Document:

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                                                                    EXHIBIT 10.3

                               PURCHASE AGREEMENT

                  THIS PURCHASE AGREEMENT ("Agreement") is made as of the 26th
day of January, 2001 by and between Interleukin Genetics, Inc., a Delaware
corporation (the "Company"), and the Investors set forth on the signature page
affixed hereto (each an "Investor" and collectively the "Investors").

                                    RECITALS

                  A. The Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated by
the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended;

                  B. The Investors wish to purchase, and the Company wishes to
sell and issue to the Investors, upon the terms and conditions stated in this
Agreement, that number of shares of the common stock of the Company, $0.001 par
value per share (the "Common Stock") and that number of warrants to purchase
Common Stock in the form attached hereto as EXHIBIT A (the "Warrants"), as are
set forth on the signature page attached hereto and executed by each such
Investor; and

                  C. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration Rights
Agreement, in the form attached hereto as EXHIBIT B (the "Registration Rights
Agreement"), pursuant to which the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended and the rules
and regulations promulgated thereunder, and applicable state securities laws;

                  In consideration of the mutual promises made herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

         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 "Affiliate" means, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person.

                  1.2 "Agreements" means this Agreement, the Registration Rights
Agreement, and the Warrants.
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                  1.3 "Closing" means the consummation of the transactions
contemplated by this Agreement, and "Closing Date" means the date of such
Closing.

                  1.4 "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.

                  1.5 "Exempt Issuances" means (i) sales of shares of Common
Stock by the Company upon conversion or exercise of any convertible securities,
options or warrants outstanding prior to the date hereof; (ii) securities issued
to employees, officers or directors of the Company pursuant to any stock option,
stock purchase or stock bonus plan, agreement or arrangement as existing on date
hereof or subsequently adopted upon approval of the shareholders of the Company;
(iii) securities issued to universities provided such securities are issued for
other than primarily equity financing purposes and is limited to an aggregate
value of no more than $5,000,000; (iv) up to $500,000 in the aggregate of the
Company's securities issued to consultants of the Company; (v) securities issued
to vendors, customers, suppliers, consultants, financial advisors or to other
persons in similar commercial situations with the Company if such issuance is
approved by the Board of Directors, provided such securities are issued for
other than primarily equity financing purposes and is limited to an aggregate
value of $500,000 and (vi) shares of Common Stock issued pursuant to Section 7
of that certain Purchase Agreement dated December 5, 2000 between the Company
and The Tail Wind Fund Ltd.

                  1.6 "Market Price" means the average of the 4:00 p.m. closing
bid prices of the Common Stock over the twenty (20) consecutive trading days
preceding a specified date.

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

                  1.8 "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.

                  1.9 Purchase Price means $2.50.

                  1.10 "SEC Filings" has the meaning set forth in Section 4.6.

                  1.11 "Securities" means the Shares, the Warrants and the
Warrant Shares (defined below).

                  1.12 "Shares" means the shares of Common Stock being purchased
by the Investors hereunder.

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                  1.13 "Warrant Shares" means the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants.

                  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.

         2. Purchase and Sale of the Shares and Warrants. Subject to the terms
and conditions of this Agreement, each of the Investors hereby severally, and
not jointly, agrees to purchase, and the Company hereby agrees to sell and issue
to the Investors, the number of Shares and Warrants to purchase the number of
shares of Common Stock set forth on such Investor's signature page attached
hereto. The number of Shares to be purchased by each Investor shall be
determined by dividing such Investor's aggregate purchase price (as such
aggregate purchase price is set forth on such Investor's signature page attached
hereto) by the Purchase Price. The number of shares of Common Stock purchasable
by the Investors upon exercise of the Warrants shall be as set forth on such
Investor's signature page attached hereto and the exercise price of the Warrants
shall be $3.00.

         3. Closing. The Company shall promptly deliver to Investors' counsel,
in trust, a certificate or certificates, registered in such name or names as the
Investors may designate, representing all of the Shares and all of the Warrants,
with instructions that such certificates are to be held for release to the
Investors only upon payment of the aggregate Purchase Price to the Company. Upon
receipt by counsel to the Investors of the certificates, each Investor shall
promptly cause a wire transfer in same day funds to be sent to the account of
the Company as instructed in writing by the Company, in an amount representing
such Investor's aggregate Purchase Price. On the date the Company receives such
funds, the certificates evidencing the Shares and the Warrants shall be released
to the Investors (and such date shall be deemed the "Closing Date").

         4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors that:

                  4.1 Organization, 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 would not have a Material Adverse
Effect. The Company's subsidiaries are reflected on Schedule 4.1 hereto.

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                  4.2 Authorization. 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 (i) the authorization, execution and
delivery of the Agreements, (ii) authorization of the performance of all
obligations of the Company hereunder or thereunder, and (iii) the authorization,
issuance (or reservation for issuance) and delivery of the Securities. The
Agreements constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors'
rights generally.

                  4.3 Capitalization. Set forth on Schedule 4.3 hereto is (a)
the authorized capital stock of the Company on the date hereof; (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; and (d) the number
of shares of capital stock issuable and reserved for issuance pursuant to
securities (other than the Shares and the Warrants) exercisable for, or
convertible into or exchangeable for any shares of capital stock. Except as set
forth on Schedule 4.3, 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. Except as set forth on Schedule
4.3, no Person is entitled to preemptive or similar statutory or contractual
rights with respect to any securities of the Company. Except as set forth on
Schedule 4.3, 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
4.3, 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 securityholders of the Company relating to the securities of
the Company held by them. Except as set forth on Schedule 4.3, the Company has
not granted any Person 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.

                  4.4 Valid Issuance. The Company has reserved a sufficient
number of shares of Common Stock for the issuance of the Shares pursuant to this
Agreement and upon exercise of the Warrants. The Company will take such steps as
may be necessary to reserve sufficient shares for issuance pursuant to Section 7
below when such issuance is determinable. The Shares and Warrants are duly
authorized, and such Securities, along with the Warrant Shares when issued in
accordance herewith and with the terms of the Warrants, will be duly authorized,
validly issued, fully paid, non-assessable and free and clear of all
encumbrances and restrictions, except for restrictions on transfer imposed by
applicable securities laws.

                  4.5 Consents. The execution, delivery and performance by the
Company of the Agreements and the offer, issuance and sale of the Securities
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

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pursuant to applicable state and federal securities laws and the requirements of
the Nasdaq SmallCap Stock Market, which the Company undertakes to file within
the applicable time periods.

                  4.6 Delivery of SEC Filings; Business. The Company has
provided the Investors with copies of the Company's most recent Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, 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 the Company hereby represents and warrants are all filings
required of the Company pursuant to the 1934 Act for such period. The Company is
engaged only in the business described in the SEC Filings and the SEC Filings
contain a complete and accurate description of the business of the Company.

                  4.7 Use of Proceeds. The proceeds of the sale of the Common
Stock and the Warrants hereunder shall be used by the Company for working
capital and general corporate purposes.

                  4.8 No 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 or
as set forth on Schedule 4.8 hereto, there has not been:

                           (i) 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;

                           (ii) 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;

                           (iii) any material damage, destruction or loss,
whether or not covered by insurance to any assets or properties of the Company;

                           (iv) any waiver by the Company of a valuable right or
of a material debt owed to it not in the ordinary course of business;

                           (v) 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, 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);

                           (vi) 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;

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                           (vii) any material labor difficulties or labor union
organizing activities with respect to employees of the Company;

                           (viii) any transaction entered into by the Company
other than in the ordinary course of business; or

                           (ix) any other event or condition of any character
that might have a Material Adverse Effect.

                  4.9 SEC Filings; Material Contracts.

                           (a) 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.

                           (b) 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.

                           (c) Except as set forth on Schedule 4.3 hereto, there
are no agreements or instruments currently in force and effect that constitute a
warrant, option, convertible security or other right, agreement or arrangement
of any character under which the Company is or may be obligated to issue any
material amounts of any equity security of any kind, or to transfer any material
amounts of any equity security of any kind.

                  4.10 Form S-3 Eligibility. The Company is currently eligible
to register the resale of its Common Stock on a registration statement on Form
S-3 under the 1933 Act.

                  4.11 No Conflict, Breach, Violation or Default. The execution,
delivery and performance of the Agreements by the Company and the issuance and
sale of the Securities will not conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under (i) the
Company's Certificate of Incorporation or the Company's Bylaws, both as in
effect on the date hereof (copies of which have been provided to the Investors
before the date hereof), or (ii) except where it would not have a Material
Adverse Effect, (a) any

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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 (b) except as set forth on Schedule 4.11, any 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.

                  4.12 Tax 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 corporation or entity.

                  4.13 Title to Properties. Except as disclosed in the SEC
Filings or Schedule 4.13, 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 except as disclosed in the SEC Filings, 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.

                  4.14 Certificates, 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.

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

                  4.16 Intellectual Property. The Company has sufficient title
or adequate rights or licenses to the inventions, know-how, patents, copyrights,
trademarks, trade names, confidential information and other intellectual
property (collectively, "Intellectual Property Rights"), free and clear of any
material liens, security interests, charges, encumbrances, equities and other
adverse claims, necessary to conduct the business now operated by it, or
presently employed by it, and presently contemplated to be operated by it, and
except as set forth on Schedule 4.16 hereto, the Company has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any Intellectual Property Rights. To the knowledge

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of the Company, the Company's patents and other Intellectual Property Rights and
the present activities of the Company do not infringe any patent, copyright,
trademark, trade name or other proprietary rights of any third party.

                  4.17 Environmental 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.

                  4.18 Litigation. Except as disclosed in the SEC Filings or on
Schedule 4.18 hereto, there are no pending actions, suits or proceedings against
or affecting the Company, its subsidiaries or any of its or their properties
that, if determined adversely to the Company or such subsidiary, would
individually or in the aggregate have a Material Adverse Effect or would
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement, or which are otherwise material in the context
of the sale of the Securities; and to the Company's knowledge, no such actions,
suits or proceedings are threatened or contemplated.

                  4.19 Financial Statements. The financial statements 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 as set
forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof, to the best of the Company's knowledge, the
Company has no liabilities, contingent or otherwise, except those which
individually or in the aggregate would not have a Material Adverse Effect.

                  4.20 Insurance 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.

                  4.21 Compliance with Nasdaq Continued Listing Requirements.
The Company is in compliance with all applicable Nasdaq SmallCap Market
continued listing requirements. There are no proceedings pending or to the
Company's knowledge threatened against the Company relating to the continued
listing of the Company's Common Stock on the Nasdaq Smallcap Market and, except
as set forth on Schedule 4.21, the Company has not received any notice of, nor
to the knowledge of the Company is there any basis for, the delisting of the
Common Stock from the Nasdaq Smallcap Market.

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                  4.22 Acknowledgement of Dilution. The number of shares of
Common Stock issuable pursuant to this Agreement may increase substantially. The
Company's executive officers and directors have studied and fully understand the
nature of the transactions being contemplated hereunder and recognize that they
have a potential dilutive effect.

                  4.23 Brokers and Finders. The Investors shall have no
liability or responsibility for the payment of any commission or finder's fee to
any third party in connection with or resulting from this agreement or the
transactions contemplated by this Agreement by reason of any agreement of or
action taken by the Company.

                  4.24 No Directed Selling Efforts or General Solicitation.
Neither the Company nor any Person acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of any of the Securities.

                  4.25 No Integrated Offering. 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
transactions contemplated hereby or would require registration of the Securities
under the 1933 Act.

                  4.26 Disclosures. No representation or warranty made under any
Section hereof contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein, in
light of the circumstances under which the statements were made, not misleading.

         5. Representations and Warranties of the Investor. Each of the
Investors hereby severally, and not jointly, represents and warrants to the
Company that:

                  5.1 Organization and Existence. The Investor is a validly
existing corporation or limited liability company and has all requisite
corporate or limited liability company power and authority to invest in the
Securities pursuant to this Agreement.

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

                  5.3 Purchase Entirely for Own Account. The Securities to be
received by the Investor hereunder will be acquired for the Investor's own
account, not as nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same. The

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Investor is not a registered broker dealer or an entity engaged in the business
of being a broker dealer.

                  5.4 Investment Experience. The 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.

                  5.5 Disclosure of Information. The 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. The 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 the Investor shall modify, amend or affect
the Investor's right to rely on the Company's representations and warranties
contained in this Agreement.

                  5.6 Restricted Securities. The 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 be resold without registration under
the 1933 Act only in certain limited circumstances.

                  5.7 Legends. It is understood that, until registration for
resale pursuant to the Registration Rights Agreement or until resale under Rule
144(k) is available with respect to the Securities, certificates evidencing the
Securities may bear one or more restrictive legends, substantially as follows:

                           (a) "The shares represented by this certificate may
not be transferred without (i) the opinion of counsel satisfactory to the
corporation that such transfer may lawfully be made without registration under
the Securities Act of 1933 or qualification under applicable state securities
laws; or (ii) such registration or qualification."

                           (b) If required by the authorities of any state in
connection with the issuance of sale of the Securities, the legend required by
such state authority.

                  Upon registration for resale pursuant to the Registration
Rights Agreement or upon Rule 144(k) becoming available, the Company shall
promptly cause certificates evidencing the Shares previously issued hereunder
(including Shares issued pursuant to Section 7.1 below) to be replaced with
certificates which do not bear such restrictive legends, and all Warrant Shares
subsequently issued shall not bear such restrictive legends. The Investor hereby
covenants with the Company not to make any sale of the Securities under the
Registration Statement (as defined in the Registration Rights Agreement) without
effectively causing the prospectus delivery requirements under the 1933 Act to
be satisfied. When the Company is required to cause unlegended certificates to
replace previously issued legended certificates, if unlegended certificates are
not delivered to an Investor within ten (10) business days of submission by that

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Investor of legended stock certificate(s) to the Company's transfer agent, the
Company shall be liable to the Investor for a penalty equal to 2% of the
aggregate purchase price of the Shares evidenced by such certificate(s) for each
thirty day period (or portion thereof) beyond such ten days that the unlegended
certificates have not been so delivered.

                  5.8 Accredited Investor. The Investor is an accredited
investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933
Act.

                  5.9 No General Solicitation. The Investor did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.

                  5.10 Brokers and Finders. The Investor represents and warrants
to the Company that it has made no commitment for payment of any commissions or
finders' fees to any third party in connection with the transactions
contemplated by this Agreement.

         6. Registration Rights Agreement. The parties acknowledge and agree
that part of the inducement for the Investor to enter into this Agreement is the
Company's execution and delivery of the Registration Rights Agreement. The
parties acknowledge and agree that simultaneously with the execution hereof, the
Registration Rights Agreement is being duly executed and delivered by the
parties thereto.

         7.       Covenants and Agreements of the Company.

                  7.1 Purchase Price Adjustments.

                                    (a) Required Adjustments. Subject to the
exclusions contained in Section 7.1(f) below, if during the MFN Period (defined
below) the Company issues or sells any shares of its Common Stock at a Per Share
Selling Price (as defined below) lower than the Purchase Price set forth in
Section 2 hereof, the Purchase Price of the Shares sold to the Investors
hereunder shall be adjusted downward to equal such lower Per Share Selling Price
and Investors shall be entitled to receive the additional shares as provided by
Section 7.1(c); provided, however, that in the event an Investor then owns less
than 65% of the Shares acquired by it hereunder, such Investor shall be entitled
to additional shares only with respect to the number of Shares then owned by
such Investor as provided in Section 7.1(c). The Company shall give to the
Investors written notice of any such sale within 24 hours of the closing of any
such issuance or sale. For so long as an Investor owns 65% or more of the Shares
originally acquired by such Investor hereunder, such Investor shall be entitled
to the full benefit of the Purchase Price adjustment required by this Section
7.1. The term "Shares" as used in this Agreement shall include shares issued to
the Investors pursuant to this Section 7.1.

                                    (b) Definitions.

                                            (i) For the purposes of this Section
7.1, the term "Per Share Selling Price" as used in this Section 7.1 shall
include the amount actually paid by third parties for each share of Common
Stock. In the event a fee is paid by the Company in

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connection with such transaction, any such excess amount shall be deducted from
the selling price pro rata to all shares sold in the transaction to arrive at
the Per Share Selling Price. A sale of shares of Common Stock shall include the
sale or issuance of rights, options, warrants or convertible securities under
which the Company is or may become obligated to issue shares of Common Stock,
and in such circumstances the Per Share Selling Price of the Common Stock
covered thereby shall also include the exercise or conversion price thereof (in
addition to the consideration received by the Company upon such sale or issuance
less the excess fee amount as provided above). In case of any such security
issued within the MFN Period in a "Variable Rate Transaction" or an "MFN
Transaction" (each as defined below), the Per Share Selling Price shall be
deemed to be the lowest conversion or exercise price at which such securities
are converted or exercised or might have been converted or exercised in the case
of a Variable Rate Transaction, or the lowest adjustment price in the case of an
MFN Transaction, over the life of such securities. If shares are issued for a
consideration other than cash, the Per Share Selling Price shall be the fair
value of such consideration as determined in good faith by independent certified
public accountants mutually acceptable to the Company and the Investors.

                                            (ii) The term "Variable Rate
Transaction" shall mean a transaction in which the Company issues or sells (a)
any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (x) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
Common Stock at any time after the initial issuance of such debt or equity
securities, or (y) with a fixed conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock (but excluding standard stock split anti-dilution provisions),
or (b) any securities of the Company pursuant to an "equity line" structure
which provides for the sale, from time to time, of securities of the Company
which are registered for resale pursuant to the 1933 Act.

                                            (iii) The term "MFN Transaction"
shall mean a transaction in which the Company issues or sells any securities in
a capital raising transaction or series of related transactions (the "New
Offering") which grants to the investor (the "New Investor") the right to
receive additional securities based upon future capital raising transactions of
the Company on terms more favorable than those granted to the New Investor in
the New Offering.

                                            (iv) The term "MFN Period" shall
mean the period ending twenty four (24) months following the first effective
date of the "registration statement" to be filed pursuant to the Registration
Rights Agreement.

(c) Adjustment Mechanism. If an adjustment of the Purchase Price is required
pursuant to Section 7.1(a), to effect such adjustment the Company shall deliver
to the Investors within twenty (20) calendar days of the closing of the
transaction giving rise to the adjustment ("Delivery Date") each Investor's
pro-rata share of such number of additional shares of Common Stock equal to (i)
the aggregate Purchase Price paid by the Investor divided by the Per Share
Selling

                                       12
<PAGE>   13
Price as required under Section 7.1(a), minus (ii) the total number of shares of
Common Stock previously delivered to that Investor hereunder; provided however,
that the Company shall effect such adjustment in cash, in whole or in part, to
the extent required by Section 7.1(d). In the event the Company fails to deliver
the additional shares (or cash, as the case may be) by the Delivery Date, the
Company shall be liable to the Investors for a penalty equal to 2% of the
aggregate Purchase Price adjustment per month (in each instance to such Investor
pro rata in accordance with its participation in this offering), payable in
Common Stock or cash, at each Investor's election. If at the time of any
adjustment pursuant to Section 7.1(a) an Investor owns less than 65% of the
Shares acquired by it hereunder, then the number of additional shares otherwise
determined as deliverable hereunder shall be adjusted to reflect the percentage
of Shares originally acquired hereunder and then owned by the Investor.

                                    (d) Limitation on Number of Shares.

                                            (i) If by way of any adjustment
required by this Section 7.1, an Investor would receive a number of shares of
Common Stock such that the total number of such shares held by the Investor as
of the date of such adjustment would be greater than 9.90% of the total
outstanding Common Stock of the Company, then the Company shall not effect the
adjustment required by this Section to the extent necessary to avoid causing the
aforesaid limitation to be exceeded and shall agree to effect such adjustment at
the earliest possible time when such adjustment would not exceed the
aforementioned limitation.

                                            (ii) In the event that the Company
would be obligated to issue an amount of shares of Common Stock which, when
aggregated with all shares of Common Stock issued to an Investor, would
constitute a breach of the Company's obligations under the rules or regulations
of Nasdaq as they apply to the Company, or any other principal securities
exchange or market upon which the Common Stock is or becomes traded (the "Cap
Regulations"), the Company shall not be obligated to issue any such shares of
Common Stock. Instead, the Company shall promptly pay to the Investor at an
amount equal to 110% of the cash value of the adjustment with respect to such
shares which would have exceeded the Cap Regulations. Only shares acquired
pursuant to this Agreement will be included in determining whether the
limitations would be exceeded for purposes of this Section 7.1(d)(ii).

                                    (e) Capital Adjustments. In case of any
stock split or reverse stock split, stock dividend, reclassification of the
common stock, recapitalization, merger or consolidation, or like capital
adjustment affecting the Common Stock of the Company, the provisions of Section
7.1 shall be applied in a fair, equitable and reasonable manner so as to give
effect, as nearly as may be, to the purposes hereof.

                                    (f) Exclusions. Section 7.1(a) shall not
apply to Exempt Issuances.

                                       13
<PAGE>   14
                  7.2      Limitation on Transactions.

                                    (a) Until the date of effectiveness of the
Registration Statement covering the Shares as contemplated by the Registration
Rights Agreement, without the prior written consent of the Investors (which
consent may be withheld in the Investors' discretion), the Company shall not
issue or sell or agree to issue or sell for cash any securities in a capital
raising transaction. In addition, until the date of effectiveness of the
Registration Statement covering the Shares as contemplated by the Registration
Rights Agreement and the subsequent issuance by the Company to the Investors of
de-legended certificates as required by Section 5.6 above, the Company will
cause all of its directors and executive officers to refrain from making sales
of shares of Common Stock into the public market.

                                    (b) Until the expiration of the MFN Period,
without the prior written consent of the Investors (which consent may be
withheld in the Investors' discretion), the Company shall not (i) issue or sell
or agree to issue or sell for cash any securities in a MFN Transaction; or (ii)
issue or sell, or agree to issue or sell, for cash any securities in a Variable
Rate Transaction, provided, however, that the foregoing limitation shall not
apply to Variable Rate Transactions involving the issuance of such securities
having a face value of less than $2,000,000 in the aggregate.

                  7.3 Right of the Investors to Participate in Future
Transactions. Until the expiration of the MFN Period, the Investors will have a
right to participate in future capital raising transactions (which would not
include an Exempt Issuance) on the terms and conditions set forth in this
Section 7.3. During such period, the Company shall give seven (7) business days
advance written notice to the Investor prior to any non-public offer or sale of
any of the Company's equity securities or any securities convertible into or
exchangeable or exercisable for such securities by providing to the Investors a
comprehensive term sheet containing all significant business terms of such a
proposed transaction. The Investors shall have the right (pro rata in accordance
with the Investors' participation in this offering) to purchase up to an
aggregate of sixty-percent (60%) of such securities which are the subject of
such a proposed transaction for the same consideration and on the same terms and
conditions as contemplated for such third-party sale. The Investor(s)' rights
hereunder must be exercised in writing by the Investor(s) within five (5)
business days following receipt of the notice from the Company. If, subsequent
to the Company giving notice to an Investor hereunder but prior to the Investor
exercising its right to participate (or the expiration of the five-day period
without response from the Investor), the terms and conditions of the proposed
third-party sale are changed from that disclosed in the comprehensive term sheet
provided to such Investor, the Company shall be required to provide a new notice
to the Investor hereunder and the Investors shall have the right, which must be
exercised within five (5) business days of such new notice, to exercise their
rights to purchase the securities on such changed terms and conditions as
provided hereunder. In the event other investors with participation rights
similar to the rights of the Investors hereunder do not exercise their
participation rights with respect to the proposed third-party sale, the
Investors hereunder shall have the right (pro rata in accordance with the
Investors' participation in this offering) to purchase up to all of the
securities not purchased by such other investors. In the event the Investors do
not exercise their rights hereunder, or affirmatively decline to engage in the
proposed transaction with the Company, then the Company may proceed with such
proposed

                                       14
<PAGE>   15
transaction on the same terms and conditions as noticed to the Investors
(assuming the Investors have consented to the transaction, if required, pursuant
to Section 7.2 of this Agreement). The rights and obligations of this Section
7.3 shall in no way diminish the other rights of the Investor pursuant to this
Section 7.

                  7.4 Cash Maintenance. During the MFN Period, if the amount of
cash and cash equivalents held by the Company, net of all debt, on the last day
of any fiscal quarter shall be less than $3 million in the aggregate (after
disclosed publicly by the Company in its 10-Q for such quarter or earlier
pursuant to public announcement or SEC filings), then at the Investors' request
the Company shall use its best efforts to (1) within twenty (20) days of such
request, sell or agree to sell a sufficient amount of equity securities of the
Company, either publicly or in a private placement of Common Stock not
constituting a Variable Rate Transaction or MFN Transaction (as such terms are
defined herein), in order to increase the balance of the Company's cash and cash
equivalents to above $3 million net of all debt (or up to the highest amount
under $3 million as the Company is then capable of so raising funds), and (2)
within sixty (60) days of such request, consummate any such sale and issuance of
securities referred to in the preceding clause (1). The Company acknowledges
that, in using its best efforts to sell securities as provided in this
paragraph, it will be selling securities on terms based on then prevailing
market conditions, which may not be advantageous to the Company at such time,
and the Company nevertheless agrees to use its best efforts to sell securities
pursuant hereto notwithstanding such adverse market conditions. (For
clarification purposes, in no event shall the Company disclose to the Investor
any information regarding the Company's cash balances to the extent such
information is material and not yet disclosed to the public.) The foregoing
shall in no way limit or restrict the Company's ability to expend its cash and
cash equivalents (even if such expenditure would reduce such cash and cash
equivalents to below $3,000,000), it being understood and agreed that such
$3,000,000 threshold is intended by the parties hereto to be only a triggering
event to the Company's obligations hereunder to raise additional funds.

                  7.5 Opinion of Counsel. On or prior to the Closing Date, the
Company will deliver to the Investors the opinion of legal counsel to the
Company, in form and substance reasonably acceptable to the Investors,
addressing those legal matters set forth in Schedule 7.5 hereto.

                  7.6 Reservation of Common Stock Pursuant to Section 7.1 and
Exercise of Warrants. The Company hereby agrees at all times to reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the exercise of the Warrants, such number of shares
of Common Stock as shall from time to time equal the number of shares sufficient
to permit the exercise of the Warrants in accordance with the terms of the
Warrants. In addition, as soon as such number is determinable, the Company
agrees to reserve such shares as may be necessary to permit the issuances to the
Investors required by Section 7.1.

                  7.7 Reports. For so long as the Investors beneficially own any
of the Securities, the Company will furnish to the Investors the following
reports, each of which shall

                                       15
<PAGE>   16
be provided to the Investors by air mail (within one week of filing with the
SEC, in the case of SEC filings):

                           (a) Quarterly Reports. The Company's quarterly report
on Form 10-Q or, in the absence of such report, consolidated balance sheets of
the Company as at the end of such period and the related consolidated statements
of operations, stockholders' equity and cash flows for such period and for the
portion of the Company's fiscal year ended on the last day of such quarter, all
in reasonable detail and certified by a principal financial officer of the
Company to have been prepared in accordance with generally accepted accounting
principles, subject to year-end and audit adjustments.

                           (b) Annual Reports. The Company's Form 10-K or, in
the absence of a Form 10-K, consolidated balance sheets of the Company as of the
end of such year and the related consolidated statements of earnings,
stockholders' equity and cash flows for such year, all in reasonable detail and
accompanied by the report on such consolidated financial statements of an
independent certified public accountant selected by the Company and reasonably
satisfactory to the Investor.

                           (c) Securities Filings. Copies of (i) all notices,
proxy statements, financial statements, reports and documents as the Company
shall send or make available generally to its stockholders or to financial
analysts, promptly after providing same to the stockholders and (ii) all
periodic and special reports, documents and registration statements (other than
on Form S-8) which the Company furnishes to or files, or any officer or director
of the Company (in such person's capacity as such) furnishes to or files with
the SEC.

                           (d) Other Information. Such other information
relating to the Company as from time to time may reasonably be requested by the
Investors provided the Company produces such information in its ordinary course
of business, and further provided that the Company, solely in its own
discretion, determines that such information is not confidential in nature and
disclosure to the Investor would not be harmful to the Company.

                  7.8 Press Releases. Any press release or other publicity
concerning this Agreement or the transactions contemplated by this Agreement
shall be submitted to the Investors for comment at least two (2) 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.

                  7.9 No 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 the Investors under
the Agreements.

                  7.10 Insurance. So long as the Investors beneficially own any
Securities, the Company shall not materially reduce the insurance coverages set
forth in Schedule 4.20.

                                       16
<PAGE>   17
                  7.11 Compliance with Laws. So long as the Investors
beneficially own any Securities, the Company will use reasonable efforts to
comply with all applicable laws, rules, regulations, orders and decrees of all
governmental authorities, except to the extent non-compliance (in one instance
or in the aggregate) would not have a Material Adverse Effect.

                  7.12 Listing of Underlying Shares and Related Matters. The
Company hereby agrees, promptly following the Closing of the transactions
contemplated by this Agreement, to take such action to cause the Shares and the
Warrant Shares to be listed on the Nasdaq SmallCap Market as promptly as
possible but no later than the effective date of the registration contemplated
by the Registration Rights Agreement. The Company further agrees that if the
Company applies to have its Common Stock or other securities traded on any other
principal stock exchange or market, it will include in such application the
Warrant Shares and will take such other action as is necessary to cause such
Common Stock to be so listed. For so long as the Investors beneficially own any
of the Securities, the Company will take all action necessary to continue the
listing and trading of its Common Stock on the Nasdaq SmallCap Market and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of such exchange, as applicable, to ensure
the continued eligibility for trading of the Shares and the Warrant Shares
thereon.

                  7.13 Corporate Existence. So long as the Investors
beneficially own any of the Shares or Warrants, the Company shall maintain its
corporate existence, except in the event of a merger, consolidation or sale of
all or substantially all of the Company's assets, as long as the surviving or
successor entity in such transaction (a) assumes the Company's obligations
hereunder and under the agreements and instruments entered into in connection
herewith, regardless of whether or not the Company would have had a sufficient
number of shares of Common Stock authorized and available for issuance in order
to fulfill its obligations hereunder and effect the exercise in full of all
Warrants outstanding as of the date of such transaction; (b) has no legal,
contractual or other restrictions on its ability to perform the obligations of
the Company hereunder and under the agreements and instruments entered into in
connection herewith; and (c) is a publicly traded corporation whose common stock
and the shares of capital stock issuable upon exercise of the Warrants are (or
would be upon issuance thereof) listed for trading on the Nasdaq National
Market, the Nasdaq SmallCap Market, the New York Stock Exchange or the American
Stock Exchange; provided, however, that in the event of a merger or other
transaction as a result of which the Company is not a surviving public company,
the Investor shall have the option to require the Company to repurchase all of
the shares of Common Stock (and Common Stock equivalents) then held by the
Investor at a price equal to 120% of the the adjusted Purchase Price for the
shares.

         8. Survival. 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 for a period of three years from the date of this
Agreement; provided, however, that the provisions contained in Section 7 hereof
shall survive in accordance therewith.

                                       17
<PAGE>   18
         9. Miscellaneous.

                  9.1 Successors 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 prior written consent of the Company, but after notice
duly given, an Investor may assign its rights and delegate its duties hereunder
in whole or in part to an Affiliate or to a third party acquiring some portion
or all of its Shares in a private transaction, and without the prior written
consent of the Investors, 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.

                  9.2 Counterparts. 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.

                  9.3 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

                  9.4 Notices. 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) telex 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:   Fenel Eloi
                                    Fax:    781/398-0720

                           If to the Investors, to the addresses set forth on
                           the signature pages hereto.

                                       18
<PAGE>   19
                  9.5 Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Company shall pay an aggregate
sum not to exceed $20,000 as and for reimbursement for legal and due diligence
expenses incurred by the Investors in connection herewith and such amount shall
be paid at Closing from gross proceeds of the offering.

                  9.6 Amendments 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 the Special
Situation Fund. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Securities purchased under
this Agreement at the time outstanding, each future holder of all such
securities, and the Company.

                  9.7 Severability. 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.

                  9.8 Entire Agreement. This Agreement, including the Exhibits
and Schedules hereto, and the Registration Rights Agreement 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.

                  9.9 Further 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.

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

                                       19
<PAGE>   20
                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.

The Company:                                  INTERLEUKIN GENETICS, INC.

                                              By:_________________________
                                              Name:
                                              Title:

                                       20
<PAGE>   21
The Investor:                                 Special Situations Fund III, L.P.

                                              By:_________________________
                                              Name: ______________________
                                              Title: _______________________

Aggregate Purchase Price:  $1,650,000
Number of Shares of Common Stock:  660,000
Number of Warrants:  330,000
    (50% of number of Shares purchased)
Effective per share Purchase Price of Shares:  $2.50
Exercise price of Warrants:  $3.00
Address for Notice:

                                              Special Situations Fund
                                              153rd E. 53rd Street, 55th Floor
                                              New York, New York  10022
                                              Attn:  Steven R. Becker
                                              Telephone:
                                              Facsimile:

                                              with a copy to:

                                              Steven Becker
                                              Lowenstein Fandler
                                              65 Livingston Avenue
                                              Roseland, N.J. 07068-1791
                                              Telephone:        973-597-2310
                                              Facsimile:        ___________

                                       21
<PAGE>   22
The Investor:                               Special Situations Cayman Fund, L.P.

                                            By:
                                            Name:
                                            Title:

Aggregate Purchase Price:  $550,000
Number of Shares of Common Stock:  220,000
Number of Warrants:  110,000
   (50% of number of Shares purchased)
Effective per share Purchase Price of Shares:  $2.50
Exercise price of Warrants:  $3.00
Address for Notice:

                                            Special Situations Fund
                                            153rd E. 53rd Street, 55th Floor
                                            New York, New York  10022
                                            Attn:  Steven R. Becker
                                            Telephone:
                                            Facsimile:

                                            with a copy to:

                                            Steven Becker
                                            Lowenstein Fandler
                                            65 Livingston Avenue
                                            Roseland, N.J. 07068-1791
                                            Telephone:        973-597-2310
                                            Facsimile:        ___________

                                       22
<PAGE>   23
The Investor:                               Special Situations Private Equity
                                            Fund, L.P.

                                            By:
                                            Name:
                                            Title:

Aggregate Purchase Price:  $800,000
Number of Shares of Common Stock:  320,000
Number of Warrants:  160,000
   (50% of number of Shares purchased)
Effective per share Purchase Price of Shares:  $2.50
Exercise price of Warrants:  $3.00
Address for Notice:

                                            Special Situations Fund
                                            153rd E. 53rd Street, 55th Floor
                                            New York, New York  10022
                                            Attn:  Steven R. Becker
                                            Telephone:
                                            Facsimile:

                                            with a copy to:

                                            Steven Becker
                                            Lowenstein Fandler
                                            65 Livingston Avenue
                                            Roseland, N.J. 07068-1791
                                            Telephone:        973-597-2310
                                            Facsimile:        ___________

                                       23<PAGE>   1
                                                                    EXHIBIT 10.4

                          REGISTRATION RIGHTS AGREEMENT

                  This Registration Rights Agreement (the "Agreement") is made
and entered into as of this 26th day of January, 2001 by and between Interleukin
Genetics, Inc., a Delaware corporation (the "Company"), and the "Investors"
named in that Purchase Agreement of even date herewith by and between the
Company and the Investors (the "Purchase Agreement").

         The parties hereby agree as follows:

         1.       Certain Definitions.

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

                  "Additional Registrable Securities" shall mean the shares of
Common Stock, if any, issued to the Investors pursuant to Section 7.1 of the
Purchase Agreement.

                  "Common Stock" shall mean the Company's Common Stock, par
value $0.001 per share.

                  "Investors" shall mean the purchasers identified in the
Purchase Agreement and any affiliate or permitted transferee of any Investor who
is a subsequent holder of any Warrants, Registrable Securities or Additional
Registrable Securities.

                  "Prospectus" shall mean the prospectus included in any
Registration Statement, as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities or Additional Registrable Securities covered by such Registration
Statement and by all other amendments and supplements to the prospectus,
including post-effective amendments and all material incorporated by reference
in such prospectus.

                  "Register," "registered" and "registration" refer to a
registration made by preparing and filing a registration statement or similar
document in compliance with the 1933 Act (as defined below), and the declaration
or ordering of effectiveness of such registration statement or document.

                  "Registrable Securities" shall mean the shares of Common Stock
issued and issuable to the Investors pursuant to the Purchase Agreement (other
than additional shares of Common Stock issuable pursuant to Section 7.1 of the
Purchase Agreement) and issuable upon the exercise of the Warrants, and any
other securities issued or issuable with respect to or in exchange for
Registrable Securities.

                  "Registration Statement" shall mean any registration statement
of the Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities or Additional Registrable Securities pursuant to the
provisions of this Agreement, amendments and
<PAGE>   2
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.

                  "SEC" means the U.S. Securities and Exchange Commission.

                  "1933 Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

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

                  "Warrants" mean the warrants to purchase shares of Common
Stock issued to the Investors pursuant to the Purchase Agreement, the form of
which is attached to the Purchase Agreement as Exhibit A.

         2.       Registration.

                           (a) Registration Statements.

                                    (i) Registrable Securities. Promptly
following the closing of the purchase and sale of Common Stock and Warrants
contemplated by the Purchase Agreement (the "Closing Date") (but no later than
thirty (30) days after the Closing Date), the Company shall prepare and file
with the SEC one Registration Statement on Form S-3 (or, if Form S-3 is not then
available to the Company, on such form of registration statement as is then
available to effect a registration for resale of the Registrable Securities,
subject to the Investors' consent), covering the resale of the Registrable
Securities in an amount equal to the number of shares of Common Stock issued to
the Investors on the Closing Date plus the number of shares of Common Stock
necessary to permit the exercise in full of the Warrants. Such Registration
Statement also shall cover, to the extent allowable under the 1933 Act and the
Rules promulgated thereunder (including Rule 416), such indeterminate number of
additional shares of Common Stock resulting from stock splits, stock dividends
or similar transactions with respect to the Registrable Securities. The Company
shall use its best efforts to obtain from each person who now has piggyback
registration rights a waiver of those rights with respect to the Registration
Statement. The securities of the Company owned by The Tail Wind Fund Ltd. and
those securities issued to The Tail Wind Fund Ltd. as a result of the
transactions contemplated by the Purchase Agreement shall be included in the
Registration Statement. The Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 3(c) to the Investors and their
counsel prior to its filing or other submission.

                                    (ii) Additional Registrable Securities. Upon
the written demand of any Investor and following the issuance of any additional
shares of Common Stock to such Investor pursuant to Section 7.1, of the Purchase
Agreement, the Company shall prepare and file with the SEC one Registration
Statement on Form S-3 (or, if Form S-3 is not then available to the Company, on
such form of registration statement as is then available to effect a
registration for resale of the Additional Registrable Securities, subject to the
Investor's consent)

                                      -2-
<PAGE>   3
covering the resale of the Additional Registrable Securities in an amount equal
to the number of shares of Common Stock issued to such Investor. Such
Registration Statement also shall cover, to the extent allowable under the 1933
Act and the Rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Additional
Registrable Securities. No securities held by a third party shall be included in
the Registration Statement without the consent of each Investor. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided in
accordance with Section 3(c) to the Investor and its counsel prior to its filing
or other submission.

                           (b) Expenses. The Company will pay all expenses
associated with each registration, including the Investors' reasonable expenses
in connection with the registration but excluding discounts, commissions, fees
of underwriters, selling brokers, dealer managers or similar securities industry
professionals.

                           (c) Effectiveness.

                                    (i) The Company shall use its best efforts
to have each Registration Statement declared effective as soon as practicable.
If (A) the Registration Statement covering Registrable Securities is not
declared effective by the SEC within three (3) months following the Closing
Date, or the Registration Statement covering Additional Registrable Securities
is not declared effective by the SEC within three (3) months following the
demand of an Investor relating to the Additional Registrable Securities covered
thereby, or with respect to either a Registration Statement which is subject to
full review by the SEC staff (which shall not include a "plain English" review),
within four (4) months following the Closing Date or demand, as the case may be
(each, a "Registration Date"), (B) after a Registration Statement has been
declared effective by the SEC, sales cannot be made pursuant to such
Registration Statement for any reason (including without limitation by reason of
a stop order, or the Company's failure to update the Registration Statement) but
except as excused pursuant to subparagraph (ii) below, or (C) the Common Stock
generally or the Registrable Securities specifically are not listed or included
for quotation on the Nasdaq National Market System, the Nasdaq Small Cap Market,
the New York Stock Exchange or the American Stock Exchange, then the Company
will make pro rata payments to each Investor, as liquidated damages and not as a
penalty, in an amount equal to 2% of the aggregate amount paid by such Investor
on the Closing Date to the Company for shares of Common Stock still held by such
Investor for any month or pro rata for any portion thereof following the
Registration Date during which any of the events described in (A) or (B) or (C)
above occurs and is continuing (the "Blackout Period"), provided, however, that
in the case of the events described in (A) or (B) above with respect only to the
Additional Registrable Securities, such penalty shall equal 2% of the aggregate
market value of such Additional Registrable Securities for the duration of the
Blackout Period. Each such payment shall be due and payable within five (5) days
of the end of each month (or ending portion thereof) of the Blackout Period.
Such payments shall be in partial compensation to the Investors, and shall not
constitute the Investors' exclusive remedy for such events. The Blackout Period
shall terminate upon (x) the effectiveness of the applicable Registration
Statement in the

                                      -3-
<PAGE>   4
case of (A) and (B) above; (y) listing or inclusion of the Common Stock on the
Nasdaq National Market System, the Nasdaq Small Cap Market, the New York Stock
Exchange or the American Stock Exchange in the case of (C) above; and (z) in the
case of the events described in (A) or (B) above, the earlier termination of the
Registration Period (as defined in Section 3(a) below). The amounts payable as
liquidated damages pursuant to this paragraph shall be payable, at the option of
the Investors, in lawful money of the United States or in shares of Common Stock
at the Market Price (as defined in the Purchase Agreement), and amounts payable
as liquidated damages shall be paid monthly within two (2) business days of the
last day of each month following the commencement of the Blackout Period until
the termination of the Blackout Period. Amounts payable as liquidated damages
hereunder shall cease when an Investor no longer holds Warrants or Registrable
Securities, or Additional Registrable Securities, as applicable.

                                    (ii) For not more than ten (10) consecutive
trading days or for a total of not more than twenty (20) trading days in any
twelve (12) month period, the Company may delay the disclosure of material
non-public information concerning the Company, by terminating or suspending
effectiveness of any registration contemplated by this Section containing such
information, the disclosure of which at the time is not, in the good faith
opinion of the Company, in the best interests of the Company (an "Allowed
Delay"); provided, that the Company shall promptly (a) notify the Investors in
writing of the existence of (but in no event, without the prior written consent
of an Investor, shall the Company disclose to such Investor any of the facts or
circumstances regarding) material non-public information giving rise to an
Allowed Delay, and (b) advise the Investors in writing to cease all sales under
the Registration Statement until the end of the Allowed Delay. The duration of
the MFN Period provided for in the Purchase Agreement will be extended by the
number of days of any and all Allowed Delays.

                           (d) Underwritten Offering. If any offering pursuant
to a Registration Statement pursuant to Section 2(a) hereof involves an
underwritten offering, the Company shall have the right to select an investment
banker and manager to administer the offering, which investment banker or
manager shall be reasonably satisfactory to the Investors.

         3. Company Obligations. The Company will use its best efforts to effect
the registration of the Registrable Securities and Additional Registrable
Securities in accordance with the terms hereof, and pursuant thereto the Company
will, as expeditiously as possible:

                           (a) use its best efforts to cause such Registration
Statement to become effective and to remain continuously effective for a period
that will terminate upon the earlier of (i) the date on which all Registrable
Securities or Additional Registrable Securities, as the case may be, covered by
such Registration Statement, as amended from time to time, have been sold, and
(ii) the date on which all Registrable Securities or Additional Registrable
Securities, as the case may be, may be sold pursuant to Rule 144(k) (the
"Registration Period");

                           (b) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement and the Prospectus as
may be necessary to keep the Registration Statement effective for the period
specified in Section 3(a) and to comply with the provisions of the 1933 Act and
the 1934 Act with respect to the distribution of all Registrable

                                      -4-
<PAGE>   5
Securities and Additional Registrable Securities; provided that, at least five
(5) business days prior to the filing of a Registration Statement or Prospectus,
or any amendments or supplements thereto, the Company will furnish to the
Investors copies of all documents proposed to be filed, which documents will be
subject to the comments of the Investors, which must be received within such
five (5) business day period;

                           (c) permit counsel designated by the Investors to
review each Registration Statement and all amendments and supplements thereto no
fewer than seven (7) days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects;

                           (d) furnish to the Investors and their legal counsel
(i) promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of any Registration Statement and any
amendment thereto, each preliminary prospectus and Prospectus and each amendment
or supplement thereto, and each letter written by or on behalf of the Company to
the SEC or the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion of any thereof which contains information for which the
Company has sought confidential treatment), and (ii) such number of copies of a
Prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as each Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities and
Additional Registrable Securities owned by such Investor;

                           (e) in the event the Company selects an underwriter
for the offering, the Company shall enter into and perform its reasonable
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriter of such offering;

                           (f) if required by the underwriter, or if any
Investor is described in the Registration Statement as an underwriter, the
Company shall furnish, on the effective date of the Registration Statement, on
the date that Registrable Securities or Additional Registrable Securities, as
applicable, are delivered to an underwriter, if any, for sale in connection with
the Registration Statement and at periodic intervals thereafter from time to
time on request, (i) an opinion, dated as of such date, from independent legal
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the underwriter and the Investors and (ii) a letter,
dated such date, from the Company's independent certified public accountants in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriter and the Investors;

                           (g) make effort to prevent the issuance of any stop
order or other suspension of effectiveness and, if such order is issued, obtain
the withdrawal of any such order at the earliest possible moment;

                           (h) furnish to each Investor at least five copies of
the Registration Statement and any post-effective amendment thereto, including
financial statements and schedules by air mail within two business days of the
effective date thereof;

                                      -5-
<PAGE>   6
                           (i) prior to any public offering of Registrable
Securities or Additional Registrable Securities, use its reasonable best efforts
to register or qualify or cooperate with the Investors and their counsel in
connection with the registration or qualification of such Registrable Securities
or Additional Registrable Securities, as applicable, for offer and sale under
the securities or blue sky laws of such jurisdictions requested by the Investor
and do any and all other reasonable acts or things necessary or advisable to
enable the distribution in such jurisdictions of the Registrable Securities or
Additional Registrable Securities covered by the Registration Statement;

                           (j) cause all Registrable Securities or Additional
Registrable Securities covered by a Registration Statement to be listed on each
securities exchange, interdealer quotation system or other market on which
similar securities issued by the Company are then listed;

                           (k) immediately notify the Investors, at any time
when a Prospectus relating to the Registrable Securities or Additional
Registrable Securities is required to be delivered under the Securities Act,
upon discovery that, or upon the happening of any event as a result of which,
the Prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and at the
request of any such holder, promptly prepare and furnish to such holder a
reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities or Additional Registrable Securities,
as applicable, such Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; and

                           (l) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC under the 1933 Act and the 1934 Act,
take such other actions as may be reasonably necessary to facilitate the
registration of the Registrable Securities and Additional Registrable
Securities, if applicable, hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the 1933 Act (for the purpose of this subsection 3(l), "Availability
Date" means the 45th day following the end of the fourth fiscal quarter that
includes the effective date of such Registration Statement, except that, if such
fourth fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter).

         4. Due Diligence Review; Information. The Company shall make available,
during normal business hours, for inspection and review by the Investors,
advisors to and representatives of the Investors (who may or may not be
affiliated with the Investors and who are reasonably acceptable to the Company),
any underwriter participating in any disposition of Common Stock on behalf of
the Investors pursuant to the Registration Statement or amendments or
supplements

                                      -6-
<PAGE>   7
thereto or any blue sky, NASD or other filing, all financial and other records,
all SEC Documents and other filings with the SEC, and all other corporate
documents and properties of the Company as may be reasonably necessary for the
purpose of such review, and cause the Company's officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the Investors or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investors and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the Registration
Statement.

                  The Company shall not disclose material nonpublic information
to the Investors, or to advisors to or representatives of the Investors, unless
prior to disclosure of such information the Company identifies such information
as being material nonpublic information and provides the Investors, such
advisors and representatives with the opportunity to accept or refuse to accept
such material nonpublic information for review. The Company may, as a condition
to disclosing any material nonpublic information hereunder, require the
Investors' advisors and representatives to enter into a confidentiality
agreement (including an agreement with such advisors and representatives
prohibiting them from trading in Common Stock during such period of time as they
are in possession of material nonpublic information) in form reasonably
satisfactory to the Company and the Investors. Nothing herein shall require the
Company to disclose material nonpublic information to the Investors or their
advisors or representatives.

         5.       Obligations of the Investors.

                           (a) Each Investor shall furnish in writing to the
Company such information regarding itself, the Registrable Securities or
Additional Registrable Securities, as applicable, held by it and the intended
method of disposition of the Registrable Securities or Additional Registrable
Securities, as applicable, held by it, as shall be reasonably required to effect
the registration of such Registrable Securities or Additional Registrable
Securities, as applicable, and shall execute such documents in connection with
such registration as the Company may reasonably request. At least fifteen (15)
business days prior to the first anticipated filing date of any Registration
Statement, the Company shall notify each Investor of the information the Company
requires from such Investor if such Investor elects to have any of the
Registrable Securities or Additional Registrable Securities included in the
Registration Statement. An Investor shall provide such information to the
Company at least five (5) business days prior to the first anticipated filing
date of such Registration Statement if such Investor elects to have any of the
Registrable Securities or Additional Registrable Securities included in the
Registration Statement.

                           (b) Each Investor, by its acceptance of the
Registrable Securities and Additional Registrable Securities, if any, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of a Registration Statement hereunder, unless
such Investor has notified the Company in writing of its election to

                                      -7-
<PAGE>   8
exclude all of its Registrable Securities or Additional Registrable Securities,
as applicable, from the Registration Statement.

                           (c) In the event the Company, at the request of the
Investors, determines to engage the services of an underwriter, such Investor
agrees to enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the dispositions of the Registrable Securities or
Additional Registrable Securities, as applicable.

                           (d) Each Investor agrees that, upon receipt of any
notice from the Company of the happening of any event rendering a Registration
Statement no longer effective, such Investor will immediately discontinue
disposition of Registrable Securities or Additional Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities or
Additional Registrable Securities, until the Investor's receipt of the copies of
the supplemented or amended prospectus filed with the SEC and declared effective
and, if so directed by the Company, the Investor shall deliver to the Company
(at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in the Investor's possession of the
prospectus covering the Registrable Securities or Additional Registrable
Securities, as applicable, current at the time of receipt of such notice.

                           (e) No Investor may participate in any third party
underwritten registration hereunder unless it (i) agrees to sell the Registrable
Securities or Additional Registrable Securities, as applicable, on the basis
provided in any underwriting arrangements in usual and customary form entered
into by the Company, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements, and (iii) agrees to
pay its pro rata share of all underwriting discounts and commissions and any
expenses in excess of those payable by the Company pursuant to the terms of this
Agreement.

         6.       Indemnification.

                           (a) Indemnification by Company. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law the
Investors, each of their officers, directors, partners and employees and each
person who controls the Investors (within the meaning of the 1933 Act) against
all losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorney's fees) and expenses imposed on such person caused by (i)
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or any preliminary prospectus or any
amendment or supplement thereto or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based upon any
information furnished in writing to the Company by such Investors, expressly for
use therein, or (ii) any violation by the Company of any federal, state or
common law, rule or regulation applicable to the Company in connection with any
Registration Statement, Prospectus or any preliminary prospectus, or any
amendment or supplement thereto, and shall reimburse in

                                      -8-
<PAGE>   9
accordance with subparagraph (c) below, each of the foregoing persons for any
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claims. The foregoing is subject to the
condition that, insofar as the foregoing indemnities relate to any untrue
statement, alleged untrue statement, omission or alleged omission made in any
preliminary prospectus or Prospectus that is eliminated or remedied in any
Prospectus or amendment or supplement thereto, the above indemnity obligations
of the Company shall not inure to the benefit of any indemnified party if a copy
of such corrected Prospectus or amendment or supplement thereto had been made
available to such indemnified party and was not sent or given by such
indemnified party at or prior to the time such action was required of such
indemnified party by the 1933 Act and if delivery of such Prospectus or
amendment or supplement thereto would have eliminated (or been a sufficient
defense to) any liability of such indemnified party with respect to such
statement or omission. Indemnity under this Section 5(a) shall remain in full
force and effect regardless of any investigation made by or on behalf of any
indemnified party and shall survive the permitted transfer of the Registrable
Securities and Additional Registrable Securities.

                           (b) Indemnification by Holder. In connection with any
registration pursuant to the terms of this Agreement, each Investor will furnish
to the Company in writing such information as the Company reasonably requests
concerning the holders of Registrable Securities and Additional Registrable
Securities or the proposed manner of distribution for use in connection with any
Registration Statement or Prospectus and agrees, severally but not jointly, to
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors, officers, employees, stockholders and each person who
controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expense (including reasonable attorney's fees)
resulting from or arising out of (i) any failure by the Investor to comply with
the prospectus delivery requirements or (ii) any untrue statement of a material
fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary prospectus or amendment or
supplement thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by such Investor to the
Company specifically for inclusion in such Registration Statement or Prospectus
or amendment or supplement thereto and that such information was substantially
relied upon by the Company in preparation of the Registration Statement or
Prospectus or any amendment or supplement thereto. In no event shall the
liability of an Investor be greater in amount than the dollar amount of the
proceeds (net of all expense paid by such Investor and the amount of any damages
such holder has otherwise been required to pay by reason of such untrue
statement or omission) received by such Investor upon the sale of the
Registrable Securities or Additional Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.

                           (c) Conduct of Indemnification Proceedings. Any
person entitled to indemnification hereunder shall (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided that any
person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel

                                      -9-
<PAGE>   10
shall be at the expense of such person unless (a) the indemnifying party has
agreed to pay such fees or expenses, or (b) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.

                           (d) Contribution. If for any reason the
indemnification provided for in the preceding paragraphs (a) and (b) is
unavailable to an indemnified party or insufficient to hold it harmless, other
than as expressly specified therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the 1933 Act
shall be entitled to contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a holder of
Registrable Securities or Additional Registrable Securities be greater in amount
than the dollar amount of the proceeds (net of all expenses paid by such holder
and the amount of any damages such holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission) received by it upon the sale of the Registrable Securities or
Additional Registrable Securities giving rise to such contribution obligation.

         7.       Miscellaneous.

                           (a) Amendments and Waivers. This Agreement may be
amended only by a writing signed by the parties hereto. The Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written consent to
such amendment, action or omission to act, of each Investor.

                           (b) Notices. All notices and other communications
provided for or permitted hereunder shall be made as set forth in Section 9.4 of
the Purchase Agreement.

                           (c) Assignments and Transfers by Investors. This
Agreement and all the rights and obligations of the Investors hereunder may not
be assigned or transferred to any

                                      -10-
<PAGE>   11
transferee or assignee except to an affiliate or permitted transferee of an
Investor who is a subsequent holder of any Warrants, Registrable Securities or
Additional Registrable Securities.

                           (d) Assignments and Transfers by the Company. This
Agreement may not be assigned by the Company without the prior written consent
of each Investor, except that without the prior written consent of the
Investors, but after notice duly given, the Company shall assign its rights and
delegate its duties hereunder to any successor-in-interest corporation, and such
successor-in-interest shall assume such rights and duties, in the event of a
merger or consolidation of the Company with or into another corporation or the
sale of all or substantially all of the Company's assets.

                           (e) Benefits of the Agreement. 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.

                           (f) Counterparts. 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.

                           (g) Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.

                           (h) Severability. 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 to the fullest extent permitted by law.

                           (i) Further 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.

                           (j) Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.

                           (k) Applicable Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York without
regard to principles of conflicts of law.

                                      -11-
<PAGE>   12
                  IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.

The Company:                             INTERLEUKIN GENETICS, INC.

                                         By:_______________________________
                                         Name: ____________________________
                                         Title: _____________________________

The Investors:                           SPECIAL SITUATIONS FUND III, L.P.

                                         By:_______________________________
                                         Name: ____________________________
                                         Title: _____________________________

                                         SPECIAL SITUATIONS CAYMAN FUND, L.P.

                                         By:_______________________________
                                         Name: ____________________________
                                         Title: _____________________________

                                         SPECIAL SITUATIONS PRIVATE EQUITY
                                         FUND, L.P.

                                         By:_______________________________
                                         Name: ____________________________
                                         Title: _____________________________

                                      -12-

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