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                                 BLACK & COMPANY

August 7, 1997

Mr. Taylor Devine, President & CEO
Mr. Ken Ross, CFO
Coffee People, Inc.
15100 SW Koll Parkway, Suite J
Beaverton, OR  97006

                                  CONFIDENTIAL

Dear Taylor and Ken:

Confirming  our recent  conversation,  Black & Company,  Inc.  ("Black"  or "the
Advisor")  would be pleased to act as financial  advisor to Coffee People,  Inc.
("Coffee  People" or the "Company") in connection  with the evaluation of Coffee
People's strategic financing  alternatives and acquisition  strategy.  Among the
financing  alternatives  that will be  evaluated  are  financing  in the public,
private and corporate markets and real estate financing vehicles. This financial
advisory   assignment   will  have  two  stages:   an  Advisory   Stage  and  an
Implementation Stage.

ADVISORY STAGE

During the Advisory Stage, Black will:

     1.   Study and evaluate the Company's business prospects as part of their
          due diligence;

     2.   Assist  the  Company  in  evaluating   its  strategic   financing
          alternatives,  including public,  private and corporate financings
          and real estate financing vehicles;

     3.   Advise  the  Company  as to a range  of  values  which  might  be
          achieved for such  strategic  alternatives  given  today's  market
          environment, and the likely structure of a Transaction;

     4.   Review  the   Company's   options  for  possible   future  public
          offerings, with Black acting as a manager or co-manager;

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     5.   Regarding  mergers  and  acquisitions,  we will  develop the most
          promising  ideas from the list of companies we discussed  with you
          on June 12, 1997, as well as other  opportunities  that may arise;
          and

     6.   If  requested,  make  presentations  to the Board of Directors of
          Coffee People.

IMPLEMENTATION STAGE

If, based on the results of the Advisory Stage, the Board of Directors of Coffee
People  should  decide to  pursue a  Transaction,  Black  shall  proceed  to the
Implementation Stage. In this stage, Black will:

     1.   Advise  Coffee  People with regard to the  structure and terms of
          any  Transaction  which might be  realized  in the current  market
          environment;

     2.   Assist Coffee People in identifying  and  evaluating  prospective
          qualified private investors,  corporate  investors and prospective
          candidates  for merger or  acquisition  (the "List").  The Company
          shall  inform  Black  of  all  corporate  opportunities  including
          prospective  acquisitions,  mergers and  investment  proposals for
          equity  or  convertible  securities  of  the  Company,  and  these
          opportunities  will be placed on the List unless the Company gives
          good and substantial  reason for their  exclusion.  Black will not
          unreasonably  object  to  such  exclusions.  In the  event  of any
          disagreement, the Company, in its sole discretion, shall determine
          whether such opportunity shall be placed on the List.

     3.   Work  with  Coffee  People  to  prepare  any  necessary  material
          concerning the Company to be given to prospective investors;

     4.   Assist in  negotiations  to obtain price and other material terms
          for the proposed financing that are most favorable to the Company;

     5.   At the request of the Board of Directors  of the Company,  render
          an opinion (an  "Opinion")  as to the fairness of the  Transaction
          from a financial point of view for the Company's shareholders.

          It is  understood  that any opinion shall be in such a form as the
          Advisors  shall  determine  and that the Opinion  will be prepared
          solely for the  confidential  use of the Board of Directors of the
          entity  to  which  it is  rendered  and  will  not be  reproduced,
          summarized, described, referred to or given to any other person or
          otherwise made public without the Advisor's prior written consent.
          If any such Opinion is included in a proxy  statement to be mailed
          to the Company's  stockholders in connection with the Transaction,
          the Opinion will be  reproduced  in such proxy  statement in full,

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          and any  description of or reference to the Advisors or summary of
          the Opinion in such proxy  statement will be in a form  acceptable
          to the Advisors and their counsel.

     6.   Advise on such other terms and  conditions  and any other actions
          necessary to  consummate  the  Transaction.

If the Company  decides to pursue a public offering in this stage, the
Advisors will:

     1.   Advise the Company  with regard to the  structure  and terms of a
          public  offering  which might be  realized  in the current  market
          environment;

     2.   Assist the Company in planning public equity offerings; and

     3.   Manage any public  equity  offerings,  including  preparation  of
          prospectus, filing documents, and roadshow materials, managing the
          underwriting  syndicate,  organizing  a roadshow  to  present  the
          Company to qualified  investors,  selling the stock,  managing the
          books and records concerning the public offering,  making a market
          in the stock, and providing in-depth research coverage.

If Coffee People decides to pursue a sale of all or part of the Company's  stock
or assets, or acquire a third party in this stage, Black will:

     1.   Advise  Coffee  People with regard to the  structure and terms of
          any  Transaction  which might be  realized  in the current  market
          environment;

     2.   Assist in negotiations to obtain price and other material terms for
          the proposed  Transaction  favorable to the Company;

     3.   Assist Coffee People in developing  the List of parties which may
          be interested in acquiring the Company or a portion of its assets;

     4.   Advise  Coffee People on the  reasonableness  of the terms in any
          Letter(s) of Intent for a Transaction and on any other terms which
          should be included,  and assist in negotiating such a Letter(s) of
          Intent  that  is  mutually  satisfactory  to the  Company  and the
          potential acquirer and/or merger partner or acquisition candidate;
          and

     5.   Work with Coffee People and its corporate  counsel to negotiate a
          definitive agreement and other related documentation to fairly and
          favorably reflect the agreed material terms and, at the request of
          the Board of Directors of Coffee People,  render an opinion as the
          fairness of the Transaction from a financial point of view for its
          shareholders.

<PAGE>


COMPENSATION

During both the Advisory Stage and the Implementation  Stage, Coffee People will
reimburse Black for all reasonable out-of-pocket expenses, not to exceed $500 in
any month without written approval of the Company,  including fees of counsel if
approved in writing in advance by the Company. These out-of-pocket expenses will
be payable to Black upon request.  There will be no additional  fee for services
provided by Black to the Company during the Advisory Stage of this assignment.

Should  the  Company  raise  funds by  issuing  securities  to one or more third
parties  in one or  more  private  placement(s)  or  minority  equity  corporate
partnering  Transactions  during the term of this  Agreement,  or with  entities
named on the List within six (6) months of the  termination  of this  Agreement,
Black will receive a Transaction  Fee equal to six percent (6%) of the first $10
million of  Aggregate  Consideration  to Coffee  People plus two percent (2%) of
Aggregate Consideration in excess of $10 million. In addition, the Advisor shall
receive a ten percent (10%) Warrant of the  Aggregate  Consideration  at a price
equal  to  120% of the  price  per  share  paid to the  Company  in the  private
placement  or corporate  partner  Transaction.  The Warrant will be  exercisable
beginning one year from the date of issuance and expire in ten (10) years.  Such
Warrant  will be callable  by the  Company at 140% of the strike  price on terms
similar to the warrant  issued in connection  with the Company's  initial public
offering.

Should Coffee People enter into a Transaction  or  Transactions  approved by the
Board of  Directors  or not  actively  opposed by the Board of  Directors  which
result in more than fifty percent  (50%) of the Company's  stock or assets being
held by a third  party,  Black  will  receive a  Transaction  Fee equal to three
percent (3%) of the first $10 million of Aggregate Consideration received by the
Company and/or its  shareholders,  plus two percent (2%) of the next $10 million
of  Aggregate  Consideration,  plus  one  and  one-half  percent  (1.5%)  of the
Aggregate Consideration in excess of $20 million.

Should the  Company  acquire the stock or assets of a third  party,  the Advisor
will receive a Transaction  Fee of two and one-half  percent (2.5%) of the first
$10 million of Aggregate  Consideration  in such a Transaction or  Transactions,
plus two percent (2%) of the next $10 million of Aggregate  Consideration,  plus
one and one-half percent (1.5%) of the Aggregate  Consideration in excess of $20
million.

The  Advisor  will be entitled to the  Transaction  Fees  referred to above with
respect to any  Transaction  that occurs during the term of this  Agreement,  or
within six (6) months following the termination of this Agreement with any third
party identified by the Advisor and named on the List.

If Coffee People completes any public offerings of securities, Black will manage
or  co-manage  the  public   offering(s)   receiving  the  usual  and  customary
underwriting  fees,  at least equal to those  received by any  co-manager of the
offering.

<PAGE>

If an Opinion is rendered at the request of the  Company's  Board of  Directors,
the Advisors will receive, in addition to the Transaction Fees indicated herein,
an additional fee of $100,000 for Transactions  under $10 million,  $200,000 for
Transactions in excess of $20 million involving a change of control and $150,000
for  Transactions  between $10 million and $20 million,  which shall be due upon
delivery of such  Opinion(s) and payable before or on the date of Closing of the
Transaction(s)  described herein or immediately upon the Company's determination
that such closing is unlikely to occur.

Aggregate Consideration is defined as cash and/or securities received by or paid
by Coffee People and/or its  shareholders.  Consideration  will include debt and
other non-operating liabilities assumed by the Company or a third party. If, and
to the extent that the consideration in a Transaction is cash or securities, any
Transaction  Fees shall be paid as and when the cash and securities are received
or paid by the Company and/or its shareholders.

INDEMNIFICATION

Coffee  People  agrees  to  indemnify  Black as set forth in a  separate  letter
agreement between Black and the Company.
TERM

Unless otherwise extended, the duration of this agreement is two (2) years. This
engagement  may be terminated at any time upon thirty (30) days notice by either
the  Company or the  Advisor.  No such  termination  will  affect the  Company's
obligation to pay expenses incurred prior to such termination or to indemnify as
herein  provided.  Black shall be entitled to the  Transaction  Fee  referred to
above in respect to any private placement,  corporate partnering  Transaction or
Transactions  with  third  party(ies)  on the List which  occurs  within six (6)
months of such  termination if the termination  notice was made by Coffee People
or within six (6) months of the end of this Agreement.

The team assigned by Black for this  assignment  will include  Bruce  Alexander,
President and CEO;  Laura Black,  Managing  Director,  Corporate  Finance;  Fred
Roehm, Financial Analyst and Shawn Willard, Research Analyst. We look forward to
working with you on this  assignment.  Please  confirm that the  foregoing is in
accordance  with Coffee  People's  understanding  by signing and returning  this
letter to me at your earliest convenience.

Best regards,                                   Accepted & Agreed:
BLACK & COMPANY, INC.                           COFFEE PEOPLE, INC.


by:      /s/ Laura Black                        by: :    /s/ Taylor Devine
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         Laura Black                                     Taylor Devine
         Managing Director                               President & CEO
         Corporate Finance

Date:    August 11, 1997                        Date:    25 August 1997
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