<PAGE>

                                   EXHIBIT 4.3

                   SERIES A PREFERRED STOCK PURCHASE AGREEMENT

      This Series A Preferred Stock Purchase Agreement (the "Agreement") is made
as of the 28th day of  January,  2005 by and among  Pacifichealth  Laboratories,
Inc., a Delaware  corporation  (the  "Company")  and Hormel Health Labs,  LLC, a
Delaware limited liability Company (the "Purchaser").

      The parties hereby agree as follows:

      1. Purchase and Sale of Preferred Stock.

            1.1. Sale and Issuance of Series A Preferred Stock.

                  (a) The  Company  shall adopt and file with the  Secretary  of
State of the State of Delaware  on or before the Closing (as defined  below) the
Certificate  of  Designation in the form of Exhibit A attached to this Agreement
(the "Certificate of Designation").

                  (b) Subject to the terms and conditions of this Agreement, the
Purchaser  agrees to purchase at the Closing and the Company  agrees to sell and
issue to the Purchaser at the Closing 90,909 shares of Series A Preferred  Stock
at a purchase price of $11.00 per share.  The shares of Series A Preferred Stock
issued to the Purchaser  pursuant to this Agreement shall be referred to in this
Agreement as the "Shares."

            1.2. Closing; Delivery.

                  (a) The  purchase  and sale of the  Shares  shall  take  place
remotely via the exchange of documents and  signatures,  at 12:00 Noon,  central
time,  on January 28,  2005,  or at such other time and place as the Company and
the Purchasers  mutually agree upon,  orally or in writing (which time and place
are designated as the "Closing").

                  (b) At Closing,  the Company  shall deliver to the Purchaser a
certificate  representing  the Shares being  purchased by such Purchaser at such
Closing  against payment of the purchase price therefore by check payable to the
Company or by wire  transfer of  immediately  available  funds to a bank account
designated by the Company.

            1.3. Defined Terms Used in this Agreement.  In addition to the terms
defined above,  the following terms used in this Agreement shall be construed to
have the meanings set forth or referenced below.

            "Affiliate"  means with respect to any person or entity (a "Person")
any Person which,  directly or  indirectly,  controls,  is controlled  by, or is
under common  control  with such  Person,  including,  without  limitation,  any
partner,  officer,  director,  or member of such Person and any venture  capital
fund now or hereafter  existing  which is controlled by or under common

<PAGE>

control with one or more general partners or shares the same management  company
with such Person.

            "Code" means the Internal Revenue Code of 1986, as amended.

            "Investors'  Rights  Agreement"  means  the  agreement  between  the
Company and the Purchasers,  dated as of the date of the Closing, in the form of
Exhibit C attached to this Agreement.

            "Manufacturing  Agreement"  means the agreement  between the Company
and the Purchaser, dated as of the date of the Closing, in the form of Exhibit E
attached to this Agreement.

            "Material  Adverse  Effect" means a material  adverse  effect on the
business,   assets  (including   intangible  assets),   liabilities,   financial
condition, property, prospects or results of operations of the Company.

            "Purchaser" has the meaning given in the preamble of this Agreement.
"Right of First Refusal and Co-Sale  Agreement"  means the  agreement  among the
Company,  certain  Purchasers,  and certain other  stockholders  of the Company,
dated as of the date of the  Closing,  in the form of Exhibit D attached to this
Agreement.

            "Securities" means the Shares and the shares of the Company's Common
Stock issuable upon conversion of the Shares.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Series A Preferred  Stock" means the Company's Series A Convertible
Preferred Stock, par value $.01 per share.

            "Shares" means the shares of Series A Preferred  Stock issued at the
Closing.

            "Transaction Agreements" means this Agreement, the Investors' Rights
Agreement,   the  Right  of  First  Refusal  and  Co-Sale  Agreement,   and  the
Manufacturing Agreement.

      2.  Representations  and  Warranties  of the Company.  The Company  hereby
represents  and  warrants  to each  Purchaser  that,  except as set forth on the
Disclosure  Schedule  attached as Exhibit B to this Agreement  which  exceptions
shall be deemed to be part of the representations and warranties made hereunder,
the  following  representations  are  true  and  complete  as of the date of the
Closing,  except  as  otherwise  indicated.  The  Disclosure  Schedule  shall be
arranged in sections  corresponding  to the numbered  and lettered  sections and
subsections  contained in this Section 2, and the  disclosures in any section or
subsection  of  the  Disclosure   Schedule  shall  qualify  other  sections  and
subsections  in this Section 2 only to the extent it is readily  apparent from a
reading of the  disclosure  that such  disclosure  is  applicable  to such other
sections and subsections.


                                       2
<PAGE>

            For purposes of these representations and warranties, the phrase "to
the Company's  knowledge" shall mean the actual  knowledge of Company  executive
officers.  In addition,  for purposes of these  representations  and  warranties
(other  than  those in  Sections  2.1,  2.2,  2.3,  2.4 and 2.5),  the term "the
Company" shall include any  subsidiaries of the Company,  unless otherwise noted
herein.

            2.1. Organization, Good Standing, Corporate Power and Qualification.
The  Company is a  corporation  duly  organized,  validly  existing  and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and  authority  to carry on its  business as  presently  conducted  and as
proposed to be conducted. The Company is duly qualified to transact business and
is in good  standing  in each  jurisdiction  in which the  failure to so qualify
would have a Material Adverse Effect.

            2.2.  Capitalization.  The  capitalization  of the Company as of the
date hereof, including the authorized capital stock, the number of shares issued
and  outstanding,  the  number of shares  issuable  and  reserved  for  issuance
pursuant to the Company's stock option plans,  the number of shares issuable and
reserved for issuance pursuant to securities (other than the Shares) exercisable
or  exchangeable  for, or convertible  into, any shares of capital stock and the
number of shares to be reserved for issuance  upon exercise of the Shares is set
forth in Section 2.2 of the Disclosure Schedule.  All of such outstanding shares
of capital stock have been, or upon issuance in accordance with the terms of any
such  exercisable,  exchangeable  or  convertible  securities  will be,  validly
issued, fully paid and non-assessable. The rights, privileges and preferences of
the Series A Preferred Stock are as stated in the Certificate of Designation and
as provided by the general  corporation law of the jurisdiction of the Company's
formation.  No shares of capital  stock of the Company are subject to preemptive
rights or any other  similar  rights of the  stockholders  of the Company or any
liens or  encumbrances.  Except for the  Securities  and as set forth in the SEC
Documents  or  Section  2.2  of  the  Disclosure  Schedule,  (i)  there  are  no
outstanding  options,   warrants,  scrip,  rights  to  subscribe  to,  calls  or
commitments  of any  character  whatsoever  relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of capital stock
of  the  Company  or  any  of  its  Subsidiaries,  or  contracts,   commitments,
understandings  or arrangements by which the Company or any of its  Subsidiaries
is or may  become  bound to issue  additional  shares  of  capital  stock of the
Company  or any of its  Subsidiaries,  nor are any  such  issuances,  contracts,
commitments,  understandings  or  arrangements  contemplated,  (ii) there are no
contracts,  commitments,  understandings or arrangements under which the Company
or any of its  Subsidiaries  is  obligated to register the sale of any of its or
their  securities  under  the  Securities  Act  (except  the  Investors'  Rights
Agreement);  (iii) there are no  outstanding  securities or  instruments  of the
Company  or any of its  Subsidiaries  that  contain  any  redemption  or similar
provisions,  and  there  are  no  contracts,   commitments,   understandings  or
arrangements  by which the Company or any of its  Subsidiaries  is or may become
bound to redeem or  otherwise  acquire any security of the Company or any of its
Subsidiaries;  and (iv) the Company does not have any  shareholder  rights plan,
"poison pill" or other anti-takeover plans or similar arrangements.  Section 2.2
of the  Disclosure  Schedule  sets forth all of the  securities  or  instruments
issued by the Company or any of its Subsidiaries  that contain  anti-dilution or
similar provisions, and, except as and to the extent set forth thereon, the sale
and issuance of the Securities will not trigger any anti-dilution adjustments to
any such securities or  instruments.  The Company has furnished to the Purchaser
true and correct  copies of


                                       3
<PAGE>

the  Company's  Certificate  of  Incorporation  as in effect on the date  hereof
("Certificate of Incorporation"),  the Company's Bylaws as in effect on the date
hereof  (the  "Bylaws"),  and all other  instruments  and  agreements  governing
securities  convertible into or exercisable or exchangeable for capital stock of
the Company,  all of which  instruments  and agreements are set forth in Section
2.2 of the Disclosure  Schedule.  The Company or one of its Subsidiaries has the
unrestricted  right to vote, and (subject to  limitations  imposed by applicable
law) to receive dividends and  distributions  on, all capital  securities of its
Subsidiaries as owned by the Company or any such Subsidiary.

            2.3.  Subsidiaries.  Except as  disclosed  in its SEC  Reports,  the
Company does not currently own or control, directly or indirectly,  any interest
in any other corporation,  partnership,  trust, joint venture, limited liability
company, association, or other business entity. The Company is not a participant
in any joint venture, partnership or similar arrangement.

            2.4. Authorization. All corporate action required to be taken by the
Company's Board of Directors and  stockholders in order to authorize the Company
to enter into the Transaction Agreements, and to issue the Shares at the Closing
and the Common Stock issuable upon  conversion of the Shares,  has been taken or
will be taken prior to the  Closing.  All action on the part of the  officers of
the  Company  necessary  for  the  execution  and  delivery  of the  Transaction
Agreements,  the  performance  of all  obligations  of  the  Company  under  the
Transaction  Agreements to be performed as of the Closing,  and the issuance and
delivery of the Shares has been taken or will be taken prior to the Closing. The
Transaction  Agreements,  when  executed and  delivered  by the  Company,  shall
constitute  valid and legally  binding  obligations of the Company,  enforceable
against the Company in  accordance  with their  respective  terms  except (i) as
limited  by  applicable  bankruptcy,  insolvency,  reorganization,   moratorium,
fraudulent  conveyance,  or other laws of  general  application  relating  to or
affecting the  enforcement of creditors'  rights  generally,  (ii) as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable remedies, or (iii) to the extent the indemnification  provisions
contained  in the  Investors'  Rights  Agreement  may be limited  by  applicable
federal or state securities laws.

            2.5. Valid  Issuance of Shares.  The Shares,  when issued,  sold and
delivered in accordance  with the terms and for the  consideration  set forth in
this Agreement, will be validly issued, fully paid and nonassessable and free of
restrictions  on  transfer  other  than  restrictions  on  transfer  under  this
Agreement,  the  Investors'  Rights  Agreement,  applicable  state  and  federal
securities laws and liens or encumbrances  created by or imposed by a Purchaser.
Assuming the accuracy of the  representations  of the Purchasers in Section 3 of
this  Agreement and subject to the filings  described in Section  2.6(ii) below,
the issuance of the Shares will not require  registration  under any  applicable
federal and state  securities laws. The Common Stock issuable upon conversion of
the Shares has been duly reserved for issuance,  and upon issuance in accordance
with the terms of the Certificate of Designation,  will be validly issued, fully
paid  and  nonassessable  and  free  of  restrictions  on  transfer  other  than
restrictions on transfer under the Transaction  Agreements,  applicable  federal
and state  securities laws and liens or encumbrances  created by or imposed by a
Purchaser.  Based in part upon the representations of the Purchaser in Section 3
of this Agreement,  and subject to Section 2.6 below,  the Common Stock issuable
upon


                                       4
<PAGE>

conversion  of the  Shares  will be issued  in  compliance  with all  applicable
federal and state securities laws.

            2.6. Governmental Consents and Filings. Assuming the accuracy of the
representations  made by the  Purchasers  in  Section  3 of this  Agreement,  no
consent,  approval,  order or authorization of, or registration,  qualification,
designation,   declaration  or  filing  with,   any  federal,   state  or  local
governmental authority is required on the part of the Company in connection with
the consummation of the transactions contemplated by this Agreement,  except for
(i) the filing of the Certificate of Designation,  which will have been filed as
of the Closing, and (ii) filings pursuant to Regulation D of the Securities Act,
and applicable  state securities laws, which have been made or will be made in a
timely manner.

            2.7. Litigation.  Except as set forth in the SEC Documents, there is
no  claim,  action,  suit,  proceeding,   arbitration,   complaint,   charge  or
investigation  pending or to the Company's  knowledge,  currently  threatened in
writing (i) against  the  Company or any  officer of the  Company,  which to the
Company's  knowledge,  would reasonably be expected to have, either individually
or in the  aggregate,  a Material  Adverse  Effect;  or (ii) that  questions the
validity of the Transaction Agreements or the right of the Company to enter into
them,  or  to  consummate  the  transactions  contemplated  by  the  Transaction
Agreements;  . Neither the Company nor, to the Company's  knowledge,  any of its
officers,  is a party or is named as  subject  to the  provisions  of any order,
writ,  injunction,  judgment  or  decree of any  court or  government  agency or
instrumentality  which,  to the Company's  knowledge,  that would  reasonably be
expected to have,  either  individually or in the aggregate,  a Material Adverse
Effect.  There is no action,  suit,  proceeding or  investigation by the Company
pending or which the Company has decided to initiate.  The  foregoing  includes,
without limitation,  actions,  suits,  proceedings or investigations  pending or
threatened  in writing  involving  the prior  employment of any of the Company's
employees, their services provided in connection with the Company's business, or
any  information  or  techniques  allegedly  proprietary  to any of their former
employers, or their obligations under any agreements with prior employers.

            2.8. Intellectual Property. The Company owns or possesses sufficient
legal rights to (i) all trademarks, service marks, tradenames, copyrights, trade
secrets, licenses,  information and proprietary rights and processes and (ii) to
the  Company's  knowledge,  all  patents  and  patent  right,  (such  rights are
collectively referred to herein as the "Company  Intellectual  Property") as are
necessary  to the  conduct of the  Company's  business as now  conducted  and as
presently  proposed  to be  conducted,  without  any  known  conflict  with,  or
infringement of, the rights of others. To the Company's knowledge, no product or
service  marketed  or sold (or  proposed  to be marketed or sold) by the Company
violates  or will  violate any license or  infringe  any  intellectual  property
rights of any other  party.  Other than with respect to  commercially  available
software products under standard end-user object code license agreements,  there
are no outstanding options, licenses, agreements, claims, encumbrances or shared
ownership  interests of any kind relating to the  foregoing,  nor is the Company
bound by or a party to any  options,  licenses  or  agreements  of any kind with
respect to the patents,  trademarks,  service  marks,  trade names,  copyrights,
trade secrets,  licenses,  information,  proprietary rights and processes of any
other person or entity. The Company has not received any  communications  within
the previous 36 months  alleging that the Company has violated or, by conducting
its


                                       5
<PAGE>

business,  would  violate  any  of  the  patents,  trademarks,   service  marks,
tradenames,  copyrights,  trade secrets or other proprietary rights or processes
of any other  person or entity.  The Company has obtained  and  possesses  valid
licenses to use all of the software  programs present on the computers and other
software-enabled  electronic  devices  that  it owns  or  leases  or that it has
otherwise  provided  to its  employees  for  their  use in  connection  with the
Company's business. To the Company's knowledge,  it will not be necessary to use
any inventions of any of its employees (or persons it currently intends to hire)
made prior to their  employment by the Company.  Each employee who has access to
or involvement  with research and  development  activities or the development of
intellectual  property has executed the form of assignment agreement attached to
the  Disclosure  Schedule.  Section  2.8 of the  Disclosure  Schedule  lists all
patents,  patent applications,  registered trademarks,  trademark  applications,
registered service marks, service mark applications,  registered  copyrights and
domain names of the Company. For purposes of this Section 2.8, the Company shall
be  deemed  to have  knowledge  of a patent  right  if the  Company  has  actual
knowledge of the patent right.

            2.9.  Compliance  with  Other  Instruments.  The  Company  is not in
violation or default (i) of any provisions of its  Certificate of  Incorporation
or Bylaws, (ii) of any instrument,  judgment, order, writ or decree, (iii) under
any note, indenture or mortgage, or (iv) under any lease, agreement, contract or
purchase  order to which it is a party or by which it is bound that is  required
to be listed on the Disclosure Schedule, or, to its knowledge,  of any provision
of federal or state statute,  rule or regulation  applicable to the Company, the
violation of which would have a Material Adverse Effect. The execution, delivery
and  performance  of the  Transaction  Agreements  and the  consummation  of the
transactions  contemplated by the Transaction  Agreements will not result in any
such violation or be in conflict with or constitute, with or without the passage
of time and giving of notice,  either  (i) a default  under any such  provision,
instrument,  judgment,  order,  writ,  decree,  contract or agreement or (ii) an
event which results in the creation of any lien,  charge or encumbrance upon any
assets of the Company or the suspension,  revocation,  forfeiture, or nonrenewal
of any material permit or license  applicable to the Company.  The businesses of
the  Company  and its  Subsidiaries  are not being  conducted,  and shall not be
conducted so long as the Purchaser owns any of the  Securities,  in violation of
any law, ordinance or regulation of any governmental entity, except for possible
violations the sanctions for which either  individually or in the aggregate have
not had and would not have a Material Adverse Effect.  Neither the Company,  nor
any of its Subsidiaries,  nor any director,  officer,  agent,  employee or other
person acting on behalf of the Company or any  Subsidiary  has, in the course of
his  actions  for,  or on behalf of, the  Company  or any  Subsidiary,  used any
corporate  funds for any unlawful  contribution,  gift,  entertainment  or other
unlawful  expenses relating to political  activity,  made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate  funds,  violated  or is in  violation  of any  provision  of the U.S.
Foreign  Corrupt  Practices  Act of 1977,  or made any  bribe,  rebate,  payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government  official or employee.  The Company and its Subsidiaries  possess all
certificates,  authorizations  and permits  issued by the  appropriate  federal,
state,  provincial or foreign  regulatory  authorities  that are material to the
conduct of its business, and neither the Company nor any of its Subsidiaries has
received any notice of proceeding  relating to the revocation or modification of
any such certificate, authorization or permit.


                                       6
<PAGE>

            2.10. Agreements; Actions.

                  (a)  Except  for the  Transaction  Agreements  and  except  as
disclosed  in the  Select  SEC  Documents,  there  are no  material  agreements,
understandings,  instruments,  contracts or proposed  transactions  to which the
Company  is a party  or by  which  it is  bound  that  involve  (i)  obligations
(contingent or otherwise) of, or payments to, the Company in excess of $100,000,
(ii) the license of any patent,  copyright,  trade  secret or other  proprietary
right to or from the Company, (iii) the grant of rights to manufacture, produce,
assemble,  license,  market,  or sell its products to any other person or affect
the Company's  exclusive right to develop,  manufacture,  assemble,  distribute,
market or sell its products, or (iv) indemnification by the Company with respect
to infringements of proprietary rights.

                  (b)  Except as  previously  disclosed  to the  Purchaser,  the
Company  has not  engaged  in the past six  months  in any  discussion  with any
representative of any corporation,  partnership,  trust, joint venture,  limited
liability company, association or other entity, or any individual, regarding (i)
a sale of all or substantially  all of the Company's assets, or (ii) any merger,
consolidation or other business  combination  transaction of the Company with or
into another corporation, entity or person.

            2.11. Affiliate Transactions.  Except as set forth in the Select SEC
Documents,  and except for bridge loans from the  officers and  directors in the
aggregate  amount of  $60,000  to be  repaid  with the  proceeds  of sale of the
Shares, none of the officers,  directors,  or employees of the Company or any of
its Subsidiaries is presently a party to any transaction with the Company or any
of its  Subsidiaries  (other than for ordinary  course  services solely in their
capacity as officers, directors or employees), including any contract, agreement
or  other  arrangement  providing  for  the  furnishing  of  services  to or by,
providing  for rental of real or  personal  property  to or from,  or  otherwise
requiring  payments  to or from any such  officer,  director  or employee or any
corporation,  partnership,  trust or other  entity  in which  any such  officer,
director, or employee has an ownership interest of five percent or more or is an
officer, director, trustee or partner.

            2.12.  Rights of Registration and Voting Rights.  Except as provided
in the Investors' Rights  Agreement,  the Company is not under any obligation to
register under the Securities Act any of its currently outstanding securities or
any securities issuable upon exercise or conversion of its currently outstanding
securities.  To the Company's knowledge,  except as contemplated in the Right of
First Refusal and Co-Sale  Agreement,  no stockholder of the Company has entered
into any agreements with respect to the voting of capital shares of the Company.

            2.13. Absence of Liens. Except for the liens in the Company's assets
granted to the  Purchaser  under the  Company's  accounts  receivable  financing
facility,  and except as disclosed on Section 2.13 of the  Disclosure  Schedule,
the  property  and  assets  that the  Company  owns  are  free and  clear of all
mortgages,  deeds of trust, liens, loans and encumbrances,  except for statutory
liens  for the  payment  of  current  taxes  that  are not  yet  delinquent  and
encumbrances  and liens that arise in the ordinary course of business and do not
materially  impair the  Company's  ownership or use of such  property or assets.
With respect to the property and assets it leases,  the Company is in compliance
with such leases and, to its knowledge, holds a valid leasehold


                                       7
<PAGE>

interest  free of any  liens,  claims or  encumbrances  other  than those of the
lessors of such property or assets.

            2.14. SEC Documents,  Financial  Statements.  Since January 1, 2002,
the Company has timely filed (within applicable  extension periods) all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange  Act") (all of the foregoing  filed prior to the
date hereof and all  exhibits  included  therein and  financial  statements  and
schedules  thereto and documents  incorporated  by reference  therein,  the "SEC
Documents").  As of their respective  dates,  the SEC Documents  complied in all
material  respects with the  requirements  of the Exchange Act or the Securities
Act, as the case may be, and the rules and  regulations  of the SEC  promulgated
thereunder  applicable to the SEC Documents,  and none of the SEC Documents,  at
the time they were  filed with the SEC,  contained  any  untrue  statement  of a
material fact or omitted to state a material fact required to be stated  therein
or  necessary  in  order  to  make  the  statements  therein,  in  light  of the
circumstances under which they were made, not misleading. None of the statements
made in any such SEC  Documents  is,  or has been,  required  to be  amended  or
updated under applicable law (except for such statements as have been amended or
updated  in  subsequent  filings  made  prior to the date  hereof).  As of their
respective  dates,  the financial  statements of the Company included in the SEC
Documents  complied  as  to  form  in  all  material  respects  with  applicable
accounting  requirements  and the  published  rules and  regulations  of the SEC
applicable with respect thereto. Such financial statements have been prepared in
accordance  with  U.S.  generally  accepted  accounting   principles   ("GAAP"),
consistently  applied,  during the periods  involved (except as may be otherwise
indicated in such  financial  statements or the notes thereto or, in the case of
unaudited  interim  statements,  to the extent they may not include footnotes or
may be  condensed  or summary  statements)  and fairly  present in all  material
respects the consolidated financial position of the Company and its consolidated
Subsidiaries  as of the dates  thereof  and the  consolidated  results  of their
operations  and cash flows for the periods then ended  (subject,  in the case of
unaudited statements, to normal, immaterial year-end audit adjustments).  Except
as set forth in the financial  statements of the Company  included in the Select
SEC Documents , the Company has no liabilities,  contingent or otherwise,  other
than (i) liabilities  incurred in the ordinary course of business  subsequent to
the date of such financial  statements and (ii) obligations  under contracts and
commitments  incurred in the ordinary  course of business and not required under
GAAP to be  reflected  in  such  financial  statements,  which  liabilities  and
obligations  referred  to in  clauses  (i)  and  (ii),  individually  or in  the
aggregate,  are not material to the financial  condition or operating results of
the  Company.  To the extent  required by the rules and  regulations  of the SEC
applicable  thereto,  the Select SEC  Documents  contain a complete and accurate
list of all material undischarged written or oral contracts,  agreements, leases
or other  instruments  to which the Company or any  Subsidiary  is a party or by
which the Company or any  Subsidiary is bound or to which any of the  properties
or assets of the  Company  or any  Subsidiary  is  subject  (each,  a  "Material
Contract").  Except  as set  forth  in the  Select  SEC  Documents,  none of the
Company,  its Subsidiaries or, to the best knowledge of the Company,  any of the
other parties thereto is in breach or violation of any Material Contract,  which
breach or violation could have a Material  Adverse Effect.  For purposes of this
Agreement,  "Select SEC Documents"  means the Company's (A) Proxy  Statement for
its most recent Annual Meeting,  (B) Annual Report on Form


                                       8
<PAGE>

10-KSB for the fiscal year ended  December 31, 2003 (the "2003 Annual  Report"),
(C) Quarterly  Reports on Form 10-QSB filed since  December 31, 2003 and (D) all
Reports on Form 8-K filed since December 31, 2003.

            2.15.  Internal  Controls.  The Company and each of its Subsidiaries
maintains  a system  of  internal  accounting  controls  sufficient  to  provide
reasonable  assurance  that (i)  transactions  are executed in  accordance  with
management's general or specific authorizations,  (ii) transactions are recorded
as necessary to permit  preparation of financial  statements in conformity  with
GAAP and to maintain asset  accountability,  (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded  accountability  for assets is compared with the existing assets at
reasonable  intervals  and  appropriate  action  is taken  with  respect  to any
differences.  The Company has established disclosure controls and procedures (as
defined in  Exchange  Act Rules  13a-15(e)  and  15d-15(d))  for the Company and
designed  such  disclosures  controls  and  procedures  to ensure that  material
information relating to the Company,  including its Subsidiaries,  is made known
to the certifying officers by others within those entities,  particularly during
the  period in which the  Company's  Annual  Report  on Form  10-KSB or  Current
Reports  on Form  8-K,  as the case may be,  is being  prepared.  The  Company's
certifying  officers have evaluated the effectiveness of the Company's  controls
and  procedures as the end of the period  covered by the most recent Form 10-KSB
and Form 10-QSBs filed during 2004 (each such date, an "Evaluation  Date").  The
Company  presented in the 2003 Annual Report and its most recently  filed Report
on  Form  10-QSB  the   conclusions  of  the   certifying   officers  about  the
effectiveness  of  the  disclosure   controls  and  procedures  based  on  their
evaluations as of the respective  Evaluation Date. Since the Evaluation Date for
the 2003 Annual Report,  there have been no significant changes in the Company's
internal  controls  (as such term is defined in Item  307(b) of  Regulation  S-K
under the Exchange  Act) or, to the Company's  knowledge,  in other factors that
could significantly affect the Company's internal controls.

            2.16.  Anti-takeover  Provisions.  The  Company  and  its  board  of
directors  have  taken  all  necessary  action,  if  any,  in  order  to  render
inapplicable any control share acquisition,  business  combination,  poison pill
(including  any  distribution   under  a  rights  agreement)  or  other  similar
anti-takeover  provision under its Certificate of  Incorporation  or the laws of
the jurisdiction of its  incorporation or other laws or regulations which are or
could  become  applicable  to any  Purchaser  as a  result  of the  transactions
contemplated by this Agreement,  including,  without  limitation,  the Company's
issuance  of the  Securities  and  any  and  all  Purchaser's  ownership  of the
Securities.

            2.17.  Changes.  Except as set forth in the  Select  SEC  Documents,
since  September  30,  2004,  there has been no material  adverse  change and no
material adverse development in the business, properties, operations, prospects,
financial   condition  or  results  of   operations   of  the  Company  and  its
Subsidiaries,  taken as a whole,  provided  that the  Company has  continued  to
experience  losses and negative cash flow since  September 30, 2004. The Company
has not taken any steps,  and does not  currently  expect to take any steps,  to
seek  protection  pursuant to any bankruptcy or  receivership  law, nor does the
Company or any of its Subsidiaries  have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy proceedings with respect
to the Company or any of its Subsidiaries.


                                       9
<PAGE>

            2.18. No General  Solicitation or Integrated  Offering.  Neither the
Company  nor  any  distributor  participating  on the  Company's  behalf  in the
transactions contemplated hereby (if any) nor any person acting for the Company,
or any such distributor,  has conducted any "general solicitation" (as such term
is defined in Regulation D) with respect to any of the Securities  being offered
hereby. 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 require  registration  of the  Securities  being offered  hereby under the
Securities  Act or cause this offering of  Securities to be integrated  with any
prior offering of securities of the Company for purposes of the Securities  Act,
which result of such integration would require registration under the Securities
Act, or any applicable stockholder approval provisions.

            2.19.  Employee  Matters.   Neither  the  Company  nor  any  of  its
Subsidiaries  is  involved  in any  material  union  labor  dispute  nor, to the
knowledge  of  the  Company  or any of its  Subsidiaries,  is any  such  dispute
threatened.  The Company and its Subsidiaries  believe that their relations with
their employees are good. No executive officer (as defined in Rule 501(f) of the
Securities  Act) has notified the Company that such officer intends to leave the
Company or otherwise terminate such officer's  employment with the Company.  The
Company and its  Subsidiaries are in compliance with all federal,  state,  local
and foreign laws and regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours,  except where failure to
be in compliance would not, either individually or in the aggregate, result in a
Material Adverse Effect.

            2.20. Tax Returns and Payments. There are no federal, state, county,
local or foreign  taxes  dues and  payable  by the  Company  which have not been
timely paid. There are no accrued and unpaid federal,  state, country,  local or
foreign taxes of the Company which are due, whether or not assessed or disputed.
There have been no  examinations  or audits of any tax returns or reports by any
applicable federal, state, local or foreign governmental agency. The Company has
duly and timely filed all federal,  state, county, local and foreign tax returns
required  to have  been  filed by it and  there  are in  effect  no  waivers  of
applicable statutes of limitations with respect to taxes for any year.

            2.21.  Insurance.  The Company and each of its  Subsidiaries  has in
force fire,  casualty,  product  liability and other  insurance  policies,  with
extended  coverage,  sufficient  in  amount  to allow it to  replace  any of its
material  properties or assets which might be damaged or destroyed or sufficient
to cover  liabilities to which the Company may reasonably  become  subject,  and
such types and  amounts of other  insurance  with  respect to its  business  and
properties,  on both a per occurrence and an aggregate basis, as are customarily
carried by persons  engaged in the same or similar  business as the Company.  No
default or event has occurred  that could give rise to a default  under any such
policy.

            2.22. Confidential  Information and Invention Assignment Agreements.
Each  current  employee,  consultant  and officer of the Company has executed an
agreement with the Company regarding confidentiality and proprietary information
substantially  in the form or forms delivered to the counsel for the Purchasers.
(the   "Confidential   Information   Agreements"),   except  for  employees  and
consultants  who do not have  access to  material  confidential  or  proprietary


                                       10
<PAGE>

information. No current or former employee, consultant or officer of the Company
has  excluded  works or  inventions  from his or her  assignment  of  inventions
pursuant to such employee's,  consultant's or officer's Confidential Information
Agreements.  The Company is not aware that any of its employees,  consultants or
officers is in violation thereof.

            2.23.  Permits.  The  Company and each of its  subsidiaries  has all
franchises,  permits,  licenses  and any  similar  authority  necessary  for the
conduct of its business,  the lack of which could reasonably be expected to have
a Material Adverse Effect. The Company is not in default in any material respect
under any of such franchises, permits, licenses or other similar authority.

            2.24.  Environmental and Safety Laws. Except as could not reasonably
be expected to have a Material Adverse Effect (a) the Company is and has been in
compliance with all Environmental Laws; (b) to the Company's knowledge there has
been no release or threatened release of any pollutant,  contaminant or toxic or
hazardous  material,  substance or waste, or petroleum or any fraction  thereof,
(each a  "Hazardous  Substance")  on, upon,  into or from any site  currently or
heretofore owned, leased or otherwise used by the Company;  (c) to the Company's
knowledge, there have been no Hazardous Substances generated by the Company that
have been  disposed of or come to rest at any site that has been included in any
published  U.S.  federal,  state or local  "superfund"  site  list or any  other
similar  list of hazardous  or toxic waste sites  published by any  governmental
authority in the United States;  and (d) there are no underground  storage tanks
located on, no polychlorinated  biphenyls  ("PCBs") or PCB-containing  equipment
used  or  stored  on,  and  no  hazardous  waste  as  defined  by  the  Resource
Conservation and Recovery Act, as amended, stored on, any site owned or operated
by the Company,  except for the storage of hazardous  waste in  compliance  with
Environmental  Laws. The Company has made  available to the Purchasers  true and
complete copies of all material environmental records,  reports,  notifications,
certificates  of need,  permits,  pending permit  applications,  correspondence,
engineering studies, and environmental studies or assessments.

For  purposes  of  this  Section  2.24,  "Environmental  Laws"  means  any  law,
regulation,  or  other  applicable  requirement  relating  to  (a)  releases  or
threatened  release of  Hazardous  Substance;  (b)  pollution or  protection  of
employee  health  or  safety,  public  health  or the  environment;  or (c)  the
manufacture,  handling,  transport,  use,  treatment,  storage,  or  disposal of
Hazardous Substances.

            2.25.  Disclosure.  All  information  relating to or concerning  the
Company and/or any of its  Subsidiaries  set forth in this Agreement or provided
to the Purchaser  pursuant to Section 2 hereof or otherwise in  connection  with
the  transactions  contemplated  hereby  is true  and  correct  in all  material
respects and the Company has not omitted to state any material fact necessary in
order  to  make  the  statements  made  herein  or  therein,  in  light  of  the
circumstances  under which they were made,  and taken  together as a whole,  not
misleading.  No event or circumstance has occurred or exists with respect to the
Company  or  its  Subsidiaries  or  their  respective  businesses,   properties,
prospects,  operations  or  financial  conditions,  which has not been  publicly
disclosed but, under applicable law, rule or regulation, would be required to be
disclosed by the Company in a registration statement filed on the date hereof by
the Company under the Securities  Act with respect to a primary  issuance of the
Company's securities.


                                       11
<PAGE>

Note: the following sections need to be renumbered., as there is no Section 3.

      3. Representations and Warranties of the Purchasers.  The Purchaser hereby
represents and warrants to the Company, severally and not jointly, that

            3.1  Authorization.  The  Purchaser  has full power and authority to
enter into the Transaction Agreements.  The Transaction Agreements to which such
Purchaser  is a party,  when  executed  and  delivered  by the  Purchaser,  will
constitute valid and legally binding  obligations of the Purchaser,  enforceable
in accordance with their terms, except (a) as limited by applicable  bankruptcy,
insolvency,  reorganization,  moratorium,  fraudulent conveyance,  and any other
laws  of  general  application   affecting   enforcement  of  creditors'  rights
generally,  and as limited by laws  relating to the  availability  of a specific
performance,  injunctive  relief,  or other  equitable  remedies,  or (b) to the
extent  the  indemnification  provisions  contained  in  the  Investors'  Rights
Agreement may be limited by applicable federal or state securities laws.

            3.2 Purchase  Entirely for Own Account.  This Agreement is made with
the Purchaser in reliance upon the  Purchaser's  representation  to the Company,
which by the  Purchaser's  execution of this  Agreement,  the  Purchaser  hereby
confirms,  that the  Securities to be acquired by the Purchaser will be acquired
for investment for the Purchaser's own account,  not as a nominee or agent,  and
not with a view to the resale or distribution of any part thereof,  and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise  distributing  the same. By executing  this  Agreement,  the Purchaser
further  represents  that the Purchaser  does not  presently  have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.  The  Purchaser  has not been  formed  for the  specific  purpose of
acquiring the Shares.

            3.3 Disclosure of Information.  The Purchaser has had an opportunity
to discuss the Company's business,  management,  financial affairs and the terms
and  conditions of the offering of the Stock with the Company's  management  and
has had an opportunity to review the Company's facilities and SEC Documents. The
foregoing,  however, does not limit or modify the representations and warranties
of the Company in Section 2 of this  Agreement or the right of the Purchasers to
rely thereon.

            3.4 Restricted Securities. The Purchaser understands that the Shares
have not been, and will not be,  registered  under the Securities Act, by reason
of a specific  exemption from the registration  provisions of the Securities Act
which depends upon,  among other things,  the bona fide nature of the investment
intent and the accuracy of the Purchaser's  representations as expressed herein.
The Purchaser  understands  that the Shares are  "restricted  securities"  under
applicable U.S.  federal and state  securities laws and that,  pursuant to these
laws, the Purchaser must hold the Shares indefinitely unless they are registered
with the Securities and Exchange  Commission and qualified by state authorities,
or an  exemption  from  such  registration  and  qualification  requirements  is
available.  The  Purchaser  acknowledges  that the Company has no  obligation to
register  or  qualify  the  Shares,  or the  Common  Stock  into which it may be
converted,  for resale except as set forth in the Investors'  Rights  Agreement.
The Purchaser  further  acknowledges  that if an exemption from  registration or
qualification  is  available,  it may be


                                       12
<PAGE>

conditioned on various requirements including,  but not limited to, the time and
manner of sale, the holding period for the Shares, and on requirements  relating
to the  Company  which are  outside of the  Purchaser's  control,  and which the
Company is under no obligation and may not be able to satisfy.

            3.5  Legends.  The  Purchaser  understands  that the  Shares and any
securities issued in respect of or exchange for the Shares,  may bear one or all
of the following legends:

                  (a) "The securities  represented by this  certificate have not
been registered under the Securities Act of 1933, as amended,  or the securities
laws of any  state  of the  United  States  or in any  other  jurisdiction.  The
securities  represented  hereby may not be offered,  sold or  transferred in the
absence  of  an  effective  registration  statement  for  the  securities  under
applicable  securities laws unless offered,  sold or transferred  pursuant to an
available exemption from the registration requirements of those laws."

                  (b) Any  legend  set  forth  in,  or  required  by,  the other
Transaction Agreements.

                  (c) Any legend required by the securities laws of any state to
the extent such laws are applicable to the Shares represented by the certificate
so legended.

            3.6 Accredited Investor.  The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

            3.7 No General Solicitation.  Neither the Purchaser,  nor any of its
officers,  directors,  employees,  agents,  stockholders  or partners has either
directly or indirectly,  including through a broker or finder (a) engaged in any
general solicitation,  or (b) published any advertisement in connection with the
offer and sale of the Shares.

            3.8 Exculpation Among Purchasers. Purchaser acknowledges that it has
reviewed  such  materials  it deems  necessary  to make an  informed  investment
decision and has been afforded (i) the  opportunity  to ask such questions as it
has deemed  necessary of, and to receive  answers from,  representatives  of the
Company concerning the terms and conditions of the offering of the Stock and the
merits and risks of  investing  in the  Securities;  (ii) access to  information
about the Company and the Subsidiaries and their respective financial condition,
results of operations, business, properties, management and prospects sufficient
to enable it to evaluate its  investment;  and (iii) the  opportunity  to obtain
such additional  information  that the Company  possesses or can acquire without
unreasonable  effort or expense that is necessary to make an informed investment
decision with respect to the  investment.  Neither such  inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its representatives
or counsel shall modify,  amend or affect such Purchaser's  right to rely on the
truth,  accuracy  and  completeness  of such  materials  it has reviewed and the
Company's representations and warranties contained in the Transaction Documents.
Each Purchaser agrees that no Purchaser nor the respective  controlling persons,
officers,  directors,  partners,  agents, or employees of any Purchaser shall be
liable to any other  Purchaser for any action  heretofore or hereafter  taken or
omitted  to be  taken by any of them in  connection  with  the  purchase  of the
Shares.


                                       13
<PAGE>

            3.9  Residence.  The office or offices of the Purchaser in which its
principal  place of  business  is located at the  address  or  addresses  of the
Purchaser set forth on the signature page hereto.

            3.10  Organization.  The  Purchaser  is an  entity  duly  organized,
validly  existing and in good standing under the laws of the jurisdiction of its
organization  with full right,  corporate or partnership  power and authority to
enter into and to consummate the  transactions  contemplated  by the Transaction
Documents and otherwise to carry out its obligations thereunder.

      4. Conditions to the Purchaser's  Obligations at Closing.  The obligations
of  the  Purchaser  to  purchase  Shares  at  the  Closing  are  subject  to the
fulfillment,  on or before such Closing,  of each of the  following  conditions,
unless otherwise waived:

            4.1   Representations   and  Warranties.   The  representations  and
warranties  of the Company  contained  in Section 2 shall be true and correct in
all material respects as of such Closing,  except that any such  representations
and   warranties   shall  be  true  and  correct  in  all  respects  where  such
representation  and warranty is qualified with respect to materiality in Section
2 or Section 3, as the case may be.

            4.2 Performance.  The Company shall have performed and complied with
all  covenants,  agreements,   obligations  and  conditions  contained  in  this
Agreement  that are required to be performed or complied with by it on or before
such Closing.

            4.3  Compliance  Certificate.  The  President  of the Company  shall
deliver to the  Purchasers  at such Closing a  certificate  certifying  that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.

            4.4  Qualifications.  All  authorizations,  approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection  with the lawful  issuance and sale of
the Shares pursuant to this Agreement shall be obtained and effective as of such
Closing.

            4.5 Investors' Rights Agreement. The Company and the Purchaser shall
have executed and delivered the Investors' Rights Agreement.

            4.6 Right of First Refusal and Co-Sale Agreement.  The Company,  the
Purchaser,  and the other  stockholders  of the Company named as parties thereto
shall  have  executed  and  delivered  the Right of First  Refusal  and  Co-Sale
Agreement.

            4.7  Manufacturing  Agreement.  The Company and the parties  thereto
shall have executed and delivered the Manufacturing Agreement.

            4.8  Certificate  of  Designation . The Company shall have filed the
Certificate of Designations  with the Secretary of State of Delaware on or prior
to the  Closing,  which shall  continue to be in full force and effect as of the
Closing.


                                       14
<PAGE>

            4.9 Secretary's Certificate. The Secretary of the Company shall have
delivered  to the  Purchaser  at the Closing a  certificate  certifying  (i) the
Bylaws of the Company, (ii) resolutions of the Board of Directors of the Company
approving the Transaction  Agreements,  the transactions  contemplated under the
Transaction Agreements, and the Certificate of Designation.

            4.10 Proceedings and Documents.  All corporate and other proceedings
in  connection  with  the  transactions  contemplated  at the  Closing  and  all
documents  incident  thereto  shall  be  reasonably  satisfactory  in  form  and
substance to Purchaser,  and Purchaser (or its counsel)  shall have received all
such  counterpart  original and  certified or other copies of such  documents as
reasonably requested. Such documents may include good standing certificates.

      5. Conditions of the Company's  Obligations at Closing. The obligations of
the Company to sell Shares to the  Purchasers  at the Closing are subject to the
fulfillment,  on or before the  Closing,  of each of the  following  conditions,
unless otherwise waived:

            5.1   Representations   and  Warranties.   The  representations  and
warranties of the Purchaser  contained in Section 3 shall be true and correct in
all material respects as of the Closing.

            5.2  Performance.  The Purchaser  shall have  performed and complied
with all covenants,  agreements,  obligations  and conditions  contained in this
Agreement  that are  required to be  performed  or  complied  with by them on or
before such Closing.

            5.3  Qualifications.  All  authorizations,  approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection  with the lawful  issuance and sale of
the Stock pursuant to this  Agreement  shall be obtained and effective as of the
Closing.

            5.4 Investors' Rights  Agreement.  The Purchaser shall have executed
and delivered the Investors' Rights Agreement.

            5.5 Right of First Refusal and Co-Sale Agreement.  The Purchaser and
each  stockholder  party  thereto shall have executed and delivered the Right of
First Refusal and Co-Sale Agreement.

            5.6  Manufacturing  Agreement.  The Purchaser or its  Affiliate,  as
applicable, shall have executed and delivered the Manufacturing Agreement.

      6. Miscellaneous.

            6.1.  Survival of  Warranties.  Unless  otherwise  set forth in this
Agreement,  the  representations  and warrants of the Company and the Purchasers
contained in or made pursuant to this Agreement  shall survive the execution and
delivery of this  Agreement and the Closing for a period of two years  following
Closing,  and shall in no way be  affected by any  investigation  of the subject
matter thereof made by or on behalf of the Purchasers or the Company.


                                       15
<PAGE>

            6.2. Transfer;  Successors and Assigns.  The terms and conditions of
this Agreement  shall inure to the benefit of and be binding upon the respective
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.

            6.3.  Governing  Law.  This  Agreement  shall  be  governed  by  and
construed  in  accordance  with  the  General  Corporation  Law of the  State of
Delaware as to matters  within the scope  thereof,  and as to all other  matters
shall be governed by and construed in  accordance  with the internal laws of the
New Jersey, without regard to its principles of conflicts of laws.

            6.4.  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.  This Agreement may also
be  executed  and   delivered  by  facsimile   signature  and  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.

            6.5.  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.

            6.6.  Notices.  All notices and other  communications  given or made
pursuant to this Agreement  shall be in writing and shall be deemed  effectively
given: (a) upon personal delivery to the party to be notified,  (b) when sent by
confirmed  electronic  mail or facsimile if sent during normal business hours of
the recipient, and if not so confirmed,  then on the next business day, (c) five
(5) days after having been sent by registered or certified mail,  return receipt
requested,  postage prepaid,  or (d) one (1) day after deposit with a nationally
recognized  overnight  courier,  specifying  next  day  delivery,  with  written
verification  of receipt.  All  communications  shall be sent to the  respective
parties at their address as set forth on the  signature  page, or to such e-mail
address,  facsimile number or address as subsequently modified by written notice
given in accordance with this Section 6.6. If notice is given to the Company,  a
copy shall also be sent to Gary A. Miller, Eckert Seamans Cherin & Mellott, LLC,
1515 Market Street, Ninth Floor, Philadelphia,  Pennsylvania 19102 and if notice
is given to the Purchaser,  a copy shall also be given to Kimberley R. Anderson,
Dorsey & Whitney LLP, 1420 Fifth Avenue, Suite 3400, Seattle, Washington 98101.

            6.7. No Finder's Fees.  Except as described in any separate  written
agreement between the parties regarding finders fees, each party represents that
it  neither is nor will be  obligated  for any  finder's  fee or  commission  in
connection with this transaction. Each Purchaser agrees to indemnify and to hold
harmless the Company from any liability for any  commission or  compensation  in
the nature of a finder's fee arising out of this  transaction (and the costs and
expenses of defending  against such  liability or asserted  liability) for which
each  Purchaser  or  any of  its  officers,  employees,  or  representatives  is
responsible.  The Company  agrees to indemnify and hold harmless each  Purchaser
from any  liability  for any  commission  or  compensation  in the  nature  of a
finder's or broker's  fee  arising  out of this  transaction  (and the costs and
expenses of


                                       16
<PAGE>

defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.

            6.8.  Attorney's Fees. If any action at law or in equity  (including
arbitration)  is  necessary  to  enforce  or  interpret  the terms of any of the
Transaction  Agreements,  the  prevailing  party shall be entitled to reasonable
attorney's  fees,  costs and  necessary  disbursements  in addition to any other
relief to which such party may be entitled.

            6.9.  Amendments  and  Waivers.  Any term of this  Agreement  may be
amended,  terminated or waived only with the written  consent of the Company and
(i) the  holders of at least a majority of the  then-outstanding  Shares or (ii)
for an  amendment,  termination  or waiver  effected  prior to the Closing,  the
Purchaser.  Any amendment or waiver effected in accordance with this Section 6.9
shall be binding upon the  Purchaser  and each  transferee of the Shares (or the
Common Stock issuable upon conversion  thereof),  each future holder of all such
securities, and the Company.

            6.10.  Severability.  The  invalidity  of  unenforceability  of  any
provision  hereof shall in no way affect the validity or  enforceability  of any
other provision.

            6.11.  Delays or  Omissions.  No delay or omission  to exercise  any
right,  power or remedy  accruing  to any party under this  Agreement,  upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such  non-breaching or non-defaulting  party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein,  or of or in any similar breach or default  thereafter  occurring;  nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default  theretofore  or  thereafter  occurring.  Any waiver,  permit,
consent or  approval  of any kind or  character  on the part of any party of any
breach or default under this  Agreement,  or any waiver on the part of any party
of any provisions or conditions of this Agreement,  must be in writing and shall
be effective  only to the extent  specifically  set forth in such  writing.  All
remedies,  either under this  Agreement  or by law or otherwise  afforded to any
party, shall be cumulative and not alternative.

            6.12.  Entire  Agreement.  This  Agreement  (including  the Exhibits
hereto,  if any), the Certificate of Designation,  any prior or  contemporaneous
separate  written  agreement  regarding  finders fees and the other  Transaction
Agreements (as defined in the Stock Purchase Agreement)  constitute the full and
entire  understanding  and  agreement  between the parties  with  respect to the
subject matter hereof,  and any other written or oral agreement  relating to the
subject matter hereof existing between the parties are expressly canceled. .

            6.13 Dispute Resolution. Any unresolved controversy or claim arising
out of or relating to this Agreement,  except as (i) otherwise  provided in this
Agreement,  or (ii) any such  controversies  or  claims  arising  out of  either
party's intellectual property rights for which a provisional remedy or equitable
relief is sought,  shall be submitted to arbitration by one arbitrator  mutually
agreed upon by the parties,  and if no agreement  can be reached  within 30 days
after  names  of  potential  arbitrators  have  been  proposed  by the  American
Arbitration  Association (the "AAA"),  then by one arbitrator  having reasonable
experience in corporate  finance  transactions  of


                                       17
<PAGE>

the type  provided  for in this  Agreement  and who is  chosen  by the AAA.  The
arbitration  shall take place in Newark,  New Jersey in accordance  with the AAA
rules then in effect,  and judgment upon any award rendered in such  arbitration
will be binding  and may be entered in any court  having  jurisdiction  thereof.
There shall be limited  discovery prior to the  arbitration  hearing as follows:
(a) exchange of witness lists and copies of  documentary  evidence and documents
relating to or arising out of the issues to be  arbitrated,  (b)  depositions of
all party  witnesses  and (c) such  other  depositions  as may be allowed by the
arbitrators  upon a showing of good cause.  Depositions  shall be  conducted  in
accordance with the New Jersey Code of Civil Procedure,  the arbitrator shall be
required  to provide in writing to the  parties the basis for the award or order
of such  arbitrator,  and a court reporter shall record all hearings,  with such
record constituting the official transcript of such proceedings.  The prevailing
party shall be entitled to  reasonable  attorney's  fees,  costs,  and necessary
disbursements  in  addition  to any  other  relief  to which  such  party may be
entitled.   Each  of  the  parties  to  this  Agreement   consents  to  personal
jurisdiction for any equitable action sought in the U.S.  District Court for the
District  of New Jersey or any court of the State of New Jersey  having  subject
matter jurisdiction.

                  [Remainder of Page Intentionally Left Blank]


                                       18
<PAGE>

      The parties have executed this Series A Preferred Stock Purchase Agreement
as of the date first written above.

                                        COMPANY:

                                        By: ____________________________________

                                        Name: __________________________________
                                                           (print)
                                        Title: _________________________________

                                        Address:


                                        PURCHASER:

                                        Hormel Health Labs, LLC

                                        By: ____________________________________

                                        Name: __________________________________
                                                           (print)
                                        Title: _________________________________

                                        Address:

                      SIGNATURE PAGE TO PURCHASE AGREEMENT

<PAGE>

                                    EXHIBITS

Exhibit A -       Form of Certificate of Designation

Exhibit B -       Disclosure Schedule

Exhibit C -       Form of Investors' Rights Agreement

Exhibit D -       Form of Right of First Refusal and Co-Sale Agreement

<PAGE>

                                    EXHIBIT A

                        FORM OF CERTIFICATE OF AMENDMENT

<PAGE>

                                    EXHIBIT B

                               DISCLOSURE SCHEDULE

<PAGE>

                                    EXHIBIT C

                       FORM OF INVESTORS' RIGHTS AGREEMENT

<PAGE>

                                    EXHIBIT D

              FORM OF RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT

<PAGE>

                                    EXHIBIT E

                         FORM OF MANUFACTURING AGREEMENT