June 15,1999


                    AGREEMENT OF PURCHASE AND SALE OF ASSETS

                    BY AND BETWEEN LA JOLLA COFFEE CO., INC.

                         AND STEPHEN'S COFFEE CO., INC.


     This  Agreement  and  Purchase  and Sale of Assets  (this  "Agreement")  is
entered into the 15th day of June 1999 (the "Effective  Date") by and between La
Jolla Coffee  Company  Inc., a Washington  corporation  (the  "Purchaser"),  and
Stephen's Coffee Company Inc., a California corporation (the "Seller").

                                    RECITALS

     A. The Board of Directors of the Purchaser and the Seller  believe it is in
the best  interests  of each such  company  and each such  company's  respective
shareholders that the Purchaser  acquire  substantially all of the assets of the
Seller, subject to the liabilities assumed in this Agreement and, in furtherance
thereof, have approved the Transaction.

     B. The  Purchaser and the Seller wish to make certain  representations  and
other agreements in connection with the Transaction.

     C. The  parties  intend  that this  Transaction  be within  the  meaning of
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended.

                                    AGREEMENT

     In  order  to  consummate  such  a  transaction,  the  parties  hereto,  in
consideration of the mutual  agreements and on the basis of the  representations
and warranties hereinafter set forth, do hereby agree as follows:

                                   DEFINITIONS

     As used in this Agreement, the terms identified below in this Article shall
have the meanings  indicated,  unless a different and common meaning of the term
is clearly  indicated  by the  context,  and  variants  and  derivatives  of the
following terms shall have correlative  meanings.  To the extent that certain of
the definitions set forth below suggest, indicate, or express agreements between
or among parties to this Agreement,  or contain representations or warranties or
covenants  of a  party,  the  parties  agree to the  same by  execution  of this
agreement.


<PAGE>


     Acquired  Assets:  The assets of the Seller being acquired by the Purchaser
pursuant to the terms  hereof,  as  identified  on Schedule 1.1 hereto,  and all
other  assets of the Seller,  tangible  or  intangible  (including  contractual,
warranty, and other rights), the use or value of which is inextricably linked to
the assets so identified, or which relate to or arise out of transactions of the
Seller involving the assets so identified.

     Affiliate:  When used with  respect  to a person,  an  "affiliate"  of that
person is a person Controlling, Controlled by, or under common Control with that
person.

     Agreement:  This Agreement of Purchase and Sale of Assets, including all of
its exhibits and schedules and all other documents  specifically  referred to in
this  Agreement  that  have  been  or are to be  delivered  by a  party  to this
Agreement  to another  such party in  connection  with the  Transaction  or this
Agreement,  and  including  all  duly  adopted  amendments,  modifications,  and
supplements  to or of this  Agreement  and such  exhibits,  schedules  and other
documents.

     Assumed  Liabilities:  The  Liabilities  of the Seller being assumed by the
Purchaser pursuant to this Agreement, as specifically identified in Schedule 1.1
to this Agreement, and no other Liabilities of the Seller.

     Business  Day:  Any day that is not a Saturday,  Sunday,  or a day on which
banks in New York are authorized to close.

     Claims Request:  A Claims Request is a written request  pursuant to which a
party seeks  reimbursement  for  alleged  Losses,  which shall  contain (i) such
information as is, under the  circumstances,  necessary to allow the reimbursing
party to determine its  liability (if any) for the alleged  Losses for which the
other party seeks  reimbursement;  (ii) supporting  documentation  sufficient to
allow the reimbursing party to verify the amount of the alleged Losses;  (iii) a
legally  binding and  enforceable  assignment  to the  reimbursing  party of all
Recoveries  related to the  claim;  and (iv) such  other  information  as may be
specifically required by the provisions of this Agreement.

     Closing:  The completion of the Transaction,  to take place as described in
Article 2.

     Closing Date: The date on which the Closing actually occurs, which shall be
June 15, 1999,  unless  otherwise  agreed by the  parties,  but shall not in any
event be prior to  satisfaction or waiver of the conditions to Closing set forth
in Article 5 hereof.

     Closing Time:  The time at which the Closing  actually  occurs.  All events
that are to occur at the Closing  Time  shall,  for all  purposes,  be deemed to
occur simultaneously,  except to the extent, if at all, that a specific order of
occurrence is otherwise described.

     Code:  The Internal  Revenue Code of 1986,  as amended and in effect at the
time of execution of the Agreement.

     Complete Withdrawal:  A "complete  withdrawal" from a Multiemployer Plan as
defined in  Section  4203 of ERISA or  successor  provisions  to such  provision
adopted by  amendments to ERISA and  including  other  provisions of ERISA or of
other law, and  regulations  adopted  under ERISA or such other law,  modifying,
amending, interpreting or otherwise affecting the application of such provision,
either in general or as applied to the nature or  circumstances  of a particular
Entity that is a party to, or is  affected by or is involved in the  Transaction
and with


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<PAGE>


respect  to  which  Entity  the use of the  term in  this  Agreement,  or in the
particular location in this Agreement, is relevant.

     Consideration:  The securities of the Purchaser to be paid by the Purchaser
to the Seller as the Closing for the Acquired  Assets,  subject to  modification
and adjustment as provided herein.

     Control:  Generally,  the power to direct the  management  or affairs of an
Entity.

     Counsel to the Seller: Robert Nostrand, Esq.

     Counsel to the  Purchaser:  Robert  Blair  Krueger  II, Esq. of The Krueger
Group, LLP, a professional law partnership.

     Entity: A corporation,  partnership, sole proprietorship, joint venture, or
other form of organization formed for the conduct of a business,  whether active
or passive.

     ERISA: The Employee  Retirement Income Security Act of 1974, as amended and
in effect at the time of execution of this Agreement.

     Exchange Act: The  Securities  Exchange Act of 1934, as amended to the date
as of which any reference  thereto is relevant under this  Agreement,  including
any substitute or replacement statute adopted in place or lieu therefor.

     GAAP: Generally Accepted Accounting Principles, as in effect on the date of
any statement,  report or  determination  that purports to be, or is required to
be, prepared or made in accordance with GAAP. All references herein to financial
statements  prepared in accordance  with GAAP shall mean in accordance with GAAP
consistently applied throughout the periods to which reference is made.

     HSR Act:  The  Hart-Scott-Rodino  Antitrust  Improvements  Act of 1976,  as
amended.

     Inventories:  The  stock of raw  materials,  work-in-process  and  finished
goods, including but not limited to finished goods purchased for resale, held by
the Seller for manufacturing,  assembly, processing,  finishing, sale, or resale
to  others,  from time to time in the  ordinary  course of the  business  of the
Seller  in  the  form  in  which  such   inventories  then  are  held  or  after
manufacturing, assembling, finishing, processing, incorporating with other goods
or items, refining, or the like.

     IRS: The Internal Revenue Service.

     Liabilities: At any point in time (the Determination Time), the obligations
of a person  or  Entity,  whether  known or  unknown,  contingent  or  absolute,
recorded  on its  books or not,  arising  or  resulting  in any way from  facts,
events,  agreements,  obligations or occurrences that existed or transpired at a
prior point in time, or resulted  from the passage of time to the  Determination
Time, but not including obligations accruing or payable after Determination Time
to the extent (but only to the  extent)  that such  obligations  (1) arise under
previously existing agreements for services,  benefits, or other considerations,
and (2) accrue or become  payable with respect to services,  benefits,  or other
considerations received by the person or Entity after the Determination Time.

     Loss or  Losses:  Shall  include  any  claim,  liability,  cost,  damage or
expense,  including  reasonable attorneys fees, court costs, or other reasonable
costs incurred or in the process of


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<PAGE>


being incurred in investigating,  defending against, or settling any such claim,
liability, cost, damage or expense, or any amounts paid in settlement thereof.

     Multiemployer  Plan:  A  "Multiemployer  plan" as defined in ERISA  Section
3(37) or Section 414(F) of the Code, or, in either case, successor provisions to
such provisions  adopted by amendments to ERISA or the Code, as the case may be,
and including,  in each case, other provisions of ERISA, of the Code or of other
law,  and  regulations  adopted  under  ERISA  or the  Code or such  other  law,
modifying,  amending,  interpreting,  or otherwise  affecting the application of
such provisions,  either in general or as applied to the nature or circumstances
of a  particular  Entity that is a party to, or is affected by or is involved in
the  Transaction  and with  respect to which  Entity the use of the term in this
Agreement, or in the particular location in this Agreement, is relevant.

     Partial  Withdrawal:  A "partial  withdrawal" from a Multiemployer Plan, as
defined in  Section  4205 of ERISA or  successor  provisions  to such  provision
adopted by  amendments to ERISA and  including  other  provisions of ERISA or of
other law, and  regulations  adopted  under ERISA or such other law,  modifying,
amending,   interpreting   or  otherwise   affecting  the  application  of  such
provisions,  either in general or as applied to the nature or circumstances of a
particular  Entity  that is a party to, or is  affected by or is involved in the
Transaction  and  with  respect  to  which  Entity  the use of the  term in this
Agreement, or in the particular location in this Agreement, is relevant.

     Payables:  Liabilities  of a party arising from the  borrowings of money or
the incurring of obligations for merchandise or goods purchased.

     Plan  Termination:  A  termination  of a Pension Plan,  whether  partial or
complete, within the meaning of Title IV of ERISA.

     PBGC: The Pension Benefit Guaranty Corporation.

     Pension  Plan: A "pension  plan" or  "employee  pension  benefit  plan," as
defined in  Section  3(2) of ERISA or  successor  provisions  to such  provision
adopted by  amendments to ERISA and  including  other  provisions of ERISA or of
other law, and  regulations  adopted  under ERISA or such other law,  modifying,
amending,   interpreting,   or  otherwise  affecting  the  application  of  such
provision,  either in general or as applied to the nature or  circumstances of a
particular  Entity  that is a party to, or is  affected by or is involved in the
Transaction  and  with  respect  to  which  Entity  the use of the  term in this
Agreement, or in the particular location in this Agreement, is relevant.

     Prohibited  Transaction:  A "prohibited  transaction,"  as defined in ERISA
Section  406 or  Section  4975(c)  of the Code,  or, in either  case,  successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and including, in each case, other provisions of ERISA, of the Code
or of other law, and  regulations  adopted under ERISA or the Code or such other
law, modifying,  amending,  interpreting, or otherwise affecting the application
of  such  provisions,  either  in  general  or  as  applied  to  the  nature  or
circumstances of a particular Entity that is a party to, or is affected by or is
involved in the Transaction and with


                                       4
<PAGE>


respect  to  which  Entity  the use of the  term in  this  Agreement,  or in the
particular location in this Agreement, is relevant.

         Proprietary Rights:  Trade secrets,  copyrights,  patents,  trademarks,
service  marks,  customer  lists,  and all similar types of intangible  property
developed,  created or owned by the Seller,  or used by the Seller in connection
with its business, whether or not the same are entitled to legal protection.

     Purchaser: La Jolla Coffee Co., Inc., a Washington corporation, which under
the terms of this Agreement is acquiring  substantially all of the assets of the
Seller.

     Receivables:  Accounts Receivable,  notes receivable, and other obligations
appearing  as assets on the books of the Seller,  and  customarily  reflected as
assets  in  balance  sheets  of  entities  prepared  in  accordance  with  GAAP,
indicating moneys owed to the entity.

     Recovery or Recoveries:  Includes any recovery or reimbursement received or
receivables  by the  parties  from  any  source,  other  than the  other  party,
including without limitation, insurance proceeds.

     Reportable  Event: A "reportable  event," as defined in Section  4043(b) of
ERISA or successor  provisions to such provision  adopted by amendments to ERISA
and including other provisions of ERISA or of other law, and regulations adopted
under ERISA or such other law, modifying,  amending,  interpreting, or otherwise
affecting the application of such provision,  either in general or as applied to
the nature or  circumstances  of a  particular  Entity  that is a party to or is
affected by or is involved in the  Transaction  and with respect to which Entity
the use of the term in this  Agreement,  or in the  particular  location in this
Agreement, is relevant.

     SEC: The Securities and Exchange Commission.

     Securities  Act: The  Securities  Act of 1933, as amended to the date as of
which any  reference  thereto is relevant  under this  Agreement,  including any
substitute or replacement statute adopted in place or lieu thereof

     Seller: Stephen's Coffee Co., Inc., a California corporation, as the seller
of the Acquired Assets.

     Transaction:  The  Sale of the  Acquired  Assets,  subject  to the  Assumed
Liabilities,  for the Consideration as contemplated by, and subject to the terms
and conditions of, this Agreement.

     Unaudited  Financial  Statements:  The  balance  sheet,  income  statement,
statement  of  shareholders'  equity,  and  statement  of cash flows or, in each
instance, equivalent statements as commonly prepared.

     Welfare Plan: A "welfare  plan" or an "employee  welfare  benefit plan," as
defined in  Section  3(1) of ERISA or  successor  provisions  to such  provision
adopted by  amendments to ERISA and  including  other  provisions of ERISA or of
other law, and  regulations  adopted  under ERISA or such other law,  modifying,
amending,   interpreting,   or  otherwise  affecting  the  application  of  such
provision,  either in general or as applied to the nature or  circumstances of a
particular  Entity  that is a party to, or is  affected by or is involved in the
Transaction.


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<PAGE>


                                    ARTICLE 1

                                 THE TRANSACTION

     Section 1.1 The Transaction.  On the Closing Date, and at the Closing Time,
subject  in all  instances  to each of the  terms,  conditions,  provisions  and
limitations contained in this Agreement, the Seller shall sell, transfer, convey
and assign to the Purchaser,  by instruments  satisfactory  to the Purchaser and
its counsel,  and the  Purchaser  shall  acquire  from the Seller,  the Acquired
Assets, subject to Assumed Liabilities,  in exchange for the Consideration.  The
assets contained in Schedule 1.1 hereto are all the assets reasonably  necessary
to consummate the transaction. The liabilities contained in Schedule 1.1 are all
of the liabilities being assumed by the Purchaser pursuant to the Transaction.

     Section 1.2.  The  Consideration.  Immediately  after  consummation  of the
Transaction,  the Seller will be  entitled to receive one million  shares of the
Common Stock of the Purchaser.

     Section  1.3  Directors  and  Officers.  The  directors  of the  Purchaser,
immediately prior to June 15, 1999, shall be the directors of the Sellers,  each
to hold office in accordance with the Articles of  Incorporation  and By-laws of
the Purchaser Section.

     Section 1.4 Effect on Capital Stock.  As of June 15, 1999, by virtue of the
Transaction,  and  without any action on the part of the holder of any shares of
the issued and outstanding shares of the Purchaser:

     (a)  Adjustments to Common Stock.  The Purchaser  shall authorize and issue
one million  shares of its common stock,  leaving  approximately  twenty million
(20,000,000)  shares  issued  and  outstanding  to  holders  of  record  of  the
Purchaser, of which approximately one million (1,000,000) shall be issued to the
Seller.

     (b) Fractional  Shares.  No fractional shares of the Purchaser Common Stock
("Purchaser Common") shall be issued.

     Section 1.5 Tax Consequences. It is intended by the parties hereto that the
Transaction  shall  constitute  a  reorganization  within the meaning of Section
368(a)(1)(C) of the Internal


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<PAGE>


Revenue Code of 1986,  as amended.  The parties to this  Agreement  hereby adopt
this  Agreement  as a "plan of  reorganization"  within the  meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States  Treasury  Regulations.  No party
shall take any action  that would  cause the  Transaction  to fail to qualify as
such a reorganization.

     Section 1.6 Taking of Necessary  Action:  Further  Action.  If, at any time
after the June 15, 1999,  any such  further  action is necessary or desirable to
carry out the purposes of this  Agreement  and to vest the  Purchaser  with full
right,  title, and possession to  substantially  all assets,  property,  rights,
privileges,  powers and franchises of the Seller,  the officers and directors of
the  Seller  and  shall be  fully  authorized  in the  name of their  respective
corporations  or otherwise to take, and will take, all such lawful and necessary
action.

                                    ARTICLE 2

                                     CLOSING

     Section 2.1 The Closing and the Closing Date.  The closing (the  "Closing")
shall be held at 9060 Activity  Road,  Suite A, San Diego,  CA. 92126,  at 10:00
a.m. on June 15, 1999 (the "Closing Date.") At the Closing,  the parties to this
Agreement  will  transfer   certificates  and  exchange  other  instruments  and
documents  in order to  determine  whether  the  terms  and  conditions  of this
Agreement have been  satisfied.  Upon the  determination  of each party that its
conditions to consummate  the  Transaction  have been  satisfied or waived,  the
Seller shall deliver to the Purchaser all instruments or documents  required for
the  transfer  of  substantially  all of the  Seller's  assets,  subject  to the
liabilities assumed in this Agreement, to the Purchaser,  and the Consideration,
one million  (1,000,000)  shares of the Common Stock of the Purchaser,  shall be
delivered to the Seller.

     Section 2.2 Termination or Failure to Close. In the event the Closing shall
not have  occurred  within  sixty (60) days from the date hereof and each of the
parties has  performed  all of the  obligations  required to be  performed by it
under the terms of this Agreement,  and the parties have not otherwise agreed to
extend the Closing  Date, in writing,  then this  Agreement  shall  thereupon be
deemed to have been  terminated  and the parties shall return to the status that
existed prior to the execution of this Agreement.

     Section 2.3  Expenses.  The costs and  expenses  actually  or  incidentally
incurred in connection with the  preparation,  negotiation of this Agreement and
the Closing shall be borne by


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<PAGE>


the Seller,  including the  reproduction of records and independent  consultancy
costs, if any, relating to professionals engaged by the parties.


                                    ARTICLE 3

                         REPRESENTATIONS AND WARRANTIES

     Section 3.1  Representations  and  Warranties of the Seller.  As a material
inducement  to the Purchaser to execute and perform its  obligations  under this
Agreement,  the Seller represents and warrants to the Purchaser,  subject to the
exceptions specifically disclosed in the schedules,  referencing the appropriate
section  number,  delivered by the Seller to the Purchaser prior to signing this
Agreement (the "Seller Schedules") as follows:

     (a)  Organization  and Standing of the Seller.  The Seller is a corporation
duly  organized and validly  existing and in good standing under the laws of the
State of California. It has all requisite corporate power and authority to carry
on its business as now being  conducted,  to enter into this  Agreement,  and to
carry out and perform the terms and provisions of this Agreement.  The Seller is
duly  qualified to do business and is in good standing in each  jurisdiction  in
which the failure to be so qualified would have a significant negative effect on
the condition (financial or otherwise),  business,  net worth, assets (including
intangible  assets),  properties or operations  (hereinafter  "Material  Adverse
Effect") of the Seller.  The Seller has no  subsidiaries  and,  further,  has no
direct or indirect interest,  either by way of stock ownership or otherwise,  in
any other firm, corporation, association, or business.

     (b) Capitalization and Indebtedness for Borrowed Monies.

          (i) The  Purchaser is duly and lawfully  authorized  by the  Purchaser
     Articles  to issue  1,000,000  shares of  Purchaser  Common  Stock of which
     approximately  20,000,000  shares are validly issued and outstanding on the
     date of this  Agreement.  All the  outstanding  shares of Purchaser  Common
     stock have been duly  authorized  and validly issued and are fully paid and
     nonassessable and free of preemptive rights.


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          (ii)  The  Purchaser  is  not  presently  liable  on  account  of  any
     indebtedness  for borrowed  monies,  except as  reflected in the  financial
     statements described in subparagraph (e) below.

     (c) Seller's  Authority.  The Seller has all requisite  corporate power and
authority  to enter  into this  Agreement  and to  consummate  the  transactions
contemplated hereby. The execution,  delivery, and performance of this Agreement
has been duly authorized by all requisite  corporate action.  This Agreement has
been duly  executed  and  delivered  by the Seller and  constitutes  a valid and
binding  obligation  of the  Seller  enforceable  in  accordance  with its terms
(except as limited  by  bankruptcy,  insolven  cy, or other laws  affecting  the
enforcement of creditors' rights).  The execution and delivery of this Agreement
by the Seller and the consummation of the transactions  contemplated hereby will
not  conflict  with or result in any  violation  of or  default  under  (with or
without notice or lapse of time or both) or give rise to a right of termination,
cancellation,  acceleration  of any obligation or to loss of a material  benefit
under (i) any  provision of the Seller's  Articles of  Incorporation  ("Seller's
Articles")  or the  Seller's  Bylaws  or (ii) any  mortgage,  indenture,  lease,
contract,  or other  agreement or  instrument,  permit,  concession,  franchise,
license,  judgment,  order, decree, statute, law, ordinance,  rule or regulation
applicable  to the Seller or its  properties  or assets.  No consent,  approval,
order, or  authorization  of, or  registration,  declaration or filing with, any
court,  administrative  agency or commission or other governmental  authority or
instrumentality  ("Governmental  Entity") is required by or with  respect to the
Seller in connection  with the  execution and delivery of this  Agreement or the
consummation of the  transactions  contemplated  hereby and thereby,  except for
such consents, approvals, orders, authorizations,  registrations,  declarations,
and filings as may be required under applicable state securities laws.

     (e) Financial  Statements.  The Seller has  furnished  the  Purchaser  with
unaudited  financial  statements  of the Seller as of  November  1998.  All such
financial  statements  present  fairly the financial  condition of the Seller at
such date, and the results of its  operations for the period therein  specified.
Furthermore, the unaudited Financial Statements were prepared in accordance with
generally  accepted   accounting   principles  ("GAAP")  applied  upon  a  basis
consistent with prior accounting periods.  The Seller' s unaudited balance sheet
is hereinafter referred to as the "Seller Balance Sheet," and all such financial
statements are hereinafter referred to as the "Seller Financial Statements."

     (f) Present  Status.  Since the date of the Seller  Balance  Sheet (or such
other date specifically set forth herein),  except as otherwise  contemplated by
this  Agreement,  the Seller has conducted its business only in the ordinary and
usual course and, without limiting the generality of the foregoing:


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<PAGE>


          (i) The Seller has not sustained any damage,  destruction,  or loss by
     reason of fire, explosion,  earthquake,  casualty, labor trouble (including
     but not limited to any claim of wrongful  discharge or other unlawful labor
     practice),  requisition  or taking of property by any  government  or agent
     thereof,  windstorm,  embargo,  riot,  act of God or public  enemy,  flood,
     accident,  revocation of license or right to do business,  total or partial
     termination, suspension, default or modification of contracts, governmental
     restriction or regulation,  other calamity,  or other similar or dissimilar
     event (whether or not covered by insurance) that would result in a Material
     Adverse Effect on the Seller;

          (ii)  There  have  been no  changes  in the  condition  (financial  or
     otherwise),   business,   net  worth,   assets,   properties,   operations,
     obligations  or  liabilities  (fixed or  contingent)  of the Seller  which,
     individually  or in the  aggregate,  have  resulted  or  may be  reasonably
     expected  (whether  before  or  after  the June 15,  1999) to  result  in a
     Material Adverse Effect on the Seller;

          (iii) The Seller has not  issued,  or  authorized  for  issuance,  any
     equity security, bond, note or other security of the Seller. The Seller has
     not granted or entered into any  commitment  or obligation to issue or sell
     any such  equity  security,  bond,  note or other  security  of the Seller,
     whether  pursuant  to  offers,   stock  option   agreements,   stock  bonus
     agreements,  stock purchase plans,  incentive compensation plans, warrants,
     calls, conversion rights or otherwise;

          (iv) The Seller has not  incurred  any  additional  debt for  borrowed
     money,  nor incurred any  obligation  or liability  (fixed,  contingent  or
     otherwise)  except in the  ordinary and usual course of the business of the
     Seller;

          (v) The  Seller  has not  paid any  obligation  or  liability  (fixed,
     contingent  or   otherwise),   or  discharged  or  satisfied  any  lien  or
     encumbrance, or settled any liability, claim, dispute, proceeding, suit, or
     appeal,  pending  or  threatened  against  it  or  any  of  its  assets  or
     properties, except for current liabilities included in Seller Balance Sheet
     and current liabilities  incurred since the date of Seller Balance Sheet in
     the ordinary and usual course of the business of the Seller;

          (vi) The Seller has not declared,  set aside for payment,  or paid any
     dividend, payment, or other distribution on or with respect to any share of
     capital stock of the Seller;

          (vii) The Seller has not purchased,  redeemed or otherwise acquired or
     committed itself to acquire, directly or indirectly, any share or shares of
     capital stock of the Seller;

          (viii) The Seller has not mortgaged,  pledged, otherwise encumbered or
     subjected to lien any of its assets or properties,  tangible or intangible,
     nor has it committed  itself to do any of the  foregoing,  except for liens
     for current taxes which are not yet due and payable


                                       10
<PAGE>


     and purchase money liens arising out of the purchase or sale of products or
     services made in the ordinary and usual course of business;

          (ix) The Seller  has not  disposed  of, or agreed to  dispose  of, any
     asset or property, tangible or intangible, except in the ordinary and usual
     course of-business,  and in each case for a consideration at least equal to
     the fair value of such  asset or  property,  nor has the  Seller  leased or
     licensed to others  (including  officers and  directors of the Seller),  or
     agreed so to lease or license, any asset or property;

          (x) The Seller has not  purchased  or agreed to purchase or  otherwise
     acquire  any debt or equity  securities  of any  corporation,  partnership,
     joint  venture,  firm  or  other  entity.  The  Seller  has  not  made  any
     expenditure or commitment for the purchase,  acquisition,  construction  or
     improvement of a capital asset;

          (xi) The Seller has not entered into any  transaction or contract,  or
     made any  commitment to do the same. The Seller has not waived any right of
     substantial  value or canceled any debts or claims or voluntarily  suffered
     any  extraordinary  losses,  which  individually  or in the aggregate would
     result in a Material Adverse Effect on the Seller;

          (xii) The Seller has not effected or agreed to effect any amendment or
     supplement to any employee  profit sharing,  stock option,  stock purchase,
     pension,  bonus,  incentive,   retirement,  medical  reimbursements,   life
     insurance,  deferred  compensation  or any other  employee  benefit plan or
     arrangement;

          (xiii)  The Seller has not  effected  or agreed to effect any  change,
     including by way of hiring or  involuntary  termination,  in its directors,
     executive officers, or key employees;

          (xiv) The Seller has not  effected or  committed  itself to effect any
     amendment or modification of the Seller's Articles or the Seller's By-laws;

          (xv) To the  knowledge of the Seller,  no statute has been enacted nor
     has any rule or regulation  been adopted  (whether before or after the date
     of Seller  Balance  Sheet) which may  reasonably be expected to result in a
     Material Adverse Effect on the Seller;

          (xvi) The Seller has not changed in any way its accounting  methods or
     practices (including any change in depreciation or amortization policies or
     rates, or any changes in policies in making or reversing accruals);


                                       11
<PAGE>


          (xvii) The  Seller has not made any loan to any person or entity,  and
     the Seller has not guaranteed the payment of any loan or debt of any person
     or entity; and

          (xviii)  The  Seller  has not  negotiated  or  agreed to do any of the
     things  described in the preceding  clauses (i) through  (xvii) (other than
     negotiations  with  the  Seller  and  its  representatives   regarding  the
     transactions contemplated by this Agreement).

     (g)  Litigation.  Except as disclosed  in Exhibit  1.1,  there is no claim,
dispute,  action,  proceeding,  suit or appeal, or  investigation,  at law or in
equity,  pending  against  the  Seller,  or  involving  any  of  its  assets  or
properties,  before any court,  agency,  authority,  arbitration  panel or other
tribunal, and, to the knowledge of the Seller, none have been threatened against
the Seller to the knowledge of the Seller. There are no facts which, if known to
shareholders,  customers,  governmental  authorities,  or other  persons,  would
result  in any such  claim,  dispute,  action,  proceeding,  suit or  appeal  or
investigation  which would have a Material  Adverse  Effect on the  Seller.  The
Seller is not  subject to any order,  writ,  injunction  or decree of any court,
agency, authority, arbitration panel or other tribunal, and the Seller is not in
default with respect to any notice, order, writ, injunction or decree.

     (h) Compliance With the Law and other  Instruments.  The business operation
of the  Seller  has been and is being  conducted  in all  material  respects  in
accordance with all applicable laws,  rules, and regulations of all authorities.
The  Seller  has not  received  any  notice of  violation  with  respect  to any
applicable laws,  regulations,  orders, or other  requirements of a Governmental
Entity or other  authority,  including,  without  limiting the generality of the
foregoing,  the Employee Retirement Income Security Act of 1974, as amended. The
Seller is not in violation of, or in default under, any term or provision of the
Seller's  Articles  or the  Seller's  By-laws.  The Seller  has in all  material
respects  performed,  or is now performing the obligations of, and the Seller is
not in  default  (and  would  not by the lapse of time or giving of notice be in
default) in respect of any note, debt instrument,  lien, mortgage, lease, order,
judgment,  or decree, or any other contract,  agreement,  or commitment  binding
upon it or its assets or  properties or material to the conduct of its business.
There is no  agreement  (assuming  the  parties  thereto  other  than the Seller
performed  their  respective  obligations  thereunder  as  required),  judgment,
injunctive order or decree binding upon the Seller which has or could reasonably
be expected to have the effect of materially prohibiting or materially impairing
any business practice of the Seller,  any acquisition of property by the Seller,
or the conduct of business by the Seller as  currently  conducted or as proposed
to be conducted following the Transaction.

     (i) Title to  Properties  and  Assets.  The Seller has good and  marketable
title to all its  properties  and assets,  including  without  limitation  those
reflected  in the  Seller  Financial  Statements  and those  used or  located on
property  controlled  by the  Seller in its  business  on the date of the Seller
Balance Sheet and acquired thereafter (except assets sold in the ordinary course
of business),  subject to no mortgage,  pledge, lien, charge, security interest,
encumbrance, or


                                       12
<PAGE>


restriction except those which (i) are disclosed in the Schedule 1.1 as securing
specified  liabilities  or  (ii)  do not  materially  adversely  affect  the use
thereof.  The buildings  and  equipment of the Seller are in good  condition and
repair,  reasonable  wear and tear  excepted.  The Seller  has not been,  to the
knowledge of any officer of the Seller, threatened with any action or proceeding
under any building or zoning ordinance,  regulation, or law. Except as otherwise
provided in Schedule 1.1 of this  Agreement,  the Seller owns, free and clear of
all liens,  claims,  encumbrances,  royalty interests,  or other restrictions or
limitations  of any  nature  whatsoever,  any and all  patents,  trade  secrets,
copyrights,  procedures,  techniques,  business plans, methods of management, or
other information utilized in connection with the Seller's business.

     (j) The Seller  Leases.  There are no related party leases,  and all leases
have been negotiated at "arms length."

     (k)  Schedule of Leases and  Insurance.  Schedules  1.1 contains a true and
complete description of each indenture, lease, sublease, or any instrument under
which the Seller  claims or holds a  leasehold  interest  for either  equipment,
automobiles, or real property. The Seller has good and valid leasehold interests
in such  properties  and all such  instruments  are in  effect  and  enforceable
according to their respective  terms. A complete  schedule of all fire and other
casualty and liability  policies of the Seller in effect at the time of delivery
of said schedule is attached hereto.

     (l) Creditor's Arrangements. The Seller has not made any assignment for the
benefit of creditors nor has any involuntary or voluntary petition in bankruptcy
been filed by or against the Seller.

     (m)  Contracts  and  Other   Obligations.   Except  with  respect  to  this
Transaction, the Seller is not a party to, or otherwise bound by, any written or
oral:

          (i) Contract or agreement not made in the ordinary course of business;

          (ii) Employment or consultant contract which is not terminable at will
     without cost or other liability to the Seller or any successor;

          (iii) Contract with any labor union;


                                       13
<PAGE>

          (iv) Bonus, pension, profit-sharing, retirement, share purchase, stock
     option,  hospitalization,   group  insurance,  or  similar  plan  providing
     employee benefits;

          (v) Advertising contract or contract for public relations services;

          (vi) Purchase,  supply, or service contacts in excess of $25,000 each,
     or in the  aggregate of $150,000 for all such  contracts  whether  below or
     above $25,000, except as disclosed on Schedule 1.1;

          (vii) Deed of trust,  mortgage,  conditional sales contract,  security
     agreement,  pledge  agreement,  trust  receipt,  or any other  agreement or
     arrangement  whereby  any of the  assets or  properties  of the  Seller are
     subjected to a lien, encumbrance,  charge, or other restriction,  except as
     disclosed on Schedule 1.1;

          (viii)  Contract or other  commitment  continuing for a period of more
     than 30 days and which is not terminable without cost or other liability to
     the Seller or its successor, except as disclosed on Schedule 1.1;

          (ix) Contract which (a) contains a redetermination of price or similar
     type of  provision;  or (b) provides for a fixed price for goods or service
     sold, except as disclosed on Schedule 1.1; or

          (x) Contract or arrangement containing any covenant limiting the right
     of the Seller to compete in any business or with any person.

     The Seller has in all material respects performed all obligations  required
to be  performed by it to date and is not in material  default  under any of the
contracts, agreements, leases, documents, or other arrangements to which it is a
party or by which it is otherwise bound. To the best of the Seller's  knowledge,
all parties with whom the Seller has  contractual  arrangements  are in material
compliance therewith and are not in default thereunder.

     (n) Changes in  Compensation.  Since the date of the Seller  Balance Sheet,
there has not been any general pay  increase to  employees  or any change in the
rate of compensation,  commission,  bonus, or other remuneration  payable to any
officer,  employee,  director, agent, or shareholder of the Seller other than in
the ordinary course of business.

     (o) Records.  The books of account,  minute books, stock certificate books,
and stock  transfer  ledgers of the Seller are complete  and correct,  and there
have been no transactions involving the business of the Seller which should have
been set forth in said respective books, other than those set forth therein.


                                       14
<PAGE>


     (p) Brokers or Finders. All negotiations on the part of the Seller relative
to this Agreement and the transactions  contemplated hereby have been carried on
by the Seller without the intervention of any person or as the result of any act
of the  Seller in such  manner as to give rise to any valid  claim  against  the
Seller or the Purchaser for a brokerage commission,  finder's fee, or other like
payment.

     (q) Taxes.  Except as disclosed in Schedule 1.1, the Seller has  accurately
prepared  and  timely  filed  all  federal,  state,  county  and  local  income,
franchise,  excise, real and personal property and other tax returns and reports
(including, but not limited to, those relating to social security,  withholding,
unemployment  insurance,  and occupation (sales) and use taxes) required to have
been filed by the Seller up to the date hereof. All of the foregoing returns are
true and  correct in all  material  respects  and the Seller has paid all taxes,
interest and penalties shown on such returns or reports as being due. The Seller
has withheld  with respect to its  employees all federal and state income taxes,
FICA, FETA, and other taxes that the Seller is required to withhold.  The Seller
has  not  been  delinquent  in the  payment  of any  tax  nor is  there  any tax
deficiency  outstanding,  proposed,  or assessed against the Seller, nor has the
Seller  executed any waiver of any statute of  limitations  on or extending  the
period for the  assessment  or  collection of any tax except as disclosed in the
liabilities  list.  No audit or other  examination  of any  return of the Seller
filed with any taxing  authority is  presently in progress.  The Seller does not
have any liabilities for unpaid,  federal state,  local, or foreign tax, whether
asserted or  unasserted,  known or unknown,  contingent  or  otherwise,  and the
Seller has no  knowledge of any basis for the  assertion  of any such  liability
attributable to the Seller,  its assets,  or operations.  The Seller is not (and
has  never  been)  required  to join with any  other  entity in the  filing of a
consolidated  tax return for federal tax purposes or a consolidated  or combined
return or report for state tax  purposes.  The Seller is not a party to or bound
by any tax indemnity,  tax sharing, or tax allocation agreement.  The Seller has
provided to the Purchaser or its legal  counsel  copies of all federal and state
income and all state sales and use tax returns for all  periods.  There are (and
as of immediately following the Closing there will be) no liens on the assets of
the Seller relating to or attributable to taxes).

     (r)  Environmental  Matters.  The Seller's  operations  of its business and
assets has been in material  compliance  with and the Seller has complied in all
material respects with and is not in violation of applicable federal, state, and
local  laws,  ordinances,  regulations  and  orders  relating  to  environmental
matters,  including but not limited to matters  related to air pollution,  water
pollution,  and  the  handling  of  hazardous  substances  (as  defined  in  the
Comprehensive  Environmental  Response,  Companion,  and  Liability  Act of 1990
("CERCLA")).  There are no actions, proceedings or investigations pending or, to
the actual  knowledge  of the  Seller,  threatened  before any  federal or state
environmental  regulatory  body, or before any federal or state court,  alleging
noncompliance  by the  Seller  with  CERCLA or any other  Environmental  Law (as
hereinafter  defined).  To the actual  knowledge of the Seller:  (i) there is no
reasonable basis for the institution of any action,  proceeding or investigation
against the Seller


                                       15
<PAGE>


under  any  Environmental  Law;  (ii) the  Seller is not  responsible  under any
environmental  law for any  release by any person at or in the  vicinity of real
property  of any  hazardous  substance  (as  defined  by  CERCLA)  caused by the
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping,  leaching,  dumping or disposing of any such hazardous  substance into
the  environment;  (iii)  the  Seller  is not  responsible  for any costs of any
remedial  action  required  by virtue of any  release of any toxic or  hazardous
substance,  pollutant or contaminant  into the  environment  including,  without
limitation,  costs arising from security  fencing,  alternative  water supplies,
temporary  evacuation and housing and other emergency  assistance  undertaken by
any  environmental  regulatory  body,  (iv) the Seller is in compliance with all
applicable  Environmental Laws; and (v) no real property used, owned, managed or
controlled by the Seller  contains any toxic or hazardous  substance  including,
without  limitation,  any asbestos,  PCBs or petroleum products or byproducts in
any  form,  the  presence,  location  or  condition  of which (a)  violates  any
Environmental  Law, or (b) otherwise would pose any significant health or safety
risk unless  remedial  measures  were  taken.  For  purposes of this  Agreement,
"Environmental  Law" shall mean any federal,  state, local or municipal statute,
ordinance  or  regulation,  or order,  ruling or other  decision  of any  court,
administrative agency, or other governmental authority pertaining to the release
of hazardous substances (as defined in CERCLA) into the environment.

     (s) Indemnification Liabilities. There are no existing liabilities or facts
known to the Seller which would  require the Seller to indemnify its officers or
directors for acts or omissions by such persons acting in behalf of the Seller.

     (t) Accounts Receivable. All accounts receivable of the Seller shown on the
Seller  Balance Sheet or thereafter  acquired  arose and are  collectible in the
ordinary and usual course of its business,  except that the value of any account
receivable, the collection of which is doubtful or which is subject to a defense
or set-off,  has been written down to an amount not in excess of net  realizable
value or adequate reserves or allowances therefor have been provided. The values
at which  accounts  receivable  are  carried  reflect  the  accounts  receivable
valuation  policy of the Seller,  which is consistent with its past practice and
in accordance  with GAAP applied on a consistent  basis. To the knowledge of the
Seller,  none of the  receivables  of the  Seller  are  subject  to any claim of
offset,  recoupment,  set-off,  or  counterclaim,  and  there  are no  facts  or
circumstances  (whether  asserted  or  unasserted)  that  would give rise to any
claim.  No receivables  are contingent upon the performance by the Seller of any
obligation  or  contract.  No  person or entity  has any lien,  charge,  pledge,
security  interest,  or  other  encumbrance  on  any  such  receivables,  and no
agreement  for  deduction  or discount has been made with respect to any of such
receivables.

     (u) Bank Accounts. Schedule 3.1 constitutes a full and complete list of all
the  bank  accounts  of the  Seller,  together  with the  names  of the  persons
authorized to draw thereon. All cash in such accounts is held in demand deposits
and is not subject to any restriction or limitation as to withdrawal.


                                       16
<PAGE>


     (v)  Certain  Advances.  There are no  receivables  of the Seller  owing by
directors or officers of the Seller or owing by any Affiliate of any director or
officer of the Seller.  For purposes of this Agreement,  "Affiliate"  shall mean
the officers and directors of the Seller and any  shareholder  of the Seller who
owns five percent (5%) or more of the outstanding capital stock of the Seller.

     (w) Insurance. Schedule 3.1 lists all insurance policies and fidelity bonds
covering the assets, business,  equipment,  properties,  operations,  employees,
officers,  and  directors  of the  Seller as well as all  claims  made under any
insurance  policy by the Seller.  There is no claim by the Seller  pending under
any of such policies or bonds as to which coverage has been questioned,  denied,
or disputed by the  underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid, and the Seller is otherwise in
compliance  in all material  respects  with the terms of such policies and bonds
(or  other  policies  and  bonds  providing   substantially   similar  insurance
coverage).  Such  policies of insurance and bonds are of the type and in amounts
customarily  carried by  persons  conducting  businesses  similar to that of the
Seller.  The Seller does not know of any  threatened  termination of or material
premium increase with respect to any of such policies. The Seller has never been
denied  insurance  coverage nor has any insurance policy of the Seller ever been
canceled for any reason.

     (x) FIRPTA  Status.  The Seller is not, and has not been at any time during
the five-year  period  preceding the date hereof, a "United States real property
holding  corporation" as defined in Section 897 of the Internal  Revenue Code of
1954, as amended, and the regulations promulgated thereunder.

     (y)  Representations  Complete.  None of the  representations or warranties
made  by the  Seller,  nor  any  statement  made in any  exhibit,  schedule,  or
certificate furnished by the Seller pursuant to this Agreement, contains or will
contain any untrue  statement of a material  fact or omits or will omit to state
any material fact necessary in order to make the statements  contained herein or
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.

     Section 3.2 Representations and Warranties by the Purchaser.  As a material
inducement  to the Seller to execute  and  perform  its  obligations  under this
Agreement,  the Purchaser represents and warrants to the Seller,  subject to the
exceptions specifically disclosed in the schedules,  referencing the appropriate
section  number,  delivered by the Purchaser to the Seller prior to signing this
Agreement (the "Purchaser Schedules"), as follows:

     (a)  Organization  and  Standing  of  the  Purchaser.  The  Purchaser  is a
corporation  duly organized and validly  existing and in good standing under the
laws of the  State of  Washington  . It has all  requisite  corporate  power and
authority to carry on its business as now


                                       17
<PAGE>


being  conducted and as proposed to be conducted,  to enter into this  Agreement
and, subject to approval of Purchaser's  shareholders,  to carry out and perform
the terms and provisions of this  Agreement.  The Purchaser is duly qualified to
do  business  and  is  in  good  standing  as  a  foreign  corporation  in  each
jurisdiction  in which the  failure  to be so  qualified  would  have a Material
Adverse Effect on the  Purchaser.  The Purchaser does not now and has not within
the two years  prior to the date of this  Agreement  conducted  business  in any
jurisdiction  other than the States of California or  Washington.  The Purchaser
has  delivered a true and correct copy of its Articles of  Incorporation  (the "
Purchaser Articles") and its By-laws (the " Purchaser By-laws"), each as amended
to date,  to counsel for the  Seller.  The  Purchaser  has no direct or indirect
interest,  either by way of stock  ownership  or  otherwise,  in any other firm,
corporation, association, or business.


                                       18
<PAGE>


     (b) Capitalization and Indebtedness for Borrowed Monies.

          (i) The  Purchaser is duly and lawfully  authorized  by the  Purchaser
     Articles  to issue  10,000,000  shares of  preferred  stock and  50,000,000
     shares  of Common  Stock,  of which  approximately  20,000,000  shares  are
     validly issued and  outstanding on the date of this  Agreement.  All of the
     shares of Purchaser  Common  Stock to be issued by Purchaser in  connection
     with the Transaction shall be duly authorized,  validly issued, fully paid,
     non-assessable,  and not subject to preemptive  rights  created by statute,
     the Purchaser Articles,  or any agreement to which the Purchaser is a party
     or bound.  The Purchaser  Common Stock to be issued in connection with this
     Transaction  are intended to be exempt pursuant to Regulation D and Section
     4(2) of the Securities Act of 1933, as amended (the "1933 Act").

          (ii)  The  Purchaser  is  not  presently  liable  on  account  of  any
     indebtedness  for borrowed  monies,  except as  reflected in the  financial
     statements  described in subparagraph (e) below. The borrowed  indebtedness
     of the Purchaser as of the Closing Date is set forth in Schedule 3.1.

     (c)  Ownership  of  Purchaser  Capital  Stock.  Schedule  3.2 sets  forth a
complete and accurate  list of all issued and  outstanding  shares and warrants,
options,  or similar  rights to acquire such shares of the  Purchaser's  capital
stock and the names of the holders thereof.

     (d) Purchaser's Authority.  Purchaser has all requisite corporate power and
authority  to  enter  into  this  Agreement  and,  subject  to  approval  of the
Purchaser's  shareholders,  to consummate the transactions  contemplated hereby.
The execution,  delivery, and performance of this Agreement shall have been duly
authorized  by all  requisite  corporate  action.  This  Agreement has been duly
executed  and  delivered  by  Purchaser  and  constitutes  a valid  and  binding
obligation of the Purchaser, enforceable in accordance with its terms (except as
limited by bankruptcy,  insolvency,  or other laws affecting the  enforcement of
creditors'  rights).  The  execution  and  delivery  of  this  Agreement  by the
Purchaser does not, and the consummation of the transactions contemplated hereby
will not,  conflict with or result in any violation of or default under (with or
without  notice  or  lapse  of  time,  or  both)  or give  rise  to a  right  of
termination,  cancellation,  or  acceleration  of any obligation or to loss of a
material  benefit  under (i) any  provision  of the  Purchaser  Articles  or the
Purchaser  By-laws or (ii) any  mortgage  indenture,  lease,  contract  or other
agreement or  instrument,  permit,  concession,  franchise,  license,  judgment,
order, decree,  statute,  law, ordinance,  rule or regulation  applicable to the
Purchaser  or  its  properties  or  assets.  No  consent,  approval,  order,  or
authorization of, or registration,  declaration or filing with, any Governmental
Entity is required by or with respect to the  Purchaser in  connection  with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.


                                       19
<PAGE>


     (e) LEFT INTENTIONALLY BLANK

     (f) Present Status.  Since the date of the Purchaser Balance Sheet (or such
other date specifically set forth herein),  except as otherwise  contemplated by
this  Agreement,  the  Purchaser  has  conducted  its  business in the usual and
ordinary course and, without limiting the generality of the foregoing:

          (i) The Purchaser has not sustained any damage,  destruction,  or loss
     by  reason  of  fire,  explosion,   earthquake,   casualty,  labor  trouble
     (including  but not  limited to any claim of  wrongful  discharge  or other
     unlawful  labor  practice),  requisition  or  taking  of  property  by  any
     government or agent thereof, windstorm, embargo, riot, act of God or public
     enemy,  flood,  accident,  revocation  of license or right to do  business,
     total or  partial  termination,  suspension,  default  or  modification  of
     contracts, governmental restriction or regulation, other calamity, or other
     similar or  dissimilar  event  (whether or not covered by  insurance)  that
     would result in a Material Adverse Effect on the Purchaser;

          (ii)  There  have  been no  changes  in the  condition  (financial  or
     otherwise),   business,   net  worth,   assets,   properties,   operations,
     obligations  or liabilities  (fixed or contingent) of the Purchaser  which,
     individually  or in the  aggregate,  have  resulted  or  may be  reasonably
     expected to result in a Material Adverse Effect on the Purchaser;

          (iii)  Except for the  1,000,000  shares  issued since the date of the
     Purchaser  Balance Sheet,  the Purchaser has not issued,  or authorized for
     issuance,  any  equity  security,  bond,  note  or  other  security  of the
     Purchaser.  The Purchaser has not granted or entered into any commitment or
     obligation to issue or sell any such equity  security,  bond, note or other
     security  of the  Purchaser,  whether  pursuant  to  offers,  stock  option
     agreements,   stock  bonus  agreements,  stock  purchase  plans,  incentive
     compensation plans, warrants, calls, conversion rights or otherwise;

          (iv) The  Purchaser has not incurred any  additional  debt or borrowed
     money,  nor incurred any  obligation  or liability  (fixed,  contingent  or
     otherwise),  except in the ordinary and usual course of the business of the
     Purchaser;

          (v) The  Purchaser has not paid any  obligation  or liability  (fixed,
     contingent  or   otherwise),   or  discharged  or  satisfied  any  lien  or
     encumbrance, or settled any liability, claim, dispute proceeding,  suit, or
     appeal,  pending  or  threatened  against  it  or  any  of  its  assets  or
     properties,  except  for  current  liabilities  included  in the  Purchaser
     Balance  Sheet  and  current  liabilities  incurred  since  the date of the
     Purchaser Balance Sheet in the ordinary and usual course of the business of
     the Purchaser;


                                       20
<PAGE>

          (vi) The Purchaser has not  declared,  set aside for payment,  or paid
     any  dividend,  payment,  or other  distribution  on or with respect to any
     share of capital stock of the Purchaser;

          (vii) The Purchaser has not purchased,  redeemed or otherwise acquired
     or committed itself to acquire, directly or indirectly, any share or shares
     of capital stock of the Purchaser;

          (viii) The Purchaser has not mortgaged,  pledged, otherwise encumbered
     or  subjected  to  lien  any of  its  assets  or  properties,  tangible  or
     intangible, nor has it committed itself to do any of the foregoing,  except
     for liens for current  taxes which are not yet due and payable and purchase
     money  liens  arising  out of the  purchase or sale of products or services
     made in the ordinary and usual course of business;

          (ix) The  Purchaser  has not disposed of, or agreed to dispose of, any
     asset or property, tangible or intangible, except in the ordinary and usual
     course of business,  and in each case for a consideration at least equal to
     the fair value of such asset or property,  nor has the Purchaser  leased or
     licensed to others (including officers and directors of the Purchaser),  or
     agreed to lease or license, any asset or property;

          (x) The Purchaser has not purchased or agreed to purchase or otherwise
     acquire  any debt or equity  securities  of any  corporation,  partnership,
     joint  venture,  firm or  other  entity.  The  Purchaser  has not  made any
     expenditure or commitment for the purchase,  acquisition,  construction  or
     improvement of a capital asset;

          (xi) The Purchaser has not entered into any  transaction  or contract,
     or made any  commitment  to do the same.  The  Purchaser has not waived any
     right of  substantial  value or canceled any debts or claims or voluntarily
     suffered any extraordinary  losses,  which individually or in the aggregate
     would result in a Material Adverse Effect on the Purchaser;

          (xii) The Purchaser has not effected or agreed to effect any amendment
     or supplement to any employee profit sharing, stock option, stock purchase,
     pension,  bonus,  incentive,   retirement,   medical  reimbursement,   life
     insurance,  deferred  compensation  or any other  employee  benefit plan or
     arrangement;

          (xiii) The  Purchaser has not effected or agreed to effect any change,
     including by way of hiring or  involuntary  termination,  in its directors,
     executive officers, or employees;

          (xiv) The Purchaser has not effected or committed itself to effect any
     amendment  or  modification  of the  Purchaser  Articles  or the  Purchaser
     Bylaws;


                                       21
<PAGE>


          (xv) To the  knowledge of the  Purchaser,  no statute has been enacted
     nor has any rule or regulation  been adopted  (whether  before or after the
     date of the Purchaser  Balance  Sheet) which may  reasonably be expected to
     result in a Material Adverse Effect on the Purchaser;

          (xvi) The Purchaser has not changed in any way its accounting  methods
     or practices (including any change in depreciation or amortization policies
     or rates, or any changes in policies in making or reversing accruals);

          (xvii)  The  Purchaser  has not made any loan to any person or entity,
     and the Purchaser has not guaranteed the payment of any loan or debt of any
     person or entity; and

          (xviii) The  Purchaser  has not  negotiated or agreed to do any of the
     things  described in the preceding  clauses (i) through  (xvii) (other than
     negotiations  with  The  Seller  and  its  representatives   regarding  the
     transactions contemplated by this Agreement).

     (g)  Litigation.  Except as disclosed  in Exhibit  3.2,  there is no claim,
dispute,  action,  proceeding,  suit or appeal, or  investigation,  at law or in
equity,  pending  against  the  Purchaser,  or  involving  any of its  assets or
properties,  before any court,  agency,  authority,  arbitration  panel or other
tribunal,  and, to the  knowledge of the  Purchaser,  none have been  threatened
against the  Purchaser.  To the knowledge of the  Purchaser,  there are no facts
which, if known to shareholders,  customers,  governmental  authorities or other
0persons, would result in any such claim, dispute, action,  proceeding,  suit or
appeal or  investigation  which  would  have a  Material  Adverse  Effect on the
Purchaser. The Purchaser is not subject to any order, writ, injunction or decree
of any court, agency,  authority,  arbitration panel or other tribunal,  and the
Purchaser is not in default with respect to any notice,  order, writ, injunction
or decree.

     (h) Compliance With the Law and Other  Instruments.  The business operation
of the  Purchaser  has been and is being  conducted in all material  respects in
accordance with all applicable laws,  rules, and regulations of all authorities.
The  Purchaser  has not  received  any notice of  violation  with respect to any
applicable laws,  regulations,  orders, or other  requirements of a Governmental
Entity or other  authority,  including,  without  limiting the generality of the
foregoing,  the Employee Retirement Income Security Act of 1974, as amended. The
Purchaser is not in violation of, or in default under,  any term or provision of
the Purchaser Articles,  or the Purchaser By-laws, as amended. The Purchaser has
in all material respects performed, or is now performing the obligations of, and
the Purchaser is not in default (and would not by the lapse of time or giving of
notice be in default) in respect of any note, debt instrument,  lien,  mortgage,
lease,  order,  judgment,  or  decree,  or any  other  contract,  agreement,  or
commitment  binding  upon it or its  assets or  properties  or  material  to the
conduct of its business.  There is no agreement  (assuming  the parties  thereto
other than the Purchaser  performed their respective  obligations  thereunder as
required),  judgment,  injunction,  order or decree  binding upon the  Purchaser
which


                                       22
<PAGE>


has or could reasonably be expected to have the effect of materially prohibiting
or materially impairing any business practice of the Purchaser,  any acquisition
of property by the  Purchaser,  or the conduct of business by the  Purchaser  as
currently conducted or as proposed to be conducted following the Transaction.

     (i) Title to Properties  and Assets.  The Purchaser has good and marketable
title to all its  properties  and assets,  including  without  limitation  those
reflected in the  Purchaser  Financial  Statements  and those used or located on
property  controlled  by the  Purchaser  in its  business  on  the  date  of the
Purchaser  Balance  Sheet and  acquired  thereafter  (except  assets sold in the
ordinary  course of business),  subject to no mortgage,  pledge,  lien,  charge,
security  interest,  encumbrance  or  restriction  except  those  which  (i) are
disclosed  in  the  Purchaser   Financial   Statements  as  securing   specified
liabilities;  or (ii) do not  materially  adversely  affect the use  thereof The
buildings  and  equipment of the  Purchaser  are in good  condition  and repair,
reasonable wear and tear excepted.  The Purchaser has not been, to the knowledge
of any officer of Purchaser,  threatened with any action or proceeding under any
building  or  zoning  ordinance,  regulation,  or law.  The  Purchaser  does not
currently, nor has it in the past, owned any real property.

     (j)  Purchaser  Leases.  The  Purchaser  is not  liable  on any  lease  for
property, equipment, or real estate except as disclosed in Schedule 3.2.

     (k) Creditor's Arrangements.  The Purchaser has not made any assignment for
the benefit of  creditors,  nor has any  involuntary  or  voluntary  petition in
bankruptcy been filed by or against the Purchaser.

     (l) Contracts and Other  Obligations.  Schedule 3.2  constitutes a full and
complete list (subject to the dollar amounts set forth in clause (vii) below) of
each partially or totally  executory contact or agreement to which the Purchaser
is a party or by which it is bound. Other than as set forth on Schedule 3.2, the
Purchaser is not a party to or otherwise bound by, any written or oral:

          (i) Contract or agreement not made in the ordinary course of business;

          (ii) Employment or consultant contract which is not terminable at will
     without cost or other liability to the Purchaser or any successor;

          (iii) Contract with any labor union;

          (iv) Bonus, pension, profit-sharing, retirement, share purchase, stock
     option,  hospitalization,   group  insurance,  or  similar  plan  providing
     employee  benefits,  except as disclosed in its filings with the Securities
     and Exchange Commission;

                                       23
<PAGE>


          (v) Lease with respect to any property,  real or personal,  whether as
     lessor or lessee;

          (vi) Advertising contract or contract for public relations services;

          (vii) Purchase, supply, or service contracts in excess of $1,000 each,
     or in the  aggregate  of $10,000 for all such  contracts  whether  below or
     above $1,000;

          (viii) Deed of trust, mortgage,  conditional sales contract,  security
     agreement,  pledge  agreement,  trust  receipt,  or any other  agreement or
     arrangement  whereby  any of the assets or property  of the  Purchaser  are
     subjected to a lien, encumbrance, charge, or other restriction;

          (ix) Contract or other commitment continuing for a period of more than
     30 days and which is not terminable  without cost or other liability to the
     Purchaser or its successor;

          (x) Contract which (a) contains a redetermination  of price or similar
     type of  provision  or (b) provides for a fixed price for goods or services
     sold;

          (xi) Contract or arrangement  which will result in an excess parachute
     payment under Code Section 280G of the Internal Revenue Code; or

          (xii)  Contact or  arrangement  containing  any covenant  limiting the
     right of the Purchaser to compete in any business or with any person.

     The Purchaser has performed all obligations  required to be performed by it
to date and is not in default  under any of the  contracts,  agreements  leases,
documents, or other arrangements to which it is a party or bound. To the best of
Purchaser's  knowledge,  all parties  with whom the  Purchaser  has  contractual
arrangements are in compliance therewith and are not in default thereunder.

     (m) Changes in  Compensation.  Schedule 3.2 constitutes a full and complete
list of all directors, officers, employees of or consultants to the Purchaser as
of the date of the Purchaser Balance Sheet and specifies each of their names and
job  designations,  the total amount paid or payable to such director,  officer,
employee,  or  consultant  in their prior fiscal years and from the beginning of
the current fiscal year through the date of the Purchaser  Balance Sheet and the
basis  of such  compensation,  whether  fixed  or  commission  or a  combination
thereof.

     (n) Inventories. Purchaser has no inventories.

     (o) Records.  The books of account,  minute books, stock certificate books,
and stock transfer ledgers of the Purchaser are complete and correct,  and there
have been no


                                       24
<PAGE>


transactions  involving the business of the Purchaser which properly should have
been set forth in said respective books, other than those set forth therein.

     (p)  Brokers or  Finders.  All  negotiations  on the part of the  Purchaser
relative to this Agreement and the  transactions  contemplated  hereby have been
carried on by Purchaser  without the intervention of any person or as the result
of any act of the  Purchaser  in such  manner as to give rise to any valid claim
against  the Seller for a  brokerage  commission,  finder's  fee,  or other like
payment.

     (q) Taxes.  The  Purchaser  has  accurately  prepared  and timely filed all
federal,  state, county and local income,  franchise,  excise, real and personal
property and other tax returns and reports (including, but not limited to, those
relating to social security, withholding, unemployment insurance, and occupation
(sales) and use taxes)  required to have been filed by the  Purchaser  up to the
date hereof.  All of the foregoing  returns are true and correct in all material
respects and the Purchaser has paid all taxes,  interest and penalties  shown on
such returns or reports as being due. The Purchaser has withheld with respect to
its employees all federal and state income taxes,  FICA,  FUTA,  and other taxes
that the  Purchaser  is required to withhold.  The accruals for the  Purchaser's
taxes on the books and records of the Purchaser are  sufficient to discharge the
taxes for all periods  (or the portion of any period)  ending on or prior to the
Closing Date.  The  Purchaser has not been  delinquent in the payment of any tax
nor is there any tax deficiency  outstanding,  proposed, or assessed against the
Purchaser,  nor  has  the  Purchaser  executed  any  waiver  of any  statute  of
limitations  on or extending the period for the  assessment or collection of any
tax. No audit or other examination of any return of the Purchaser filed with any
taxing  authority  is presently in  progress.  The  Purchaser  does not have any
liabilities for unpaid, federal, state, local or foreign taxes, whether asserted
or unasserted,  known or unknown, contingent or otherwise, and the Purchaser has
no knowledge of any basis for the assertion of any such  liability  attributable
to the Purchaser, its assets, or operations. The Purchaser is not (and has never
been) required to join with any other entity in the filing of a consolidated tax
return for federal tax purposes or a consolidated  or combined  return or report
for  state tax  purposes.  The  Purchaser  is not a party to or bound by any tax
indemnity,  tax sharing, or tax allocation agreement. The Purchaser has provided
to the Seller or its legal  counsel  copies of all federal and state  income and
all  state  sales  and use tax  returns  for all  periods.  There are (and as of
immediately  following  the Closing there will be) no liens on the assets of the
Purchaser  relating to or attributable to taxes). The Purchaser has no knowledge
of any basis for the  assertion  of any claim which,  if  adversely  determined,
would result in liens on the assets of the Purchaser.

     (r) Environmental  Matters. The Purchaser's  operations of its business and
assets have been in material  compliance  and the  Purchaser has complied in all
material respects with and is not in violation of applicable federal, state, and
local  laws,  ordinances,  regulations,  and orders  relating  to  environmental
material, including but not limited to matters related to air


                                       25
<PAGE>


pollution, water pollution, and the handling of hazardous substances (as defined
by CERCLA).  There are no actions,  proceedings or investigations pending or, to
the actual  knowledge of the Purchaser,  threatened  before any federal or state
environmental  regulatory  body, or before any federal or state court,  alleging
noncompliance by the Purchaser with CERCLA or any other  Environmental  Laws. To
the actual knowledge of the Purchaser:  (i) there is no reasonable basis for the
institution  of any action,  proceeding or  investigation  against the Purchaser
under any  Environmental  Law; (ii) the Purchaser is not  responsible  under any
Environmental  Law for any  release by any person at or in the  vicinity of real
property  of any  hazardous  substance  (as  defined by  CERCLA),  caused by the
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping,  leaching,  dumping or disposing of any such hazardous  substance into
the  environment;  (iii) the Purchaser is not  responsible  for any costs of any
remedial  action  required  by virtue of any  release of any toxic or  hazardous
substance,  pollutant or contaminant  into the  environment  including,  without
limitation,  costs arising from security  fencing,  alternative  water supplies,
temporary  evacuation and housing and other emergency  assistance  undertaken by
any environmental  regulatory body; (iv) the Purchaser is in compliance with all
applicable  Environmental Laws; and (v) no real property used, owned, managed or
controlled by the Purchaser contains any toxic or hazardous substance including,
without  limitation,  any asbestos,  PCBs or petroleum products or byproducts in
any form,  the  presence,  location,  or  condition  of which (a)  violates  any
Environmental  Law or (b) otherwise would pose any significant  health or safety
risk unless remedial measures were taken.

     (s) Indemnification Liabilities. There are no existing liabilities or facts
known to the  Purchaser  which would  require the  Purchaser  to  indemnify  its
officers or directors for acts or omissions by such persons  acting on behalf of
the Purchaser.

     (t) Bank Accounts. Schedule 3.2 constitutes a full and complete list of all
the bank  accounts  of the  Purchaser,  together  with the names of the  persons
authorized to draw thereon. All cash in such accounts is held in demand deposits
and is not subject to any restriction or limitation as to withdrawal.

     (u) Certain  Advances.  There are no receivables of the Purchaser  owing by
directors, officers, employees, consultants or shareholders of the Purchaser, or
owing by any Affiliate of any director or officer of the Purchaser.

     (v) Insurance. Schedule 3.2 lists all insurance policies and fidelity bonds
covering the assets, business,  equipment,  properties,  operations,  employees,
officers,  and  directors of the  Purchaser as well as all claims made under any
insurance  policy by the Purchaser.  There is no claim by the Purchaser  pending
under any of such  policies or bonds as to which  coverage has been  questioned,
denied,  or disputed by the underwriters of such policies or bonds. All premiums
payable under all such  policies and bonds have been paid,  and the Purchaser is
otherwise in compliance in all material respects with the terms of such policies
and


                                       26
<PAGE>


bonds (or other policies and bonds  providing  substantially  similar  insurance
coverage).  Such  policies  of  insurance  and  bonds are of the type and in the
amounts customarily carried by persons conducting businesses similar to those of
the Purchaser.  The Purchaser does not know of any threatened  termination of or
material  premium  increase with suspect to any of such policies.  The Purchaser
has never been denied  insurance  coverage nor has any  insurance  policy of the
Purchaser ever been canceled for any reason.

     (w)  FIRPTA  Status.  The  Purchaser  is not,  and has not been at any time
during the five year period  preceding  the date hereof,  a "United  States real
property holding  corporations as defined in Section 897 of the Internal Revenue
Code of 1954, as amended, and the regulations promulgated thereunder.

     (x)  Representations  Complete.  None of the  representations or warranties
made by the  Purchaser,  nor any  statement  made in any exhibit,  schedule,  or
certificate  furnished by the Purchaser pursuant to this Agreement,  contains or
will contain any untrue  statement  of a material  fact or omits or will omit to
state any manual fact necessary in order to make the statements contained herein
or  therein,  in light of the  circumstances  under  which they were  made,  not
misleading.


                                    ARTICLE 4

                         ACTIONS AND OBLIGATIONS OF THE
                     THE PURCHASER AND THE SELLER BEFORE AND
                  AFTER THE CLOSING AND SECURITIES ACT MATTERS

         Section 4.1 Actions of the Seller Pending Closing. The Seller covenants
with the Purchaser that from the date hereof to and including the Closing Date:

     (a) Correct as of Closing.  Each  representation and warranty of the Seller
set forth in Section 3.1 of this  Agreement  shall be true and correct on and as
of the Closing Date.

     (b)  Operations.  Except with the prior written  consent of the  Purchaser,
which consent will not be unreasonably withheld, the Seller will:

          (i) Conduct its affairs and business  only in the  ordinary  course of
     business;

          (ii) Not create or incur any material  liabilities  other than current
     liabilities  incurred in the  ordinary  course of  business,  except as set
     forth in the Seller Schedules;


                                       27
<PAGE>


          (iii) Not create or incur,  or suffer to exist,  any  mortgage,  lien,
     pledge,  hypothecation,  charge,  encumbrance,  or  restriction of any kind
     which is not otherwise disclosed in this Agreement or the Seller Schedules;

          (iv)  Not make any  capital  expenditures,  or  capital  additions  or
     betterment,  except as many be involved in ordinary  repairs,  maintenance,
     and replacement;

          (v) Not enter into,  renew,  extend,  amend, or modify any contract or
     commitment, except in the ordinary course of business, pursuant to which it
     will be obligated to expend, or entitled to receive,  in excess of $100,000
     annually,

          (vi) Maintain its assets and  properties in good condition and repair,
     and not sell, lease,  license, or otherwise dispose of, any of its material
     assets or properties,  except sales out of inventory in the ordinary course
     of business;

          (vii)  Not  declare  or  pay  any  dividend  on,  or  make  any  other
     distribution upon, or purchase, retire, or redeem, any shares of the Seller
     Common,  or the  Seller  Warrants,  or set  aside  any  funds  for any such
     purpose;

          (viii)  Not  issue or sell,  or  obligate  itself to issue or sell any
     additional  shares of the Seller  Common,  whether or not such  shares have
     been  previously  authorized  or  issued,  or issue  or sell any  warrants,
     rights,  or options to acquire any such shares, or acquire any stock of any
     corporation,  or any  interest in any  business  enterprise,  except as set
     forth in the Seller Schedules;

          (ix) Not amend the Seller Articles or the Seller By-laws;

          (x) Not pay, or agree to pay,  conditionally or otherwise,  any bonus,
     extra compensation, pension, or severance pay to any director, shareholder,
     officer, consultant, agent, or employee under any pension plan or otherwise
     or increase the compensation  paid by it (except  increases in the ordinary
     course of business in accordance with the Seller's  employee  appraisal and
     salary  adjustment  programs  currently  in effect or  pursuant  to written
     agreements  outstanding  on the  date  hereof)  at the  date of the  Seller
     Balance Sheet to any officer, director, agent, consultant, or employee;

          (xi)  Not  discharge  or  satisfy  any  material  lien,   charge,   or
     encumbrance,  nor pay any obligation or liability,  absolute or contingent,
     except (i) current liabilities shown on the Seller Balance Sheet or current
     liabilities incurred since such date in the ordinary course of business and
     (ii) expenses incurred in connection with the transactions  contemplated by
     this Agreement (including, without limitation,  reasonable attorneys' fees,
     accounting fees, and costs);


                                       28
<PAGE>


          (xii) Except with  respect to the  transactions  contemplated  by this
     Agreement, not merge or consolidate,  or obligate itself to do so, with, or
     into any other entity;

          (xiii) Use  reasonable  commercial  efforts to preserve  its  business
     organization intact;

          (xiv) Use  reasonable  commercial  efforts to preserve the goodwill of
     its suppliers, customers, and those having business relations with it;

          (xv) Not  enter  into  any  transactions,  or take  any acts  which if
     effected or performed prior to the date of this Agreement, would constitute
     a breach  of the  representations,  warranties,  and  agreements  contained
     herein;

          (xvi)  Not  institute,  settle,  or  agree to  settle  any  action  or
     proceeding before any court or governmental body;

          (xvii) Not effect or agree to  effect,  including  by way of hiring or
     involuntary  termination,  any change in the  directors  or officers of the
     Seller; and

          (xviii) Not take,  or agree to take,  any of the actions  described in
     (i)  through  (xvii)  above,  or any  action  that  would  make  any of the
     representations,  covenants,  or  warranties of the Seller set forth herein
     untrue and incorrect.

     (c)  Access  to  Records.  The  Seller  will  afford  the  Purchaser,   its
representatives,  counsel,  agents, and employees, at reasonable times, and in a
manner and under  circumstances  which will not cause unreasonable  interference
with the operation of the Seller's business,  access to all of the properties of
the  Seller,  and its  books,  files,  records,  insurance  policies,  and other
corporate  books  and  records,  for  the  purpose  of  audit,  inspection,  and
examination  thereof,  and will do,  and  cause  the  Seller  to do,  everything
reasonably  necessary to enable the Purchaser to make a complete  examination of
the assets and  properties  of the Seller,  and the condition  thereof.  No such
examination, however, shall constitute a waiver or relinquishment on the part of
the  Purchaser,  of its right to rely upon the covenants,  representations,  and
warranties made by the Seller in the provisions of this Agreement.

     (d) Consultation.  The Seller will endeavor to keep the Purchaser  apprised
with respect to the operation and conduct of the Seller's  business prior to the
Closing Date.

     Section 4.2 Actions of Purchaser Pending Closing.  The Purchaser  covenants
with the Seller that from the date hereof to and including the Closing Date:


                                       29
<PAGE>


     (a)  Correct  as of  Closing.  Each  representation  and  warranty  of  the
Purchaser set forth in Section 3.2 of this  Agreement  shall be true and correct
on and as of the Closing Date.

     9 (b)  Operations.  Except  with the prior  written  consent of the Seller,
which consent will not be unreasonably withheld, the Purchaser will:

          (i) Conduct its affairs and business  only in the  ordinary  course of
     business;

          (ii)  Not  create  or  incur  any   liabilities   other  than  current
     liabilities  incurred in connection with the  transactions  contemplated by
     this Agreement;

          (iii) Not create or incur,  or suffer to exist,  any  mortgage,  lien,
     pledge, hypothecation, charge, encumbrance, or restriction of any kind;

          (iv)  Not  make any  capital  expenditures  or  capital  additions  or
     betterment except as many be involved in ordinary repairs, maintenance, and
     replacement;

          (v) Except in connection  with the  transactions  contemplated by this
     Agreement,  not enter into, renew, extend, amend, or modify any contract or
     commitment pursuant to which it will be obligated to expend, or entitled to
     receive, in excess of $5,000 in amount;

          (vi) Maintain its assets and  properties in good condition and repair,
     and not sell, lease,  license, or otherwise dispose of any of its assets or
     properties;

          (vii)  Not  declare  or  pay  any   dividend  on  or  make  any  other
     distribution  upon, or purchase,  retire or redeem, any shares of Purchaser
     Common, or set aside any funds for any such purpose;

          (viii)  Not  issue  or sell or  obligate  itself  to issue or sell any
     additional shares of Purchaser Common, whether or not such shares have been
     previously authorized or issued, or issue or sell any warrants,  rights, or
     options to acquire any such shares, or acquire any stock of any corporation
     or any interest in any business enterprise;

          (ix) Not amend the Purchaser Articles, except to effect a name change,
     or the Purchaser By-laws;

          (x) Not pay or agree to pay,  conditionally  or otherwise,  any bonus,
     extra compensation, pension, or severance pay to any director, shareholder,
     officer, consultant,


                                       30
<PAGE>


agent,  or  employee  under any  pension  plan or  otherwise,  or  increase  the
compensation  paid  by it at the  date of the  Purchaser  Balance  Sheet  to any
officer, director, agent, consultant, or employee;

          (xi) Not discharge or satisfy any lien, charge or encumbrance, nor pay
     any  obligation or liability,  absolute or  contingent,  except (i) current
     liabilities  shown on the Purchaser  Balance  Sheet or current  liabilities
     incurred  since  said  date in the  ordinary  course of  business  and (ii)
     expenses incurred in connection with the transactions  contemplated by this
     Agreement  (including,  without  limitation,  reasonable  attorneys'  fees,
     accounting fees, and costs);

          (xii) Use  reasonable  commercial  efforts to  preserve  its  business
     organization intact;

          (xiii) Except with respect to the  transactions  contemplated  by this
     Agreement, not merge or consolidate with or into, or acquire the assets of,
     with or into any other entity;

          (xiv) Use  reasonable  commercial  efforts to preserve the goodwill of
     its suppliers, customers, and those having business relations with it;

          (xv) Not  enter  into  any  transactions  or take  any  acts  which if
     effected or performed prior to the date of this Agreement, would constitute
     a breach  of the  representations,  warranties,  and  agreements  contained
     herein;

          (xvi)  Not  institute,  settle,  or  agree to  settle  any  action  or
     proceeding before any court or governmental body;

          (xvii) Not effect or agree to  effect,  including  by way of hiring or
     involuntary  termination,  any  change  in  the  directors,   officers,  or
     employees of the Purchaser;  and (xviii) Not take, or agree to take, any of
     the actions described in (i) through (xvii) above, or any action that would
     make any of the representations,  covenants, or warranties of the Purchaser
     set forth herein untrue or incorrect.

     (c)  Access  to  Records.   The  Purchaser  will  afford  the  Seller,  its
representatives,  counsel,  agents, and employees,  at reasonable times and in a
manner and under  circumstances  which will not cause unreasonable  interference
with the operation of the Purchaser's business,  access to all of the properties
of the Purchaser and its books, files,  records,  insurance policies,  and other
corporate  books  and  records,  for  the  purpose  of  audit,  inspection,  and
examination  thereof,  and will do, and cause the  Purchaser  to do,  everything
reasonably  necessary to enable the Purchaser to make a complete  examination of
the assets and  properties of the Purchaser and the condition  thereof.  No such
examination, however, shall constitute


                                       31
<PAGE>


a waiver or  relinquishment  on the part of the  Purchaser  of its right to rely
upon the covenants, representations, and warranties made by the Purchaser in the
provisions of this Agreement.

     (d)  Consultation.  The Purchaser will endeavor to keep the Seller apprised
with respect to the operation and conduct of the  Purchaser's  business prior to
the Closing Date.


                                       32
<PAGE>


     Section 4.3 Undertakings of the Purchaser and the Seller.

     (a) The  Purchaser  and the  Seller  each  will  hold,  and will  cause its
respective officers, directors, employees,  consultants,  advisors and agents to
hold, in confidence,  unless compelled to disclose by judicial or administrative
process  or by  other  requirements  of  law,  all  confidential  documents  and
information  concerning  the parties  furnished to any other party in connection
with the transactions contemplated by this Agreement,  except to the extent that
such  information  can  be  shown  to  have  been  (i)  previously  known  on  a
non-confidential  basis by the disclosing parties, (ii) in the public domain; or
(iii) later lawfully acquired by the disclosing party from sources other than as
a result of the transactions  contemplated herein;  provided that each party may
disclose such information to its officers,  directors,  employees,  consultants,
advisors and agents in connection  with the  transactions  contemplated  by this
Agreement,  so long as such persons are informed of the  confidential  nature of
such  information and are directed to treat such information  confidentially  in
accordance  herewith.  Each party's  obligation to hold any such  information in
confidence shall be satisfied if it exercises the same care with respect to such
information as it would take to preserve the  confidentiality of its own similar
information. Subject to the foregoing and Section 4.3(b) below, each party shall
keep confidential the terms of this Agreement and the transactions  contemplated
hereby  except  to  the  extent  such  information  is  legally  required  to be
disclosed. If this Agreement is terminated,  such confidence shall be maintained
and each  party  shall  and will use its best  efforts  to cause  its  officers,
directors, employees,  consultants, advisors and agents to destroy or deliver to
each other party,  upon  request,  all documents  and other  materials,  and all
copies thereof,  obtained by such party in connection with this Agreement,  that
are subject to such  confidence.  The  parties  obligations  under this  Section
4.3(a) shall terminate on the Closing Date.

     (b) No press release or other public  disclosure of matters related to this
Agreement or any of the  transactions  contemplated  hereby shall be made by the
Purchaser or the Seller unless the other party  provides its consent to the form
and substance thereof, provided, however, that nothing herein shall be deemed to
prohibit any party  hereto from making any  disclosure  which its counsel  deems
necessary or advisable in order to fulfill such party's  disclosure  obligations
imposed by law.

     (c) Each party shall provide the other with adequate opportunity to conduct
such  reviews  and  examinations  of the  business,  properties  and  conditions
(financial  and  otherwise)  of the  other as each  party  shall  deem  prudent,
provided  that such  investigations  shall not interfere  unreasonably  with the
normal operations of the party being reviewed.


                                       33
<PAGE>


                                    ARTICLE 5

                              CONDITIONS PRECEDENT

     Section  5.1  Conditions  to  Obligations  of  Each  Party  to  Effect  the
Transaction.  The  respective  obligations  of each party to this  Agreement  to
effect the Transaction  shall be subject to the  satisfaction at or prior to the
Closing Date of the following conditions:

     (a) Shareholder Approval.  This Agreement and the Transaction  contemplated
hereby  shall  have been  approved  and  adopted  by the vote or  consent of the
requisite  number of  shareholders  of the Seller.  Shareholders  of the Seller,
holding not less than 51% of the  outstanding  voting  stock of the Seller shall
have delivered to the Purchaser an agreement pursuant to which such shareholders
agree to vote all shares of the Seller Common held by such shareholders in favor
of the Transaction, this Agreement, and the transactions contemplated hereby and
thereby.

     (b) Filings Government Approvals. All authorizations,  consents, orders, or
approvals of, or  declarations  or flings with, or expiration of waiting periods
imposed  by, any  Governmental  Entity  necessary  for the  consummation  of the
transactions  contemplated by this Agreement,  including such requirements under
applicable  state  securities  laws,  shall have been filed,  occurred,  or been
obtained,  other than filings with and approvals by foreign governments relating
to the  Transaction  if failure to make such  filings or obtain  such  approvals
would not be materially adverse to the Seller or the Purchaser.

     (c) No  Injunctions  or Restraints;  Illegality.  No temporary  restraining
order, preliminary or permanent injunction or other order issued by any court of
competent  jurisdiction or other legal  restraint or prohibition  preventing the
consummation  of the  Transaction  shall be in effect,  nor shall any proceeding
brought  by  an  administrative  agency  or  commission  or  other  governmental
authority or instrumentality,  domestic or foreign, seeking any of the foregoing
be  pending;  nor  shall  there  be any  action  taken,  or any  statute,  rule,
regulation,  or order enacted,  entered,  enforced,  or deemed applicable to the
Transaction which makes the consummation of the Transaction illegal.

     Section 5.2 Conditions  Precedent to  Obligations of the Seller.  Except as
may be waived in  writing  by the  Seller,  the  obligations  of the  Seller are
subject to the  fulfillment,  prior to or at the Closing on the Closing Date, of
each of the following conditions:

     (a) No Material Errors. The representations and warranties of the Purchaser
in Section 3.2 hereof shall be true and correct in all  material  respects as of
the Closing Date, subject to any changes contemplated by this Agreement.


                                       34
<PAGE>

     (b) Directors'  Approval.  Consummation  of the  transactions  contemplated
herein shall have been  approved by the Board of  Directors of the  Purchaser at
special  meetings  of the  Board  of  Directors  to be had  for the  purpose  of
obtaining such approvals.

     (c)  Third-Party  Consents.  On or before the Closing  Date,  all  material
consents or  approvals  by any third  party,  if any,  which are  required to be
obtained  by the  Purchaser  in  connection  with  the  execution,  delivery  or
performance  of  this  Agreement  or  the   consummation  of  the   transactions
contemplated herein shall have been obtained.

     (d)  Compliance  with  Agreements.  The Purchaser  shall have performed and
complied  with all  agreements or  conditions  required by this  Agreement to be
performed and complied with by it prior to or on the Closing Date.

     (e)  Certificate  of Officers.  The Purchaser  shall have  delivered to the
Seller a certificate dated the Closing Date,  executed in its corporate name by,
and  verified  by,  the  oath  of its  President  and  Chief  Financial  Officer
certifying to the fulfillment of the conditions specified in this Section 5.2.

     (f) Post-Closing Officers and Directors. The Seller shall have delivered to
the  Purchaser  the written  resignations,  effective as of the Closing,  of all
officers  and  directors  of Seller,  prior to the Closing the  Purchaser  shall
reasonably  determine in order to appoint  persons  designated  by the Seller to
such positions immediately after the Closing.

     (g) INTENTIONALLY LEFT BLANK.

     Section 5.3 Conditions Precedent to Obligations of Purchaser. Except as may
be waived in writing by the Purchaser,  all of the  obligations of the Purchaser
under this Agreement are subject to  fulfillment,  prior to or at the Closing on
the Closing Date, of each of the following conditions:

     (a) No Material Errors. The representations and warranties of the Seller in
Section 3.1 hereof shall be true and correct as of the Closing Date,  subject to
any changes contemplated by this Agreement.

     (b) Directors'  Approval.  Consummation  of the  transactions  contemplated
herein  shall  have been  approved  by the Board of  Directors  of the Seller at
special  meetings  of the  Board  of  Directors  to be had  for the  purpose  of
obtaining such approvals.

     (c)  Third-Party  Consents.  On or before the Closing  Date,  all  material
consents or  approvals  by any third  party,  if any,  which are  required to be
obtained,  including  the  Shareholders  of the  Seller in  connection  with the
execution, delivery or performance of this


                                       35
<PAGE>


Agreement or the consummation of the transactions contemplated herein shall have
been obtained.

     (d) Compliance With Agreement. The Seller shall have performed and complied
with all agreement or conditions  required by this Agreement to be performed and
complied with by them prior to or on the Closing Date.

     (e)  Certificate  of  Officers.  The  Seller  shall have  delivered  to the
Purchaser a certificate,  dated the Closing Date, executed in its corporate name
by, and verified by, the oath of its  President  or any Vice  President  and its
Secretary  or an  Assistant  Secretary,  certifying  to the  fulfillment  of the
conditions  specified in this Section 5.3 and certifying  specifically as to the
accuracy of the Company's  representations  set forth in Sections 3.1 and 3.1(i)
and that no contract of the Seller has been terminated if such termination would
have a Material Adverse Effect on the Seller.

                                    ARTICLE 6

                             POST-CLOSING COVENANTS

     It is the  understanding of the parties hereto that, as soon as practicable
subsequent to the Closing Date,  the parties will undertake such actions as will
allow the  Purchaser  to qualify for listing on the Nasdaq  Small-Cap  market or
maintain its listing on the Over-the-Counter Bulletin Board. ARTICLE 7

                                 INDEMNIFICATION

     Section  7.1  Indemnification  by the  Purchaser.  Subject to the terms and
conditions  hereof,  the Purchaser shall indemnify,  reimburse and hold harmless
the Seller from and against all claims, damages, losses,  liabilities,  demands,
suits, judgments,  causes of action, civil and criminal proceedings,  penalties,
fines, and other sanctions, and any attorneys fees and other reasonable costs or
expenses, arising from or related to:

     (a)  This  Agreement  or the  breach  of any  representation,  warranty  or
covenant made by the Purchaser under this Agreement; and

     (b) The  non-fulfillment  of any covenant or condition of the  Purchaser in
this  Agreement,  without regard to any scheduled  exceptions  thereto,  without
regard to any stated materiality thereof, without regard to the Purchaser's,  or
Seller's knowledge  concerning the truth or accuracy of the representation  when
made or  later  affirmed  or in any  Exhibit,  Schedule,  written  statement  or
certificate furnished by the Purchaser, pursuant to the Agreement, and


                                       36
<PAGE>


without  regard to any  waiver of such  breach  which is or was  granted  by the
Seller in order to allow the  closing to occur,  except to the extent  that such
waiver expressly provides to the contrary.

     Section  7.2  Indemnification  by the  Seller.  Subject  to the  terms  and
conditions hereof,  the Seller shall indemnify,  reimburse and hold harmless the
Purchaser from and against all claims, damages,  losses,  liabilities,  demands,
suits, judgments,  causes of action, civil and criminal proceedings,  penalties,
fines, and other sanctions, and any attorneys fees and other reasonable costs or
expenses, arising from or related to:

     (a)  This  Agreement  or the  breach  of any  representation,  warranty  or
covenant made by the Seller under this Agreement; and

     (b) The  non-fulfillment of any covenant or condition of the Seller in this
Agreement, without regard to any scheduled exceptions thereto, without regard to
any stated materiality thereof,  without regard to the Purchaser's,  or Seller's
knowledge  concerning the truth or accuracy of the  representation  when made or
later  affirmed or in any exhibit,  schedule,  written  statement or certificate
furnished by the Seller,  pursuant to the  Agreement,  and without regard to any
waiver of such breach which is or was granted by the Purchaser in order to allow
the closing to occur,  except to the extent that such waiver expressly  provides
to the contrary.

     Section 7.3 Claims for Losses.  The indemnified party shall promptly submit
a Claims  Request either not later than sixty calendar days (a) after all Losses
with respect to a particular  claim are believed to have been  incurred,  or (b)
after the indemnified  party discovers a breach of a  representation,  warranty,
covenant or other  matter  giving rise to  indemnification  under this  Article.
Following  the  receipt  of a  Claims  Request,  the  indemnifying  party  shall
determine  its  liability (if any) and (i) pay the amount for which it is liable
within  forty-five (45) calendar days or such earlier period as may be necessary
or required by the indemnified party or third parties, (ii) undertake to defend,
settle,  tender to any  insurance  carrier  or other  indemnitor,  guarantor  or
responsible  party,  or (iii)  otherwise  dispose  of any such claim as may have
formed  the basis  for such  Claims  Request,  provided  however  that any final
disposition  of such  Claims  Request  shall  result in there  being no  further
liability of any kind to the indemnified  party.  The  indemnifying  party shall
have a reasonable opportunity to cure any defect constituting a breach of any of
its representations and warranties hereunder.

     Section  7.4  Mitigation  of Losses.  The  indemnified  party shall use its
reasonable   efforts  at  all  times  to  minimize  the  Losses  for  which  the
indemnifying party may be liable under this Agreement.


                                       37
<PAGE>


                                    ARTICLE 8

                       TERMINATION, AMENDMENT AND WAIVER:

     Section 8.1 Termination. This Agreement may be terminated at any time prior
to the June 15, 1999,  whether before or after approval of matters  presented in
connection with the Transaction by the shareholders of the Seller:

     (a) by mutual consent of the Seller and the Purchaser;

     (b) by either  the  Seller or the  Purchaser  if there has been a  material
breach of any representation,  warranty, covenant or agreement contained in this
Agreement by the other party, and such breach of a covenant or agreement has not
been promptly cured;

     (c) by  either  the  Purchaser  or the  Seller  if the  Transaction  is not
consummated before August 15, 1999;

     (d) by either the  Purchaser  or the  Seller if (i) there  shall be a final
nonappealable   order  of  a  federal  or  state  court  in  effect   preventing
consummation  of the Transaction or (ii) there shall be any action taken, or any
statute,  rule,  regulation or order  enacted,  promulgated or issued or defined
applicable  to the  Transaction  by any  Governmental  Entity  which  would make
consummation of the Transaction illegal;

     (e) by either  the  Purchaser  or the  Seller if there  shall be any action
taken, or any statute, rule, regulation or order enacted,  promulgated or issued
or deemed applicable to the Transaction by any Governmental  Entity, which would
(i) prohibit the Seller's or the Purchaser's  ownership or operation of all or a
material  portion of the business or assets of the Seller or the  Purchaser,  or
compel the  Purchaser  or the Seller to  dispose  of or hold  separate  all or a
material  portion of the business or assets of the Seller or the  Purchaser as a
result of the  Transaction  or (ii) render the Purchaser or the Seller unable to
consummate the Transaction, except for any waiting period provisions; or

     (f) by either party if any  required  approval of the  shareholders  of the
Seller shall not have been obtained;

     Where action is taken to terminate this Agreement  pursuant to this Section
8.1, it shall be  sufficient  for such action to be  authorized  by the Board of
Directors of the party taking such action.

     Section  8.2 Effect of  Termination.  In the event of  termination  of this
Agreement by either the Purchaser or the Seller as provided in Section 8.1, this
Agreement shall forthwith


                                       38
<PAGE>


become void,  and there shall be no liability or  obligation  on the part of the
Purchaser,  or the Seller,  or their respective  officers or directors except as
set forth in Sections 2.3, 2.4(b),  4.3(a) and 9.7 and except to the extent that
such termination results from the willful breach by a party hereto of any of its
representations,   warranties,  covenants,  or  agreements  set  forth  in  this
Agreement.

     Section 8.3 Amendment.  This Agreement may be amended by the parties hereto
at any time before or after approval of matters presented in connection with the
Transaction  by  the  shareholders  of  the  Seller  and  but,  after  any  such
shareholder  approval,  no  amendment  shall be made which by law  requires  the
further approval of shareholders  without obtaining such further approval.  This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.

     Section 8.4  Extension;  Waiver.  At any time prior to the August 15, 1999,
any party hereto, by action taken by its Board of Directors,  may, to the extent
legally  allowed,  (i)  extend  the  time  for  the  performance  of  any of the
obligations  or  other  acts  of  the  other  parties  hereto,  (ii)  waive  any
inaccuracies in the  representations and warranties made to such party contained
herein or in any document  delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein.  Any  agreement on the part of a party  hereto to any such  extension or
waiver shall be valid if set forth in an instrument in writing  signed on behalf
of such party.

                                   ARTICLE 9

                                 MISCELLANEOUS

     Section 9.1 Assignment. Neither this Agreement nor any right created hereby
shall be  assignable  by the Seller (or their  successors  in  interest)  or the
Purchaser without the prior written consent of the other party.  Nothing in this
Agreement, express or implied, is intended to confer upon any person, other than
the parties hereto and their respective successors,  assigns,  heirs, executors,
administrators, or personal representations,  any rights or remedies under or by
reason of this Agreement.

     Section 9.2 Notices. Any notice, communication,  request, reply, or advice,
hereinafter  severally  and  collectively  called  "notice,"  in this  Agreement
provided or  permitted  to be given,  made,  or accepted by either  party to the
other must be in writing and may be given or be served by depositing the same in
the United States mail,  addressed to the party to be notified,  postage prepaid
and registered or certified with return receipt requested,  or by delivering the
same in person to an officer of such party.  Notice deposited in the mail in the
manner hereinabove described shall be effective only if and when received by the
parties to be  notified.  For  purposes of notice the  addresses  of the parties
shall until changed as hereinafter provided, be as follows:


                                       39
<PAGE>


     (a)      If to the Purchaser:
              Kurt B. Toneys
              President
              La Jolla Coffee Company , Inc.
              9060 Activity Road, Suite A.
              San Diego, California 92037

              with a copy to:

              Robert Blair Krueger II, Esq.
              The Krueger Group, L.L.P.
              11423 West Bernardo Court
              San Diego, California 92127


     (b)      If to the Seller:

              Stephen F. Corey
              President
              Stephen's Coffee Co., Inc.
              9060 Activity Road, Suite A
              San Diego, California 92126

              with a copy to:

              Robert Nostrand, Esq.
              5358 Middleton Road
              San Diego, California 92109

     or at such  other  addresses  as any party may have  advised  the others in
     writing.

     Section 9.3 Paragraph  and Other  Headings.  Paragraph  and other  headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.

     Section  9.4  Severability.  In the  event  that  any  one or  more  of the
provisions  contained  in this  Agreement  shall  for any  reason  be held to be
invalid, illegal, or unenforceable in any respect, such invalidity,  illegality,
or unenforceability shall not affect other provisions of this


                                       40
<PAGE>


Agreement but this Agreement  shall be constructed as if such invalid,  illegal,
or unenforceable provisions had never been contained therein.

     Section 9.5  California  Law to Apply.  This  Agreement  shall be construed
under  and in  accordance  with the  laws of the  State  of  California  without
reference to principles of conflicts of law.

     Section  9.6 Duties in  Interest.  This  Agreement  shall be binding on and
inure to the benefit of and be enforceable by the  shareholders,  the Seller and
the  Purchaser,  their  respective  heirs,  executors,   administrators,   legal
representatives,  successors, and assigns except as otherwise expressly provided
herein.

     Section  9.7  Arbitration.  Any  dispute,  difference,  or  controversy  in
connection  with or arising out of this Agreement  shall be submitted to binding
arbitration by the American Arbitration Association in San Diego, California, in
accordance with the rules then pertaining. Any decision by the arbitration panel
may include the expenses and attorney's fees of the successful  party,  and such
decision   shall  be  final  and  may  be  made  a  judgment  of  any  competent
jurisdiction.  Should  arbitration  proceedings  be  commenced  and either party
desire to complete an alternate  transaction pending the arbitration award, such
party  may  do so on the  condition  that  it  shall  deposit  into  escrow,  in
accordance  with escrow terms approved by the parties hereto and the arbitration
panel,  all of the  outstanding  claimed  expenses  of the other  party prior to
Closing,  not to exceed  $100,000,  plus $15,000 to cover the  possibility of an
award of attorneys'  fees and the  arbitration  expenses.  The escrow  provision
shall  provide  that the escrow  shall break and the funds shall be delivered by
the escrow agent to the party in  accordance  with the award of the  arbitration
panel, or upon a settlement of the dispute by the parties hereto.

     Section 9.8 Attorneys'  Fees. If any action at law or in equity,  including
an action for  declaratory  relief,  is brought  to  enforce  or  interpret  the
provisions of this Agreement,  the prevailing party shall be entitled to recover
reasonable  attorney's  fees from the other party,  which fees may be set by the
court in the trial of such on or may be  enforced in a separate  action  brought
for that purpose,  and which fees shall be in addition to any other relief which
may be awarded.

     Section  9.9  Counterparts.  This  Agreement  and all other  copies of this
Agreement insofar as they relate to the rights, duties, and remedies of parties,
shall be deemed to be one agreement. This Agreement may be executed concurrently
in one or more counterparts,  each of which shall be deemed an original, but all
of  which  together  shall  constitute  one and the same  instrument.  Facsimile
signatures  shall be treated as original  until  replaced by the  original  copy
which shall then be substituted.


                                       41
<PAGE>


     Section 9.10 Integrated  Agreement.  This Agreement  constitutes the entire
agreement   between  the   parties   hereto,   and  there  are  no   agreements,
understandings, restrictions, warranties, or representations between the parties
other than those set forth herein or herein provided for.



                                       42
<PAGE>


IN WITNESS  WHEREOF,  this  Agreement  and  Purchase and Sale of Assets has been
executed as of the day and year first set forth above.

PURCHASER:

LA JOLLA COFFEE CO., INC.,
     a Washington corporation



/s/ Kurt B. Toneys
-----------------------------------------------------
Kurt B. Toneys, President and Chief Executive Officer


SELLER:

STEPHEN'S COFFEE, INC.



/s/ Stephen F. Corey
-------------------------------------------------------
Stephen F. Corey, President and Chief Executive Officer


                                       43
<PAGE>


Schedule 1.1

STEPHEN'S COFFEE INC. SCHEDULE OF ASSETS

It is the  Purchaser's  intent to purchase all the assets owned by the Seller at
the close of this transaction. These assets include, but are not limited to, the
following items: equipment, equipment leases, inventory,  intellectual property,
proprietary rights,  trade secrets,  all legally assignable  government permits,
and all files and records  containing  technical  support and other  information
pertaining to the operation of Seller's business.


STEPHEN'S COFFEE INC. SCHEDULE OF LIABILITIES

LEASES

Balboa Capital equipment leases                      #001-05008-01
                                                     #00105009-01
                                                     #001-05941-01
                                                     #001-06087-01

Forest Financial equipment lease                     #5000530001



LEGAL

Robert M. Nostrand, Esq.                             $30,000

TAXES

Employment taxes, interest and penalties             $9,500

OTHER DEBTS

Tom Reed                                             $9,000
Sandra Corey                                         $37,000


LITIGATION

A settlement  agreement with Stephen's Coffee, Inc. and Stephen's Coffee Holding
and Mr. Michael  Gilbert,  an investor in both  corporations,  was negotiated by
Robert Nostrand,  Stephen's Coffee's, Inc.'s attorney. Michael Gilbert was given
a promissory note in the amount of Fifteen  Thousand  Dollars  ($15,000) and One
Hundred Fifty Thousand (150,000) shares of North West Farms, Inc.'s common stock
pursuant to a settlement  agreement  dated  November 10, 1998.  The November 10,
1998 signed


<PAGE>


settlement  agreement  has  been  misplaced,  however,  it  is  incorporated  by
reference by the promissory note signed on December 3, 1998. In pertinent part:

     As settlement  pursuant to our signed  agreement dated November 10, 1998 by
     and between Michael Gilbert and Stephen's Coffee Company,  Inc.  (Stephen's
     Coffee  Corporation  and  Stephen F. Corey at San Diego,  the  undersigned.
     Stephen's Coffee Company, ("the Promissor") promises to pay to the order of
     Michael Gilbert, (the Payee").

Pursuant to the promissory  note and  settlement  agreement Mr. Gilbert has been
paid $15,000 and issued 150,000 shares of stock.  Mr. Gilbert now claims that he
is  entitled  to a 15 percent  interest  in LJCC,  the  combined  percentage  he
previously owned in Stephen's  Coffee Inc. and Stephen's Coffee Holding.  LJCC's
position is that the current settlement agreement is valid.


<PAGE>


SCHEDULE 3.2
LA JOLLA FRESH SQUEEZED COFFEE CO., INC.,
June 15, 1999

LONG TERM CONTRACTS
See leases

INSURANCE
Snap Insurance                                      # 01-CD-889223-4
Statefund / America States Insurance                #1526450-99
Blue Shield of California                           #572756385-0

BANK ACCOUNTS
Wells Fargo Bank Account                            #0372-64194
Signor: Greg Prestel

LEASES
Office/Factory Lease                                Geologistics /Voit Brokerage
Expiring June 30, 2002

DEBTS
See attached

OWNERSHIP
See attached Corporate Stock Transfer list as of June 15, 1999

OPTIONS

1.   Kurt Toneys- employment - 6,000,000 shares at $.001 per share

o    2,000,000 shares on 1st anniversary

o    500,000 at the end of each quarter march 31, June 30,  September 30, Dec 31
     until the year 2001

2.   Stephen Corey - employment 3,400,000 shares over 3 years vesting quarterly.

     Based on stock  option/employment  agreement

3.   Greg Prestel - employment 1,600,000 shares.

4.   N. Blayn  Broderson  employment  235,000  annually at cost  $.0025  vesting
     quarterly.

5.   Options  expiring  December 31, 1999 see attached  Form D dated January 23,
     1998.

6.   Options  expiring  December 31, 2001 see attached  Form D dated January 23,
     1998.

7.   Warrants expiring July 7, 1999 see attached Form D dated January 23, 1998.


DIRECTORS
-------------------
Kurt B. Toneys
Stephen F. Corey
Gregory Writer, COB
Gregory Prestel
Clifford J. Smith



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Secretary of Corporation
Chris Lucidi


EMPLOYEES

Schedule 3.2  constitutes a full and complete list of all  directors,  officers,
employees of or  consultants  to the  Purchaser as of the date of the  Purchaser
Balance Sheet and specifies each of their names and job designations,  the total
amount paid or payable to such  director,  officer,  employee,  or consultant in
their prior  fiscal  years and from the  beginning  of the  current  fiscal year
through  the  date  of the  Purchaser  Balance  Sheet  and  the  basis  of  such
compensation, whether fixed or commission or a combination thereof.

Thao Nguyen              Receptionist/Secretary              $25,612.50
Kurt Toneys              CEO/ President                       33,675.00
N. Blayn Broderson       Director of Marketing and Sales       4,721.50
Stephen F. Corey         Vice President                       41,535.01
Gregory Prestel          Chief Operating Officer              38,672.50
Dan Davis                Production Supervisor                 7,363.65


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                                    ADDENDUM

1)   During the acquistion of SCC by NWF, many debts were automatically  assumed
     such as the overhead,  operating  expenses and  production,  and instituted
     into the new overhead of LJCC. Some of these debts included lease payments,
     which are still in my name.  Every individual  payment,  debt or obligation
     therefore  was not itemized & listed.  For the record,  it should be stated
     that all debts are assumed along with all the assets.

2)   My name, with which any commercial debt was personally guaranteed, shall be
     removed from these debts and replaced if necessary with a new guarantor.

3)   The balance of the 1.0m shares distributed to shareholders,  as part of the
     purchase agreement shall be included. (740,000).


     /s/ Stephen F. Corey
     Stephen F. Corey
     President/CEO