ASSET PURCHASE AGREEMENT


                                  BY AND AMONG


                    NATIONAL HEALTH BENEFITS & CASUALTY CORP.

                                   AS SELLER,

                                       AND

                                HEALTHSTAR CORP.

                                    AS PARENT

                                       AND

                          CARLMONT CAPITAL GROUP, INC.

                                    AS BUYER







                          DATED AS OF DECEMBER 28, 1999
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                                TABLE OF CONTENTS


SECTION                                                                     PAGE
-------                                                                     ----
ARTICLE I. DEFINITIONS......................................................   1

ARTICLE II. PURCHASE AND SALE OF PURCHASED ASSETS...........................   5
         2.1 Assets to be Purchased.........................................   5
         2.2 Excluded Assets................................................   5
         2.3 Assumption of Liabilities......................................   6
         2.4 Purchase Price.................................................   6
         2.5 Payment of Purchase Price......................................   6
         2.6 Closing........................................................   6
         2.7 Seller's Closing Deliveries....................................   6
         2.8 Buyer's Closing Deliveries.....................................   7
         2.9 Earnout Payment................................................   7
         2.10 Seller's Employees............................................   8
         2.11 Further Assurances............................................   9

ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT............   9
         3.1 Corporate Authority and Ownership of Seller....................   9
         3.2 Corporate Authority and Ownership of Parent....................  10
         3.3 Litigation and Related Matters.................................  10
         3.4 Title to Personal Property - Owned.............................  11
         3.5 Real and Personal Property - Leased............................  11
         3.6 Intellectual Property..........................................  11
         3.7 Taxes..........................................................  11
         3.8 Financial Statements...........................................  11
         3.9 No Broker......................................................  11
         3.10 Absence of Certain Changes....................................  12
         3.11 Compliance with Law; Licenses and Permits.....................  12
         3.12 Insurance.....................................................  12
         3.13 Contracts.....................................................  12
         3.14 Transactions with Related Persons.............................  12
         3.15 Labor Relations...............................................  12
         3.16 Compliance with ERISA.........................................  13
         3.17 Environmental Matters.........................................  13
         3.18 Full Disclosure...............................................  13

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYER.........................  13
         4.1 Corporate Authority and Ownership of Buyer.....................  13
         4.2 No Litigation Concerning Agreement.............................  14
         4.3 No Broker......................................................  14
         4.4 Full Disclosure................................................  14
<PAGE>
ARTICLE V. CONDUCT OF THE BUSINESS PENDING CLOSING..........................  15
         5.1 Business in Ordinary Course....................................  15
         5.2 Preservation of Business.......................................  15
         5.3 Insurance and Maintenance of Property..........................  15
         5.4 Books and Records..............................................  15

ARTICLE VI. ADDITIONAL COVENANTS OF SELLER..................................  15
         6.1 Full Access....................................................  15
         6.2 Bulk Sales Law.................................................  15
         6.3 Consents; Assignments..........................................  16

ARTICLE VII. ADDITIONAL COVENANTS OF BUYER..................................  16
         7.1 Financing Commitment; Solvency.................................  16
         7.2 Insurance......................................................  16
         7.3 Access to Books and Records....................................  16

ARTICLE VIII. CONDITIONS TO OBLIGATIONS OF BUYER............................  17
         8.1 Representations and Warranties of Seller and Parent............  17
         8.2 Necessary Action...............................................  17
         8.3 Performance of this Agreement..................................  17
         8.4 Related Party Liabilities......................................  17
         8.5 Delivery of Seller's Closing Documents.........................  17
         8.6 No Consistent Requirements.....................................  17

ARTICLE IX. CONDITIONS TO OBLIGATIONS OF SELLER AND PARENT..................  18
         9.1 Representations and Warranties of Buyer........................  18
         9.2 Necessary Action...............................................  18
         9.3 Consent of Parent's Lender.....................................  18
         9.4 Performance of this Agreement..................................  18
         9.5 Delivery of Buyer's Closing Documents..........................  18
         9.6 Payment of Purchase Price......................................  18
         9.7 No Inconsistent Requirements...................................  18

ARTICLE X. CONFIDENTIALITY..................................................  18
         10.1 Obligations of Confidentiality................................  18
         10.2 Definition of Confidential Information........................  19

ARTICLE XI. INDEMNIFICATION AND INSURANCE...................................  19
         11.1 Indemnification of Buyer......................................  19
         11.2 Indemnification of Seller.....................................  20
         11.3 Indemnification Procedures....................................  20
         11.4 Computation of Claims.........................................  21
         11.5 Exclusive Remedy..............................................  21

                                       ii
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ARTICLE XII. SURVIVAL OF CERTAIN PROVISIONS................................   21

ARTICLE XIII. TERMINATION...................................................  21
         13.1 Termination...................................................  21
         13.2 Effect of Termination.........................................  22

ARTICLE XIV. MISCELLANEOUS..................................................  22
         14.1 Notices.......................................................  22
         14.2 Binding Agreement; Assignment.................................  23
         14.3 Entire Agreement; Amendments..................................  23
         14.4 Severability..................................................  23
         14.5 Counterparts..................................................  24
         14.6 Headings; Interpretation......................................  24
         14.7 Remedies; No Waiver...........................................  24
         14.8 Governing Law.................................................  24
         14.9 Payment of Fees and Expenses..................................  24

                                      iii
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                                TABLE OF EXHIBITS


Exhibit A................................ Assignment and Assumption of Contracts

Exhibit B................................ Bill of Sale and Assignment

Exhibit C................................ Seller and Parent Certificates

Exhibit D................................ Buyer Certificate

                                       iv
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                               TABLE OF SCHEDULES


Schedule 2.1(a)....................Assigned Contracts
Schedule 3.3.......................Litigation
Schedule 3.5.......................Real and Personal Property - Leased
Schedule 3.6.......................Patents, Trademarks and Intellectual Property
Schedule 3.7.......................Taxes
Schedule 3.8.......................Financial Statements
Schedule 3.10......................Absence of Certain Changes
Schedule 3.11......................Compliance with Law; Licenses and Permits
Schedule 3.12......................Insurance
Schedule 3.13......................Contracts
Schedule 3.14......................Transactions with Related Persons
Schedule 3.15......................Labor Relations
Schedule 3.16......................Compliance with ERISA

                                       v
<PAGE>
                            ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE  AGREEMENT (this  "AGREEMENT") is made and entered into
as of this 28th day of December,  1999, by and among NATIONAL  HEALTH BENEFITS &
CASUALTY  CORP., a corporation  organized  under the laws of the State of Nevada
("SELLER"),  HEALTHSTAR  CORP.,  a corporation  organized  under the laws of the
State of Delaware  ("PARENT"),  and CARLMONT CAPITAL GROUP,  INC., a corporation
organized under the laws of the State of California ("BUYER").

                                   RECITALS:

     A. Seller is engaged in, among other things,  promoting management of group
healthcare  services,  workers'  compensation  claims  and  automobile  accident
medical claims for property and casualty  insurers,  third-party  administrators
and self-insured employers (collectively, the "BUSINESS").

     B. Buyer desires to purchase substantially all of the assets of Seller used
in  connection  with the Business and to assume  certain  liabilities  of Seller
related  thereto,  and Seller  desires to sell and transfer to Buyer such assets
and to assign to Buyer such  liabilities,  all upon and subject to the terms and
conditions set forth herein.

     NOW,  THEREFORE,  in  consideration  of the mutual covenants and agreements
herein contained, and intending to be legally bound, the parties hereby agree as
follows:

                                   ARTICLE I.
                                   DEFINITIONS

     In  addition  to the terms  defined in the  Preamble  and  Recitals to this
Agreement, as used in this Agreement, the following capitalized terms shall have
the respective meanings specified in this Article I.

     1.1 "ACTION" has the meaning specified in Section 11.3 hereof.

     1.2 "AFFILIATE" means a Person that directly or indirectly,  through one or
more  intermediaries,  controls,  is controlled  by, or is under common  control
with,  the  Person  referred  to.  In  this  definition,   "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  ownership  of
securities, by contract, or otherwise.

     1.3  "ANCILLARY  AGREEMENTS"  has the meaning  specified in Section  3.1(b)
hereof.

     1.4  "ASSIGNED  CONTRACTS"  has the  meaning  specified  in Section  2.1(a)
hereof.

     1.5 "ASSIGNMENT AND ASSUMPTION  AGREEMENT" means the form of Assignment and
Assumption of Contracts attached hereto as EXHIBIT A.
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     1.6 "ASSUMED LIABILITIES" has the meaning specified in Section 2.3 hereof.

     1.7 "BALANCE SHEET DATE" means July 31, 1999.

     1.8 "BILL OF SALE" means the form of Bill of Sale and  Assignment  attached
hereto as EXHIBIT B.

     1.9 "BUYER  INDEMNIFIED  LOSSES" has the meaning  specified in Section 11.1
hereof.

     1.10 "BUYER INDEMNIFIED  PARTIES" has the meaning specified in Section 11.1
hereof.

     1.11 "CLOSING" means the consummation of the  transactions  contemplated by
this Agreement.

     1.12  "CLOSING  DATE"  means  December  30, 1999 or, if the  conditions  to
Closing  are not by then  satisfied,  such date  within ten (10)  business  days
following satisfaction of such conditions (other than conditions to be satisfied
at Closing  according to the terms  hereof),  or such other date, as the parties
may agree in writing.

     1.13  "CLOSING  PURCHASE  PRICE" has the meaning  specified  in Section 2.4
hereof.

     1.14 "CODE" means the Internal  Revenue Code of 1986,  as amended from time
to time.

     1.15  "CONFIDENTIAL  INFORMATION" has the meaning specified in Section 10.2
hereof.

     1.16 "CONTRACT" means any contract, agreement, arrangement,  understanding,
lease, evidence of indebtedness,  binding commitment or other instrument entered
into or made by or on  behalf  of  Seller,  or to which  Seller is a party or by
which Seller or the Purchased Assets are bound.

     1.17 "EARNOUT PAYMENT" has the meaning specified in Section 2.9(a) hereof.

     1.18 "EBITDA" means  earnings  before  interest,  taxes,  depreciation  and
amortization.

     1.19  "EMPLOYEES"  means all salaried and hourly  employees of the Business
employed by Seller prior to the Closing.

     1.20 "ENVIRONMENTAL LAWS" means all federal,  state, local or foreign laws,
regulations,  rules,  ordinances,  orders,  judgments  and  Permits  relating to
pollution  or  protection  of  the  environment  or  human  health  and  safety,
including,  without  limitation,  laws and  regulations  relating to Releases or
threatened   Releases  of  Hazardous   Materials  into  the  indoor  or  outdoor
environment  (including,   without  limitation,   ambient  air,  surface  water,
groundwater,  land,  surface and subsurface strata) or otherwise relating to the
manufacture,   processing,   distribution,  use,  treatment,  storage,  Release,
transport or handling of Hazardous  Materials and all laws and regulations  with
regard to  recordkeeping,  notification,  disclosure and reporting  requirements

                                       2
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respecting  Hazardous  Materials,  and all  laws  and  regulations  relating  to
endangered or threatened species of fish, wildlife and plants and the management
or use of natural resources.

     1.21 "ERISA" means the Employee  Retirement Income Security Act of 1974, as
amended.

     1.22 "EXCLUDED RECEIVABLE" has the meaning specified in Section 2.2 hereof.

     1.23  "FINANCIAL  STATEMENTS"  has the  meaning  specified  in Section  3.8
hereof.

     1.24 "GAAP" means United States generally  accepted  accounting  principles
consistently applied.

     1.25 "HAZARDOUS  MATERIALS" means any pollutants,  contaminants,  hazardous
substances,  hazardous chemicals, toxic substances, hazardous wastes, infectious
wastes,  radioactive  materials,  petroleum (including crude oil or any fraction
thereof), asbestos in any form or condition, polychlorinated biphenyls, or solid
wastes or other hazardous materials,  including without limitation those defined
as any of the foregoing in, or regulated as such under, any  Environmental  Law,
including, without limitation, petroleum and asbestos.

     1.26  "INITIAL  MEASUREMENT  PERIOD" has the meaning  specified  in Section
2.9(a) hereof.

     1.27  "INTELLECTUAL  PROPERTY" has the meaning  specified in Section 2.1(c)
hereof.

     1.28 "JULY BALANCE SHEET" means the unaudited balance sheet of Seller dated
as of the Balance Sheet Date.

     1.29 "LAW" means any statute,  law, treaty,  ordinance,  rule,  regulation,
instrument,  directive,  decree,  order,  or injunction of any  governmental  or
quasi-governmental  body or  authority,  or any  court,  and  includes  rules or
regulations of any regulatory or self-regulatory authority compliance with which
is required by law.

     1.30 "LIABILITY" or "LIABILITIES" means any liabilities or obligations of a
Person,  whether or not required to be reflected on the financial  statements of
such Person.

     1.31 "LIEN" means any lien,  security interest,  mortgage,  option,  lease,
tenancy,  occupancy,   covenant,  condition,  easement,  pledge,  hypothecation,
charge, claim, restriction, or other encumbrance of every kind and nature.

     1.32 "LOSSES" has the meaning specified in Section 11.1 hereof.

     1.33 "MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means an event,
change or  occurrence  which has, or would  reasonably  be  expected to have,  a
material  adverse  effect,  individually  or in the aggregate,  on the business,
assets, liabilities, condition (financial or otherwise) or results of operations
of a Person.

                                       3
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     1.34 "NEUTRAL AUDITORS" has the meaning set forth in Section 2.9(e) hereof.

     1.35  "NOTICE OF  DISPUTE"  has the  meaning  set forth in  Section  2.9(d)
hereof.

     1.36 "PERMITS" has the meaning set forth in Section 3.11 hereof.

     1.37 "PERSON" means any natural person, corporation,  partnership,  limited
liability company, limited liability partnership,  joint venture, association or
other legal entity, and any governmental or regulatory authority or body.

     1.38  "PERSONAL  PROPERTY"  has the  meaning  specified  in Section  2.1(d)
hereof.

     1.39 "PLANS" has the meaning specified in Section 3.16(a) hereof.

     1.40  "POST-CLOSING  FINANCIAL  STATEMENTS"  has the  meaning  set forth in
Section 2.9(c) hereof.

     1.41 "PURCHASE PRICE" has the meaning specified in Section 2.4 hereof.

     1.42 "PURCHASED ASSETS" has the meaning specified in Section 2.1 hereof.

     1.43 "RECEIVABLES" has the meaning specified in Section 2.1(b) hereof.

     1.44 "RELEASE" shall mean any release, spill, emission, discharge, leaking,
pumping,  injection,  deposit,  disposal,  discharge,   dispersal,  leaching  or
migration into the indoor or outdoor environment (including, without limitation,
ambient air, surface water,  groundwater,  and surface or subsurface  strata) or
into or out of any property,  including,  without  limitation,  such movement of
Hazardous  Materials through or in the air, soil, surface water,  groundwater or
property.

     1.45  "RESOLUTION  PERIOD"  has the  meaning  specified  in Section  2.9(d)
hereof.

     1.46 "SELLER  INDEMNIFIED LOSSES" has the meaning specified in Section 11.2
hereof.

     1.47 "SELLER INDEMNIFIED PARTIES" has the meaning specified in Section 11.2
hereof.

     1.48 "SUBSEQUENT  MEASUREMENT  PERIOD" has the meaning specified in Section
2.9(b) hereof.

     1.49  "SURVIVAL  PERIOD" has the meaning  specified  in Article XII of this
Agreement.

     1.50 "TARGET AMOUNT" has the meaning specified in Section 2.9(a) hereof.

     1.51 "TAXES"  shall mean all United States  Federal,  state and local taxes
upon the income of the Business,  including any interest, penalties or additions
to tax that may become  payable in respect  thereof,  arising before the Closing

                                       4
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Date,  and "Taxes"  shall not include  payroll and employee  withholding  taxes,
unemployment  insurance,  social  security,  sales and use taxes,  excise taxes,
franchise  taxes,  gross receipts  taxes,  occupation  taxes,  real and personal
property taxes, stamp taxes and transfer taxes.

                                   ARTICLE II.
                      PURCHASE AND SALE OF PURCHASED ASSETS

     2.1 ASSETS TO BE PURCHASED.  Subject to the terms and conditions  contained
herein, on the Closing Date, Seller shall sell,  transfer,  deliver,  convey and
assign to Buyer,  and Buyer shall  purchase  and  acquire  from  Seller,  all of
Seller's right, title and interest in and to all of the assets and properties of
Seller of every kind and description related to the Business,  wherever located,
other than the  Excluded  Receivable  free and clear of all Liens  (such  assets
being herein referred to collectively as the "PURCHASED ASSETS").  The Purchased
Assets shall include, without limitation, the following assets:

          (a) all Contracts of Seller related to the Business,  including  those
listed on SCHEDULE 2.1(A), (the "ASSIGNED CONTRACTS");


          (b) all of Seller's accounts  receivable related to the Business other
than the Excluded Receivable (collectively, the "Receivables");

          (c) all of Sellers'  proprietary  information related to the Business,
including, without limitation: domain or URL names and Internet web pages, logos
and trade names related to the Business,  trade secrets,  technical information,
Confidential Information, proprietary rights and licenses, know-how, designs and
processes;  and  computer  software  developed  by Seller  and all  improvements
thereto, including, without limitation, the assets listed on SCHEDULE 3.6 hereto
(collectively "INTELLECTUAL PROPERTY");

          (d) all  equipment,  furniture,  fixtures and supplies owned by Seller
and used in connection with the Business  (collectively,  "PERSONAL  PROPERTY");

          (e) all refunds,  deposits,  prepaid  expenses and other prepaid items
related to the Business or the Purchased Assets;

          (f) all Permits related to the Business, to the extent transferable to
Buyer; and

          (g) copies of all books,  records,  files,  financial  statements  and
supporting documents of Seller relating solely to the Business and the Purchased
Assets.

     2.2  EXCLUDED  ASSETS.  Notwithstanding  anything in this  Agreement to the
contrary,  the  Purchased  Assets do not and shall not include the  intercompany
receivable  owed to Seller by Parent and  reflected on the July Balance Sheet in
the amount of $1,480,003 (the "EXCLUDED RECEIVABLE").

                                       5
<PAGE>
     2.3 ASSUMPTION OF  LIABILITIES.  On the terms and subject to the conditions
set forth in this Agreement,  effective from and as of the Closing,  Buyer shall
assume  and  thereafter  shall  pay and  fully  discharge  the  liabilities  and
obligations of Seller under the Assigned Contracts,  but only to the extent that
such   liabilities  or   obligations   accrue  on  or  after  the  Closing  Date
(collectively, "ASSUMED LIABILITIES"). Except as otherwise expressly provided in
the preceding sentence, Buyer shall not assume any debt, liability or obligation
of Seller, whether known or unknown, fixed or contingent.

     2.4 PURCHASE  PRICE.  The purchase price payable by Buyer to Seller for the
Purchased  Assets at the Closing  shall be One  Million  Five  Hundred  Thousand
Dollars  ($1,500,000) in cash (the "CLOSING PURCHASE PRICE"). The term "PURCHASE
PRICE" as used in this  Agreement  shall mean and include  the Closing  Purchase
Price and any Earnout Payment due to Seller pursuant to Section 2.9 hereof.

     2.5 PAYMENT OF CLOSING  PURCHASE PRICE. At the Closing on the Closing Date,
Buyer shall pay the  Closing  Purchase  Price to Seller by wire  transfer to the
account  or  accounts  designated  by Seller at least two (2) days  prior to the
Closing.

     2.6 CLOSING. The Closing shall take place at 10:00 a.m., local time, on the
Closing Date at the offices of Bryan Cave LLP, Two North Central  Avenue,  Suite
2200, Phoenix, Arizona 85004-4406 or at such other place and time as the parties
may agree in  writing.  All  deliveries,  payments  and other  transactions  and
documents  relating to the  Closing  shall be  interdependent  and none shall be
effective  unless and until all are  effective  (except  to the extent  that the
party  entitled to the benefit  thereof has waived  satisfaction  or performance
thereof as a condition precedent to Closing).

     2.7 SELLER'S CLOSING DELIVERIES. At the Closing on the Closing Date, Seller
shall sell, assign, transfer, convey and deliver to Buyer all of Seller's right,
title and interest in and to the Purchased Assets, free and clear of any and all
Liens, and in furtherance thereof, Seller shall deliver to Buyer:

          (a) the Bill of Sale, duly executed by Seller;

          (b) the Assignment and Assumption Agreement, duly executed by Seller;

          (c) a check  payable to Seller in the amount of $65,000,  representing
Seller's cash on hand as of the Closing Date;

          (d) a certificate of the President of each of Seller and Parent, dated
as of the Closing Date,  substantially in the form attached hereto as EXHIBIT C;
and

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          (e) such other certificates,  documents and instruments as Buyer shall
reasonably request in order to consummate the transactions  contemplated by this
Agreement.

     2.8 BUYER'S CLOSING  DELIVERIES.  At the Closing on the Closing Date, Buyer
shall purchase and acquire all of Seller's  right,  title and interest in and to
the  Purchased  Assets  and  shall  assume  the  Assumed  Liabilities,   and  in
furtherance  thereof,  Purchaser  shall  deliver,  or cause to be delivered,  to
Seller:

          (a) the Closing Purchase Price;

          (b) the Assignment and Assumption Agreement, duly executed by Buyer;

          (c) a certificate  of the President of Buyer,  dated as of the Closing
Date, substantially in the form attached hereto as EXHIBIT D; and

          (d) such other certificates; documents and instruments as Seller shall
reasonably request in order to consummate the transactions  contemplated by this
Agreement.

     2.9 EARNOUT PAYMENT.

          (a) INITIAL  MEASUREMENT PERIOD. In the event that Seller's EBITDA for
the  consecutive  twelve (12) month  period  commencing  on the first day of the
first full month following the Closing Date (the "INITIAL  MEASUREMENT  PERIOD")
is equal to or greater  than Seven  Hundred  Thousand  Dollars  ($700,000)  (the
"TARGET AMOUNT"),  then Buyer shall pay to Seller,  as additional  consideration
for the sale of the Purchased Assets,  the sum of Three Hundred Thousand Dollars
($300,000) in cash (the "EARNOUT  PAYMENT") in accordance  with paragraph (f) of
this Section 2.9.

          (b) SUBSEQUENT  MEASUREMENT  PERIOD.  If no Earnout  Payment is due to
Seller pursuant to paragraph (a) of this Section 2.9, then Seller's EBITDA shall
be determined  for the  consecutive  twelve (12) month period  commencing on the
first day of the sixth  (6th)  month  following  the month in which the  Closing
occurred  (the  "SUBSEQUENT  MEASUREMENT  PERIOD").  In the event that  Seller's
EBITDA for the  Subsequent  Measurement  Period is equal to or greater  than the
Target Amount,  then Buyer shall pay to Seller the Earnout Payment in accordance
with paragraph (f) of this Section 2.9.

          (c) DELIVERY OF POST-CLOSING FINANCIAL STATEMENTS.  Within thirty (30)
days following the end of the Initial Measurement Period and, if applicable, the
Subsequent  Measurement  Period,  Buyer shall  prepare and deliver to Seller and
Parent an unaudited  balance  sheet and related  statements  of income of Seller
which shall set forth Seller's EBITDA for the Initial  Measurement Period or the
Subsequent   Measurement   Period,  as  the  case  may  be  (collectively,   the
"POST-CLOSING  FINANCIAL  STATEMENTS").  The Post-Closing  Financial  Statements
shall  be  prepared  in  accordance  with  GAAP  applied  consistently  with the
accounting  policies and  procedures  used in the  preparation  of the Financial
Statements.

                                       7
<PAGE>
          (d) NOTICE OF DISPUTE.  If Seller  disputes the  calculation of EBITDA
set forth in the Post-Closing Financial Statements, then Seller shall deliver to
Buyer,  within thirty (30) days following  Seller's  receipt of the Post-Closing
Financial Statements, a written notice specifying in reasonable detail the basis
for  Seller's  dispute and setting  forth the  adjustment  to EBITDA that Seller
believes should be made (a "NOTICE OF DISPUTE"). Unless Seller delivers a Notice
of Dispute within the period specified in the preceding  sentence,  Seller shall
be deemed to have accepted and agreed to the calculation of EBITDA  reflected in
the Post-Closing  Financial Statements.  If Seller delivers a Notice of Dispute,
Buyer and Seller  shall,  within  thirty  (30) days  following  delivery of such
notice (the "RESOLUTION PERIOD"), attempt to resolve their differences,  and any
resolution  by them  shall  be in  writing  and  shall  be  final,  binding  and
conclusive.

          (e) RESOLUTION BY NEUTRAL AUDITORS. In the event that Buyer and Seller
are unable to resolve all disputes  with respect to the  Post-Closing  Financial
Statements prior to the expiration of the Resolution Period, issues remaining in
dispute shall be submitted,  as soon as  practicable,  to a firm of  independent
public  accountants of nationally  recognized  standing  mutually  acceptable to
Buyer and Seller that is not the regular accounting firm of either Buyer, Seller
or Parent (the  "NEUTRAL  AUDITORS").  The parties agree to execute a reasonable
engagement  letter if requested by the Neutral  Auditors.  The Neutral  Auditors
shall act as an expert and not as an arbitrator  to determine  only those issues
with  respect  to the  Post-Closing  Financial  Statements  which  are  still in
dispute.  The Neutral Auditors'  determination  shall be made within thirty (30)
days after their selection,  shall be set forth in a written statement delivered
to Buyer,  Seller and  Parent and shall be final,  binding  and  conclusive  and
enforceable in any court of competent jurisdiction. The fees and expenses of the
Neutral  Auditors shall be allocated by the Neutral  Auditors  between Buyer, on
the one hand,  and Seller and Parent on the other  hand,  in  proportion  to the
extent that either party did not prevail on its items in dispute;  provided that
so long as a party  complies  in all  material  respects  in good faith with the
procedures of this Section 2.9(e), such fees shall not include the other party's
outside counsel or accounting fees.

          (f) TIMING OF EARNOUT PAYMENT.  The Earnout Payment,  if any, shall be
paid by wire transfer of immediately  available  funds to an account or accounts
designated by Seller within ten (10) days after Seller's EBITDA for the relevant
measurement  period is  finally  agreed  upon by Seller  and Buyer or  otherwise
determined to be final by the Neutral Auditors in accordance with Section 2.9(e)
hereof.

     2.10  SELLER'S  EMPLOYEES.  Seller  shall  terminate  all of its  Employees
effective as of the Closing.  Seller  shall be solely  responsible  for Seller's
obligations  with respect to its Employees for all periods prior to the Closing,
including,   without  limitation,   severance   payments,   bonus  and  vacation
liabilities,   pension  and  any  other  employee   benefit  plan   liabilities,
withholding   taxes   (including   FICA  and   FUTA   taxes),   and  all   other
employee-related  costs, expenses and liabilities accruing prior to the Closing.
Effective as of the  Closing,  Buyer  intends to hire all of Seller's  Employees
with respect to the Business;  PROVIDED, HOWEVER, that Buyer shall have a period
of thirty (30) days  following the Closing in which to evaluate such  Employees'
qualifications and performance. Seller agrees with Buyer that Seller shall fully
reimburse Buyer for any severance  payments that may be due to former  Employees
of Seller whose  employment with Buyer is terminated by Buyer within such 30-day
period  following  the Closing.  Except as otherwise  provided in the  preceding

                                       8
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sentence,  Buyer shall assume all  liabilities  and  obligations  following  the
Closing for all Employees rehired by Buyer.

     2.11  FURTHER  ASSURANCES.  Each party  shall,  at the request of any other
party from time to time and at any time,  whether on or after the Closing  Date,
and  without  further  consideration,  execute  and  deliver  such  assignments,
transfers, assumptions, conveyances, receipts, acknowledgments,  acceptances and
assurances  as  may  be  reasonably  necessary  to  procure  for  the  party  so
requesting,  and its successors and assigns, any and all of the Purchased Assets
or the Assumed  Liabilities,  or otherwise to satisfy and perform the respective
obligations of the parties hereunder.

                                  ARTICLE III.
               REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT

     Seller and Parent  hereby  jointly and  severally  represent and warrant to
Buyer as follows:

     3.1 CORPORATE AUTHORITY AND OWNERSHIP OF SELLER.

          (a) Seller is a corporation  duly organized,  validly  existing and in
good  standing  under the laws of the State of Nevada.  Seller has all necessary
corporate power to own, lease and operate its properties and assets and to carry
on the Business as  currently  conducted.  Seller is duly  qualified to transact
business and is in good standing in all jurisdictions in which the nature of its
business or assets makes such qualification necessary,  except where the failure
to be so qualified would not have a Material Adverse Effect.

          (b) Seller has full corporate power and authority to execute,  deliver
and perform this Agreement and the other  agreements  contemplated  by the terms
hereof,  including without  limitation,  the Bill of Sale and the Assignment and
Assumption  Agreement   (collectively,   the  "ANCILLARY   AGREEMENTS")  and  to
consummate  the  transactions  contemplated  hereby and thereby.  The execution,
delivery and  performance  of this Agreement and the Ancillary  Agreements  have
been duly  authorized by all necessary  corporate  action on the part of Seller,
and no further  approval of the board of directors  of Seller (or any  committee
thereof) is necessary for the execution hereof or thereof or consummation of the
transactions contemplated hereby or thereby.

          (c) This  Agreement has been,  and the Ancillary  Agreements  will be,
duly executed and delivered by Seller and constitute or will  constitute  valid,
legally binding and enforceable  obligations of Seller,  subject, in the case of
enforceability,  to applicable bankruptcy, insolvency and similar laws affecting
creditors'   rights   generally  and  to  principles  of  equity  regarding  the
availability of equitable remedies.

          (d) The  execution  and delivery of this  Agreement  and the Ancillary
Agreements by Seller and consummation by Seller of the transactions contemplated
hereby and thereby  are not  prohibited  by, and do not violate in any  material
respect any provision of, the Articles of Incorporation or Bylaws of Seller,  or
violate any  material  provision  or result in the breach of, or  accelerate  or

                                       9
<PAGE>
permit the  acceleration  of the  performance  required  by, or permit any other
party to terminate or alter the provisions of, any material term of any Contract
to which  Seller is a party or which  relates to the  Business,  other than such
violations,  breaches or accelerations  that will not, in the aggregate,  have a
Material   Adverse  Effect  on  Seller's  ability  to  perform  its  obligations
hereunder,  and have not  resulted  in and will not  result in the  creation  or
imposition of any material Lien on the Purchased Assets,  and do not violate any
material Law,  arbitration award,  judgment or decree to which Seller is a party
or by which any of the Purchased Assets are bound.

     3.2 CORPORATE AUTHORITY AND OWNERSHIP OF PARENT.

          (a) Parent is a corporation  duly organized,  validly  existing and in
good standing under the laws of the State of Delaware.  Parent has all necessary
corporate power to own, lease and operate its properties and assets and to carry
on its business as currently conducted.

          (b) Parent has full corporate power and authority to execute,  deliver
and perform this  Agreement  and to  consummate  the  transactions  contemplated
hereby. The execution, delivery and performance of this Agreement by Parent have
been duly  authorized by all necessary  corporate  action on the part of Parent,
and no further  approval of the board of directors  of Parent (or any  committee
thereof)  is  necessary  for the  execution  hereof or the  consummation  of the
transactions contemplated hereby.

          (c) This  Agreement has been duly executed and delivered by Parent and
constitutes  a valid,  legally  binding and  enforceable  obligation  of Parent,
subject, in the case of enforceability, to applicable bankruptcy, insolvency and
similar laws affecting  creditors'  rights generally and to principles of equity
regarding the availability of equitable remedies.

          (d) The  execution  and  delivery  of this  Agreement  by  Parent  and
consummation  by  Parent  of  the  transactions   contemplated  hereby  are  not
prohibited by, and do not violate in any material  respect any provision of, the
Certificate  of  Incorporation  or Bylaws of  Parent,  or violate  any  material
provision or result in the breach of, or accelerate  or permit the  acceleration
of the performance  required by, or permit any other party to terminate or alter
the  provisions of, any material term of any contract to which Parent is a party
or by which its  properties  and assets are bound,  other than such  violations,
breaches  or  accelerations  that will not,  in the  aggregate,  have a Material
Adverse Effect on Parent's ability to perform its obligations hereunder,  and do
not violate any material  Law,  arbitration  award,  judgment or decree to which
Parent is a party or by which its properties and assets are bound.

     3.3  LITIGATION AND RELATED  MATTERS.  Except as set forth on SCHEDULE 3.3,
there are no claims, actions, suits, legal proceedings or investigations pending
or, to the knowledge of Seller or Parent,  threatened,  against Seller which are
reasonably  likely to have a Material  Adverse  Effect on the Business or on the
ability of Seller to consummate the transactions  contemplated by this Agreement
and the Ancillary  Agreements,  nor is Seller subject to any outstanding  order,
rule,  decree or  judgment  of any  court or  governmental  agency of  competent
jurisdiction,  which is reasonably  likely to have a Material  Adverse Effect on

                                       10
<PAGE>
the  Business  or the  transactions  contemplated  by  this  Agreement  and  the
Ancillary Agreements.

     3.4  TITLE  TO  PERSONAL  PROPERTY  - OWNED.  Seller  does not own any real
property.  Except for Liens for  current  taxes or  assessments  due but not yet
payable,  Seller has good and marketable title to its material personal property
included in the Purchased  Assets,  free and clear of all Liens,  and, except as
provided above,  good and marketable title to such material  personal  property,
free and clear of all Liens, shall pass to Buyer at Closing.

     3.5 REAL AND PERSONAL  PROPERTY - LEASED.  All material  leases relating to
the  Business  pursuant  to which  Seller  is a lessee  or lessor of any real or
personal  property  are listed on SCHEDULE  3.5.  All of such leases are in full
force and effect,  all rental  payments due under such leases have been paid and
there exist no material  defaults by Seller under the terms of such leases,  and
the  consummation  of the  transactions  contemplated  by this Agreement and the
Ancillary  Agreements  will not create  any such  default  with  respect to such
leases or result  in the  lessor  having  the  right to  terminate  or alter the
material operative provisions of any such leases.

     3.6  INTELLECTUAL  PROPERTY.  SCHEDULE 3.6 lists all material  Intellectual
Property.  Except as set forth on SCHEDULE 3.6,  Seller owns, or to Seller's and
Parent's  knowledge,  holds valid license rights to, all Intellectual  Property,
free and clear of all Liens.  Except as set forth on SCHEDULE 3.6, (a) there are
no material actions,  proceedings or infringement suits pending, or, to Seller's
and Parent's  knowledge,  threatened,  with  respect to any of the  Intellectual
Property,  and (b) no material  licenses  have been  granted to any other Person
with respect to any of the Intellectual Property.

     3.7 TAXES. Except as set forth on SCHEDULE 3.7, all Taxes have been or will
be paid by Seller  and will not result in the  imposition  of any Lien on any of
the  Purchased  Assets which would have a Material  Adverse  Effect on the value
thereof or title thereto.

     3.8 FINANCIAL STATEMENTS. Seller and Parent have delivered to Buyer (a) the
unaudited balance sheets and related unaudited statements of income of Seller at
and for each of the years ending March 31, 1998 and March 31, 1999,  and (b) the
unaudited  balance sheets and related  statements of income of Seller at and for
the four (4) month period  ended July 31, 1999,  copies of which are attached as
Schedule 3.8 hereto  (collectively,  the  "FINANCIAL  STATEMENTS").  The balance
sheets  included in the Financial  Statements  present  fairly,  in all material
respects,  the financial  position of Seller as of the respective dates thereof,
and the  related  statements  of income  included  in the  Financial  Statements
present fairly, in all materials  respects,  the results of operations of Seller
for the respective  periods or as of the respective dates set forth therein,  in
each  case in  accordance  with  GAAP,  consistently  applied  for  all  periods
presented except for the absence of footnote disclosures,  statements of changes
in stockholders' equity, and report of independent accountants, each of which is
required under GAAP.

     3.9 NO BROKER. Neither Seller nor Parent has retained a broker or finder in
connection with the transactions  contemplated  herein so as to give rise to any
valid claim against either Seller, Parent or Buyer for a finder's fee, brokerage
commission or similar payment.

                                       11
<PAGE>
     3.10 ABSENCE OF CERTAIN CHANGES.  Other than as disclosed on SCHEDULE 3.10,
since the Balance Sheet Date, there has occurred no Material Adverse Change with
respect to Seller, the Business or the Purchased Assets.

     3.11  COMPLIANCE  WITH LAW;  LICENSES AND  PERMITS.  Except as set forth on
SCHEDULE  3.11,  to the  knowledge  of Seller and Parent,  the Business has been
operated in compliance with all applicable Laws and with all permits,  licenses,
authorizations  or  consents  granted by any  governmental  authority  or entity
(collectively "PERMITS"), the noncompliance with which would be likely to have a
Material  Adverse  Effect  on  Seller  or the  Business.  Except as set forth on
SCHEDULE  3.11,  no  investigation  or review by any  governmental  authority or
entity with  respect to the  Business is pending or, to the  knowledge of Parent
and Seller,  threatened,  nor has any governmental  authority or entity,  to the
knowledge of Parent and Seller,  indicated an intention to conduct the same.  To
the knowledge of Parent and Seller, Seller has all material Permits necessary to
carry on the Business as currently conducted.

     3.12  INSURANCE.  SCHEDULE  3.12  sets  forth:  (i) each  insurance  policy
currently in effect with respect to the Purchased  Assets or the Business  under
which  Seller is a  beneficiary;  (ii) the name of the  insurer  with which such
policy is carried; (iii) the liabilities covered thereunder;  (iv) the amount of
coverage (including the amount of any deductible) thereunder; and (v) the period
of coverage thereunder.  All premiums under each such insurance policy have been
duly paid to date and each such insurance  policy is in full force and effect up
to the full amount of coverage indicated on SCHEDULE 3.12. Seller has not failed
to give any notice or present any claim  thereunder in due and timely fashion or
as required by any of such insurance policies.

     3.13 CONTRACTS. SCHEDULE 3.13 sets forth all Contracts to which Seller is a
party and which  relate to the  Business,  and which (i) involve  payments to be
made by or to Seller of amounts  which,  together  with any payments  previously
made,  exceed  $50,000 in any year or (ii) were  entered  into other than in the
ordinary course of the Business. All such Contracts are in full force and effect
and are  binding  obligations  of Seller  and,  to the  knowledge  of Seller and
Parent, of the other parties thereto, and Seller and, to the knowledge of Seller
and Parent,  the other parties thereto,  have in all material respects performed
all  obligations  required  to be  performed  by them  and  are  not in  default
thereunder.

     3.14  TRANSACTIONS  WITH RELATED  PERSONS.  Except as set forth on SCHEDULE
3.14,  no officer,  director or employee of Seller or Parent nor any relative of
any  such  officer,  director  or  employee,  is a party  to or has an  interest
(excluding  equity interests in third parties),  directly or indirectly,  in any
Contract  or  commitment  to  which  Seller  is a party in  connection  with the
Business or by which any of the Purchased Assets are or may be bound, or has any
interest (excluding equity interests in third parties),  directly or indirectly,
in any property, real or personal, tangible or intangible, used in the Business.

     3.15 LABOR  RELATIONS.  Except as set forth on SCHEDULE 3.15, (i) Seller is
not a party to any collective  bargaining  agreement pertaining to the Business,
and no  collective  bargaining  agreement  with respect to any  employees of the
Business is  currently  being  negotiated  by Seller;  (ii) the Business has not

                                       12
<PAGE>
experienced any work stoppage or any other material labor difficulty  during the
three (3) years  immediately  preceding  the date of this  Agreement;  and (iii)
there is no labor  strike,  slowdown,  stoppage  or  material  dispute  actually
pending,  or to the  knowledge  of Seller and  Parent,  threatened,  against the
Business.

     3.16 COMPLIANCE WITH ERISA.

          (a) SCHEDULE 3.16 sets forth each "employee  benefit plan" (as defined
in Section  3(3) of the Employee  Retirement  Income  Security  Act of 1974,  as
amended  ("ERISA")) which Seller maintains or contributes to with respect to its
Employees (collectively, the "Plans").

          (b) To the  knowledge of Seller and Parent,  each Plan complies in all
material respects with all applicable Laws. No claims or actions by the Internal
Revenue  Service,  the Pension Benefit Guaranty  Corporation,  the Department of
Labor, any participant or beneficiary or any other Person currently are pending,
or to the knowledge of Seller and Parent,  are  threatened,  with respect to any
Plan, other than claims for benefits in the ordinary course.

          (c)  Seller  will not incur  any  liability  under any Plan  solely on
account of the consummation of the transactions contemplated hereby.

     3.17 ENVIRONMENTAL  MATTERS. To the knowledge of Seller and Parent,  Seller
is not in  violation  of any  applicable  Environmental  Laws,  and no  material
expenditures  are or will be required in order to comply with any such  existing
Environmental  Laws. No Hazardous  Materials are used or have been used, stored,
or disposed of by Seller or, to the knowledge of Seller or Parent,  by any other
Person on any property leased or used by Seller.

     3.18 FULL DISCLOSURE.  No  representation  or warranty of Seller and Parent
contained in this Article III contains or will contain any untrue statement of a
material fact or omits or will omit to state a material  fact  necessary to make
the statements contained herein or therein not misleading.

                                   ARTICLE IV.
                     REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Seller as follows:

     4.1 CORPORATE AUTHORITY AND OWNERSHIP OF BUYER.

          (a) Buyer is a corporation  duly  organized,  validly  existing and in
good standing under the laws of the State of California. Buyer has all necessary
corporate power to own, lease and operate its properties and assets and to carry
on its business as currently conducted.

          (b) Buyer has full corporate  power and authority to execute,  deliver
and perform this  Agreement and the Ancillary  Agreements to which it is a party
and  to  consummate  the  transactions  contemplated  hereby  and  thereby.  The

                                       13
<PAGE>
execution, delivery and performance by Buyer of this Agreement and the Ancillary
Agreements  have been duly authorized by all necessary  corporate  action on the
part of Buyer,  and no further  approval of the board of  directors of Buyer (or
any  committee  thereof) is  necessary  for the  execution  hereof or thereof or
consummation of the transactions contemplated hereby or thereby.

          (c) This  Agreement has been,  and the Ancillary  Agreements  will be,
duly executed and delivered by Buyer and  constitute or will  constitute  valid,
legally binding, and enforceable  obligations of Buyer,  subject, in the case of
enforceability,  to applicable bankruptcy, insolvency and similar laws affecting
creditors'   rights   generally  and  to  principles  of  equity  regarding  the
availability of equitable remedies.

          (d) The  execution  and delivery of this  Agreement  and the Ancillary
Agreements by Buyer and consummation by Buyer of the  transactions  contemplated
hereby and thereby  are not  prohibited  by, and do not violate in any  material
respect any provision of, the Articles of  Incorporation  or Bylaws of Buyer, or
violate any  material  provision  or result in the breach of, or  accelerate  or
permit the  acceleration  of the  performance  required  by, or permit any other
party to terminate or alter the provisions of, any material term of any contract
to which Buyer is a party or by which its assets or properties are bound,  other
than such violations, breaches or accelerations that will not, in the aggregate,
have a Material  Adverse  Effect on Buyer's  ability to perform  its  respective
obligations  hereunder,  and do not violate any material Law, arbitration award,
judgment  or decree to which  Buyer is a party or by which any of the  Purchased
Assets are bound.

     4.2 NO LITIGATION CONCERNING  AGREEMENT.  As of the date of this Agreement,
there are no actions,  suits or  proceedings  pending or, to Buyer's  knowledge,
threatened,  against Buyer which will have a Material  Adverse Effect on Buyer's
ability to consummate the transactions contemplated by this Agreement.

     4.3 NO BROKER. Buyer has not retained a broker or finder in connection with
the  transactions  contemplated  herein so as to give  rise to any  valid  claim
against  Seller,  Parent or Buyer for a finder's  fee,  brokerage  commission or
similar payment.

     4.4 FULL DISCLOSURE.  No  representation  or warranty of Buyer contained in
this Article IV contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact  necessary to make the statements
contained herein or therein not misleading.

                                       14
<PAGE>
                                   ARTICLE V.
                     CONDUCT OF THE BUSINESS PENDING CLOSING

     5.1 BUSINESS IN ORDINARY COURSE. At all times prior to the Closing, without
the prior  written  consent of Buyer,  Seller shall conduct the Business only in
the ordinary course consistent with past practice.

     5.2  PRESERVATION  OF BUSINESS.  At all times prior to the Closing,  Seller
shall carry on the Business  diligently and  substantially in the same manner as
heretofore  conducted  and shall use its  reasonable  best  efforts  to keep its
business  organizations  intact,  including  its present  Employees  and present
relationships  with suppliers and customers and others having business relations
with Seller with respect to the Business.

     5.3  INSURANCE  AND  MAINTENANCE  OF  PROPERTY.  At all times  prior to the
Closing,  Seller shall cause all of the Purchased  Assets and all property owned
or leased pursuant to the Assumed Liabilities to be insured against all ordinary
and insurable risks (except in respect of any leased property where the terms of
the lease do not impose on lessee the obligation to maintain insurance and where
the loss of such property  would not materially  adversely  affect the Purchased
Assets or the conduct of the Business),  and shall operate,  maintain and repair
all of such property in a careful, prudent and efficient manner.

     5.4 BOOKS AND  RECORDS.  Prior to the Closing,  Seller  shall  maintain its
books and financial  records in accordance  with GAAP.  Said books and financial
records shall fairly and accurately  reflect the operations of Seller including,
without limitation, the operations of the Business.

                                   ARTICLE VI.
                         ADDITIONAL COVENANTS OF SELLER

     6.1 FULL ACCESS. Upon reasonable notice, representatives of Buyer
shall have  reasonable  access  during  normal  business  hours to the premises,
properties,  books,  records,  contracts,  tax records and  documents  of Seller
relating to the Business,  and Seller shall furnish to Buyer such information in
respect of the  Business  as Buyer may from time to time  reasonably  request in
connection  with its due diligence  investigation  of the Business  prior to the
Closing.  Buyer shall use  reasonable  efforts to promptly  inform Seller of any
matters  of  which  Buyer  becomes  aware  that   constitute  a  breach  of  the
representations  and  warranties  pursuant to Article III hereof;  provided that
Buyer's  failure to so inform  Seller of such matters  shall in no way adversely
impact Buyer's right to indemnification as provided for in Article XI hereof.

     6.2 BULK SALES LAW. Seller shall indemnify and hold Buyer harmless from and
against  any and all claims  relating  to the  failure to comply  with the "bulk
sales law" of any applicable  jurisdiction with respect to the sale and transfer
of the Purchased  Assets as contemplated by this Agreement.  Buyer hereby waives
compliance with the "bulk sales law" of any applicable jurisdiction with respect
to the transactions contemplated by this Agreement.

                                       15
<PAGE>
     6.3 CONSENTS; ASSIGNMENTS.

          (a)  Seller  shall use its  reasonable  best  efforts  to  obtain  all
consents or approvals  from parties to the Assigned  Contracts and all consents,
licenses or Permits  from  governmental  authorities,  which are required by the
terms  thereof  or this  Agreement  for  the  consummation  of the  transactions
contemplated hereby;  provided,  that anything in this Agreement to the contrary
notwithstanding,  this  Agreement  shall not constitute an agreement to transfer
any Assigned Contract or Permit if the attempted  assignment thereof without the
consent of another Person would  constitute a breach of, or a default under,  or
in any other  manner  affect the rights of Seller or Buyer with  respect to such
Assigned  Contract  or Permit.  To the  extent  necessary,  Buyer  shall use its
reasonable  best efforts to cooperate with Seller in obtaining such consents and
approvals,  provided that Buyer shall not be required (i) to agree to any change
in the material  terms and conditions of any Assigned  Contract,  or (ii) to pay
any fee or other monetary consideration to third parties from whom such consents
or approvals are requested.

          (b) In the event and to the  extent  that  Seller is unable to obtain,
prior to the  Closing  Date,  any such  necessary  consent  or  approval  to the
transfer of a Purchased  Asset,  Seller  shall so advise Buyer and shall use its
best efforts,  subject to Buyer's approval, to enter into an arrangement (to the
extent  permitted by Law or any  applicable  Assigned  Contract),  whereby Buyer
shall, to the extent possible, obtain the benefits and assume the obligations of
such Purchased Asset without the assignment thereof,  including  subcontracting,
sublicensing   or  subleasing.   If  and  when  any  such  consent  or  approval
subsequently  shall be obtained,  Seller shall promptly assign all of its rights
and obligations  under such Assigned  Contract or Permit, as the case may be, to
Buyer without the payment of any further consideration.

                                  ARTICLE VII.
                          ADDITIONAL COVENANTS OF BUYER

     7.1 FINANCING COMMITMENT;  SOLVENCY.  Prior to the Closing, Buyer shall use
its  best  efforts  to  obtain  from a bank or other  third  party  lender  debt
financing  in the amount of up to One  Million  Five  Hundred  Thousand  Dollars
($1,500,000)  to enable  Buyer to acquire the  Purchased  Assets at the Closing.
Prior to Closing,  Buyer shall provide to Seller and Parent evidence  reasonably
satisfactory  to Seller and Parent that Buyer has sufficient  working capital or
other funding to operate the Business as a going concern following the Closing.

     7.2  INSURANCE.  Prior to the Closing,  Buyer shall procure and cause to be
maintained in full force and effect,  insurance  policies covering the Purchased
Assets and such Employees of the Business as are hired by Buyer, which insurance
coverage  shall be in types and amounts  comparable  to the  insurance  coverage
maintained  by or on behalf of  Seller  prior to  Closing  with  respect  to the
Business,   including  without  limitation,   property,  casualty  and  worker's
compensation coverage.

     7.3 ACCESS TO BOOKS AND  RECORDS.  From and after the Closing  Date,  Buyer
shall  afford to Seller and  representatives  of Seller,  at  Seller's  expense,
reasonable  access and duplicating  rights during normal business hours and upon
reasonable  advance  notice to all books and records  within the  possession  or

                                       16
<PAGE>
control of Buyer relating to the Business,  the Purchased  Assets or the Assumed
Liabilities  as they  existed  prior to the  Closing,  insofar as such access is
reasonably  required  for  a  valid  business  purpose.   Without  limiting  the
foregoing,  access to such books and records may be requested by Seller pursuant
to this Section 7.2 for audit, accounting,  claims, litigation and tax purposes.
Any information provided to Seller pursuant to this Section 7.2 shall be subject
to the provisions of Article X of this Agreement.

                                  ARTICLE VIII.
                       CONDITIONS TO OBLIGATIONS OF BUYER

     The  obligations  of Buyer to consummate the  transactions  provided for in
this Agreement shall be subject to the satisfaction by Seller and Parent of each
of the  following  conditions  on or prior to the Closing  Date,  subject to the
right of Buyer to waive any one or more of such conditions:

     8.1  REPRESENTATIONS  AND  WARRANTIES  OF SELLER  AND  PARENT.  Each of the
representations and warranties of Seller and Parent contained in this Agreement,
including the schedules hereto, shall be true and correct in all respects on the
date  hereof  and on  the  Closing  Date  as  though  such  representations  and
warranties  were  made on the  Closing  Date,  except  to the  extent  that such
representations  and warranties are by their express  provisions  made as of the
date of this Agreement or another specific date.

     8.2  NECESSARY  ACTION.  Seller and Parent  shall have taken all  necessary
corporate  action to approve the  execution and delivery by Seller and Parent of
this Agreement and the consummation of the transactions contemplated hereby.

     8.3  PERFORMANCE  OF THIS  AGREEMENT.  Seller  and  Parent  shall have duly
performed or complied in all material respects with all of the obligations to be
performed or complied with by each of them under the terms of this  Agreement on
or prior to the Closing Date.

     8.4 RELATED PARTY LIABILITIES.  As of the Closing Date, no amounts shall be
owing to, and no  Liabilities  shall exist in favor of, any  officer,  director,
employee  or  stockholder  of Seller,  other than  Liabilities  incurred  in the
ordinary course of business of Seller consistent with past practice.

     8.5 DELIVERY OF SELLER'S CLOSING DOCUMENTS.  Seller shall have executed and
delivered,  or  stand  ready  to  execute  and  deliver,  to  Buyer  each of the
agreements,   documents  and  instruments  specified  in  Section  2.7  of  this
Agreement.

     8.6 NO INCONSISTENT  REQUIREMENTS.  No legal action by any public authority
or other Person  enjoining or prohibiting the transactions  contemplated  hereby
shall be in effect.

                                       17
<PAGE>
                                   ARTICLE IX.
                 CONDITIONS TO OBLIGATIONS OF SELLER AND PARENT

     The  obligations  of Seller  and  Parent  to  consummate  the  transactions
provided for in this Agreement shall be subject to the  satisfaction by Buyer of
each of the following conditions on or prior to the Closing Date, subject to the
right of Seller and Parent to waive any one or more of such conditions:

     9.1  REPRESENTATIONS  AND WARRANTIES OF BUYER. Each of the  representations
and  warranties of Buyer  contained in this  Agreement,  including the schedules
hereto,  shall be true and correct in all respects on the date hereof and on the
Closing  Date as though such  representations  and  warranties  were made on the
Closing Date, except to the extent that such  representations and warranties are
by their  express  provisions  made as of the date of this  Agreement or another
specific date.

     9.2 NECESSARY ACTION. Buyer shall have taken all necessary corporate action
to  approve  the  execution  and  delivery  of this  Agreement  by Buyer and the
consummation by Buyer of the transactions contemplated hereby.

     9.3 CONSENT OF PARENT'S  LENDER.  Parent  shall have  obtained  the written
consent of Harris Trust and Savings Bank to the  consummation of the transaction
contemplated by this Agreement.

     9.4  PERFORMANCE  OF THIS  AGREEMENT.  Buyer shall have duly  performed  or
complied in all material respects with all of the obligations to be performed or
complied with by it under the terms of this Agreement on or prior to the Closing
Date.

     9.5 DELIVERY OF BUYER'S  CLOSING  DOCUMENTS.  Buyer shall have executed and
delivered,  or  stand  ready to  execute  and  deliver,  to  Seller  each of the
agreements,   documents  and  instruments  specified  in  Section  2.8  of  this
Agreement.

     9.6  PAYMENT OF PURCHASE  PRICE.  Buyer  shall have  delivered  the Closing
Purchase Price to Seller on the Closing Date.

     9.7 NO INCONSISTENT  REQUIREMENTS.  No legal action by any public authority
or other Person  enjoining or prohibiting the transactions  contemplated  hereby
shall be in effect.

                                   ARTICLE X.
                                 CONFIDENTIALITY

     10.1 OBLIGATIONS OF CONFIDENTIALITY. Each party hereto agrees that it shall
hold and keep  confidential,  and shall  cause its  Affiliates  to hold and keep
confidential, all Confidential Information regarding the Business, the Purchased
Assets or this Agreement,  and no party nor any of its Affiliates  shall use any
of such Confidential Information for any purpose not expressly permitted by this
Agreement.  Each party hereto acknowledges that the Confidential  Information is

                                       18
<PAGE>
valuable and  proprietary,  and that any  disclosure of such  information to any
officer,  employee or agent of, or investor in or lender to, such party shall be
made  only to the  extent  necessary  in order  for such  party to carry out its
obligations  under this  Agreement  and then only if such  officer,  employee or
agent shall be bound by an agreement to maintain such information in confidence.

     10.2  DEFINITION  OF  CONFIDENTIAL   INFORMATION.   For  purposes  of  this
Agreement,  "CONFIDENTIAL INFORMATION" means any and all data and information of
a proprietary  or  confidential  nature that is owned or controlled by any party
hereto,  including,  without  limitation,   information  and  data  relating  to
Intellectual   Property;   design,   manufacturing  and  marketing  information;
identities of suppliers,  customers and  contractors;  product  distribution and
sales  information;  pricing and  compensation  policies;  operational  methods;
strategic plans; internal financial information;  research and development plans
and activities;  and acquisition and expansion plans. "Confidential Information"
shall not include any information  which (i) was known to any party prior to its
disclosure  by the  other  party;  (ii) was in the  public  domain  prior to the
disclosure  thereof by the relevant  party  hereto;  (iii) comes into the public
domain  through  no  fault of the  party  bound by this  Section  10.2;  (iv) is
disclosed by a third Person (which term shall not include attorneys, accountants
and other  non-employee  representatives  of any party hereto who are subject to
the terms of this Section 10.2) having the legal right to make such  disclosure;
or (v) is  required  to be  disclosed  by  applicable  Laws or  rules of a stock
exchange or order of any court of competent jurisdiction.

                                   ARTICLE XI.
                          INDEMNIFICATION AND INSURANCE

     11.1  INDEMNIFICATION  OF BUYER.  Seller  and  Parent  hereby  jointly  and
severally  agree  to  indemnify,   defend  and  hold  Buyer,  its  stockholders,
directors,  officers,  employees,  Affiliates,  successors,  assigns  and agents
(collectively,  the "BUYER  INDEMNIFIED  PARTIES") harmless from, against and in
respect of, any and all claims, losses, damages, liabilities, expenses or costs,
including  reasonable  attorneys'  fees,  costs and  expenses of  investigation,
penalties,  interest and amounts  paid in  settlement  (collectively,  "LOSSES")
incurred or to be incurred by any of the Buyer Indemnified  Parties,  reduced by
the amount of any third party recovery or tax benefit  actually  received by any
of such Buyer Indemnified Parties (collectively,  "BUYER INDEMNIFIED LOSSES") by
reason of, arising out of or related to:

          (a) any breach or  inaccuracy  in any  representation  or  warranty of
Seller or Parent  contained in this  Agreement,  or in any exhibit,  schedule or
Ancillary Agreement delivered pursuant hereto;

          (b) any  breach  or  nonfullfillment  of any  covenant,  agreement  or
undertaking of Seller or Parent contained in this Agreement,  or in any exhibit,
schedule or Ancillary Agreement delivered pursuant hereto;

          (c) all  Liabilities  of Seller  other than the  Assumed  Liabilities,
whether direct or indirect, fixed or contingent, known or unknown; and

                                       19
<PAGE>
          (d) any claims or demands  arising  from or relating to the  Purchased
Assets or the conduct of the Business  prior to the Closing Date,  except claims
or demands arising from or relating to Assumed Liabilities.

     11.2  INDEMNIFICATION OF SELLER.  Buyer hereby agrees to indemnify and hold
Seller  and  Parent  and their  respective  stockholders,  directors,  officers,
employees, Affiliates, successors, assigns and agents (collectively, the "SELLER
INDEMNIFIED  Parties")  harmless  from,  against  and in respect of, any and all
Losses  incurred  or to be incurred  by any of the Seller  Indemnified  Parties,
reduced  by the  amount of any third  party  recovery  or tax  benefit  actually
received  by any of  such  Seller  Indemnified  Parties  (collectively,  "SELLER
INDEMNIFIED LOSSES") by reason of, arising out of or related to:

          (a) any breach or  inaccuracy  in any  representation  or  warranty of
Buyer  contained in this  Agreement,  or in any  exhibit,  schedule or Ancillary
Agreement delivered pursuant hereto;

          (b) any  breach  or  nonfullfillment  of any  covenant,  agreement  or
undertaking of Buyer contained in this Agreement, or in any exhibit, schedule or
Ancillary Agreement delivered pursuant hereto;

          (c) the Assumed Liabilities, from and after the Closing Date; and

          (d) any claims or demands  arising  from or relating to the conduct of
the Business following the Closing Date, including claims or demands relating to
Employees hired by Buyer following the Closing, except for conduct undertaken in
reliance  upon or as a direct result of a  representation  or warranty of Seller
herein.

     11.3 INDEMNIFICATION PROCEDURES.  Promptly after acquiring knowledge of any
claim or demand against which a party entitled to indemnification hereunder (the
"INDEMNIFIED  PARTY")  may seek  indemnification  against  the other  party (the
"INDEMNIFYING  PARTY") pursuant to this Article XI, the Indemnified  Party shall
give written notice thereof to the Indemnifying Party;  PROVIDED,  HOWEVER, that
failure to provide  such notice will not relieve the  Indemnifying  Party of any
liability that it may have to the Indemnified  Party under this Agreement unless
(i) the Indemnified Party fails to give written notice to the Indemnifying Party
within twenty (20) days of the date the Indemnified Party acquires  knowledge of
such claim and (ii) the  Indemnifying  Party is  prejudiced  as a result of such
failure; and PROVIDED, FURTHER, that in such event, the Indemnifying Party shall
be relieved of  liability  only to the extent of such  prejudice.  To the extent
that the  claim  consists  of a claim,  suit or  action  by a third  Person  (an
"ACTION"),  the  Indemnifying  Party  shall be entitled  to  participate  in the
defense of such Action and, to the extent that it so elects by written notice to
the Indemnified  Party promptly after  receiving the aforesaid  notice from such
Indemnified  Party,  to assume  control of such defense with counsel  reasonably
satisfactory  to such  Indemnified  Party;  PROVIDED,  HOWEVER,  that  (i)  that
Indemnified  Party shall at its own expense be  entitled to  participate  in the
defense of such Action and to employ separate  counsel and (ii) the Indemnifying
Party  shall  not  consent  to the  entry  of any  judgment  or  enter  into any

                                       20
<PAGE>
settlement that does not include as an unconditional  term thereof the giving by
the  claimant  or  plaintiff  to each  Indemnified  Party of a release  from all
liability in respect of such Action.  After written  notice by the  Indemnifying
Party to the Indemnified  Party of its election to assume control of the defense
of any  such  Action,  the  Indemnifying  Party  shall  not be  liable  to  such
Indemnified Party hereunder for any legal expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof.

     11.4  COMPUTATION OF CLAIMS.  All  computations of claims and the amount of
indemnification to which any Indemnified Party is entitled under this Article XI
shall be made (a) giving effect to the tax consequences of any such claim and of
such indemnification payments provided for herein and (b) after deduction of all
proceeds of insurance (net of retroactive premiums and self-insurance retention)
recoverable by the Indemnified Party with respect to such claims.

     11.5  EXCLUSIVE  REMEDY . The  parties  agree that the  provisions  of this
Article XI set forth the exclusive  remedy of the parties  following the Closing
for any breach of or  noncompliance  with the provisions of this Agreement,  any
Ancillary Agreement and any transactions  contemplated hereby or thereby, except
for any Losses that occur as a result of fraudulent  acts on the part of a party
hereto.

                                  ARTICLE XII.
                         SURVIVAL OF CERTAIN PROVISIONS

         The representations,  warranties, covenants, agreements and indemnities
of the parties contained in this Agreement shall survive the consummation of the
transactions contemplated herein and shall continue in full force for the period
commencing  on the  Closing  Date and  ending on the second  anniversary  of the
Closing Date (the "SURVIVAL PERIOD"); PROVIDED, HOWEVER, that (i) the provisions
of Section 3.4 (Title to Property - Owned),  Section 3.7  (Taxes),  Section 3.16
(Compliance with ERISA) and Section 3.17  (Environmental  Matters) shall survive
until the date which is sixty (60) days after the  expiration of the  applicable
statute of limitations period (including any extensions  thereof);  and (ii) the
covenants  and  agreements  of  the  parties   contained  herein  shall  survive
indefinitely. The Survival Period shall be extended automatically to include any
time period necessary to resolve a specific claim for indemnification  which was
asserted in accordance  with Article XI prior to the  expiration of the relevant
Survival Period; and PROVIDED, FURTHER, that any such extension shall apply only
as to claims asserted but not resolved within the Survival Period.

                                  ARTICLE XIII.
                                   TERMINATION

     13.1  TERMINATION.  This Agreement may be terminated  and the  transactions
contemplated hereby abandoned at any time prior to the Closing Date:

          (a) by mutual written consent of Seller and Buyer;

                                       21
<PAGE>
          (b) by either Seller or Buyer if the transactions  contemplated hereby
shall not have been  consummated  within ninety (90) days  following the date of
this Agreement;

          (c) by  Seller  if there  shall  have  been any  material  breach of a
representation  and warranty or material  obligation of Buyer  hereunder and, if
such breach is curable,  such default  shall have not been  remedied  within ten
(10) days after  receipt by Buyer of notice in writing  from  Seller  specifying
such breach and requesting that it be remedied;  provided that such ten (10) day
period  shall be extended  for so long as Buyer  shall be making all  reasonable
attempts to cure such breach, unless the breach is not susceptible of a cure;

          (d) by  Buyer if there  shall  have  been  any  material  breach  of a
representation and warranty or material obligation of Seller or Parent hereunder
and, if such breach is curable, such default shall not have been remedied within
ten (10) days after receipt by Seller of notice in writing from Buyer specifying
such breach and requesting that it be remedied;  provided that such ten (10) day
period shall be extended  for so long as Seller  shall be making all  reasonable
attempts to cure such breach, unless the breach is not susceptible of a cure; or

          (e) by either  Seller or Buyer if any  governmental  entity shall have
issued an order,  decree  or  ruling  or taken  any  other  action  restraining,
enjoining  or  otherwise   prohibiting  the  consummation  of  the  transactions
contemplated  hereby and such order,  decree,  ruling or any other  action shall
have become final and non-appealable.

     13.2 EFFECT OF  TERMINATION.  In the event of termination of this Agreement
as provided above,  this Agreement  shall forthwith  become of no further effect
and,  except  for  termination  resulting  from a  breach  by a  party  of  this
Agreement, there shall be no liability or obligation on the part of any party or
their respective Affiliates (except as set forth in Article X hereof which shall
survive  the  termination).  Moreover,  in the  event  of  termination  of  this
Agreement pursuant to Section 13.1(c) or 13.1(d), nothing herein shall prejudice
the ability of the non-breaching party from seeking damages from any other party
for any breach of this Agreement, including, without limitation, attorneys' fees
and the right to pursue any remedy at law or in equity.

                                  ARTICLE XIV.
                                  MISCELLANEOUS

     14.1  NOTICES.  All  notices,  requests,  demands and other  communications
required or permitted to be given or made hereunder shall be deemed to have been
duly  given if the same shall be in writing  and shall be  delivered  or sent by
overnight courier, prepaid first class, certified or registered air mail, return
receipt  requested,  or by facsimile  transmission,  to the  intended  recipient
thereof at its address or facsimile number set forth below:

                                       22
<PAGE>
         If to Seller: National Health Benefits & Casualty Corp.
                       15720 North Greenway-Hayden Loop
                       Suite 1
                       Scottsdale, AZ  85260
                       Attention: Stephen J. Carder
                       Facsimile No.:  480-451-9087

                       with a copy to: Bryan Cave LLP
                                       Two North Central Avenue, Suite 2200
                                       Phoenix, Arizona 85004-4406
                                       Attention:  Joseph P. Richardson, Esq.
                                       Facsimile No.: 602-364-7070

                       and to:         HealthStar Corp.
                                       15270 North Greenway-Hayden Loop, Suite 1
                                       Scottsdale, Arizona 85260
                                       Attention: Steven A. Marcus
                                       Facsimile No.: 480-451-9087

         If to Buyer:  Carlmont Capital Group, Inc.
                       2202 Otay Lakes Road, Suite 502
                       Chula Visa, California  91915
                       Attention:  Blaine D. Pollock, President
                       Facsimile No.: 619-216-2743

Any such  notice  shall be  effective  upon  receipt.  Any party may  change the
address to which  notices to such party shall be  delivered  or mailed by giving
notice of such change to the other parties hereto in the manner provided herein.

         14.2 BINDING  AGREEMENT;  ASSIGNMENT.  This Agreement  shall be binding
upon and shall inure to the benefit of and be  enforceable by the parties hereto
and their respective  successors and permitted assigns.  No party may assign any
of its rights or delegate  any of its  obligations  hereunder  without the prior
written consent of the other parties hereto.

         14.3  ENTIRE  AGREEMENT;  AMENDMENTS.  This  Agreement,  including  the
exhibits and schedules  attached hereto,  constitutes the entire agreement among
the parties with respect to the subject  matter hereof and  supersedes all prior
discussions  and  agreements  among the  parties  with  respect to such  subject
matter,  including,  without limitation,  the Letter of Intent between Buyer and
Parent dated October 7, 1999.  This  Agreement  may not be amended,  modified or
supplemented except by an instrument in writing signed by or on behalf of all of
the parties hereto.

         14.4  SEVERABILITY.  If  any  provision  of  this  Agreement  shall  be
determined  to be  illegal,  invalid or  unenforceable  by a court of  competent
jurisdiction,  it is the intention of the parties that the remaining  provisions
hereof shall remain in full force and effect. To the extent legally permissible,

                                       23
<PAGE>
any  illegal,  invalid or  unenforceable  provision of this  Agreement  shall be
replaced by a valid provision  which shall  implement the commercial  purpose of
the illegal, invalid or unenforceable provision.

     14.5  COUNTERPARTS.  This  Agreement  may  be  executed  in any  number  of
counterparts,  each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.

     14.6  HEADINGS;  INTERPRETATION.  The table of  contents  and  article  and
section  headings  contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or  interpretation of the Agreement.
Both parties have participated  substantially in the negotiation and drafting of
this  Agreement and each party hereby  disclaims any defense or assertion in any
litigation or arbitration that any ambiguity herein should be construed  against
the draftsman.

     14.7  REMEDIES;  NO  WAIVER.  The  rights  and  remedies  provided  in this
Agreement and the Ancillary  Agreements shall be cumulative and not exclusive of
any  rights or  remedies  provided  by Law.  No failure or delay by any party in
exercising any right,  power or privilege under this Agreement will operate as a
waiver of such right,  power or privilege.  A single or partial  exercise of any
right,  power or privilege  will not  preclude any other or further  exercise of
such right, power or privilege or any other right, power or privilege. No waiver
shall  constitute a waiver of or assent to any  succeeding  breach of or default
under the same or any other provision of this Agreement.

     14.8 GOVERNING LAW. This Agreement  shall be governed by, and construed and
enforced in accordance with, the Laws of the State of Arizona, without regard to
rules relating to conflicts of Law.

     14.9 PAYMENT OF FEES AND  EXPENSES.  Except as may otherwise be provided in
this  Agreement,  each  party  hereto  shall pay all fees and  expenses  of such
party's respective counsel, accountants and other experts and all other expenses
incurred by such party incident to the negotiation, preparation and execution of
this Agreement and the  consummation  of the  transaction  contemplated  hereby,
including any finder's or brokerage fee.

                                       24
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.

                                 SELLER:

                                 NATIONAL HEALTH BENEFITS & CASUALTY CORP.

                                 By /s/ Stephen A. Carder
                                    ------------------------------------------
                                 Name: Stephen A. Carder
                                 Title: President


                                 PARENT:

                                 HEALTHSTAR CORP.

                                 By /s/ Stephen A. Marcus
                                    ------------------------------------------
                                 Name: Stephen A. Marcus
                                 Title: Vice President & Chief Financial Officer


                                 PURCHASER:

                                 CARLMONT CAPITAL GROUP, INC.

                                 By /s/ Blaine Pollock
                                    ------------------------------------------
                                 Name: Blaine Pollock
                                 Title: President