as set forth in the Stock Purchase Agreement dated as of August 17, 2006 by and between the Corporation and Pyxis Innovations Inc.  A copy of such Stock Purchase Agreement is available for inspection at the offices of the Corporation and will be provided to the holder upon request.”

If required by the authorities of any state in connection with the issuance or sale of the Common Shares and Conversion Shares, then the certificate(s) representing such shares shall bear the legend required by such state authority.  Upon resale pursuant to the Registration Rights Agreement or upon Rule 144(k) becoming available, the Company shall promptly cause certificates evidencing the Common Shares and Conversion Shares, as the case may be, to be replaced with certificates that do not bear such restrictive legends.

4.8Regulation D.  Investor is an accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.  Investor did not learn of the investment in the Securities as a result of any public advertising or general solicitation.

4.9Brokers and Finders.  Investor has made no commitment for payment of any commissions or finders’ fees to any third party in connection with the Contemplated Transactions.

ARTICLE 5.  COVENANTS

5.1Restrictions on Transfer.  In addition to restrictions imposed upon Investor under the Registration Rights Agreement, for a period of two years following the date of the Closing, Investor will not sell or otherwise transfer its Common Shares or any Conversion Shares to any Person who is not an Affiliate of Investor.  In addition, Investor will not sell or otherwise transfer any shares of the Company’s Series A Preferred Stock or any shares of Common Stock issued or issuable upon conversion thereof to any Person who is not an Affiliate of Investor prior to March 5, 2009.

5.2Fiduciary Duties.  The Directors of the Company have executed and will execute their fiduciary duties to the Company in good faith in the negotiation, deliberation, and consummation of this Agreement and the Contemplated Transactions, regardless of any affiliation with Investor.  No Director of the Company is under a contractual obligation to vote in favor of or otherwise effectuate any of the Contemplated Transactions.

5.3Expenses.  The Company shall pay the reasonable fees, disbursements, and expenses of counsel to Investor and any other reasonable out-of-pocket expenses of Investor in connection with the Contemplated Transactions (except for the Purchase Price).

5.4Press Releases.  Any press release concerning this Agreement shall be submitted to Investor for comment at least two business days prior to issuance, unless the release is required to be issued within a shorter period of time by law or pursuant to the rules of a national securities exchange.

5.5No Conflicting Agreements.  The Company will not take any action, enter into any agreement or make any commitment that would conflict or interfere in any material respect with the obligations to Investor under the Agreements.

5.6Closing Conditions.  The Company will use its best efforts to cause the conditions in Article 6 to be satisfied.

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5.7Stock Purchase Agreement Amendment.  The Stock Purchase Agreement dated March 5, 2003 between the parties to this Agreement is amended to provide in Section 6.7:

“6.7 Advisors.  All selections of legal counsel, accountants, investment bankers and other professional advisors to the Company shall be subject to approval of the Board of Directors or a duly authorized Committee of the Board of Directors.  The Board of Directors may delegate to the officers of the Company authority to select and engage advisors within parameters specified by the Board of Directors.  In addition, the Series A Directors shall be entitled to retain, at the cost and expense of the Company, the services of an investment banking firm of national reputation of their choice and one law firm of their choice to advise them in their capacity as directors with respect to any matter on which the directors, as a group, are required or permitted to act hereunder.

ARTICLE 6.  CLOSING CONDITIONS

6.1Company Conditions.  The obligations of Investor to the Company under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

6.1.1Agreements.  The Company and Investor shall have entered into the Agreements.

6.1.2Opinion of Company Counsel.  The Investors shall have received from counsel for the Company, an opinion, dated as of the Closing, in form and substance reasonably acceptable to Investor, generally to the effect provided in Exhibit C.

6.1.3Secretary Certificate.  The Company shall have delivered a certificate of its Secretary certifying as to (i) the actions of the Board of Directors to approve the Agreements and the transactions contemplated thereby; (ii) the Bylaws of the Company, in effect as of the Closing Date; (iii) the Certificate of Incorporation of the Company, issued by the State of Delaware; and (iv) the incumbency of all officers authorized to execute the Agreements and the promissory notes on behalf of the Company.

6.1.4Corporate Proceedings.  The Company shall have provided to Investor copies of resolutions of its Board of Directors, or committees thereof, authorizing the execution, delivery, and performance of the Agreements and any other documents provided for in or contemplated by this Agreement.

6.1.5Other Documents.  The Company shall have delivered to Investor such other documents as reasonably requested by Investor to carry out and effectuate the intent and purposes of this Agreement.

6.1.6Due Diligence Investigation of Alan James Group LLC.  No later than five days prior to the Closing, the Company shall have presented to Investor the due diligence investigation report of Grant Thornton LLP regarding Alan James Group LLC and its affiliates, and Investor shall be reasonably satisfied with the report and its contents.

6.1.7Acquisition of the Assets of Alan James Group LLC.  Concurrently with the execution of this Agreement, the Company shall have consummated the acquisition of all or substantially all of the assets of the Alan James Group LLC and its affiliates.

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6.2Investor Conditions.  The obligations of the Company to Investor under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived:

6.2.1Agreements.  The Company and Investor shall have entered into the Agreements.

6.2.2Payment.  Investor shall have made full payment to the Company of the purchase price for the Common Shares by wire transfer of $15,615,537 in immediately available funds.

6.2.3Pyxis Secretary Certificates.  Investor shall have delivered a certificate of its Secretary certifying as to (i) the actions of its Board of Directors to approve the Agreements and the transactions contemplated thereby; (ii) the Bylaws of the Investor in effect as of the Closing Date; (iii) the Certificate of Incorporation of the Investor issued by its state of domicile; and (iv) the incumbency of all officers authorized to execute the Agreements on behalf of the Investor.

6.2.4Other Documents.  Investor shall have delivered to Company such other documents as reasonably requested by the Company to carry out and effectuate the intent and purposes of this Agreement.

ARTICLE 7.  GENERAL

7.1Survival.  All representations, warranties, covenants and agreements contained in this Agreement shall be deemed to be representations, warranties, covenants and agreements as of the date hereof and shall survive the execution and delivery of this Agreement and the Closing provided that all representations and warranties shall terminate two years following the Closing.  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.

7.2Successors and Assigns.  This Agreement may not be assigned by a party hereto without the prior written consent of the other party hereto, except that without the consent of the Company, but after notice duly given, Investor may assign its rights and delegate its duties hereunder to an Affiliate of the Investor or, after the second anniversary of the Closing of this Agreement, to a third party acquiring some portion or all of the Common Shares or Conversion Shares in a private transaction, provided that in each case the Affiliate or third party agrees in writing to be bound by the terms of this Agreement, and without the prior written consent of Investor, but after notice duly given and in compliance with this Agreement, the Company may assign its rights and delegate its duties hereunder to any successor-in-interest corporation in the event of a merger or consolidation of the Company with or into another corporation, or any merger or consolidation of another corporation with or into the Company that results directly or indirectly in an aggregate change in the ownership or control of more than 50% of the voting rights of the equity securities of the Company, or the sale of all or substantially all of the Company’s assets.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

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7.3Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

7.4Notices.  Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given only upon delivery to each party to be notified by (i) personal delivery, (ii) electronic mail or telecopier, upon receipt of confirmation of complete transmittal, or (iii) an internationally recognized overnight air courier, addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

If to the Company:	Interleukin Genetics, Inc.
	135 Beaver Street, 2nd Floor
	Waltham, MA 02452
	Attn: Chief Executive Officer
	Fax: 781/398-0720
with a copy to:	Mintz Levin Cohn Ferris Glovsky Popeo PC
	One Financial Center
	Boston, MA 02111
	Attn:	Daniel H. Follansbee
	Fax:	617/542-2241
If to Investor:	Pyxis Innovations, Inc.
	7575 Fulton Street East
	Ada, Michigan 49355-0001
	Attn:	Thomas R. Curran, Jr.
	Fax:	616/787-7813
with a copy to:	Warner Norcross & Judd LLP
	900 Fifth Third Center
	111 Lyon Street NW
	Grand Rapids, Michigan 49503-2487
	Attn:	Gordon R. Lewis
	Fax:	616/752-2500

7.5Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investor.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon Investor, each future holder of all the Common Shares or Conversion Shares, and the Company.

7.6Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

7.7Entire Agreement.  This Agreement, including the Exhibits and Schedules hereto, and the Agreements constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.  The Note Purchase Agreement shall continue in full force and effect, except as amended as part of the Contemplated Transactions.

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7.8Further Assurances.  The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

7.9Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws.

IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement as of the date first above written.

The Company:	INTERLEUKIN GENETICS, INC.
	By:	/s/ Kenneth S. Kornman
		Name: Kenneth S. Kornman
		Title: Chief Executive Officer
Investor:	PYXIS INNOVATIONS, INC.
	By:	/s/ Kim S. Mitchell
		Name: Kim S. Mitchell
		Title: Assistant Secretary

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EX-10.3

EXHIBIT 10.3

AMENDMENT NO. 5 TO
NOTE PURCHASE AGREEMENT

THIS AMENDMENT NO. 5 (the “Amendment”), dated as of August 17, 2006, is by and between INTERLEUKIN GENETICS, INC., a Delaware corporation (the “Company”), and PYXIS INNOVATIONS INC., a Delaware corporation (“Pyxis”).

The Company and Pyxis are parties to a Note Purchase Agreement dated as of October 23, 2002, as amended November 13, 2002, January 28, 2003, March 5, 2003, and February 23, 2006 (the “Agreement”).  Capitalized terms not otherwise defined in this Amendment shall have the meanings given to them in the Agreement.

The parties agree as follows:

1.Recital C of the Agreement is revised to reflect the following developments since the Initial Closing:

Pyxis has purchased, and the Company has sold and issued to Pyxis, a promissory note in a principal amount of $500,000 on each of the following dates: October 23, 2002, November 14, 2002, December 16, 2002, and January 28, 2003 (the “Existing Notes”).

On March 5, 2003, the Company and Pyxis entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) and various agreements referenced therein (collectively, the “Affiliation Agreements”).  Pursuant to Section 2.5 of the Stock Purchase Agreement, Pyxis (i)  agreed to extend further credit to the Company to expand its research partnerships (the “Research Loans”), and (ii) refinanced the Company’s bridge financing loans previously due in August 2003 (the “Refinancing Loan”).  In addition, pursuant to Section 2.6 of the Stock Purchase Agreement, the Company and Pyxis amended and restated the terms of the Existing Notes.

On March 5, 2005, the Company and Pyxis amended the Stock Purchase Agreement to extend until March 5, 2007 the period during which Pyxis agrees to purchase additional Notes pursuant to Section 2.2B of this Agreement (Research Loans), subject to the terms and conditions of this Agreement.

On August 17, 2006, the Company and Pyxis entered into a Stock Purchase Agreement (the “2006 Stock Purchase Agreement”) for the purchase of Common Stock and extension of a credit facility in an amount not to exceed $14,384,463 in the aggregate, subject to adjustment.  Under that agreement, Pyxis agrees to purchase Notes pursuant to Section 2.2G of this Agreement, subject to the terms and conditions of this Agreement.

2.The following Sections are amended as follows:

2.2G        Credit Facility.  At any time prior to August 17, 2008, Pyxis agrees to purchase, if and when requested by the Company, and upon making such a request, the Company hereby agrees to sell and issue to Pyxis, one or more Notes, the aggregate principal amount of which shall not exceed

$14,384,463, or such lesser amount as may result from adjustment under Section 2.5.3 of the Stock Purchase Agreement (the “Loan Commitment”) (each, a “Working Capital Loan”).  Subject to the terms and conditions of this Agreement, and the terms and conditions of the 2006 Stock Purchase Agreement, the closing of these purchases (each, a “Subsequent Closing”) will take place within ten business days following the Company’s written request to Pyxis to make such loan.  For the purposes of each Working Capital Loan: (a) Pyxis hereby waives each of the closing conditions set forth in Section 2.5 except Section 2.5.1 (Representations and Warranties), Section 2.5.2 (Covenants), Section 2.5.3 (Injunction), Section 2.5.7 (Material Adverse Change, provided, however, that for this purpose the date set forth in Section 2.5.7 shall be deemed to read June 30, 2006), Section 2.5.8 (Event of Default), and Section 2.5.12 (Other Documents); and (b) the Company hereby waives each of the closing conditions set forth in Section 2.4 except Section 2.4.1 (Representations and Warranties) and Section 2.4.3 (Injunction).  The Working Capital Loans under this Section 2.2G are unsecured obligations; as such they are not subject to the Security Agreement.

2.2H               Form of Note.  The Note for each Working Capital Loan shall be in the form set forth as Exhibit B of the Stock Purchase Agreement dated August 16, 2006 between the Company and Pyxis.

3.Except as amended hereby, all of the terms and conditions of the Agreement shall remain in full force and effect. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

This Amendment No. 5 to Note Purchase Agreement is signed as of the date first written above.

INTERLEUKIN GENETICS, INC
By	/s/ Kenneth S. Kornman
	Kenneth S. Kornman
	President and Chief Executive Officer
PYXIS INNOVATIONS INC.
By	/s/ Kim S. Mitchell
	Kim S. Mitchell
	Its Assistant Secretary

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EX-10.4

EXHIBIT 10.4

PROMISSORY NOTE

	Date
$	Ada, Michigan

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

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

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

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

“Change of Control” shall mean (a) a dissolution or liquidation of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation, (c) a merger or share exchange in which the Company is the surviving corporation but after which the stockholders of the Company immediately prior to such merger cease to own at least 51% of the outstanding shares of the Company, (d) the sale, license, or other transfer of substantially all of the assets of the Company, or (e) the acquisition, sale, or transfer (other than a transaction involving primarily shares held by Payee or its affiliates) of more than 50% of the outstanding shares of the Company, whether by tender offer, similar transaction, or newly issued stock (other than to Payee or its affiliates).

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

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

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

No fractional shares of stock shall be issued upon conversion of this Note.  In lieu of the Company issuing any fractional shares to Payee upon conversion, the number of shares issued shall be rounded to the nearest whole number.  If the entire balance of this Note is to be converted, then Payee shall surrender this Note, duly endorsed, at the office of the Company.  If only a portion of the balance of this Note is converted, then the balance of this Note shall be reduced by the amount converted, with the remaining balance continuing as outstanding under this Note.  Upon conversion, the Company shall, at its expense, issue and deliver to Payee a certificate for the number of shares of such stock to which Payee shall be entitled upon such

conversion (bearing such legends as are required by the Stock Purchase Agreement dated August 17, 2006), together with any other securities and property to which Payee is entitled upon such conversion under the terms of this Note.

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

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

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

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

Remedies.  Payee shall have all rights and remedies that the law and any agreement of the Company provide.  Any requirement of reasonable notice with respect to any sale or other disposition of collateral shall be met if Payee sends the notice at least ten days before the date of sale or other disposition.  The Company shall reimburse Payee for any and all

expenses, including reasonable attorney fees and legal expenses, that Payee pays or incurs in protecting and enforcing the rights of and obligations to Payee under any provision of this Note.

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

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

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

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

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

INTERLEUKIN GENETICS, INC.
By
	Kenneth S. Kornman
	President and Chief Executive Officer

EX-10.5

Exhibit 10.5

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”), is made and entered into as of August 17, 2006 (the “Effective Date”), by and between Interleukin Genetics, Inc. a Delaware corporation (“Employer” or the “Company”), and Timothy J. Richerson, an individual (“Employee”).

RECITALS< /font>

A.Employer desires to obtain the benefit of the services of Employee and Employee desires to render such services to Employer.

B.The Board of Directors of Employer (the “Board”) has determined that it is in Employer’s best interest to employ Employee and to provide certain benefits to Employee.

C.Employer and Employee desire to set forth the terms and conditions of Employee’s employment with Employer on the terms and subject to the conditions of this Agreement.

AGREEMENT

In consideration of the foregoing recitals and of the mutual covenants and conditions contained herein, the parties, intending to be legally bound, agree as follows:

1 .Term.  Subject to the terms hereof, the Employee’s employment hereunder will commence on the Effective Date and will continue until the third anniversary thereof (the “Initial Term”), provided that on the third and each subsequent anniversary of the Effective Date, the term of the Employee’s employment hereunder will be automatically extended for an additional period of one year (each a “Subsequent Term”) unless either the Employee or the Employer has given written notice to the other that such automatic extension will not occur (a “Non-Renewal Notice”), which notice was given not less than thirty (30) days prior to the relevant anniversary of the Effective Date.  The Initial Term and any Subse quent Term are referred to herein collectively as the “Term.”

2.Employment of Employee.

(a)Specific Positions.  Employer and Employee hereby agree that, subject to the provisions of this Agreement, Employer will employ Emp loyee and Employee will serve as an employee of Employer.  Employee shall have the title and perform the duties set forth on Exhibit A hereto and such other reasonable, usual and customary duties of such office as may be delegated to Employee from time to time by the Board or its designee, subject always to the policies as reasonably determined from time to time by the Board or such designee.

(b)Promotion of Employer’s Business.  During the Term, Employee shall not engage in any business competitive with Employer.  Employee agrees to devote his full business time, attention, knowledge, skill and energy to the business, affairs and interests of Employer and matters related thereto, and shall use his best efforts and abilities to promote Employer’s interests; provided, however, that Employee shall not be precluded from devoting reasonable quantities of time required to managing his personal investments or participation in charitable or community service activities so long as such activities do not materially interfere with the regular performance of his duties under this Agreement.  Except as set forth on Exhibit B hereto, Employee represents that he is not currently a director (or similar position) of any other entity and is not employed by or providing consulting services

to any other person or entity, and Employee agrees to refrain from undertaking any such position or engagement without the prior written approval of the Board; provided, however, that Employee may continue to serve as a director for the entities listed on Exhibit B along with the boards of any other charitable institutions, community service organizations or any entity in which Employee has a material financial investment, to the extent that such service does not create any conflicts, ethical or otherwise, with Employee’s responsibilities to the Company and that Employee’s time commitments in the aggregate do not unreasonably interfere with his fulfillment of his responsibilities hereunder, as determined in the reasonable discretion of the Board.

(c)Location.  Employee may continue to reside in his current location in Florida, provided that Employee engage in the travel required to fulfill his duties and obligations to Employer; provided, further, that the Employer shall provide teleconferencing and/or videoconferencing facilities when reasonable and appropriate in order to reduce the amount of travel required of Employee.

3. Salary.  Employer shall pay to Employee during the term of this Agreement a base salary (“Base Salary”) of $300,000 per year, payable in substantially equal installments in accordance with the Employer’s payroll practices as in effect from time to time.  The Employer will deduct from each such installment any amounts required to be deducted or withheld under applicable law or under any employee benefit plan in which the Employee participates.  The Base Salary may be increased (but not decreased without Employee’s consent) annually at the Employer’s sole discretion.

4.Bonus/Stock Grant.

(a)Bonus.

(i)In addition to the Base Salary, for each fiscal year during which Employee is employed for the entire year, Employee shall also be eligible to receive a discretionary annual “Bonus” of up to 40% of his Base Salary.  The amount of the Bonus to be awarded to Employee shall be determined by the Board (or a committee thereof) in its sole discretion, with consideration of the Employee’s achievement of individual and company goals established by the Board (or its designee) within ninety (90) days of the beginning of each fiscal year.

(ii)For fiscal year 2006, Employee shall be eligible to receive a discretionary annual bonus of up to 40% of the Base Salary earned by Employee in 2006.  The amount of the bonus to be awarded to Employee for fiscal year 2006 shall be determined by the Board (or a committee thereof) in its sole discretion, with consideration of the Employee’s achi evement of individual and company goals established by the Board within sixty (60) days of the Effective Date.

(b)Stock Grant.

(i)Employer will grant to Employee as of the Effective Date 12,500 fully-vested shares of Employer’s common stock.

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(ii)On the day before each of the first, second, and third anniversaries of the Effective Date, subject to Employee’s continued employment with Employer as of the date of grant, Employer will grant to Employee 12,500 fully-vested shares of Employer’s common stock.

(iii)Except as otherwise expressly provided in this Agreement, any stock granted to Employee shall be subject to the terms and c onditions set forth in the agreements entered into by Employee and Employer governing such stock grants and Employer’s 2004 Employee, Director and Consultant Stock Plan (“Stock Plan”) or any successor or replacement plan thereto.

(c)Additional Equity Incentives.  Employee shall be eligible to participate in Employer’s 2004 Employee, Director and Consultant Stock Plan.  Additional awards thereunder shall be made from time to time by the Board (or its designee) in its sole discretion.

5.Benefits.

(a)Fringe Benefits.  During Employee’s employment by Employer under this Agreement, Employee shall be eligible for participation in the medical, disability, life and other insurance plans and such other similar benefits available to other executive employees.  Employee recognizes that nothing herein requires the Company to mai ntain any benefit plan or program.  Employee’s participation in any benefit plan is governed by the applicable plan documents.  Employee will receive a monthly automobile allowance of $600.00.

(b)Reimbursements.  During Employee’s employment with Employer under this Agreement, Employee shall be entitled to receive prompt reimbursement of all reasonable expenses incurred by Employee in performing services hereunder, including all expenses of travel at the request of, or in the service of, Employer provided that such expenses are incurred and accounted for in accordance with the policies and procedures est ablished by Employer.

(c)Vacation.  During Employee’s employment with Employer hereunder, Employee shall be entitled to an annual vacation leave of four (4) weeks at full pay, which shall be accrued, adjusted and administered in accordance with the vacation policy generally applicable to employees of the Employer.

6.Termination.

(a)Definition of Accrued Obligations.  For purposes of this Agreement, “Accrued Obligations” means (i) the portion of Employee’s Base Salary that has accrued prior to any termination of Employee’s employment with the Company and has not yet been paid; (ii) the Bonus awarded by the Board to Employee for the most recently completed fiscal year, if not already paid (the amount of which shall have been determined in accordance with Section 4(a) above); (iii) to the extent required by law and the Company’s po licy, an amount equal to the value of Employee’s accrued unused vacation days; and (iv) the amount of any expenses properly incurred by Employee on behalf of the Company prior to any such termination and not yet reimbursed. Employee’s entitlement to any other compensation or benefit under any plan or policy of the Company shall be governed by and determined in

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accordance with the terms of such plans or policies, except as otherwise specified in this Agreement.

(b)Termination for Cause.  Employer shall have the right, exercisable immediately upon written notice, to terminate Employee’s employment for “Cause.”

(i)      0;      Definition of Cause.  As used herein, “Cause” means any of the following: (A) habitual drunkenness under the influence of alcohol by Employee or illegal use of narcotics; (B) Employee is convicted by a court of competent jurisdiction, or pleads “no contest” to, a felony or any other conduct of a criminal nature (other than minor traffic violations) by Employee; (C) Employee engages in fraud, embezzlement, or any other illegal conduct; (D) Employee imparts confidential information relating to Employer or its business to competitors or to other third parties other than in the course of carrying out Employee’s duties; (E) Employee refuses to perform his duties hereunder or otherwise breaches any covenant, warranty or representation of this Agreement or Employee’s Non-Disclosure and Confidentiality Agreement, a nd, except for any conduct described in clauses (A) through (D) of this Section 6(b)(i), fails to cure such breach (if such breach is then capable of being cured) within ten (10) business days following written notice thereof specifying in reasonable detail the nature of such breach, or if such breach is not capable of being cured in such time, a cure shall not have been diligently initiated within such ten (10) business day period.

(ii)Effect of Termination.  Upon termination in accordance with this Section 6(b), Employee shall be entitled to no further compensation hereunder other than the Accrued Obligatio ns.  Employer’s exercise of its right to terminate for Cause shall be without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement.

(c)Voluntary Termination.  Employee may terminate his employment at any time by giving no less than thirty (30) days’ written notice to Employer.

(i)No Reason.  Upon termination in accordance with this Section 6(c), except as otherwise provided in Section 6(c)(ii), below, Employee shall be entitled to no further compensation hereunder other than the Accrued Obligations.

(ii)Good Reason.  Notwithstanding anything to the contrary in Section 6(c)(i) above, if Employee terminates his employment under this Section 6(c) for Good Reason (as defined below), Employee shall be entitled to receive from Employer all of the compensation and benefits provi ded for in Section 6(g) below. As used herein, “Good Reason” means any of the following: (A) the assignment to Employee of duties materially inconsistent with the duties customarily associated with the Employee’s title or with other employees of Employer in like positions, where Employee provides written notice to Employer within six (6) months of such assignment that such duties are materially inconsistent with his title or those duties of similarly situated employees and Employer fails to release Employee from his obligation to perform such inconsistent duties within twenty (20) business days after Employer’s receipt of such notice; (B) a breach by Employer of its material obligations set forth in this Agreement, which has not been cured within fifteen (15)

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business days after written notice of such noncompliance has been given by Employee to Employer, or if such failure is not capable of being cured in such time, a cure shall not have been diligently initiated by Employer within such fifteen (15) business day period; or (C) a change in the principal location at which you are required to perform your duties hereunder by more than 50 miles from both the current location at which you perform such duties and your primary residence as of the date of this agreement, without your prior written consent;

(d)Termination Due to Death.  This Agreement shall automatically terminate upon the death of Employee.  Upon termination in accordance with this Section 6(d), Employee’s estate shall be entitled to no further compensation hereunder other than the Accrued Obligations.

(e)Termination Due to Disability.  Employer may terminate Employee’s employment upon written notice to Employee due to Employee’s Disability.  “Disability” shall mean (A) Employee is unable to engage in any substantial gainful activity by reason of any medically deter minable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (B) Employee is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under a Company-sponsored group disability plan.  A determination of Disability shall be made in good faith by a majority vote of the Board, based on the opinion of one or more physicians reasonably and mutually agreed to by the Employee and the Company.  If Employee is so terminated by Employer pursuant to this Section 6(e) during the Term, then, in addition to payment of the Accrued Obligations, Employer shall (i) pay to Employee the Base Salary, and (ii) pursuant to COBRA, provide the same health insurance benefits to which Empl oyee was entitled hereunder, in each case (i.e., the Base Salary and health insurance benefits), until the earlier to occur of (A) the expiration of the remaining portion of the Term, or (B) the expiration of the six (6) month period commencing on the date Employee is terminated.  Employer may make such payments in accordance with its regular payroll schedule or in a single lump sum payment in its sole discretion.

(f)Termination Upon Cessation of Business.  Employer shall have the right to immediately terminate Employee’s employment under this Agreement upon a “Cessation of Business.”  For pur poses of this Agreement, a “Cessation of Business” shall mean Employer’s ceasing to operate in the ordinary course of business, whether by dissolution, liquidation, sale of assets, consolidation, merger or otherwise, in connection with, pursuant to or arising out of a good faith determination by the Board that the continuing operation of the business in its ordinary course is reasonably likely to render Employer unable to meet its liabilities as they mature.  If Employee is so terminated by Employer pursuant to this Section 6(f) during the Term, then, in addition to payment of the Accrued Obligations, Employer shall (i) pay to Employee the Base Salary, and (ii) pursuant to COBRA, provide the same health insurance benefits to which Employee was entitled hereunder, in each case (i.e., the Base Salary and health insurance benefits), until the earlier to occur of (A) the expiration of the remaining portion of the Term, or (B) the expiration of the three (3) month period commencing on t he date Employee is terminated. Employer may make such payments in accordance with its regular payroll schedule or in a single lump sum payment in its sole discretion.

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(g)Termination Without Cause.  Employer shall have the right, exercisable upon 30 days’ prior written notice, to terminate Employee’s employment under this Agreement for any reason other than set forth in Sections 6(b), (d) and (e) above, at any time during the Term.  If Employee is so terminated by Employer pursuant to this Section 6(g) during the Term, then, in addition to payment of the Accrued Obligations, Employer shall (i) pay to Employee the Base Salary, and (ii) provide the same health insurance benefits, pursuant to COBRA, at the Company’s expense, to which Employee was entitled at the time of the termination, in each case (i.e., the Base Salary and health insurance benefits pursuant to COBRA), until the earlier to occur of (A) the expiration of the remaining portion of the Term, or (B) the expiration of the eighteen (18) month period commencing on the date Employee is terminated. Employer may make such payments in accordance with its regular payroll schedule or in a single lump sum payment in its sole discretion.  In addition, all unvested common stock that has been granted to Employee by the Board shall immediately and fully vest as of the date of termination.

(h)Release of Claims/Board Resignation.  The Company shall not be obligated to pay Employee any of the compensation or provide Employee any of the benefits set forth in Section 6 (other than the Accrued Obligations) unless and until Employee has (i) executed a timely separation agreement in a form reasonably acceptable to the Company, which shall include a release of claims against the Company and may include provisions regarding mutual non-disparagement and confidentiality; and (ii) if holding any position on the Board, resigned such position, if so requested by the Chairman of the Board or a majority of the Board.

(i)No Other Payments or Benefits Owing.  The payments and benefits set forth in this Section 6 shall be the sole amounts owing to Employee as separation pay upon termination of Employee’s employment.  Employee shall not be eligible for any other payments, including but not limited to additional Base Salary payments, bonuses, commissions, or other forms of compensation or benefits, except as may otherwise be set forth in this Agreement or other Company plan documents with respect to plans in which Employee is a participant.

(j)Compliance with Code Section 409A.  Notwithstanding any other provision with respect to the timing of payment s under Section 6, if, at the time of Employee’s termination, Employee is deemed to be a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and any successor statute, regulation and guidance thereto (“Code Section 409A”), of the Company, then limited only to the extent necessary to comply with the requirements of Code Section 409A, any payments to which Employee may become entitled under Section 6 which are subject to Code Section 409A (and not otherwise exempt from its application) will be withheld until the first (1st) business day of the seventh (7th) month following the termination of Employee’s employment, at which time Employee shall be paid an aggregate amount equal to the accumulated, but unpaid, payments otherwise due to Employee under the terms of Section 6.

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7.Change In Control.

(a)Definition of “Change in Control”.  “Change in Control” of the Company as used in this Agreement shall mean the following, but only to the extent it is interpreted in a manner consistent with the meaning of “a change in the ownership or effective c ontrol of the corporation, or in the ownership of a substantial portion of the assets of the corporation” under Code Section 409A, and limited to the extent necessary so that it will not cause adverse tax consequences with respect to Code Section 409A:  (i) a merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (ii) the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all of t he Company’s assets.

(b)Notwithstanding anything herein to the contrary, in the event of a Change of Control, all common stock granted to Employee by the Company which has not previously vested shall immediately and fully vest.

8.Publicity.  During the Term and for a period of one (1) year thereafter, Employee shall not, directly or indirectly, originate or participate in the origination of any publicity, news release or other public announcements, written or oral, whether to the public press or otherwise, relating to this Agreement, to any amendment hereto, to Employee’s employment hereunder or to the Company, without the prior written approval of the Company.

9.Restrictive Covenants.

(a)  0;         Non-Competition.  In consideration of the benefits of this Agreement, including Employee’s access to and limited use of proprietary and confidential information of the Company, as well as training, education and experience provided to Employee by the Company directly and/or as a result of work projects assigned by the Company with respect thereto, Employee hereby covenants and agrees that during the Term and for a period of twelve (12) months following termination of Employee’s employment, regardless of how such termination may be brought about, Employee shall not, directly or indirectly, as proprietor, partner, stockholder, director, officer, employee, consultant, joint venturer, investor or in any other capacity, engage in, or own, manage, operate or control, or participate in the ownership, management, operation or control, of any entity which engages anywhere in the world in any business activity which is competitive to current business activities in which the Company participates during Employee’s employment with the Company, or take any action in preparation to do any of the foregoing; provided, however, the foregoing shall not, in any event, prohibit Employee from purchasing and holding as an investment not more than 1% of any class of publicly traded securities of any entity which conducts a business in competition with the business of the Company, so long as Employee does not participate in any way in the management, operation or control of such entity.  It is further recognized and agreed that, even though an activity may not be restricted under the foregoing provision, Employee shall not during the Term and for a period of twelve (12)

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months following termination of his employment, regardless of how such termination may be brought about, provide any services to any person or entity which may be used against, or is or may be in conflict with the interests of, the Company or its customers or clients.

(b)Confidentiality.  Employee agrees to execute the Non-Disclosure and Confidentiality Agreement attached hereto as Exhibit C and agrees to fulfill his obligations thereunder.

(c)Customer Lists; Non-Solicitation.  In consideration of the benefits of this Agreement, including Employee’s access to and limited use of proprietary and confidential information of the Company, as well as training, education and experience provided to Employee by the Company directly and/or as a result of work projects assigned by the Company with respect thereto, Employee hereby further covenants and agrees that for a period of twelve (12) months following the termination of Employee’s employment, regardless of how such termination may be brought about, Employee shall not, directly or indirectly, (i) use or make known to any person or entity the names or addresses of any client s or customers of the Company or any other information pertaining to them, (ii) call on for the purpose of competing, solicit, take away or attempt to call on, solicit or take away any clients or customers of the Company on whom Employee called or with whom he became acquainted during his employment with the Company, nor (iii) recruit or attempt to recruit or hire or attempt to hire any employees of the Company.

(d)Judicial Reformation.  Employee acknowledges that, given the nature of the Company’s business, the covenants contained in Section 9 establish reasonable limitations as to time, geographic area and scope of activity to be restrained and do not impose a greater restraint than is reasonably necessary to protect and preserve the goodwill of the Company’s business and to protect its legitimate business interests.  If, however, Section 9 is determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too long a period of time or over too large a geographic area or by reason of it being too extensive in any other respect or for any other reason, it will be interpreted to extend only over the longest period of time for which it may be enforceable and/or over the largest geographic area as to which it may be enforceable and/or to the maximum extent in all other aspects as to which it may be enforceable, all as determined by such court.

(e)Affiliates.  When used in this Section 9, the term “Company” includes the Employer and all affiliates, parents, and subsidiaries of the Employer.

10.Insurance.  Employee shall be entitled to the same rights to coverage under the Company’s Directors and Officers Liability Insurance policies as they may exist from time to time to the same extent as other officers of the Company.

11.Miscellaneous.

(a)Withholdings.  All payments to Employee hereunder shall be made after reduction for all federal, state and local withholding and payroll taxes, all as determined under applicable law and regulations, and Employer shall make all reports and similar filings required by such law and regu lations with respect to such payments, withholdings and taxes.

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(b)Taxation.  Employee acknowledges and agrees that Employer does not guarantee the tax treatment or tax consequences associated with any payment or benefit arising under this Agreement, including but not limited to consequences related to Code Section 409A.  Employer and Employee agree that both will negotiate in good faith and jointly execute an amendment to modify this Agreement to the extent necessary to comply with the requirements of Code Section 409A, or any successor statute, regulation and guidance thereto; provided, that no such amendment shall increase the total financial obligation of Employer under this Agree ment.

(c)Succession.  This Agreement shall inure to the benefit of and shall be binding upon Employer, its successors and assigns.  The obligations and duties of Employee hereunder shall be personal and not assignable.

(d)Notices.  An y and all notices, demands, requests or other communications hereunder shall be in writing and shall be deemed duly given when personally delivered to or transmitted overnight express delivery or by facsimile to and received by the party to whom such notice is intended (provided the original thereof is sent by mail, in the manner set forth below, on the next business day after the facsimile transmission is sent), or in lieu of such personal delivery or overnight express delivery or facsimile transmission, on receipt when deposited in the United States mail, first-class, certified or registered, postage prepaid, return receipt requested.  Notices to Employee shall be sent to the last known address in the Company’s records or such other address as Employee may specify in writing.  Notices to the Company shall be sent to the Company’s Chairman or to such other Company representative as the Company may specify in writing.

(e)Entire Agreement.  This Agreement contains the entire agreement of the parties relating to the subject matter hereof, and it replaces and supersedes any prior agreements between the parties relating to said subject matter.

(f)Headings.  The headings of Sections herein are used for convenience only an d shall not affect the meaning of contents hereof.

(g)Waiver; Amendment.  No provision hereof may be waived except by a written agreement signed by the waiving party.  The waiver of any term or of any condition of this Agreement shall not be deemed to constitute the waiver of any other term or condition.  This Agreement may be amended only by a written agreement signed by the parties hereto.

(h)&# 160;          Severability.  If any of the provisions of this Agreement shall be held unenforceable by the final determination of a court of competent jurisdiction and all appeals therefrom shall have failed or the time for such appeals shall have expired, such provision or provisions shall be deemed eliminated from this Agreement but the remaining provisions shall nevertheless be given full effect.  In the event this Agreement or any portion hereof is more restrictive than permitted by the law of the jurisdiction in which enforcement is sought, this Agreement or such portion shall be limited in that jurisdiction only to the extent required by the law of that jurisdiction.

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(i)Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without giving effect to conflict of law principles.

(j)Arbitration.  Except for the provisions of Sec tions 8 and 9 with regard to which the Company expressly reserves the right to petition a court directly for injunctive or other relief, any dispute arising out of or relating to this Agreement, or the breach, termination or the validity hereof, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  Judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof.  THE ARBITRATOR OR ARBITRATORS ARE NOT EMPOWERED TO AWARD DAMAGES IN EXCESS OF COMPENSATORY DAMAGES (INCLUDING REASONABLE ATTORNEYS FEES AND EXPERT WITNESS FEES) AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO RECOVER SUCH DAMAGES (INCLUDING, WITHOUT LIMITATION, PUNITIVE DAMAGES) IN ANY FORUM.  The arbitrator or arbitrators may award equitable relief in those circumstances where monetary damages would be inadequate.  The arbitrator or arbitrators shall be required to follow the applicable law as set forth in the governing law section of this Agreement.  The arbitrator or arbitrators shall award reasonable attorneys fees and costs of arbitration to the prevailing party in such arbitration.

(k)Equitable Relief.  In the event of a breach or a threatened breach by Employee of any of the provisions contained in Sections 8 or 9 of this Agreement, Employee acknowledges that the Company will suffer irreparable injury not fully compensable by money damages and, therefore, will not have an adequate remedy available at law.  Accordingly, the Company shall be entitled to obtain such injunctive relief or othe r equitable remedy from any court of competent jurisdiction as may be necessary or appropriate to prevent or curtail any such breach, threatened or actual, without having to post bond.  The foregoing shall be in addition to and without prejudice to any other rights that the Company may have under this Agreement, at law or in equity, including, without limitation, the right to sue for damages.

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

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first set forth above.

INTERLEUKIN GENETICS, INC.			TIMOTHY J. RICHERSON
BY:	/s/ Kenneth S. Kornman		/s/ Timothy J. Richerson
Name:		Kenneth S. Kornman
Title:		President and Chief Executive Officer

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EXHIBIT A

DESCRIPTION OF JOB

Title:

Chief Executive Officer

Duties and Responsibilities:

83;Reports to the Board of Directors.

·Serves as Employer’s principal executive officer, with overall responsibility for all of Employer’s business and activities, including finance, strategy and operations.

·Implements Employer’s strategic goals and objectives.

·Provides direction and leadership toward the achievement of the Company’s philosophy, mission and strategy, and its annual goals and objectives.

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EX-10.6

Exhibit 10.6

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”), is made and entered into as of August 17, 2006 (the “Effective Date”), by and between Interleukin Genetics, Inc. a Delaware corporation (“Employer”), and David A. Finkelstein, an individual (“Employee”).

RECITALS

A.Employer desires to obtain the benefit of the services of Employee and Employee desires to render such services to Employer.

B.The Board of Directors of Employer (the “Board”) has determined that it is in Employer’s best interest to employ Employee and to provide certain benefits to Employee.

C.Employer and Employee desire to set forth the terms and conditions of Employee’s employment with Employer on the terms and subject to the conditions of this Agreement.

AGREEMENT

In consideration of the foregoing recitals and of the mutual covenants and conditions contained herein, the parties, intending to be legally bound, agree as follows:

1.Term.  Subject to the terms hereof, the Employee’s employment hereunder will commence on the Effective Date and will continue until December 31, 2007 (the “Term”).

2.Employment of Employee.

(a)Specific Positions.  Employer and Employee hereby agree that, subject to the provisions of this Agreement, Employer will employ Employee and Employee will serve as an employee of Employer.  Employee shall have the title and perform the duties set forth on Exhibit A hereto and such other reasonable, usual and customary duties of such office as may be delegated to Employee from time to time by the Board or its designee or the Chief Executive Officer (“CEO”), subject always to the policies as reasonably determined from time to time by the Board or such designee.

(b)Promotion of Employer’s Business.  During the Term, Employee shall not engage in any business competitive with Employer.  Employee agrees to devote his full business time, attention, knowledge, skill and energy to the business, affairs and interests of Employer and matters related thereto, and shall use his best efforts and abilities to promote Employer’s interests; provided, however, that Employee shall not be precluded from devoting reasonable quantities of time required to managing his personal investments or participation in charitable or community service activities so long as such activities do not materially interfere with the regular performance of his duties under this Agreement.  Except as set forth on Exhibit B hereto, Employee represents that he is not currently a director (or similar position) of any other entity and is not employed by or providing consulting services to any other person or entity, and Employee agrees to refrain from undertaking any such position or engagement without the prior written approval of the Board; provided, however, that Employee may continue to serve as a director for the entities listed on Exhibit B along with the boards of any other charitable institutions, community service organizations or any

entity in which Employee has a material financial investment, to the extent that such service does not create any conflicts, ethical or otherwise, with Employee’s responsibilities to the Company and further provided that Employee’s time commitments do not unreasonably interfere with his fulfillment of his responsibilities hereunder, as determined in the reasonable discretion of the Board.

(c)Location.  Employee may continue to reside in his current location in Florida, provided that Employee engage in th e travel required to fulfill his duties and obligations to Employer; provided, further, that the Employer shall provide teleconferencing and/or videoconferencing facilities when reasonable and appropriate in order to reduce the amount of travel required of Employee.

3.Salary.  Employer shall pay to Employee during the term of this Agreement a base salary (“Base Salary”) of $300,000 per year, payable in substantially equal installments in accordance with the Employer’s payroll practices as in effect from time to time.  The Employer will deduct from each such installment any amoun ts required to be deducted or withheld under applicable law or under any employee benefit plan in which the Employee participates.  The Base Salary may be increased (but not decreased without Employee’s consent) annually at the Employer’s sole discretion.

4.Bonus/Stock Grant.

(a)Bonus.

(i)In addition to the Base Salary, for each fiscal year during which Employee is employed for the entire year, Employee shall also be eligible to receive a discretionary annual “Bonus” of up to 40% of his Base Salary.  The amount of the Bonus to be awarded to Employee shall be determined by the Board (or a committee thereof) in its sole discretion, with consideration of the Employee’s achievement of individual and company goals established by the Board (or its designee) within ninety (90) days of the beginning of each fiscal year.

(ii)For fiscal year 2006, Employee shall be eligible to receive a discretionary annual bonus of up to 40% of the Base Salary earned by Employee in 2006.  The amount of the bonus to be awarded to Employee for fiscal year 2006 shall be determined by the Board (or a committee thereof) in its sole discretion, with consideration of the Employee’s achievement of individual and company goals established by the Board within sixty (60) days of the Effective Date.

(b)Stock Grant.

(i)Employer will grant to Employee as of the Effective Date 12,500 fully-vested shares of Employer’s common stock.

(ii)On the day before the first anniversary of the Effective Date, subject to Employee’s continued employment with Employer as of the date of grant, Employer will grant to Employee 12,500 fully-vested shares of Employer’s common stock.

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(iii)Except as otherwise expressly provided in this Agreement, any stock granted to Employee shall be subject to the terms and conditions set forth in the agreements entered into by Employee and Employer governing such stock grants and Employer’s 2004 Employee, Director and Consultant Stock Plan (“Stock Plan”) or any successor or replacement plan thereto.

(c)Additional Equity Incentives.  Employee shall be eligible to participate in Employer’s 2004 Employee, Director and Consultant Stock Plan.  Additional awards thereunder shall be made from time to time by the Board (or its designee) in its sole discretion.

5.Benefits.

(a)Fringe Benefits.  During Employee’s employment by Employer under this Agreement, Employee shall be eligible for participation in the medical, disability, life and other insurance plans and such other similar benefits available to other executive employees.  Employee recognizes that nothing herein requires the Company to maintain any benefit plan or program.  Employee’s participation in any benefit plan is governed by the applicable plan documents.  Employee will receive a monthly automobile allowance of $600.00.

(b)Reimbursements.  During Employee’s employment with Employer under this Agreement, Employee shall be entitled to receive prompt reimbursement of all reasonable expenses incurred by Employee in performing services hereunder, including all expenses of travel at the request of, or in the service of, Employer provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by Employer.

(c)Vacation.  During Employee’s employment with Employer hereunder, Employee shall be entitled to an annual vacation leave of four (4) weeks at full pay, which shall be accru ed, adjusted and administered in accordance with the vacation policy generally applicable to employees of the Employer.

6.Termination.

(a)Definition of Accrued Obligations.  For purposes of this Agreement, “Accrued Obligations” m eans (i) the portion of Employee’s Base Salary that has accrued prior to any termination of Employee’s employment with the Company and has not yet been paid; (ii) the Bonus awarded by the Board to Employee for the most recently completed fiscal year, if not already paid (the amount of which shall have been determined in accordance with Section 4(a) above); (iii) to the extent required by law and the Company’s policy, an amount equal to the value of Employee’s accrued unused vacation days; and (iv) the amount of any expenses properly incurred by Employee on behalf of the Company prior to any such termination and not yet reimbursed. Employee’s entitlement to any other compensation or benefit under any plan or policy of the Company shall be governed by and determined in accordance with the terms of such plans or policies, except as otherwise specified in this Agreement.

(b)Termination for Cause.  Employer shall have the right, exercisable immediately upon written notice, to terminate Employee’s employment for “Cause.”

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(i)Definition of Cause.  As used herein, “Cause” means any of the following: (A) habitual drunkenness under the influence of alcohol by Employee or illegal use of narcotics; (B) Employee is convicted by a court of competent jurisdiction, or pleads “no contest” to, a felony or any other conduct of a criminal nature (other than minor traffic violations) by Employee; (C) Employee engages in fraud, embezzlement, or any other illegal conduct; (D) Employee imparts confidential information relating to Employer or its business to competitors or to other third parties other than in the cour se of carrying out Employee’s duties; (E) Employee refuses to perform his duties hereunder or otherwise breaches any covenant, warranty or representation of this Agreement or Employee’s Non-Disclosure and Confidentiality Agreement, and, except for any conduct described in clauses (A) through (D) of this Section 6(b)(i), fails to cure such breach (if such breach is then capable of being cured) within ten (10) business days following written notice thereof specifying in reasonable detail the nature of such breach, or if such breach is not capable of being cured in such time, a cure shall not have been diligently initiated within such ten (10) business day period.

(ii)Effect of Termination.  Upon termination in accordance with this Section 6(b), Employee shall be entitled to no further compensation hereunder other than the Accrued Obligations.  Employer’s exercise of its right to terminate for Cause shall be without prejudice to any other remedy to which it may be entitled at law, in equity or under this Agreement.

(c)Voluntary Termination.  Employee may terminate his employment at any time by giving no less than thirty (30) days’ written notice to Employer.

(i)No Reason.  Upon termination in accordance with this Section 6(c), except as otherwise provided in Section 6(c)(ii), below, Employee shall be entitled to no further compensation hereunder other than the Accrued Obligations.

(ii)Good Reason.  Notwithstanding anyth ing to the contrary in Section 6(c)(i) above, if Employee terminates his employment under this Section 6(c) for Good Reason (as defined below), Employee shall be entitled to receive from Employer all of the compensation and benefits provided for in Section 6(g) below. As used herein, “Good Reason” means any of the following: (A) the assignment to Employee of duties materially inconsistent with the duties customarily associated with the Employee’s title or with other employees of Employer in like positions, where Employee provides written notice to Employer within six (6) months of such assignment that such duties are materially inconsistent with his title or those duties of similarly situated employees and Employer fails to release Employee from his obligation to perform such inconsistent duties within twenty (20) business days after Employer’s receipt of such notice; (B) a breach by Employer of its material obligations set forth in this Agreement, which has not been cured within fifteen (15) business days after written notice of such noncompliance has been given by Employee to Employer, or if such failure is not capable of being cured in such time, a cure shall not have been diligently initiated by Employer within such fifteen (15) business day period; or (C) a change in the principal location at which you are required to perform your duties hereunder by more than 50 miles from both the

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current location at which you perform such duties and your primary residence as of the date of this agreement, without your prior written consent.

(d)Termination Due to Death.  This Agreement shall automatically terminate upon the death of Employee.  Upon termination in accordance with this Section 6(d), Employee’s estate shall be entitled to no further compensation hereunder other than the Accrued Obligations.

(e)Termination Due to Disability.  Employer may terminate Employee’s employment upon written notice to Employee due to Employee’s Disability.  “Disability” shall mean (A) Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (B) Employee is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than t welve (12) months, receiving income replacement benefits for a period of not less than three (3) months under a Company-sponsored group disability plan.  A determination of Disability shall be made in good faith by a majority vote of the Board, based on the opinion of one or more physicians reasonably and mutually agreed to by the Employee and the Company.  If Employee is so terminated by Employer pursuant to this Section 6(e) during the Term, then, in addition to payment of the Accrued Obligations, Employer shall (i) pay to Employee the Base Salary, and (ii) pursuant to COBRA, provide the same health insurance benefits to which Employee was entitled hereunder, in each case (i.e., the Base Salary and health insurance benefits), until the earlier to occur of (A) the expiration of the remaining portion of the Term, or (B) the expiration of the six (6) month period commencing on the date Employee is terminated.  Employer may make such payments in accordanc e with its regular payroll schedule or in a single lump sum payment in its sole discretion.

(f)Termination Upon Cessation of Business.  Employer shall have the right to immediately terminate Employee’s employment under this Agreement upon a “Cessation of Business.”  For purposes of this Agreement, a “Cessation of Business” shall mean Employer’s ceasing to operate in the ordinary course of business, whether by dissolution, liquidation, sale of assets, consolidation, merger or otherwise, in connection with, pursuant to or arising out of a good faith determination by the Board th at the continuing operation of the business in its ordinary course is reasonably likely to render Employer unable to meet its liabilities as they mature.  If Employee is so terminated by Employer pursuant to this Section 6(f) during the Term, then, in addition to payment of the Accrued Obligations, Employer shall (i) pay to Employee the Base Salary, and (ii) pursuant to COBRA, provide the same health insurance benefits to which Employee was entitled hereunder, in each case (i.e., the Base Salary and health insurance benefits), until the earlier to occur of (A) the expiration of the remaining portion of the Term, or (B) the expiration of the three (3) month period commencing on the date Employee is terminated. Employer may make such payments in accordance with its regular payroll schedule or in a single lump sum payment in its sole discretion.

(g)           Termination Without Cause.  Employer shall have the right, exercisable upon 30 days’ prior written notice, to terminate Employee’s employment under this Agreement for any reason other than set forth in Sections 6(b), (d) and (e) above, at any time during the Term.  If Employee is so terminated by Employer pursuant to this Section 6(g)

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during the Term, then, in addition to payment of the Accrued Obligations, Employer shall (i) pay to Employee the Base Salary, and (ii) provide the same health insurance benefits, pursuant to COBRA, at the Company’s expense, to which Employee was entitled at the time of the termination, in each case (i.e., the Base Salary and health insurance benefits pursuant to COBRA), until the earlier to occur of (A) the expiration of the remaining portion of the Term, or (B) the expiration of the twelve (12) month period commencing on the date Employee is terminated. Employer may make such payments in accordance with its regular payroll schedule or in a single lump sum payment in its sole discretion.  In addition, all unvested common stock that has been granted to Employee by the Board shall immediately and fully vest as of the date of termination.

(h)Release of Claims/Board Resignation.  The Company shall not be obligated to pay Employee any of the compensation or provide Employee any of the benefits set forth in Section 6 (other than the Accrued Obligations) unless and until Employee has (i) executed a timely separation agreement in a form reasonably acceptable to the Company, which shall include a release of claims against the Company and may include provisions regarding mutual non-disparagement and confidentiality; and (ii) if holding any position on the Board, resigned such position, if so requested by the Chairman of the Board or a majority of the Board.

(i)No Other Payments or Benefits Owing.  The payments and benefits set forth in this Section 6 shall be the sole amounts owing to Employee as separation pay upon termination of Employee’s employment.  Employee shall not be eligible for any other payments, including but not limited to additional Base Salary payments, bonuses, commissions, or other forms of compensation or benefits, except as may otherwise be set forth in this Agreement or other Company plan documents with respect to plans in which Employee is a participant.

(j)Compliance with Code Section 409A.  Notwithstanding any other provision with respect to the timing of payments under Section 6, if, at the time of Employee’s termination, Employee is deemed to be a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and any successor statute, regulation and guidance thereto (“Code Section 409A”), of the Company, then limited only to the extent necessary to comply with the requirements of Code Section 409A, any payments to which Employee may become entitled under Section 6 which are subject to Code Section 409A (and not otherwise exempt from its application) will be withheld until the first (1st) business day of the seventh (7th) month following the termination of Employee’s employment, at which time Employee shall be paid an aggregate amount equal to the accumulated, but unpaid, payments otherwise due to Employee under the terms of Section 6.

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7.Change In Control.

(a)Definition of “Change in Control”.  “Change in Control” of the Company as used in this Agreement shall mean the following, but only to the extent it is interpreted in a manner consistent with the meaning of “a change in the ownership or effective c ontrol of the corporation, or in the ownership of a substantial portion of the assets of the corporation” under Code Section 409A, and limited to the extent necessary so that it will not cause adverse tax consequences with respect to Code Section 409A:  (i) a merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (ii) the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all of t he Company’s assets.

(b)Notwithstanding anything herein to the contrary, in the event of a Change of Control, all common stock granted to Employee by the Company which has not previously vested shall immediately and fully vest.

8.Publicity.  During the Term and for a period of one (1) year thereafter, Employee shall not, directly or indirectly, originate or participate in the origination of any publicity, news release or other public announcements, written or oral, whether to the public press or otherwise, relating to this Agreement, to any amendment hereto, to Employee’s employment hereunder or to the Company, without the prior written approval of the Company.

9.Restrictive Covenants.

(a)  0;         Non-Competition.  In consideration of the benefits of this Agreement, including Employee’s access to and limited use of proprietary and confidential information of the Company, as well as training, education and experience provided to Employee by the Company directly and/or as a result of work projects assigned by the Company with respect thereto, Employee hereby covenants and agrees that during the Term and for a period of twelve (12) months following termination of Employee’s employment, regardless of how such termination may be brought about, Employee shall not, directly or indirectly, as proprietor, partner, stockholder, director, officer, employee, consultant, joint venturer, investor or in any other capacity, engage in, or own, manage, operate or control, or participate in the ownership, management, operation or control, of any entity which engages anywhere in the world in any business activity which is competitive to current business activities in which the Company participates during Employee’s employment with the Company, or take any action in preparation to do any of the foregoing; provided, however, the foregoing shall not, in any event, prohibit Employee from purchasing and holding as an investment not more than 1% of any class of publicly traded securities of any entity which conducts a business in competition with the business of the Company, so long as Employee does not participate in any way in the management, operation or control of such entity.  It is further recognized and agreed that, even though an activity may not be restricted under the foregoing provision, Employee shall not during the Term and for a period of twelve (12)

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months following termination of his employment, regardless of how such termination may be brought about, provide any services to any person or entity which may be used against, or is or may be in conflict with the interests of, the Company or its customers or clients.

(b)Confidentiality.  Employee agrees to execute the Non-Disclosure and Confidentiality Agreement attached hereto as Exhibit C and agrees to fulfill his obligations thereunder.

(c)Customer Lists; Non-Solicitation.  In consideration of the benefits of this Agreement, including Employee’s access to and limited use of proprietary and confidential information of the Company, as well as training, education and experience provided to Employee by the Company directly and/or as a result of work projects assigned by the Company with respect thereto, Employee hereby further covenants and agrees that for a period of twelve (12) months following the termination of Employee’s employment, regardless of how such termination may be brought about, Employee shall not, directly or indirectly, (i) use or make known to any person or entity the names or addresses of any client s or customers of the Company or any other information pertaining to them, (ii) call on for the purpose of competing, solicit, take away or attempt to call on, solicit or take away any clients or customers of the Company on whom Employee called or with whom he became acquainted during his employment with the Company, nor (iii) recruit or attempt to recruit or hire or attempt to hire any employees of the Company.

(d)Judicial Reformation.  Employee acknowledges that, given the nature of the Company’s business, the covenants contained in Section 9 establish reasonable limitations as to time, geographic area and scope of activity to be restrained and do not impose a greater restraint than is reasonably necessary to protect and preserve the goodwill of the Company’s business and to protect its legitimate business interests.  If, however, Section 9 is determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too long a period of time or over too large a geographic area or by reason of it being too extensive in any other respect or for any other reason, it will be interpreted to extend only over the longest period of time for which it may be enforceable and/or over the largest geographic area as to which it may be enforceable and/or to the maximum extent in all other aspects as to which it may be enforceable, all as determined by such court.

(e)Affiliates.  When used in this Section 9, the term “Company” includes the Employer and all affiliates, parents, and subsidiaries of the Employer.

10.Insurance.  Employee shall be entitled to the same rights to coverage under the Company’s Directors and Officers Liability Insurance policies as they may exist from time to time to the same extent as other officers of the Company.

11.Miscellaneous.

(a)Withholdings.  All payments to Employee hereunder shall be made after reduction for all federal, state and local withholding and payroll taxes, all as determined under applicable law and regulations, and Employer shall make all reports and similar filings required by such law and regu lations with respect to such payments, withholdings and taxes.

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(b)Taxation.  Employee acknowledges and agrees that Employer does not guarantee the tax treatment or tax consequences associated with any payment or benefit arising under this Agreement, including but not limited to consequences related to Code Section 409A.  Employer and Employee agree that both will negotiate in good faith and jointly execute an amendment to modify this Agreement to the extent necessary to comply with the requirements of Code Section 409A, or any successor statute, regulation and guidance thereto; provided, that no such amendment shall increase the total financial obligation of Employer under this Agree ment.

(c)Succession.  This Agreement shall inure to the benefit of and shall be binding upon Employer, its successors and assigns.  The obligations and duties of Employee hereunder shall be personal and not assignable.

(d)Notices.  An y and all notices, demands, requests or other communications hereunder shall be in writing and shall be deemed duly given when personally delivered to or transmitted overnight express delivery or by facsimile to and received by the party to whom such notice is intended (provided the original thereof is sent by mail, in the manner set forth below, on the next business day after the facsimile transmission is sent), or in lieu of such personal delivery or overnight express delivery or facsimile transmission, on receipt when deposited in the United States mail, first-class, certified or registered, postage prepaid, return receipt requested.  Notices to Employee shall be sent to the last known address in the Company’s records or such other address as Employee may specify in writing.  Notices to the Company shall be sent to the Company’s Chairman or to such other Company representative as the Company may specify in writing.

(e)Entire Agreement.  This Agreement contains the entire agreement of the parties relating to the subject matter hereof, and it replaces and supersedes any prior agreements between the parties relating to said subject matter.

(f)Headings.  The headings of Sections herein are used for convenience only an d shall not affect the meaning of contents hereof.

(g)Waiver; Amendment.  No provision hereof may be waived except by a written agreement signed by the waiving party.  The waiver of any term or of any condition of this Agreement shall not be deemed to constitute the waiver of any other term or condition.  This Agreement may be amended only by a written agreement signed by the parties hereto.

(h)&# 160;          Severability.  If any of the provisions of this Agreement shall be held unenforceable by the final determination of a court of competent jurisdiction and all appeals therefrom shall have failed or the time for such appeals shall have expired, such provision or provisions shall be deemed eliminated from this Agreement but the remaining provisions shall nevertheless be given full effect.  In the event this Agreement or any portion hereof is more restrictive than permitted by the law of the jurisdiction in which enforcement is sought, this Agreement or such portion shall be limited in that jurisdiction only to the extent required by the law of that jurisdiction.

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(i)Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without giving effect to conflict of law principles.

(j)Arbitration.  Except for the provisions of Sec tions 8 and 9 with regard to which the Company expressly reserves the right to petition a court directly for injunctive or other relief, any dispute arising out of or relating to this Agreement, or the breach, termination or the validity hereof, shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association.  Judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof.  THE ARBITRATOR OR ARBITRATORS ARE NOT EMPOWERED TO AWARD DAMAGES IN EXCESS OF COMPENSATORY DAMAGES (INCLUDING REASONABLE ATTORNEYS FEES AND EXPERT WITNESS FEES) AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT TO RECOVER SUCH DAMAGES (INCLUDING, WITHOUT LIMITATION, PUNITIVE DAMAGES) IN ANY FORUM.  The arbitrator or arbitrators may award equitable relief in those circumstances where monetary damages would be inadequate.  The arbitrator or arbitrators shall be required to follow the applicable law as set forth in the governing law section of this Agreement.  The arbitrator or arbitrators shall award reasonable attorneys fees and costs of arbitration to the prevailing party in such arbitration.

(k)Equitable Relief.  In the event of a breach or a threatened breach by Employee of any of the provisions contained in Sections 8 or 9 of this Agreement, Employee acknowledges that the Company will suffer irreparable injury not fully compensable by money damages and, therefore, will not have an adequate remedy available at law.  Accordingly, the Company shall be entitled to obtain such injunctive relief or othe r equitable remedy from any court of competent jurisdiction as may be necessary or appropriate to prevent or curtail any such breach, threatened or actual, without having to post bond.  The foregoing shall be in addition to and without prejudice to any other rights that the Company may have under this Agreement, at law or in equity, including, without limitation, the right to sue for damages.

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

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the date first set forth above.

INTERLEUKIN GENETICS, INC.			DAVID A. FINKELSTEIN
BY:	/s/ Kenneth S. Kornman		/s/ David A. Finkelstein
Name:		Kenneth S. Kornman
Title:		President and Chief Executive Officer

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EXHIBIT A

DESCRIPTION OF JOB

Title:

Chief Strategy Officer

Duties and Responsibilities:

 3;Reports to the Chief Executive Officer

·Provides direction and leadership toward the achievement of Employer’s philosophy, mission, strategy, annual goals and objectives.

·Contributes to and monitors the strategy of Employer with respect to mergers, acquisitions, and other key initiatives

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EXHIBIT B

OTHER POSITIONS

·Board member of the Museum of Discovery and Science, Fort Lauderdale, Florida

·Board member of the Devon-Woodfield Homeowners’ Association, Boca Raton, Florida

·Director of PMH Holdings (personal investments)

·Prospective director of a private equity/hedge fund to be formed

·Prospective director of a retail entity (not involved in nutraceuticals or healthcare-related products) to be formed

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EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated April 20, 2006, accompanying the consolidated financial statements of Alan James Group, Inc. and Related Companies, included in the Current Report of Interleukin Genetics, Inc. on Amendment No. 1 to Form 8-K dated August 17, 2006.  We hereby consent to the incorporation by reference of said report in the registration statements on Form S-3 (Nos. 333-83631, 333-53558, 333-56558, 333-101088, and 333-107782) and on Form S-8 (Nos. 333-37343, 333-67147, 333-32538, 333-62638 and 333-118551) of Interleukin Genetics, Inc. and subsidiary.

/s/ MORRISON, BROWN, ARGIZ & FARRA, LLP

Miami, Florida
October 26, 2006