<PAGE>

                        2,000,000 UNITS, EACH
                   UNIT CONSISTING OF ONE SHARE OF
               COMMON STOCK AND ONE REDEEMABLE WARRANT

                 HAWAIIAN NATURAL WATER COMPANY, INC.

                         UNDERWRITING AGREEMENT

                                                             New York, New York
                                                                   May 14, 1997

JOSEPH STEVENS & COMPANY, INC.
33 Maiden Lane, 8th Floor
New York, New York 10038

Ladies and Gentlemen:

         Hawaiian Natural Water Company, Inc., a Hawaii corporation (the 
"Company"),confirms its agreement with Joseph Stevens & Company, Inc. 
(hereinafter referred to as "you" or the "Underwriter"), with respect to the 
sale by the Company and the purchase by the Underwriter of 2,000,000 units 
(the "Units"), each Unit consisting of one (1) share of common stock, no par 
value (the "Common Stock") and one (1) redeemable warrant (the "Redeemable 
Warrants"). Each Redeemable Warrant is exercisable for one share of Common 
Stock. The Common Stock and Redeemable Warrants will be separately tradeable 
upon issuance and are hereinafter referred to as the "Firm Units." The 
Redeemable Warrants are exercisable commencing May 14, 1997 until May 13, 
2002, unless previously redeemed by the Company, at an initial exercise price 
equal to $6.00 per share, subject to adjustment. The Redeemable Warrants may 
be redeemed by the Company, in whole, and not in part, at a redemption price 
of five cents ($.05) per Redeemable Warrant at any time commencing May 14, 
1998 on 30 days' prior written notice provided that the average closing bid 
price of the Common Stock equals or exceeds 150% of the then exercise price 
per share (subject to adjustment) for any twenty (20) trading days within a 
period of thirty (30) consecutive trading days ending on the fifth (5th) 
trading day prior to the date of the notice of redemption and the Company 
shall have obtained the prior written consent of the Underwriter. Upon the 
Underwriter's request, as provided in Section 2(b) of this Agreement, the 
Company shall also issue and sell to the Underwriter up to an additional 
300,000 Units for the purpose of covering over-allotments, if any. Such 
300,000 Units are hereinafter collectively referred to as the "Option Units." 
The Company also proposes to issue and sell to the Underwriter or its 
designees warrants (the "Underwriter's Warrants"), pursuant to the 
Underwriter's Warrant Agreement (the "Underwriter's Warrant Agreement"), for 
the purchase of an additional 200,000 shares of Common Stock. The shares of 
Common

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Stock underlying the Underwriter's Warrants are hereinafter collectively 
referred to as the "Underwriter's Securities." The shares of Common Stock 
issuable upon exercise of the Redeemable Warrants are hereinafter referred to 
as the "Warrant Shares." Further, an additional 643,500 Redeemable Warrants 
(the "Selling Securityholders Warrants") and 643,500 shares of Common Stock 
underlying the Selling Securityholders Warrants (the "Selling Securityholders 
Shares"), are being registered for the account of certain selling security 
holders in connection with this offering (the "Offering") which are not being 
underwritten by the Underwriter. The Selling Securityholders Warrants and the 
Selling Securityholders Shares are hereinafter collectively referred to as 
the "Selling Securityholders Securities." The Firm Units, the Option Units, 
the Underwriter's Warrants, the Underwriter's Securities, the Selling 
Securityholders Securities and the Warrant Shares are hereinafter 
collectively referred to as the "Securities" and are more fully described in 
the Registration Statement and the Prospectus referred to below.

         1.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company 
represents and warrants to, and covenants and agrees with, the Underwriter as 
of the date hereof, and as of the Closing Date (hereinafter defined) and the 
Option Closing Date (hereinafter defined), if any, as follows:

         (a)  The Company has prepared and filed with the Securities and 
Exchange Commission (the "Commission") a registration statement, and 
amendments thereto, on Form SB-2 (Registration No. 333-18289), including any 
related preliminary prospectus or prospectuses (each a "Preliminary 
Prospectus"), for the registration of the Securities (excluding the 
Underwriter's Warrants and the Underwriter's Securities), under the 
Securities Act of 1933, as amended (the "Act"), which registration statement 
and amendment or amendments have been prepared by the Company in conformity 
with the requirements of the Act, and the rules and regulations of the 
Commission under the Act. The Company will not file any other amendment to 
such registration statement which the Underwriter shall have objected to in 
writing after having been furnished with a copy thereof. Except as the 
context may otherwise require, such registration statement, as amended, on 
file with the Commission at the time it becomes effective (including the 
prospectus, financial statements, schedules, exhibits and all other documents 
filed as a part thereof or incorporated therein (including, but not limited 
to, those documents or that information incorporated by reference therein) 
and all information deemed to be a part thereof as of such time pursuant to 
paragraph (b) of Rule 430A of the rules and regulations under the Act), is 
hereinafter called the "Registration Statement," and the form of prospectus 
in the form first filed with the Commission pursuant to Rule 424(b) of the 
rules and regulations under the Act is hereinafter called the "Prospectus." 
For purposes hereof, "Rules and Regulations" mean the rules and regulations 
adopted by the Commission under either the Act or the Securities Exchange Act 
of 1934, as amended (the "Exchange Act"), as applicable.

         (b)  Neither the Commission nor any state regulatory authority has 
issued any order preventing or suspending the use of any Preliminary 
Prospectus, the Registration Statement or the Prospectus or any part of any 
thereof and no proceedings for a stop order suspending the effectiveness of 
the Registration Statement or any sale of the Company's securities have been 
instituted or are pending or, to the best knowledge of the Company, 
threatened. Each of the Preliminary Prospectus and the Registration Statement 
and the Prospectus, at the time of filing thereof, conformed in all material 
respects with the requirements of the Act and the Rules and

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Regulations, and none of the Preliminary Prospectus, the Registration 
Statement nor the Prospectus, at the time of filing thereof, contained an 
untrue statement of a material fact or omitted to state a material fact 
required to be stated therein or necessary to make the statements therein, in 
light of the circumstances in which they were made, not misleading; PROVIDED, 
HOWEVER, that this representation and warranty does not apply to statements 
made or statements omitted in reliance upon and in conformity with written 
information furnished to the Company with respect to the Underwriter and its 
proposed method of distribution of the Units by or on behalf of the 
Underwriter expressly for use in such Preliminary Prospectus, the 
Registration Statement or the Prospectus; provided that such written 
information or omissions only pertain to disclosures in the Preliminary 
Prospectus, the Registration Statement or Prospectus or any amendment thereof 
or supplement thereto directly relating to the transactions effected by the 
Underwriter in connection with this Offering. The Company acknowledges that 
the statements with respect to the public offering of the Securities set 
forth under the heading "Underwriting" and the stabilization legend in the 
Prospectus have been furnished by the Underwriter expressly for use therein 
and constitute the only information furnished in writing by or on behalf of 
the Underwriter for inclusion in the Prospectus.

         (c)  When the Registration Statement becomes effective and at all 
times subsequent thereto up to the Closing Date and each Option Closing Date, 
if any, and during such longer period as the Prospectus may be required to be 
delivered in connection with sales by the Underwriter or a dealer, the 
Registration Statement and the Prospectus will contain all statements which 
are required to be stated therein in accordance with the Act and the Rules 
and Regulations, and will conform to the requirements of the Act and the 
Rules and Regulations; and, at and through such dates, neither the 
Registration Statement nor the Prospectus, nor any amendment or supplement 
thereto, will contain any untrue statement of a material fact or omit to 
state any material fact required to be stated therein or necessary to make 
the statements therein, in light of the circumstances in which they were 
made, not misleading; PROVIDED, HOWEVER, that this representation and 
warranty does not apply to statements made or statements omitted in reliance 
upon and in conformity with written information furnished to the Company with 
respect to the Underwriter and its proposed method of distribution of the 
Units by or on behalf of the Underwriter expressly for use in the 
Registration Statement or the Prospectus or any amendment thereof or 
supplement thereto; provided that such written information or omissions only 
pertain to disclosures in the Preliminary Prospectus, the Registration 
Statement or Prospectus or any amendment thereof or supplement thereto 
directly relating to the transactions effected by the Underwriter in 
connection with this Offering. The Company acknowledges that the statements 
with respect to the Offering set forth under the heading "Underwriting" and 
the stabilization legend in the Prospectus have been furnished by the 
Underwriter expressly for use therein and constitute the only information 
furnished in writing by or on behalf of the Underwriter for inclusion in the 
Prospectus.

         (d)  The Company has been duly organized and is validly existing as 
a corporation in good standing under the laws of the jurisdiction of its 
incorporation. The Company is duly qualified and licensed and in good 
standing as a foreign corporation in each jurisdiction in which its 
operations require such qualification or licensing. The Company does not own, 
directly or indirectly, an interest in any other corporation, partnership, 
trust, joint venture or other business entity. The Company has all requisite 
power and authority (corporate

                                   3    

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and other), and has obtained any and all necessary authorizations, approvals, 
orders, licenses, certificates, franchises and permits of and from all 
governmental or regulatory officials and bodies (including, without 
limitation, those having jurisdiction over environmental or similar matters), 
to own or lease its properties and conduct its business as conducted on the 
date hereof and as described in the Prospectus except where the failure to be 
so qualified or licensed would not have a material adverse effect; the 
Company is and has been doing business in material compliance with all such 
authorizations, approvals, orders, licenses, certificates, franchises and 
permits and with all federal, state, local and foreign laws, rules and 
regulations to which it is subject; and the Company has not received any 
notice of proceedings relating to the revocation or modification of any such 
authorization, approval, order, license, certificate, franchise or permit 
which, singly or in the aggregate, if the subject of an unfavorable decision, 
ruling or finding, would materially and adversely affect the condition, 
financial or otherwise, or the earnings, prospects, stockholders' equity, 
value, operations, properties, business or results of operations of the 
Company. The disclosure in the Registration Statement concerning the effects 
of federal, state, local and foreign laws, rules and regulations on the 
Company's business as currently conducted and as contemplated are correct in 
all respects and do not omit to state a material fact required to be stated 
therein or necessary to make the statements therein, in light of the 
circumstances in which they were made, not misleading.

         (e)  Except for up to 15,863 additional options granted by the 
Company, the Company has a duly authorized, issued and outstanding 
capitalization as set forth in the Prospectus under "Capitalization" and 
"Description of Capital Stock" and will have the adjusted capitalization set 
forth therein on the Closing Date and the Option Closing Date, if any, based 
upon the assumptions set forth therein, and the Company is not a party to or 
bound by any instrument, agreement or other arrangement providing for it to 
issue any capital stock, rights, warrants, options or other securities, 
except for this Agreement, the Underwriter's Warrant Agreement and the 
Warrant Agreement (as defined in SECTION 1(ff) hereof of this Agreement) and 
as described in the Prospectus. The Securities and all other securities 
issued or issuable by the Company on or prior to the Closing Date and each 
Option Closing Date, if any, conform or, when issued and paid for, will 
conform, in all respects to the descriptions thereof contained in the 
Registration Statement and the Prospectus. All issued and outstanding 
securities of the Company have been duly authorized and validly issued and 
are fully paid and non-assessable; the holders thereof have no rights of 
rescission with respect thereto and are not subject to personal liability by 
reason of being such holders; and none of such securities were issued in 
violation of the preemptive rights of any holder of any security of the 
Company or any similar contractual right granted by the Company. The 
Securities to be issued and sold by the Company hereunder and pursuant to the 
Underwriter's Warrant Agreement and the Warrant Agreement are not and will 
not be subject to any preemptive or other similar rights of any stockholder, 
have been duly authorized and, when issued, paid for and delivered in 
accordance with the terms hereof and thereof, will be validly issued, fully 
paid and non-assessable and conform to the descriptions thereof contained in 
the Prospectus; the holders thereof will not be subject to any liability 
solely as such holders; all corporate action required to be taken for the 
authorization, issue and sale of the Securities has been duly and validly 
taken; and the certificates representing the Securities, when delivered by 
the Company, will be in due and proper form. Upon the issuance and delivery 
of the Securities, pursuant to the terms hereof, and pursuant to the Warrant 
Agreement and the Underwriter's Warrant Agreement, to be sold by the Company

                                  4    

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hereunder and thereunder to the Underwriter, the Underwriter will acquire 
good and marketable title to such Securities, free and clear of any lien, 
charge, claim, encumbrance, pledge, security interest, defect or other 
restriction or equity of any kind whatsoever asserted against the Company or 
any affiliate (within the meaning of the Rules and Regulations) of the 
Company.

         (f)  The financial statements of the Company and the notes thereto 
included in the Registration Statement, each Preliminary Prospectus and the 
Prospectus fairly present the financial position, changes in stockholders' 
equity and the results of operations of the Company at the respective dates 
and for the respective periods to which they apply. Such financial statements 
have been prepared in conformity with generally accepted accounting 
principles and the Rules and Regulations, consistently applied throughout the 
periods involved. Except as described in the Prospectus, there has been no 
adverse change or development involving a material prospective change in the 
condition, financial or otherwise, or in the earnings, prospects, 
stockholders' equity, value, operations, properties, business or results of 
operations of the Company, whether or not arising in the ordinary course of 
business, since the date of the financial statements included in the 
Registration Statement and the Prospectus; and the outstanding debt, the 
property, both tangible and intangible, and the business of the Company 
conform in all respects to the descriptions thereof contained in the 
Registration Statement and the Prospectus. The financial information set 
forth in the Prospectus under the headings "The Company," "Summary Financial 
Information," "Capitalization," "Selected Financial Data" and "Management's 
Discussion and Analysis of Financial Condition and Results of Operations" 
fairly presents, on the basis stated in the Prospectus, the information set 
forth therein and such financial information has been derived from or 
compiled on a basis consistent with that of the financial statements included 
in the Prospectus.

         (g)  The Company (i) has paid all federal, state, local and foreign 
taxes for which it is liable, including, but not limited to, withholding 
taxes and amounts payable under the Internal Revenue Code of 1986, as amended 
(the "Code"), and has furnished all information returns it is required to 
furnish pursuant to the Code, (ii) has established adequate reserves for such 
taxes which are not due and payable, and (iii) does not have any tax 
deficiency or claims outstanding, proposed or assessed against it.

         (h)  No transfer tax, stamp duty or other similar tax is payable by 
or on behalf of the Underwriter in connection with (i) the issuance by the 
Company of the Securities, (ii) the purchase by the Underwriter of any of the 
Securities from the Company, (iii) the consummation by the Company of any of 
its obligations under this Agreement, the Warrant Agreement, or the 
Underwriter's Warrant Agreement, or (iv) resales of the Securities in 
connection with the distribution contemplated hereby.

         (i)  The Company maintains insurance policies, including, but not 
limited to, general liability, property, personal and product liability 
insurance, and surety bonds which insure the Company and its employees 
against such losses and risks generally insured against by comparable 
businesses. The Company (i) has not failed to give notice or present any 
insurance claim with respect to any insurable matter under the appropriate 
insurance policy or surety bond in a due and timely manner, (ii) has no 
disputes or claims against any underwriter of such insurance policies or 
surety bonds, nor has the Company failed to pay any premiums due

                                5    

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and payable thereunder, or (iii) has not failed to comply with all conditions 
contained in such insurance policies and surety bonds. There are no facts or 
circumstances under any such insurance policy or surety bond which would 
relieve any insurer of its obligation to satisfy in full any valid claim of 
the Company.

         (j)  There is no action, suit, proceeding, inquiry, arbitration, 
investigation, litigation or governmental proceeding (including, without 
limitation, those pertaining to environmental or similar matters), domestic 
or foreign, pending or, to the best knowledge of the Company, threatened 
against (or circumstances that may give rise to the same), or involving the 
properties or business of, the Company which (i) questions the validity of 
the capital stock of the Company, this Agreement, the Underwriter's Warrant 
Agreement, the Warrant Agreement or the Consulting Agreement (as defined in 
Section 1(gg) hereof) or of any action taken or to be taken by the Company 
pursuant to or in connection with this Agreement, the Underwriter's Warrant 
Agreement, the Warrant Agreement or the Consulting Agreement, (ii) is 
required to be disclosed in the Registration Statement which is not so 
disclosed (and such proceedings as are summarized in the Registration 
Statement are accurately summarized in all respects), or (iii) might 
materially and adversely affect the condition, financial or otherwise, or the 
earnings, prospects, stockholders' equity, value, operations, properties, 
business or results of operations of the Company.

         (k)  The Company has full legal right, power and authority to 
authorize, issue, deliver and sell the Securities, to enter into this 
Agreement, the Underwriter's Warrant Agreement, the Warrant Agreement and the 
Consulting Agreement and to consummate the transactions provided for in such 
agreements; and each of this Agreement, the Underwriter's Warrant Agreement, 
the Warrant Agreement and the Consulting Agreement have been duly and 
properly authorized, executed and delivered by the Company. Each of this 
Agreement, the Underwriter's Warrant Agreement, the Warrant Agreement and the 
Consulting Agreement constitutes a legal, valid and binding agreement of the 
Company, enforceable against the Company in accordance with its terms (except 
as such enforceability may be limited by applicable bankruptcy, insolvency, 
reorganization, moratorium or other laws of general application relating to 
or affecting the enforcement of creditors' rights and the application of 
equitable principles in any motion, legal or equitable, and except as 
obligations to indemnify or contribute to losses may be limited by applicable 
law). None of the Company's issue and sale of the Securities, execution or 
delivery of this Agreement, the Underwriter's Warrant Agreement, the Warrant 
Agreement or the Consulting Agreement, its performance hereunder or 
thereunder, its consummation of the transactions contemplated herein or 
therein, or the conduct of its business as described in the Registration 
Statement and the Prospectus and any amendments or supplements thereto, 
conflicts with or will conflict with or results or will result in any breach 
or violation of any of the terms or provisions of, or constitutes or will 
constitute a default under, or result in the creation or imposition of any 
lien, charge, claim, encumbrance, pledge, security interest, defect or other 
restriction or equity of any kind whatsoever upon, any property or assets 
(tangible or intangible) of the Company pursuant to the terms of (i) the 
articles of incorporation or by-laws of the Company, (ii) any license, 
contract, indenture, mortgage, lease, deed of trust, voting trust agreement, 
stockholders' agreement, note, loan or credit agreement or other agreement or 
instrument evidencing an obligation for borrowed money, or any other 
agreement or instrument to which the Company is a party or by which the 
Company

                                      6    

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is or may be bound or to which its properties or assets (tangible or 
intangible) are or may be subject, or (iii) any statute, judgment, decree, 
order, rule or regulation applicable to the Company of any arbitrator, court, 
regulatory body or administrative agency or other governmental agency or body 
(including, without limitation, those having jurisdiction over environmental 
or similar matters), domestic or foreign, having jurisdiction over the 
Company or any of its activities or properties.

         (l)  No consent, approval, authorization or order of, and no filing 
with, any arbitrator, court, regulatory body, administrative agency, 
government agency or other body, domestic or foreign, is required for the 
issuance of the Securities pursuant to the Prospectus and the Registration 
Statement, this Agreement, the Underwriter's Warrant Agreement and the 
Warrant Agreement, the performance of this Agreement, the Underwriter's 
Warrant Agreement, the Warrant Agreement and the Consulting Agreement and the 
transactions contemplated hereby and thereby, except such as have been 
obtained under the Act, state securities or Blue Sky laws and the rules of 
the National Association of Securities Dealers, Inc. (the "NASD") in 
connection with the issuance and sale of the Securities by the Company and 
the Underwriter's purchase and distribution of the Firm Units and the Option 
Units.

         (m)  All executed agreements, contracts or other documents or copies 
of executed agreements, contracts or other documents filed as exhibits to the 
Registration Statement to which the Company is a party or by which the 
Company may be bound or to which its assets, properties or business may be 
subject have been duly and validly authorized, executed and delivered by the 
Company, and constitute legal, valid and binding agreements of the Company, 
enforceable against the Company, in accordance with their respective terms 
(except as such enforceability may be limited by applicable bankruptcy, 
insolvency, reorganization, moratorium or other laws of general application 
relating to or affecting the enforcement of creditors' rights and the 
application of equitable principles in any motion, legal or equitable, and 
except as obligations to indemnify or contribute to losses may be limited by 
applicable law). The descriptions in the Registration Statement of 
agreements, contracts and other documents are accurate and fairly present the 
information required to be shown with respect thereto by Form SB-2; and there 
are no agreements, contracts or other documents which are required by the Act 
to be described in the Registration Statement or filed as exhibits to the 
Registration Statement which are not described or filed as required; and the 
exhibits which have been filed are complete and correct copies of the 
documents of which they purport to be copies.

         (n)  Subsequent to the respective dates as of which information is 
set forth in the Registration Statement and the Prospectus, and except as may 
otherwise be indicated or contemplated herein or therein, the Company has not 
(i) issued any securities other than up to 15,863 options or incurred any 
liability or obligation, direct or contingent, for borrowed money, (ii) 
entered into any transaction other than in the ordinary course of business, 
or (iii) declared or paid any dividend or made any other distribution on or 
in respect of any class of its capital stock; and, subsequent to such dates, 
and except as may otherwise be disclosed in the Prospectus, there has not 
been any change in the capital stock, debt (long or short term) or 
liabilities of the Company or any material change in the condition, financial 
or otherwise, or the earnings, prospects, stockholders' equity, value, 
operations, properties, business or results of operations of the Company.

                                  7    

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         (o)  Except as described in the Prospectus, no default exists in the 
due performance and observance of any term, covenant or condition of any 
material license, permit, contract, indenture, mortgage, lease, deed of 
trust, voting trust agreement, stockholders' agreement, note, loan or credit 
agreement or any other agreement or instrument evidencing an obligation for 
borrowed money, or any other agreement or instrument to which the Company is 
a party or by which the Company is or may be bound or to which the property 
or assets (tangible or intangible) of the Company is or may be subject.

         (p)  The Company has generally enjoyed a satisfactory 
employer-employee relationship with its employees and the Company is in 
material compliance with all federal, state, local and foreign laws, rules 
and regulations respecting employment, employment practices, terms and 
conditions of employment and wages and hours. There are no pending 
investigations involving the Company by the United States Department of Labor 
or any other governmental agency responsible for the enforcement of any 
federal, state, local or foreign laws, rules and regulations relating to 
employment. There is no unfair labor practice charge or complaint against the 
Company pending before the National Labor Relations Board or any strike, 
picketing, boycott, dispute, slowdown or stoppage pending or, to the 
knowledge of the Company, threatened against or involving the Company, or any 
predecessor entity, and none has ever occurred. No representation question 
exists respecting the employees of the Company, and no collective bargaining 
agreement or modification thereof is currently being negotiated by the 
Company. No grievance or arbitration proceeding is pending under any expired 
or existing collective bargaining agreements of the Company. No labor dispute 
with the employees of the Company exists or, to the knowledge of the Company, 
is imminent.

         (q)  The Company does not maintain, sponsor or contribute to any 
program or arrangement that is an "employee pension benefit plan," an 
"employee welfare benefit plan" or a "multiemployer plan," as such terms are 
defined in Sections 3(2), 3(1) and 3(37), respectively, of the Employee 
Retirement Income Security Act of 1974, as amended ("ERISA") ("ERISA Plans") 
other than the Company's unfunded group health plans and the Company's 
disability plan. The Company does not maintain or contribute, now or at any 
time previously, to a defined benefit plan, as defined in Section 3(35) of 
ERISA. No ERISA Plan (or any trust created thereunder) has engaged in a 
"prohibited transaction" within the meaning of Section 406 of ERISA or 
Section 4975 of the Code which could subject the Company to any tax penalty 
on prohibited transactions and which has not adequately been corrected. Each 
ERISA Plan is in compliance with all material reporting, disclosure and other 
requirements of the Code and ERISA as they relate to any such ERISA Plan. 
Determination letters have been received from the Internal Revenue Service 
with respect to each ERISA Plan which is intended to comply with Code Section 
401(a), stating that such ERISA Plan and the attendant trust are qualified 
thereunder. The Company has never completely or partially withdrawn from a 
"multiemployer plan."

         (r)  Neither the Company, nor any of its respective employees, 
directors, stockholders or affiliates (within the meaning of the Rules and 
Regulations), has taken or will take, directly or indirectly, any action 
designed to or which has constituted or which might be expected to cause or 
result in, under the Exchange Act or otherwise, the stabilization or

                                   8    

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manipulation of the price of any security of the Company, whether to 
facilitate the sale or resale of the Securities or otherwise.

         (s)  To the best of the Company's knowledge, none of the trademarks, 
trade names, service marks, service names, copyrights, patents and patent 
applications, and none of the licenses and rights to the foregoing, presently 
owned or held by the Company are in dispute or are in conflict with the right 
of any other person or entity. The Company (i) owns or has the right to use, 
free and clear of all liens, charges, claims, encumbrances, pledges, security 
interests, defects or other restrictions or equities of any kind whatsoever, 
all trademarks, trade names, service marks, service names, copyrights, 
patents and patent applications, and licenses and rights with respect to the 
foregoing, used in the conduct of its business as now conducted or proposed 
to be conducted without infringing upon or otherwise acting adversely to the 
right or claimed right of any person, corporation or other entity under or 
with respect to any of the foregoing and (ii) is not obligated or under any 
liability whatsoever to make any payments by way of royalties, fees or 
otherwise to any owner or licensee of, or other claimant to, any trademark, 
trade name, service mark, service name, copyright, patent or patent 
application except as set forth in the Registration Statement or the 
Prospectus. There is no action, suit, proceeding, inquiry, arbitration, 
investigation, litigation or governmental or other proceeding, domestic or 
foreign, pending or to the knowledge of the Company, threatened (or 
circumstances that may give rise to the same) against the Company which 
challenges the exclusive rights of the Company with respect to any 
trademarks, trade names, service marks, service names, copyrights, patents, 
patent applications or licenses or rights to the foregoing used in the 
conduct of its business.

         (t)  The Company owns and has the unrestricted right to use all 
trade secrets, know-how (including all unpatented and/or unpatentable 
proprietary or confidential information, systems or procedures), inventions, 
technology, designs, processes, works of authorship, computer programs and 
technical data and information that are material to the development, 
manufacture, operation and sale of all products and services sold or proposed 
to be sold by the Company, free and clear of and without violating any right, 
lien, or claim of others, including, without limitation, former employers of 
its employees.

         (u)  The Company has good and marketable title to, or valid and 
enforceable leasehold estates in, all items of real and personal property 
currently used in the conduct of business or stated in the Prospectus to be 
owned or leased by it, free and clear of all liens, charges, claims, 
encumbrances, pledges, security interests, defects or other restrictions or 
equities of any kind whatsoever, other than liens for taxes not yet due and 
payable.

         (v)  Arthur Andersen LLP whose reports are filed with the Commission 
as a part of the Registration Statement, are independent certified public 
accountants as required by the Act and the Rules and Regulations.

         (w)  The holders of all shares of Common Stock and securities 
exchangeable for or convertible into shares of Common Stock of the Company, 
including each director, officer and principal stockholder of the Company 
have executed an agreement (collectively, the "Lock-Up Agreements") pursuant 
to which he, she or it has agreed, (i) for a period extending

                                   9    

<PAGE>


eighteen (18) months following the effective date of the Registration 
Statement (the "Lock-Up Period"), not to, directly or indirectly, offer, 
offer to sell, sell, grant an option for the purchase or sale of, transfer, 
assign, pledge, hypothecate or otherwise encumber (whether pursuant to Rule 
144 of the Rules and Regulations or otherwise) any securities issued or 
issuable by the Company, whether or not owned by or registered in the name of 
such persons, or dispose of any interest therein, without the prior written 
consent of the Underwriter and (ii) for a period extending twenty-four (24) 
months following the effective date of the Registration Statement, that all 
sales of such securities issued by the Company shall be made through the 
Underwriter in accordance with its customary brokerage policies. The Company 
will cause its transfer agent to mark an appropriate legend on the face of 
stock certificates representing all of such securities and to place "stop 
transfer" orders on the Company's stock ledgers.

         (x)  There are no claims, payments, issuances, arrangements or 
understandings, whether oral or written, for services in the nature of a 
finder's or origination fee with respect to the sale of the Securities 
hereunder or any other arrangements, agreements, understandings, payments or 
issuances that may affect the Underwriter's compensation, as determined by 
the NASD.

          (y) The Units, the Common Stock and the Redeemable Warrants have 
been approved for quotation on the Nasdaq SmallCap Market ("Nasdaq").

         (z)  Neither the Company, nor any of its directors, officers, 
stockholders, employees, agents or any other person acting on behalf of the 
Company has, directly or indirectly, given or agreed to give any money, gift 
or similar benefit (other than legal price concessions to customers in the 
ordinary course of business) to any customer, supplier, employee or agent of 
a customer or supplier, or any official or employee of any governmental 
agency or instrumentality of any government (domestic or foreign) or 
instrumentality of any government (domestic or foreign) or any political 
party or candidate for office (domestic or foreign) or any other person who 
was, is or may be in a position to help or hinder the business of the Company 
(or assist the Company in connection with any actual or proposed transaction) 
which (i) might subject the Company or any other such person to any damage or 
penalty in any civil, criminal or governmental litigation or proceeding 
(domestic or foreign), (ii) if not given in the past, might have had a 
material and adverse effect on the condition, financial or otherwise, or the 
earnings, business affairs, prospects, stockholders' equity, value, 
operations, properties, business or results of operations of the Company, or 
(iii) if not continued in the future, might materially and adversely affect 
the condition, financial or otherwise, or the earnings, business affairs, 
prospects, stockholders' equity, value, operations, properties, business or 
results of operations of the Company. The Company's internal accounting 
controls are sufficient to cause the Company to comply with the Foreign 
Corrupt Practices Act of 1977, as amended.

         (aa) [intentionally omitted]

         (bb) Except as set forth in the Prospectus, no officer, director or 
stockholder of the Company and no affiliate or associate (as these terms are 
defined in the Rules and Regulations) of any of the foregoing persons or 
entities, has or has had, either directly or indirectly, (i) an interest in 
any person or entity which (A) furnishes or sells services or products

                                   10   

<PAGE>


which are furnished or sold or are proposed to be furnished or sold by the 
Company, or (B) purchases from or sells or furnishes to the Company any goods 
or services, or (ii) a beneficial interest in any contract or agreement to 
which the Company is a party or by which the Company may be bound. Except as 
set forth in the Prospectus under "Certain Transactions," there are no 
existing agreements, arrangements, understandings or transactions, or 
proposed agreements, arrangements, understandings or transactions, between or 
among the Company and any officer, director or any person listed in the 
"Principal Stockholders" section of the Prospectus or any affiliate or 
associate of any of the foregoing persons or entities.

         (cc) The minute books of the Company have been made available to the 
Underwriter, contain a complete summary of all material actions of the 
directors and stockholders of the Company since the time of incorporation, 
and reflect all material transactions referred to in such minutes accurately 
in all respects.

         (dd) Except as to the extent described in the Prospectus, no holder 
of any securities of the Company or of any options, warrants or other 
convertible or exchangeable securities of the Company has the right to 
include any securities issued by the Company in the Registration Statement. 
Except for the registration rights of Leisure Fund Associates, L.P.  relating 
to 24,351 warrants to purchase common stock of the Company as set forth in 
that certain common stock purchase warrant dated May 24, 1996, no holder of 
any securities of the Company or of any options, warrants or other 
convertible or exchangeable securities of the Company has the right to 
include any securities issued by the Company in any registration statement 
(other than on Form S-8) to be filed by the Company or to require the Company 
to file a registration statement. Except as set forth in the Prospectus, no 
person or entity holds any anti-dilution rights with respect to any 
securities of the Company.

         (ee) Any certificate signed by any officer of the Company and 
delivered to the Underwriter or to Underwriter's Counsel (as defined in 
Section 4(d) herein), shall be deemed a representation and warranty by the 
Company to the Underwriter as to the matters covered thereby.

         (ff) The Company has entered into a warrant agreement, substantially 
in the form filed as Exhibit 4.2 to the Registration Statement (the "Warrant 
Agreement"), with Continental Stock Transfer & Trust Company, in form and 
substance satisfactory to the Underwriter, with respect to the Redeemable 
Warrants and providing for the payment of warrant solicitation fees 
contemplated by Section 4(x) hereof. The Warrant Agreement has been duly and 
validly authorized by the Company and, assuming due execution by the parties 
thereto other than the Company, constitutes a valid and legally binding 
agreement of the Company, enforceable against the Company in accordance with 
its terms (except as such enforceability may be limited by applicable 
bankruptcy, insolvency, reorganization, moratorium or other laws of general 
application relating to or affecting the enforcement of creditors' rights and 
the application of equitable principles in any action, legal or equitable, 
and except as obligations to indemnify or contribute to losses may be limited 
by applicable law).

         (gg) The Company has entered into a financial advisory and 
consulting agreement substantially in the form filed as Exhibit 10.7 to the 
Registration Statement (the

                                      11


<PAGE>

"Consulting Agreement") with the Underwriter, with respect to the rendering 
of consulting services by the Underwriter to the Company. The Consulting 
Agreement provides that the Underwriter shall be retained by the Company 
commencing on the consummation of the proposed public offering and ending 24 
months thereafter. The Consulting Agreement has been duly and validly 
authorized by the Company and assuming due execution by the parties thereto 
other than the Company, constitutes a valid and legally binding agreement of 
the Company, enforceable against the Company in accordance with its terms 
(except as such enforceability may be limited by applicable bankruptcy, 
insolvency, reorganization, moratorium or other laws of general application 
relating to or affecting enforcement of creditors' rights and the application 
of equitable principles in any action, legal or equitable, and except as 
rights to indemnity or contribution may be limited by applicable law).

         (hh) The Company has filed a Form 8-A with the Commission providing 
for the registration under the Exchange Act of the Units, the Redeemable 
Warrants and the Common Stock and such Form 8-A has been declared effective 
by the Commission.

         (ii) Each warrant issued in connection with the Private Placement 
financing completed in August 1996, (each a "Selling Securityholders 
Warrant") has been automatically converted into a Redeemable Warrant without 
any action by the holder thereof and all of such Redeemable Warrants, as 
converted and the Selling Securityholders Shares, have been registered in the 
Registration Statement.

         (jj) The Company has as of the effective date of the Registration 
Statement (i) entered into an employment agreement with Marcus Bender, in the 
form filed as Exhibit 10.6 to the Registration Statement and (ii) purchased 
term key man insurance on the life of Marcus Bender, in the amount of 
$1,000,000, which policy names the Company as the sole beneficiary thereof.

         2.   PURCHASE, SALE AND DELIVERY OF THE SECURITIES.

         (a)  On the basis of the representations, warranties, covenants and 
agreements herein contained, but subject to the terms and conditions herein 
set forth, the Company agrees to sell to the Underwriter, and the Underwriter 
agrees to purchase from the Company, the Firm Units at a price equal to $3.60 
per Unit.

         (b)  In addition, on the basis of the representations, warranties, 
covenants and agreement, herein contained, but subject to the terms and 
conditions herein set forth, the Company hereby grants an option to the 
Underwriter to purchase all or any part of the Option Units at a price equal 
to $3.60 per Unit. The option granted hereby will expire forty-five (45) days 
after (i) the date the Registration Statement becomes effective, if the 
Company has elected not to rely on Rule 430A under the Rules and Regulations, 
or (ii) the date of this Agreement if the Company has elected to rely upon 
Rule 430A under the Rules and Regulations, and may be exercised in whole or 
in part from time to time only for the purpose of covering over-allotments 
which may be made in connection with the offering and distribution of the 
Firm Units upon notice by the Underwriter to the Company setting forth the 
number of Option Units as to which the Underwriter is then exercising the 
option and the time and date of payment and delivery for


                                      12
<PAGE>

any such Option Units. Any such time and date of delivery (an "Option Closing 
Date") shall be determined by the Underwriter, but shall not be later than 
seven (7) full business days after the exercise of said option, nor in any 
event prior to the Closing Date, unless otherwise agreed upon by the 
Underwriter and the Company. Nothing herein contained shall obligate the 
Underwriter to exercise the option granted hereby. No Option Units shall' be 
delivered unless the Firm Units shall be simultaneously delivered or shall 
theretofore have been delivered as herein provided.

         (c)  Payment of the purchase price for, and delivery of certificates 
for, the Firm Units shall be made at the offices of the Underwriter at 33 
Maiden Lane, New York, New York 10038, or at such other place as shall be 
agreed upon by the Underwriter and the Company. Such delivery and payment 
shall be made at 10:00 a.m. (New York City time) on May 19, 1997 or at such 
other time and date as shall be agreed upon by the Underwriter and the 
Company, but not less than three (3) nor more than seven (7) full business 
days after the effective date of the Registration Statement (such time and 
date of payment and delivery being herein called the "Closing Date"). In 
addition, in the event that any or all of the Option Units are purchased by 
the Underwriter, payment of the purchase price for, and delivery of 
certificates for, such Option Units shall be made at the above mentioned 
office of the Underwriter or at such other place as shall be agreed upon by 
the Underwriter and the Company. Delivery of the certificates for the Firm 
Units and the Option Units, if any, shall be made to the Underwriter against 
payment by the Underwriter of the purchase price for the Firm Units and the 
Option Units, if any, to the order of the Company by New York Clearing House 
funds. Certificates for the Firm Units and the Option Units, if any, shall be 
in definitive, fully registered form, shall bear no restrictive legends and 
shall be in such denominations and registered in such names as the 
Underwriter may request in writing at least two (2) business days prior to 
the Closing Date or the relevant Option Closing Date, as the case may be. The 
certificates for the Firm Units and the Option Units, if any, shall be made 
available to the Underwriter at such offices or such other place as the 
Underwriter may designate for inspection, checking and packaging no later 
than 9:30 a.m. on the last business day prior to the Closing Date or the 
relevant Option Closing Date, as the case may be.

         (d)  On the Closing Date, the Company shall issue and sell to the 
Underwriter or its designees the Underwriter's Warrants for an aggregate 
purchase price of $.0001 per warrant, which warrants shall entitle the 
holders thereof to purchase an aggregate of an additional 200,000 shares of 
Common Stock. The Underwriter's Warrants shall be exercisable for a period of 
four (4) years commencing one (1) year from the effective date of the 
Registration Statement at a price equaling one hundred and sixty-five percent 
(165%) of the initial public offering price of the Units. The Underwriter's 
Warrant Agreement and the form of the certificates for the Underwriter's 
Warrants shall be substantially in the form filed as Exhibit 4.3 to the 
Registration Statement. Payment for the Underwriter's Warrants shall be made 
on the Closing Date.

         3.   PUBLIC OFFERING OF THE UNITS. As soon after the Registration 
Statement becomes effective as the Underwriter deems advisable, the 
Underwriter shall make a public offering of the Firm Units and such of the 
Option Units as the Underwriter may determine (other than to residents of or 
in any jurisdiction in which qualification of the Units is required and has


                                      13   
<PAGE>

not become effective) at the price and upon the other terms set forth in the 
Prospectus. The Underwriter may from time to time increase or decrease the 
public offering price after distribution of the Units has been completed to 
such extent as the Underwriter, in its sole discretion, deems advisable. The 
Underwriter may enter into one or more agreements as the Underwriter, in its 
sole discretion, deems advisable with one or more broker-dealers who shall 
act as dealers in connection with such public offering.

         4.   COVENANTS AND AGREEMENTS OF THE COMPANY. The Company covenants 
and agrees with the Underwriter as follows:

         (a)  The Company shall use its best efforts to cause the 
Registration Statement and any amendments thereto to become effective as 
promptly as practicable and will not at any time, whether before or after the 
effective date of the Registration Statement, file any amendment to the 
Registration Statement or supplement to the Prospectus or file any document 
under the Act or the Exchange Act before termination of the offering of the 
Firm Units and the Option Units to the public by the Underwriter, of which 
the Underwriter shall not previously have been advised and furnished with a 
copy, or to which the Underwriter shall have objected or which is not in 
compliance with the Act, the Exchange Act and the Rules and Regulations.

         (b)  As soon as the Company is advised or obtains knowledge thereof, 
the Company will advise the Underwriter and confirm the same in writing, (i) 
when the Registration Statement, as amended, becomes effective, when any 
post-effective amendment to the Registration Statement becomes effective and, 
if the provisions of Rule 430A promulgated under the Act will be relied upon, 
when the Prospectus has been filed in accordance with said Rule 430A, (ii) of 
the issuance by the Commission of any stop order or of the initiation, or the 
threatening, of any proceeding the outcome of which may result in the 
suspension of the effectiveness of the Registration Statement or any order 
preventing or suspending the use of the Preliminary Prospectus or the 
Prospectus, or any amendment or supplement thereto, or the institution of any 
proceedings for that purpose, (iii) of the issuance by the Commission or by 
any state securities commission of any proceedings for the suspension of the 
qualification of any of the Securities for offering or sale in any 
jurisdiction or of the initiation, or the threatening, of any proceeding for 
that purpose, (iv) of the receipt of any comments from the Commission, and 
(v) of any request by the Commission for any amendment to the Registration 
Statement or any amendment or supplement to the Prospectus or for additional 
information. If the Commission or any state securities regulatory authority 
shall enter a stop order or suspend such qualification at any time, the 
Company will make every effort to obtain promptly the lifting of such order.

         (c)  The Company shall file the Prospectus (in form and substance 
satisfactory to the Underwriter) with the Commission, or transmit the 
Prospectus by a means reasonably calculated to result in filing the same with 
the Commission, pursuant to Rule 424(b)(1) of the Rules and Regulations (or, 
if applicable and if consented to by the Underwriter, pursuant to Rule 
424(b)(4) of the Rules and Regulations) within the time period specified in 
Rule 424(b)(1) (or, if applicable and if consented to by the Underwriter, 
Rule 424(b)(4)).

         (d)  The Company will give the Underwriter notice of its intention 
to file or prepare any amendment to the Registration Statement (including any 
post-effective amendment)


                                      14   
<PAGE>

or any amendment or supplement to the Prospectus (including any revised 
prospectus which the Company proposes for use in connection with the offering 
of any of the Securities which differs from the corresponding prospectus on 
file at the Commission at the time the Registration Statement becomes 
effective, whether or not such revised prospectus is required to be filed 
pursuant to Rule 424(b) of the Rules and Regulations), and will furnish the 
Underwriter with copies of any such amendment or supplement a reasonable 
amount of time prior to such proposed filing or use, as the case may be, and 
will not file any such amendment or supplement to which the Underwriter or 
Orrick, Herrington & Sutcliffe LLP, its counsel ("Underwriter's Counsel"), 
shall object.

         (e)  The Company shall endeavor in good faith, in cooperation with 
the Underwriter, at or prior to the time the Registration Statement becomes 
effective, to qualify the Securities for offering and sale under the 
securities laws of such jurisdictions as the Underwriter may reasonably 
designate to permit the continuance of sales and dealings therein for as long 
as may be necessary to complete the distribution contemplated hereby, and 
shall make such applications, file such documents and furnish such 
information as may be required for such purpose; PROVIDED, HOWEVER, the 
Company shall not be required to qualify as a foreign corporation or file a 
general or limited consent to service of process in any such jurisdiction.  
In each jurisdiction where such qualification shall be effected, the Company 
will, unless the Underwriter agrees that such action is not at the time 
necessary or advisable, use all reasonable efforts to file and make such 
statements or reports at such times as are or may reasonably be required by 
the laws of such jurisdiction to continue such qualification.

         (f)  During the time when a prospectus is required to be delivered 
under the Act, the Company shall use all reasonable efforts to comply with 
all requirements imposed upon it by the Act, the Exchange Act and the Rules 
and Regulations so far as necessary to permit the continuance of sales of or 
dealings in the Securities in accordance with the provisions hereof and the 
Prospectus, or any amendments or supplements thereto. If, at any time when a 
prospectus relating to the Securities is required to be delivered under the 
Act, any event shall have occurred as a result of which, in the opinion of 
counsel for the Company or Underwriter's Counsel, the Prospectus, as then 
amended or supplemented, includes an untrue statement of a material fact or 
omits to state a material fact required to be stated therein or necessary to 
make the statements therein, in the light of the circumstances in which they 
were made, not misleading, or if it is necessary at any time to amend or 
supplement the prospectus to comply with the Act, the Company will notify the 
Underwriter promptly and prepare and file with the Commission an appropriate 
amendment or supplement in accordance with Section 10 of the Act, each such 
amendment or supplement to be satisfactory to Underwriter's Counsel, and the 
Company will furnish to the Underwriter copies of such amendment or 
supplement as soon as available and in such quantities as the Underwriter may 
request.

         (g)  As soon as practicable, but in any event not later than forty 
five (45) days after the end of the 12-month period beginning on the day 
after the end of the fiscal quarter of the Company during which the effective 
date of the Registration Statement occurs (ninety (90) days in the event that 
the end of such fiscal quarter is the end of the Company's fiscal year}, the 
Company shall make generally available to its security holders, in the manner 
specified in Rule 158(b) of the Rules and Regulations, and to the 
Underwriter, an earnings statement which will


                                      15   
<PAGE>

be in the detail required by, and will otherwise comply with, the provisions 
of Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations, 
which statement need not be audited unless required by the Act, covering a 
period of at least twelve (12) consecutive months after the effective date of 
the Registration Statement.

         (h)  During a period of seven (7) years after the date hereof, the 
Company will furnish to its stockholders, as soon as practicable, annual 
reports (including financial statements audited by independent public 
accountants) and will deliver to the Underwriter:

               i)       concurrently with furnishing such annual reports to 
         its stockholders, a balance sheet of the Company as at the end of the 
         preceding fiscal year, together with statements of operations, 
         stockholders' equity and cash flows of the Company for such fiscal 
         year, accompanied by a copy of the report thereon of the Company's 
         independent certified public accountants;

              ii)       as soon as they are available, copies of all reports 
         (financial or other) mailed to stockholders;

             iii)       as soon as they are available, copies of all reports 
         and financial statements furnished to or filed with the Commission, 
         the NASD or any securities exchange;

              iv)       every press release and every material news item or 
         article of interest to the financial community in respect of the 
         Company or its affairs which was released or prepared by or on behalf 
         of the Company; and

               v)       any additional information of a public nature 
         concerning the Company (and any future subsidiaries) or its business 
         which the Underwriter may request.

    During such seven-year period, if the Company has active subsidiaries, 
the foregoing financial statements will be on a consolidated basis to the 
extent that the accounts of the Company and its subsidiaries are 
consolidated, and will be accompanied by similar financial statements for any 
significant subsidiary which is not so consolidated.

         (i)  The Company will maintain a transfer and warrant agent and, if 
necessary under the jurisdiction of incorporation of the Company, a registrar 
(which may be the same entity as the transfer agent) for the Units, the 
Common Stock and the Redeemable Warrants.

         (j)  The Company will furnish to the Underwriter, without charge and 
at such place as the Underwriter may designate, copies of each Preliminary 
Prospectus, the Registration Statement and any pre-effective or 
post-effective amendments thereto (one of which will be signed and will 
include all financial statements and exhibits), the Prospectus, and all 
amendments and supplements thereto, including any prospectus prepared after 
the effective date of the Registration Statement, in each case as soon as 
available and in such quantities as the Underwriter may request.


                                      16   
<PAGE>

         (k)  On or before the effective date of the Registration Statement, 
the Company shall provide the Underwriter with originally-executed copies of 
duly executed, legally binding and enforceable Lock-Up Agreements which are 
in form and substance satisfactory to the Underwriter. On or before the 
Closing Date, the Company shall deliver instructions to its transfer agent 
authorizing such transfer agent to place appropriate legends on the 
certificates representing the securities of the Company subject to the 
Lock-Up Agreements and to place appropriate stop transfer orders on the 
Company's ledgers.

         (l)  The Company agrees that, for a period of eighteen (18) months 
commencing on the effective date of the Registration Statement, and except as 
contemplated by this Agreement, it and its present and future subsidiaries 
will not, without the prior written consent of the Underwriter (i) issue, 
sell, contract or offer to sell, grant an option for the purchase or sale of, 
assign, transfer, pledge, distribute or otherwise dispose of, directly or 
indirectly, any shares of capital stock or any option, right or warrant with 
respect to any shares of capital stock or any security convertible, 
exchangeable or exercisable for capital stock, except pursuant to stock 
options or warrants issued by the Company or any other person or entity on 
the date hereof or up to 759,137 shares of Common Stock issuable pursuant to 
options which may be granted after the date hereof, PROVIDED, HOWEVER, that 
such options shall have an exercise price which is at least equal to the 
greater of (a) the initial public offering price per Unit and (ii) the fair 
market value of the Common Stock on the date of grant or (iii) file any 
registration statement for the offer or sale by the Company or any other 
person or entity securities issued or to be issued by the Company or any 
present or future subsidiaries.

         (m)  Neither the Company nor any of its officers, directors, 
stockholders or affiliates (within the meaning of the Rules and Regulations) 
will take, directly or indirectly, any action designed to stabilize or 
manipulate the price of any securities of the Company, or which might in the 
future reasonably be expected to cause or result in the stabilization or 
manipulation of the price of any such securities.

         (n)  The Company shall apply the net proceeds from the sale of the 
Securities offered to the public in the manner set forth under "Use of 
Proceeds" in the Prospectus. No portion of the net proceeds will be used, 
directly or indirectly, to acquire any securities issued by the Company.

         (o)  The Company shall timely file all such reports, forms or other 
documents as may be required (including, but not limited to, any Form SR 
required by Rule 463 under the Act) from time to time under the Act, the 
Exchange Act, and the Rules and Regulations, and all such reports, forms and 
documents will comply as to form and substance with the applicable 
requirements under the Act, the Exchange Act and the Rules and Regulations.

         (p)  The Company shall furnish to the Underwriter as early as 
practicable prior to each of the date hereof, the Closing Date and each 
Option Closing Date, if any, but no later than two (2) full business days 
prior thereto, a copy of the latest available unaudited interim financial 
statements of the Company (which in no event shall be as of a date more than 
thirty (30) days prior to the date hereof, the Closing Date or the relevant 
Option Closing Date, as the


                                      17   
<PAGE>

case may be) which have been read by the Company's independent public 
accountants, as stated in their letters to be furnished pursuant to SECTION 
6(j) hereof.

         (q)  The Company shall cause the Units, the Common Stock and the 
Redeemable Warrants to be quoted on Nasdaq and, for a period of seven (7) 
years from the date hereof, use its best efforts to maintain the Nasdaq 
quotation listing of the Units, the Common Stock and the Redeemable Warrants 
to the extent outstanding.

         (r)  For a period of five (5) years from the Closing Date, the 
Company shall at the request of the Underwriter, furnish or cause to be 
furnished to the Underwriter and at the Company's sole expense, (i) daily 
consolidated transfer sheets relating to the Units, the Common Stock and the 
Redeemable Warrants and (ii) a list of holders of all of the Company's 
securities.

         (s)  For a period of five (5) years from the Closing Date, the 
Company shall, at the Company's sole expense, (i) promptly provide the 
Underwriter, upon any and all requests of the Underwriter, with a "blue sky 
trading survey" for secondary sales of the Company's securities, prepared by 
counsel to the Company, and (ii) take all necessary and appropriate actions 
to further qualify the Company's securities in all jurisdictions of the 
United States in order to permit secondary sales of such securities pursuant 
to the "blue sky" laws of those jurisdictions, provided that such 
jurisdictions do not require the Company to qualify as a foreign corporation.

         (t)  As soon as practicable, but in no event more than thirty (30) 
days after the effective date of the Registration Statement, the Company 
agrees to take all necessary and appropriate actions to be included in 
Standard and Poor's Corporation Descriptions and Moody's OTC Manual and to 
continue such inclusion for a period of not less than seven (7) years.

         (u)  Without the prior written consent of the Underwriter, the 
Company hereby agrees that it will not, for a period of eighteen (18) months 
from the effective date of the Registration Statement, (i) adopt, propose to 
adopt or otherwise permit to exist any employee, officer, director, 
consultant or compensation plan or arrangement permitting the grant, issue, 
sale or entry into any agreement to grant, issue or sell any option, warrant 
or other contract right (x) at an exercise price per share of Common Stock 
that is less than the greater of (a) the initial public offering price of the 
Units and (b) the fair market value per share of Common Stock on the date of 
grant or sale or (y) to any holder of five percent (5%) or more of the Common 
Stock other than an officer or director or any holder of five percent (5%) or 
more of the Common Stock as the result of the exercise or conversion of 
equivalent securities other than an officer or director, including, but not 
limited to options, warrants or other contract rights and securities 
convertible, directly or indirectly, into shares of Common Stock or any 
affiliate of the foregoing; (ii) permit the maximum number of shares of 
Common Stock or other securities of the Company purchasable at any time 
pursuant to options, warrants or other contract rights to exceed 1,024,351 
shares of Common Stock (subject to customary anti-dilution provisions), 
excluding the Underwriter's Warrants and the Redeemable Warrants; (iii) 
permit the existence of stock appreciation rights, phantom options or similar 
arrangements; or (iv) permit the payment for such securities with any form of 
consideration other than cash.


                                      18   
<PAGE>

         (v)  Until the completion of the distribution of the Units to the 
public, and during any period during which a prospectus is required to be 
delivered, the Company shall not, without the prior written consent of the 
Underwriter, issue, directly or indirectly, any press release or other 
communication or hold any press conference with respect to the Company or its 
activities or the offering contemplated hereby, other than trade releases 
issued in the ordinary course of the Company's business consistent with past 
practices with respect to the Company's operations.

         (w)  For a period of five (5) years after the effective date of the 
Registration Statement, the Company shall use its best efforts to cause one 
(1) individual selected by the Underwriter to be elected to the Board of 
Directors of the Company (the "Board"), if requested by the Underwriter. In 
the event the Underwriter shall not have designated such individual at the 
time of any meeting of the Board or such person has not been elected or is 
unavailable to serve, the Company shall notify the Underwriter of each 
meeting of the Board. An individual selected by the Underwriter shall be 
permitted to attend all meetings of the Board and to receive all notices and 
other correspondence and communications sent by the Company to members of the 
Board. The Company shall reimburse the Underwriter's designee for his or her 
out-of-pocket expenses reasonably incurred in connection with his or her 
attendance of the Board meetings.

         (x)  Commencing one year from the date hereof, to pay the 
Underwriter a warrant solicitation fee equal to five percent (5%) of the 
exercise price of the Redeemable Warrants, payable on the date of the 
exercise thereof on terms provided in the Warrant Agreement. The Company will 
not solicit the exercise of the Redeemable Warrants through any solicitation 
agent other than the Underwriter. The Underwriter will not be entitled to any 
warrant solicitation fee unless the Underwriter provides bona fide services 
in connection with any warrant solicitation and the investor designates, in 
writing, that the Underwriter is entitled to such fee.

         (y)  For a period equal to the lesser of (i) seven (7) years from 
the date hereof, and (ii) the sale to the public of the Underwriter's 
Securities, the Company will not take any action or actions which may prevent 
or disqualify the Company's use of Form SB-2 or S-1 (or other appropriate 
form) for the registration under the Act of the Underwriter's Securities.

         (z)  For a period of twenty four (24) months after the effective 
date of the Registration Statement, the Company shall not restate, amend or 
alter any term of any written employment, consulting or similar agreement 
entered into between the Company and any officer, director or key employee as 
of the effective date of the Registration Statement in a manner which is more 
favorable to such officer, director or key employee, without the prior 
written consent of the Underwriter.

         (aa) The Company will use its best efforts to maintain the 
effectiveness of the Registration Statement for a period of five years after 
the date hereof.


                                      19   
<PAGE>

         (bb) The Company agrees, that for a period of twenty-four (24) 
months from the effective date of the Registration Statement, it will not 
without the prior written consent of the Underwriter (i) declare or pay any 
dividend or make any other distribution on any equity securities of the 
Company except for the payment of an aggregate of approximately $39,000 in 
dividends on preferred stock of the Company which was converted into Common 
Stock upon consummation of the Company's bridge financing on October 10, 
1996, or (ii) purchase, redeem or otherwise acquire or retire for value any 
equity securities of the Company, except for the Redeemable Warrants, or 
(iii) permit a subsidiary of the Company to purchase, redeem or otherwise 
acquire or retire for value any equity securities of the Company, except for 
the Redeemable Warrants.

         5.   PAYMENT OF EXPENSES.

         (a)  The Company hereby agrees to pay (such payment to be made, at 
the discretion of the Underwriter, on the Closing Date and any Option Closing 
Date (to the extent not paid on the Closing Date or a previous Option Closing 
Date)) all expenses and fees (other than fees of Underwriter's Counsel except 
as provided in (iv) below) incident to the performance of the obligations of 
the Company under this Agreement, the Underwriter's Warrant Agreement and the 
Warrant Agreement, including, without limitation, (i) the fees and expenses 
of accountants and counsel for the Company, (ii) all costs and expenses 
incurred in connection with the preparation, duplication, printing, 
(including mailing and handling charges) filing, delivery and mailing 
(including the payment of postage, overnight delivery or courier charges with 
respect thereto) of the Registration Statement and the Prospectus and any 
amendments and supplements thereto and the printing, mailing (including the 
payment of postage, overnight delivery or courier charges with respect 
thereto) and delivery of this Agreement, the Underwriter's Warrant Agreement, 
the Warrant Agreement, and agreements with selected dealers, and related 
documents, including the cost of all copies thereof and of each Preliminary 
Prospectus and of the Prospectus and any amendments thereof or supplements 
thereto supplied to the Underwriter and such dealers as the Underwriter may 
request, in such quantities as the Underwriter may request, (iii) the 
printing, engraving, issuance and delivery of the Securities, (iv) the 
qualification of the Securities under state or foreign securities or "blue 
sky" laws and determination of the status of such securities under legal 
investment laws, including the costs of printing and mailing the "Preliminary 
Blue Sky Memorandum," the "Supplemental Blue Sky Memorandum" and "Legal 
Investments Survey," if any, and disbursements and fees (such fees not to 
exceed $45,000) of counsel in connection therewith, (v) advertising costs and 
expenses, including, but not limited to costs and expenses in connection with 
"road shows," information meetings and presentations (such costs and expenses 
relating to "road shows", information meetings and presentations not to 
exceed $25,000), and prospectus memorabilia and "tombstone" advertisement 
expenses, (vi) costs and expenses in connection with due diligence 
investigations, including, but not limited to, the fees of any independent 
counsel or consultants (excluding Underwriter's Counsel's fees relating to 
due diligence), (vii) fees and expenses of a transfer and warrant agent and 
registrar for the Securities, (viii) applications for assignments of a rating 
of the Securities by qualified rating agencies, (ix) the fees payable to the 
Commission and the NASD, and (x) the fees and expenses incurred in connection 
with the quotation of the Securities on Nasdaq and any other exchange.


                                      20   
<PAGE>

         (b)  If this Agreement is terminated by the Underwriter in 
accordance with the provisions of SECTION 6, SECTION 10(a) or SECTION 11 
hereof, the Company shall reimburse and indemnify the Underwriter for all of 
its actual out-of-pocket expenses, including the fees and disbursements of 
Underwriter's Counsel, less any amounts already paid pursuant to SECTION 5(c) 
hereof. In addition, the Company shall remain liable for all Blue Sky counsel 
fees (such fees not to exceed $45,000) and expenses and Blue Sky filing fees.

         (c)  The Company further agrees that, in addition to the expenses 
payable pursuant to SECTION 5(a) hereof, it will pay to the Underwriter on 
the Closing Date by certified or bank cashier's check, or, at the election of 
the Underwriter, by deduction from the proceeds of the offering of the Firm 
Units, a non-accountable expense allowance equal to three percent (3%) of the 
gross proceeds received by the Company from the sale of the Firm Units, 
twenty-five thousand dollars ($25,000) of which has been paid to date by the 
Company. In the event the Underwriter elects to exercise the over-allotment 
option described in SECTION 2(b) hereof, the Company further agrees to pay to 
the Underwriter on each Option Closing Date, by certified or bank cashier's 
check, or, at the Underwriter's election, by deduction from the proceeds of 
the Option Units purchased on such Option Closing Date, a non-accountable 
expense allowance equal to three percent (3%) of the gross proceeds received 
by the Company from the sale of such Option Units.

         6.  CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligations of 
the Underwriter hereunder shall be subject to the continuing accuracy of the 
representations and warranties of the Company herein as of the date hereof 
and as of the Closing Date and each Option Closing Date, if any, as if they 
had been made on and as of the Closing Date and each Option Closing Date, as 
the case may be; the accuracy on and as of the Closing Date and each Option 
Closing Date, if any, of the statements of officers of the Company made 
pursuant to the provisions hereof; the performance by the Company on and as 
of the Closing Date and each Option Closing Date, if any, of its covenants 
and obligations hereunder; and to the following further conditions:

         (a)  The Registration Statement shall have become effective not 
later than 12:00 p.m., New York time, on the date of this Agreement or such 
later date and time as shall be consented to in writing by the Underwriter, 
and, at the Closing Date and each Option Closing Date, if any, no stop order 
suspending the effectiveness of the Registration Statement shall have been 
issued and no proceedings for that purpose shall have been instituted or 
shall be pending or contemplated by the Commission and any request on the 
part of the Commission for additional information shall have been complied 
with to the reasonable satisfaction of Underwriter's Counsel. If the Company 
has elected to rely upon Rule 430A of the Rules and Regulations, the price of 
the Units and any price-related information previously omitted from the 
effective Registration Statement pursuant to such Rule 430A shall have been 
transmitted to the Commission for filing pursuant to Rule 424(b) of the Rules 
and Regulations within the prescribed time period, and prior to the Closing 
Date the Company shall have provided evidence satisfactory to the Underwriter 
of such timely filing, or a post-effective amendment providing such 
information shall have been promptly filed and declared effective in 
accordance with the requirements of Rule 430A of the Rules and Regulations.


                                      21   

<PAGE>

          (b)  The Underwriter shall not have advised the Company that the 
Registration Statement, or any amendment thereto, contains an untrue 
statement of fact which, in the Underwriter's opinion, is material, or omits 
to state a fact which, in the Underwriter's opinion, is material and is 
required to be stated therein or is necessary to make the statements therein, 
in light of the circumstances in which they were made not misleading, or that 
the Prospectus, or any supplement thereto, contains an untrue statement of 
fact which, in the Underwriter's opinion, is material, or omits to state a 
fact which, in the Underwriter's opinion, is material and is required to be 
stated therein or is necessary to make the statements therein, in light of 
the circumstances in which they were made, not misleading.

          (c)  On or prior to the Closing Date, the Underwriter shall have 
received from Underwriter's Counsel such opinion or opinions with respect to 
the organization of the Company, the validity of the Securities, the 
Registration Statement, the Prospectus and such other related matters as the 
Underwriter may request and Underwriter's Counsel shall have received such 
papers and information as they may request in order to enable them to pass 
upon such matters.

          (d)  On the Closing Date, the Underwriter shall have received the 
favorable opinion of Graham & James LLP, counsel to the Company, dated the 
Closing Date, addressed to the Underwriter, in form and substance 
satisfactory to Underwriter's Counsel and substantially in the form of 
Exhibit A attached hereto:

          At each Option Closing Date, if any, the Underwriter shall have 
received the favorable opinion of Graham & James LLP counsel to the Company, 
dated the relevant Option Closing Date, addressed to the Underwriter, and in 
form and substance satisfactory to Underwriter's Counsel confirming as of the 
Option Closing Date, the statements made by Graham & James LLP in its opinion 
delivered on the Closing Date.

         (e)  On the Closing Date, the Underwriter shall have received the 
favorable opinion of Tam, O'Connor & Henderson, counsel to the Company, dated 
the Closing Date, addressed to the Underwriter, in form and substance 
satisfactory to Underwriter's Counsel and substantially in the form of 
Exhibit B attached hereto.

          At each Option Closing Date, if any, the Underwriter shall have 
received the favorable opinion of Tam, O'Connor & Henderson counsel to the 
Company, dated the relevant Option Closing Date, addressed to the 
Underwriter, and in form and substance satisfactory to Underwriter's Counsel 
confirming as of the Option Closing Date, the statements made by Tam, 
O'Connor & Henderson in its opinion delivered on the Closing Date.

          (f)  On or prior to each of the Closing Date and each Option 
Closing Date, if any, Underwriter's Counsel shall have been furnished with 
such documents, certificates and opinions as they may reasonably require for 
the purpose of enabling them to review or pass upon the matters referred to 
in SECTION 6(c) hereof, or in order to evidence the accuracy, completeness or 
satisfaction of any of the representations, warranties or conditions of the 
Company herein contained.

                                      22
<PAGE>

          (g)  Prior to the Closing Date and each Option Closing Date, if 
any, (i) there shall have been no material adverse change or development 
involving a prospective adverse change in the condition, financial or 
otherwise, or the earnings, stockholders' equity, value, operations, 
properties, business or results of operations of the Company, whether or not 
in the ordinary course of business, from the latest dates as of which such 
matters are set forth in the Registration Statement and the Prospectus; (ii) 
there shall have been no transaction, not in the ordinary course of business, 
entered into by the Company from the latest date as of which the financial 
condition of the Company is set forth in the Registration Statement and the 
Prospectus; (iii) except as disclosed in the Prospectus, the Company shall 
not be in default under any provision of any instrument relating to any 
outstanding indebtedness; (iv) the Company shall not have issued any 
securities except for the Securities and up to 15,863 options having an 
exercise price equal to or greater than the initial public offering price of 
the Units or declared or paid any dividend or made any distribution in 
respect of its capital stock of any class except as set forth in the 
Prospectus and there shall not have been any change in the capital stock, 
debt (long or short term) or liabilities or obligations of the Company 
(contingent or otherwise) from the latest dates as of which such matters are 
set forth in the Registration Statement and the Prospectus; (v) no material 
amount of the assets of the Company shall have been pledged or mortgaged, 
except as set forth in the Registration Statement and the Prospectus; (vi) no 
action, suit, proceeding, inquiry, arbitration, investigation, litigation or 
governmental or other proceeding, domestic or foreign, shall be pending or 
threatened (or circumstances giving rise to same) against the Company or 
affecting any of its properties or business before or by any court or 
federal, state or foreign commission, board or other administrative agency 
wherein an unfavorable decision, ruling or finding may materially and 
adversely affect the condition, financial or otherwise, or the earnings, 
stockholders' equity, value, operations, properties, business or results of 
operations of the Company taken as a whole, except as set forth in the 
Registration Statement and Prospectus; and (vii) no stop order shall have 
been issued under the Act with respect to the Registration Statement and no 
proceedings therefor shall have been initiated, threatened or contemplated by 
the Commission.

          (h)  At the Closing Date and each Option Closing Date, if any, the 
Underwriter shall have received a certificate of the Company signed by the 
principal executive officer and by the chief financial or chief accounting 
officer of the Company, dated the Closing Date or the relevant Option Closing 
Date, as the case may be, to the effect that each of such persons has 
carefully examined the Registration Statement, the Prospectus and this 
Agreement, and that:

               i)   The representations and warranties of the Company in this 
          Agreement are true and correct, in all material respects, as if 
          made on and as of the Closing Date or the Option Closing Date, as 
          the case may be, and the Company has complied with all agreements 
          and covenants and satisfied all conditions contained in this 
          Agreement on its part to be performed or satisfied at or prior to 
          such Closing Date or Option Closing Date, as the case may be;
          
               ii)  No stop order suspending the effectiveness of the 
          Registration Statement or any part thereof has been issued, and no 
          proceedings for that purpose have been instituted or are pending 
          or, to the best of each of such person's knowledge, are 
          contemplated or threatened under the Act;
          
                                        23   
<PAGE>

               iii) The Registration Statement and the Prospectus and, if 
          any, each amendment and each supplement thereto contain all 
          statements and information required to be included therein, and 
          none of the Registration Statement, the Prospectus or any amendment 
          or supplement thereto includes any untrue statement of a material 
          fact or omits to state any material fact required to be stated 
          therein or necessary to make the statements therein, in light of 
          the circumstances in which they were made, not misleading and 
          neither the Preliminary Prospectus nor any supplement thereto 
          included any untrue statement of a material fact or omitted to 
          state any material fact required to be stated therein or necessary 
          to make the statements therein, in light of the circumstances in 
          which they were made, not misleading; and
          
               iv)  Subsequent to the respective dates as of which 
          information is given in the Registration Statement and the 
          Prospectus, (A) the Company has not incurred any material 
          liabilities or obligations, direct or contingent; (B) the Company 
          has not paid or declared any dividends or other distributions on 
          its capital stock; (C) the Company has not entered into any 
          transactions not in the ordinary course of business; (D) there has 
          not been any change in the capital stock or long-term debt or any 
          increase in the short-term borrowings (other than any increase in 
          short-term borrowings in the ordinary course of business) of the 
          Company; (E) the Company has not sustained any material loss or 
          damage to its property or assets, whether or not insured; (F) there 
          is no litigation which is pending or threatened (or circumstances 
          giving rise to same) against the Company or any affiliate (within 
          the meaning of the Rules and Regulations) of the foregoing which is 
          required to be set forth in an amended or supplemented Prospectus 
          which has not been set forth; and (G) there has occurred no event 
          required to be set forth in an amended or supplemented Prospectus 
          which has not been set forth.
          
References to the Registration Statement and the Prospectus in this SECTION 
6(h) are to such documents as amended and supplemented at the date of such 
certificate.

          (i)  By the Closing Date, the Underwriter will have received 
clearance from the NASD as to the amount of compensation allowable or payable 
to the Underwriter, as described in the Registration Statement.

          (j)  At the time this Agreement is executed, the Underwriter shall 
have received a letter, dated such date, addressed to the Underwriter and in 
form and substance satisfactory in all respects (including the non-material 
nature of the changes or decreases, if any, referred to in clause (iii) 
below) to the Underwriter and Underwriter's Counsel, from Arthur Andersen LLP.

               i)   confirming that they are independent certified public 
          accountants with respect to the Company within the meaning of the 
          Act and the Rules and Regulations;
          
                                         24   

<PAGE>

               ii)  stating that it is their opinion that the consolidated 
          financial statements of the Company included in the Registration 
          Statement comply as to form in all material respects with the 
          applicable accounting requirements of the Act and the Rules and 
          Regulations and that the Underwriter may rely upon the opinion of 
          Arthur Andersen LLP with respect to such financial statements and 
          supporting schedules included in the Registration Statement;
          
               iii) stating that, on the basis of a limited review which 
          included a reading of the latest unaudited interim financial 
          statements of the Company, a reading of the latest available 
          minutes of the stockholders and board of directors and the various 
          committees of the board of directors of the Company, consultations 
          with officers and other employees of the Company responsible for 
          financial and accounting matters and other specified procedures and 
          inquiries, nothing has come to their attention which would lead 
          them to believe that (A) the unaudited financial statements and 
          supporting schedules of the Company included in the Registration 
          Statement do not comply as to form in all material respects with 
          the applicable accounting requirements of the Act and the Rules and 
          Regulations or are not fairly presented in conformity with 
          generally accepted accounting principles applied on a basis 
          substantially consistent with that of the audited financial 
          statements of the Company included in the Registration Statement, 
          or (B) at a specified date nor more than five (5) days prior to the 
          effective date of the Registration Statement, there has been any 
          change in the capital stock or long-term debt of the Company, or 
          any decrease in the stockholders' equity or net current assets or 
          net assets of the Company as compared with amounts shown in the 
          December 31, 1996 balance sheet included in the Registration 
          Statement, other than as set forth in or contemplated by the 
          Registration Statement, or, if there was any change or decrease, 
          setting forth the amount of such change or decrease, and (C) during 
          the period from December 31, 1996 to a specified date not more than 
          five (5) days prior to the effective date of the Registration 
          Statement, there was any decrease in net revenues, net earnings or 
          net earnings per share of Common Stock, in each case as compared 
          with the corresponding period beginning December 31, 1995, other 
          than as set forth in or contemplated by the Registration Statement, 
          or, if there was any such decrease, setting forth the amount of 
          such decrease;
          
               iv)  setting forth, at a date not later than five (5) days 
          prior to the effective date of the Registration Statement, the 
          amount of liabilities of the Company (including a break-down of 
          commercial paper and notes payable to banks);
          
               v)   stating that they have compared specific dollar amounts, 
          numbers of shares, percentages of revenues and earnings, statements 
          and other financial information pertaining to the Company set forth 
          in the Prospectus, in each case to the extent that such amounts, 
          numbers, percentages, statements and information may be derived 
          from the general accounting records, including work sheets, of the 
          Company and excluding any questions requiring an interpretation by 
          legal
          
                                         25

<PAGE>

          counsel, with the results obtained from the application of 
          specified readings, inquiries and other appropriate procedures 
          (which procedures do not constitute an audit in accordance with 
          generally accepted auditing standards) set forth in the letter and 
          found them to be in agreement; and
          
               vi)  statements as to such other matters incident to the 
          transaction contemplated hereby as the Underwriter may request.

          (k)  At the Closing Date and each Option Closing Date, if any, the 
Underwriter shall have received from Arthur Andersen LLP a letter, dated as 
of the Closing Date or the relevant Option Closing Date, as the case may be, 
to the effect that (i) it reaffirms the statements made in the letter 
furnished pursuant to SECTION 6(j), (ii) if the Company has elected to rely 
on Rule 430A of the Rules and Regulations, to the further effect that Arthur 
Andersen LLP has carried out procedures as specified in clause (v) of SECTION 
6(j) hereof with respect to certain amounts, percentages and financial 
information as specified by the Underwriter and deemed to be a part of the 
Registration Statement pursuant to Rule 430A(b) and have found such amounts, 
percentages and financial information to be in agreement with the records 
specified in such clause (v).

          (l) The Company shall have received a letter, dated such date, 
addressed to the Company, in form and substance satisfactory in all respects 
to the Underwriter, from Arthur Andersen LLP stating that they have not 
during the immediately preceding five (5) year period brought to the 
attention of the Company's management any "weakness," as defined in Statement 
of Auditing Standard No. 60 "Communication of Internal Control Structure 
Related Matters Noted in an Audit," in any of the Company's internal controls.

          (m) On each of the Closing Date and Option Closing Date, if any, 
there shall have been duly tendered to the Underwriter the appropriate number 
of Securities.

          (n) No order suspending the sale of the Securities in any 
jurisdiction designated by the Underwriter pursuant to SECTION 4(e) hereof 
shall have been issued on either the Closing Date or the Option Closing Date, 
if any, and no proceedings for that purpose shall have been instituted or 
shall be contemplated.

          (o) On or before the effective date of the Registration Statement, 
the Company shall have executed and delivered to the Underwriter, the 
Underwriter's Warrant Agreement, substantially in the form filed as Exhibit 
4.3 to the Registration Statement. On or before the Closing Date, the Company 
shall have executed and delivered to the Underwriter the Underwriter's 
Warrants in such denominations and to such designees as shall have been 
provided to the Company.

          (p) On or before Closing Date, the Units, the Common Stock and the 
Redeemable Warrants shall have been duly approved for quotation on Nasdaq, 
subject to official notice of issuance.

                                        26   

<PAGE>

          (q) On or before Closing Date, there shall have been delivered to 
the Underwriter all of the Lock-Up Agreements, in form and substance 
satisfactory to Underwriter's Counsel.

          (r) On or before the Closing Date, the Company shall have executed 
and delivered to the Underwriter the Consulting Agreement, substantially in 
the form filed as Exhibit 10.7 to the Registration Statement.

          (s) On or before the effective date of the Registration Statement, 
the Company and Continental Stock Transfer & Trust Company shall have 
executed and delivered to the Underwriter the Warrant Agreement, 
substantially in the form filed as Exhibit 4.2 to the Registration Statement.

          (t) At least two (2) full business days prior to the date hereof, 
the Closing Date and each Option Closing Date, if any, the Company shall have 
delivered to the Underwriter the unaudited interim consolidated financial 
statements required to be so delivered pursuant to SECTION 4(p) of this 
Agreement.

          If any condition to the Underwriter's obligations hereunder to be 
fulfilled prior to or at the Closing Date or at any Option Closing Date, as 
the case may be, is not so fulfilled, the Underwriter may terminate this 
Agreement or, if the Underwriter so elects, it may waive any such conditions 
which have not been fulfilled or extend the time for their fulfillment.

          7.  INDEMNIFICATION

          (a) The Company agrees to indemnify and hold harmless the 
Underwriter (for purposes of this SECTION 7, "Underwriter" shall include the 
officers, directors, partners, employees, agents and counsel of the 
Underwriter), and each person, if any, who controls the Underwriter 
("controlling person") within the meaning of Section 15 of the Act or Section 
20(a) of the Exchange Act, from and against any and all losses, claims, 
damages, expenses or liabilities, joint or several (and actions, proceedings, 
investigations, inquiries and suits in respect thereof), whatsoever 
(including but not limited to any and all costs and expenses whatsoever 
reasonably incurred in investigating, preparing or defending against such 
action, proceeding, investigation, inquiry or suit commenced or threatened, 
or any claim whatsoever), as such are incurred, to which the Underwriter or 
such controlling person may become subject under the Act, the Exchange Act or 
any other statute or at common law or otherwise or under the laws of foreign 
countries, arising out of or based upon (A) any untrue statement or alleged 
untrue statement of a material fact contained (i) in any Preliminary 
Prospectus, the Registration Statement or the Prospectus (as from time to 
time amended and supplemented); (ii) in any post-effective amendment or 
amendments or any new registration statement and prospectus in which is 
included securities of the Company issued or issuable upon exercise of the 
Securities; or (iii) in any application or other document or written 
communication (in this SECTION 7, collectively referred to as "applications") 
executed by the Company or based upon written information furnished by the 
Company filed, delivered or used in any jurisdiction in order to qualify the 
Securities under the securities laws thereof or filed with the Commission, 
any state securities commission or agency, the NASD, Nasdaq or any securities 
exchange; (B) the

                                      27   
<PAGE>

omission or alleged omission therefrom of a material fact required to be 
stated therein or necessary to make the statements therein not misleading (in 
the case of the Prospectus, in light of the circumstances in which they were 
made); or (C) any breach of any representation, warranty, covenant or 
agreement of the Company contained herein or in any certificate by or on 
behalf of the Company or any of its officers delivered pursuant hereto, 
unless, in the case of clause (A) or (B) above, such statement or omission 
was made in reliance upon and in conformity with written information 
furnished to the Company with respect to any Underwriter by or on behalf of 
such Underwriter expressly for use in any Preliminary Prospectus, the 
Registration Statement or any Prospectus, or any amendment thereof or 
supplement thereto, or in any application, as the case may be. The indemnity 
agreement in this Section 7(a) shall be in addition to any liability which 
the Company may have at common law or otherwise.

          (b)  The Underwriter agrees, to indemnify and hold harmless the 
Company, each of its directors, each of its officers who signed the 
Registration Statement, and each person, if any, who controls the Company 
within the meaning of the Act, to the same extent as the foregoing indemnity 
from the Company to the Underwriter but only with respect to statements or 
omissions, if any, made in any Preliminary Prospectus, the Registration 
Statement or the Prospectus or any amendment thereof or supplement thereto or 
in any application made in reliance upon, and in strict conformity with, 
written information furnished to the Company with respect to the Underwriter 
by the Underwriter expressly for use in such Preliminary Prospectus, the 
Registration Statement or Prospectus or any amendment thereof or supplement 
thereto or in any such application, provided that such written information or 
omissions only pertain to disclosures in the Preliminary Prospectus, the 
Registration Statement or the Prospectus directly relating to the 
transactions effected by the Underwriter in connection with the offering 
contemplated hereby. The Company acknowledges that the statements with 
respect to the Offering set forth under the heading "Underwriting" and the 
stabilization legend in the Prospectus have been furnished by the Underwriter 
expressly for use therein and constitute the only information furnished in 
writing by or on behalf of the Underwriter for inclusion in any Preliminary 
Prospectus, the Registration Statement or the Prospectus. The indemnity 
agreement in this Section 7(b) shall be in addition to any liability which 
the Underwriter may have at common law or otherwise.

          (c)  Promptly after receipt by an indemnified party under this 
SECTION 7 of notice of the commencement of any action, such indemnified party 
shall, if a claim in respect thereof is to be made against one or more 
indemnifying parties under this SECTION 7, notify each party against whom 
indemnification is to be sought in writing of the commencement thereof (but 
the failure to so notify an indemnifying party shall not relieve it from any 
liability which it may have under this SECTION 7 (except to the extent that 
it has been prejudiced in any material respect by such failure) or from any 
liability which it may have otherwise). In case any such action, 
investigation, inquiry, suit or proceeding is brought against any indemnified 
party, and it notifies an indemnifying party or parties of the commencement 
thereof, the indemnifying party or parties will be entitled to participate 
therein, and to the extent it or they may elect by written notice delivered 
to the indemnified party promptly after receiving the aforesaid notice from 
such indemnified party, to assume the defense thereof with counsel reasonably 
satisfactory to such indemnified party. Notwithstanding the foregoing, an 
indemnified party shall have the right to employ its own counsel in any such 
case but the fees and expenses of such counsel shall be at

                                           28

<PAGE>

the expense of such indemnified party unless (i) the employment of such 
counsel shall have been authorized in writing by the indemnifying parties in 
connection with the defense of such action at the expense of the indemnifying 
party, (ii) the indemnifying parties shall not have employed counsel 
reasonably satisfactory to such indemnified party to have charge of the 
defense of such action within a reasonable time after notice of commencement 
of the action, or (iii) such indemnified party shall have reasonably 
concluded that there may be defenses available to it which are different from 
or additional to those available to one or all of the indemnifying parties 
(in which event the indemnifying parties shall not have the right to direct 
the defense of such action, investigation, inquiry, suit or proceeding on 
behalf of the indemnified party or parties), in any of which events such fees 
and expenses of one additional counsel shall be borne by the indemnifying 
parties. In no event shall the indemnifying parties be liable for fees and 
expenses of more than one counsel (in addition to any local counsel) separate 
from their own counsel for all indemnified parties in connection with any one 
action, investigation, inquiry, suit or proceeding or separate but similar or 
related actions, investigations, inquiries, suits or proceedings in the same 
jurisdiction arising out of the same general allegations or circumstances. An 
indemnifying party will not, without the prior written consent of the 
indemnified parties, settle, compromise or consent to the entry of any 
judgment with respect to any pending or threatened claim, action, suit or 
proceeding in respect of which indemnification or contribution may be sought 
hereunder (whether or not the indemnified parties are actual or potential 
parties to such claim or action), unless such settlement, compromise or 
consent (i) includes an unconditional release of each indemnified party from 
all liability arising out of such claim, action, suit or proceeding and (ii) 
does not include a statement as to or an admission of fault, culpability or a 
failure to act by or on behalf of any indemnified party. Anything in this 
SECTION 7 to the contrary notwithstanding, an indemnifying party shall not be 
liable for any settlement of any claim or action effected without its written 
consent; PROVIDED, HOWEVER, that such consent may not be unreasonably 
withheld.

          (d)  In order to provide for just and equitable contribution in any 
case in which (i) an indemnified party makes a claim for indemnification 
pursuant to this SECTION 7, but it is judicially determined (by the entry of 
a final judgment or decree by a court of competent jurisdiction and the 
expiration of time to appeal or the denial of the last right of appeal) that 
such indemnification may not be enforced in such case notwithstanding the 
fact that the express provisions of this SECTION 7 provide for 
indemnification in such case, or (ii) contribution under the Act may be 
required on the part of any indemnified party, then each indemnifying party 
shall contribute to the amount paid as a result of such losses, claims, 
damages, expenses or liabilities (or actions, investigations, inquiries, 
suits or proceedings in respect thereof) (A) in such proportion as is 
appropriate to reflect the relative benefits received by each of the 
contributing parties, on the one hand, and the party to be indemnified, on 
the other hand, from the offering of the Securities or (B) if the allocation 
provided by clause (A) above is not permitted by applicable law, in such 
proportion as is appropriate to reflect not only the relative benefits 
referred to in clause (A) above but also the relative fault of each of the 
contributing parties, on the one hand, and the party to be indemnified, on 
the other hand, in connection with the statements or omissions that resulted 
in such losses, claims, damages, expenses or liabilities, as well as any 
other relevant equitable considerations. In any case where the Company is a 
contributing party and the Underwriter is the indemnified party, the relative 
benefits received by the Company, on the one hand, and the Underwriter, on 
the other, shall be deemed to be in

                                        29

<PAGE>


the same proportion as the total net proceeds from the offering of the 
Securities (before deducting expenses) bear to the total underwriting 
discounts received by the Underwriter hereunder, in each case as set forth in 
the table on the cover page of the Prospectus. Relative fault shall be 
determined by reference to, among other things, whether the untrue or alleged 
untrue statement of a material fact or the omission or alleged omission to 
state a material fact relates to information supplied by the Company or by 
the Underwriter, and the parties' relative intent, knowledge, access to 
information and opportunity to correct or prevent such untrue statement or 
omission. The amount paid by an indemnified party as a result of the losses, 
claims, damages, expenses or liabilities (or actions, investigations, 
inquiries, suits or proceedings in respect thereof) referred to in the first 
(1st) sentence of this SECTION 7(d) shall be deemed to include any legal or 
other expenses reasonably incurred by such indemnified party in connection 
with investigating or defending any such action, claim, investigation, 
inquiry suit or proceeding. Notwithstanding the provisions of this SECTION 
7(d), the Underwriter shall not be required to contribute any amount in 
excess of the underwriting discount applicable to the Securities purchased by 
the Underwriter hereunder. No person guilty of fraudulent misrepresentation 
(within the meaning of SECTION 12(f) of the Act) shall be entitled to 
contribution from any person who was not guilty of such fraudulent 
misrepresentation. For purposes of this SECTION 7(d), each person, if any, 
who controls the Company or the Underwriter within the meaning of the Act, 
each officer of the Company who has signed the Registration Statement and 
each director of the Company shall have the same rights to contribution as 
the Company or the Underwriter, as the case may be, subject in each case to 
this SECTION 7(d). Any party entitled to contribution will, promptly after 
receipt of notice of commencement of any action, suit, inquiry, investigation 
or proceeding, against such party in respect to which a claim for 
contribution may be made against another party or parties under this SECTION 
7(d), notify such party or parties from whom contribution may be sought, but 
the omission to so notify such party or parties shall not relieve the party 
or parties from whom contribution may be sought from any obligation it or 
they may have hereunder or otherwise than under this SECTION 7(d), or to the 
extent that such party or parties were not adversely affected by such 
omission. Notwithstanding anything in this SECTION 7 to the contrary, no 
party will be liable for contribution with respect to the settlement of any 
action or claim effected without its written consent. The contribution 
agreement set forth above shall be in addition to any liabilities which any 
indemnifying party may have at common law or otherwise.

          8.   REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS TO 
SURVIVE DELIVERY. All representations, warranties, covenants and agreements 
of the Company contained in this Agreement, or contained in certificates of 
officers of the Company submitted pursuant hereto, shall be deemed to be 
representations, warranties, covenants and agreements at the Closing Date and 
each Option Closing Date, if any, and such representations, warranties, 
covenants and agreements of the Company, and the respective indemnity and 
contribution agreements contained in SECTION 7 hereof, shall remain operative 
and in full force and effect regardless of any investigation made by or on 
behalf of the Underwriter, the Company, any controlling person of the 
Underwriter or the Company, and shall survive the termination of this 
Agreement or the issuance and delivery of the Securities to the Underwriter.

          9.   EFFECTIVE DATE. This Agreement shall become effective at 10:00 
a.m., New York City time, on the next full business day following the date 
hereof, or at such earlier

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<PAGE>

time after the Registration Statement becomes effective as the Underwriter, 
in its discretion, shall release the Firm Units for sale to the public; 
PROVIDED, HOWEVER, that the provisions of SECTIONS 5, 7 and 10 of this 
Agreement shall at all times be effective. For purposes of this SECTION 9, 
the Securities to be purchased hereunder shall be deemed to have been so 
released upon the earlier of dispatch by the Underwriter of telegrams to 
securities dealers releasing such Firm Units for offering or the release by 
the Underwriter for publication of the first newspaper advertisement which is 
subsequently published relating to the Securities.

          10.  TERMINATION.

          (a)  Subject to SECTION 10(b) hereof, the Underwriter shall have 
the right to terminate this Agreement: (i) if any domestic or international 
event or act or occurrence has materially adversely disrupted, or in the 
Underwriter's opinion will in the immediate future materially adversely 
disrupt, the financial markets; or (ii) if any material adverse change in the 
financial markets shall have occurred; or (iii) if trading generally shall 
have been suspended or materially limited on or by, as the case may be, any 
of the New York Stock Exchange, the American Stock Exchange, the NASD, the 
Commission or any governmental authority having jurisdiction over such 
matters; or (iv) if trading of any of the securities of the Company shall 
have been suspended, or if any of the securities of the Company shall have 
been delisted, on any exchange or in any over-the-counter market; or (v) if 
the United States shall have become involved in a war or major hostilities, 
or if there shall have been an escalation in an existing war or major 
hostilities, or a national emergency shall have been declared in the United 
States; or (vi) if a banking moratorium shall have been declared by any state 
or federal authority; or (vii) if a moratorium in foreign exchange trading 
shall have been declared; or (viii) if the Company shall have sustained a 
material or substantial loss by fire, flood, accident, hurricane, earthquake, 
theft, sabotage, volcanic eruption or other calamity or malicious act which, 
whether or not such loss shall have been insured, will, in the Underwriter's 
opinion, make it inadvisable to proceed with the delivery of the Securities; 
or (ix) if there shall have occurred any outbreak or escalation of 
hostilities or any calamity or crisis or there shall have been such a 
material adverse change in the conditions or prospects of the Company, or if 
there shall have been such a material adverse change in the general market, 
political or economic conditions, in the United States or elsewhere, as in 
the Underwriter's judgment would make it inadvisable to proceed with the 
offering, sale and/or delivery of the Securities; or (x) Mr. Marcus Bender 
shall no longer serve the Company in his present capacities.

          (b)  If this Agreement is terminated by the Underwriter in 
accordance with the provisions of SECTION 6, SECTION 10(a) or SECTION 11 
hereof the Company shall promptly reimburse and indemnify the Underwriter for 
all its actual out-of-pocket expenses, including the fees and disbursements 
of Underwriter's Counsel, less amounts previously paid pursuant to SECTION 
5(c) hereof. In addition, the Company shall remain liable for all "blue sky" 
counsel fees and expenses and "blue sky" filing fees. Notwithstanding any 
contrary provision contained in this Agreement, any election hereunder or any 
termination of this Agreement (including, without limitation, pursuant to 
SECTIONS 6, 10(a) and 11 hereof), and whether or not this Agreement is 
otherwise carried out, the provisions of SECTION 5 and SECTION 7 shall not be 
in any way be affected by such election or termination or failure to carry 
out the terms of this Agreement or any part hereof.

                                         31

<PAGE>

          11.  DEFAULT BY THE COMPANY. If the Company shall fail at the 
Closing Date or any Option Closing Date, as applicable, to sell and deliver 
the number of Securities which it is obligated to sell hereunder on such 
date, then this Agreement shall terminate (or, if such default shall occur 
with respect to any Option Units to be purchased on an Option Closing Date, 
the Underwriter may, at its option, by notice from the Underwriter to the 
Company, terminate the Underwriter's obligation to purchase Option Units from 
the Company on such date) without any liability on the part of any 
non-defaulting party other than pursuant to SECTION 5, SECTION 7 and SECTION 
10 hereof. No action taken pursuant to this SECTION 11 shall relieve the 
Company from liability, if any, in respect of such default.

          12.  NOTICES. All notices and communications hereunder, except as 
herein otherwise specifically provided, shall be in writing and shall be 
deemed to have been duly given if mailed or transmitted by any standard form 
of telecommunication. Notices to the Underwriter shall be directed to the 
Underwriter at Joseph Stevens & Company, Inc., 33 Maiden Lane, 8th Floor, New 
York, New York 10038, Attention: Mr. Joseph Sorbara, with a copy to Orrick, 
Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New York 10103, 
Attention: Rubi Finkelstein, Esq. Notices to the Company shall be directed to 
the Company at Hawaiian Natural Water Company, Inc., 248 Mokauea Street, 
Honolulu, Hawaii 96819, Attention: Marcus Bender, Chief Executive Officer, 
with a copy to Graham & James LLP, 801 South Figueroa Street, 15th Floor, Los 
Angeles, California 90017, Attention: Richard Manson, Esq.

          13.  PARTIES. This Agreement shall inure solely to the benefit of, 
and shall be binding upon, the Underwriter, the Company and the controlling 
persons, directors and officers referred to in SECTION 7 hereof, and their 
respective successors, legal representatives and assigns, and no other person 
shall have or be construed to have any legal or equitable right, remedy or 
claim under or in respect of or by virtue of this Agreement or any provisions 
herein contained. No purchaser of Units from the Underwriter shall be deemed 
to be a successor by reason merely of such purchase.

          14.  CONSTRUCTION. This Agreement shall be governed by and 
construed and enforced in accordance with the laws of the State of New York, 
without giving effect to choice of law or conflict of laws principles.

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

          16.  ENTIRE AGREEMENT: AMENDMENTS. This Agreement, the 
Underwriter's Warrant Agreement and the Consulting Agreement constitute the 
entire agreement of the parties hereto and supersede all prior written or 
oral agreements, understandings and negotiations with respect to the subject 
matter hereof and thereof. This Agreement may not be amended except in a 
writing signed by the Underwriter and the Company.

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<PAGE>

          If the foregoing correctly sets forth the understanding between the 
Underwriter and the Company, please so indicate in the space provided below 
for that purpose, whereupon this letter shall constitute a binding agreement 
between us.
     
                                      Very truly yours,
     
                                      HAWAIIAN NATURAL WATER COMPANY, INC.
     
                                      By: /s/ MARCUS BENDER
                                          ---------------------------------
                                          Name: Marcus Bender
                                          Title: Chief Executive Officer
     
Confirmed and accepted as of
the date first above written.

JOSEPH STEVENS & COMPANY, INC.

By: /s/ ENRICO SUPPA
    -------------------------------------
    Name:
    Title: