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                                                                   EXHIBIT 10.19

                     AGREEMENT AND PLAN OF REORGANIZATION

       THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is entered
into this 14th day of July, 2000, by and among GREAT AMERICAN BARBECUE COMPANY,
a Missouri corporation (the "Seller"), the shareholders of Seller whose
signatures appear on the signature page to this Agreement (collectively, the
"Principal Shareholders"), THE GREAT AMERICAN BARBECUE FOOD COMPANY, a Delaware
corporation (the "Buyer"), and INTERNATIONAL MENU SOLUTIONS CORPORATION, a
Nevada corporation (the "Parent").

                                  BACKGROUND:

       A.     The Seller is the owner of all of the outstanding common stock of
SevenJNev, Inc., a Nevada corporation ("SevenJNev"), and a one percent (1%)
general partnership interest in SevenJTex, Ltd., a Texas limited partnership
("SevenJTex," and collectively with SevenJNev, the "Acquired Subsidiaries") of
which SevenJNev holds a 99% limited partnership interest.

       B.     The Parent has formed the Buyer as its wholly owned subsidiary for
the purpose of negotiating to acquire substantially all of the assets and
business of Seller, including without limitation the Seller's interests in the
Acquired Subsidiaries.

       C.     The Seller and the Buyer have reached an understanding with
respect to the Seller's sale to Buyer of substantially all of Seller's assets
solely in consideration for (i) the Buyer's assumption of specifically disclosed
liabilities and obligations of Seller, and (ii) the Buyer's delivery to Seller
of voting stock of the Parent (collectively, the "Transaction").

       D.     The respective Boards of Directors of Seller, Buyer and Parent
have approved the execution and delivery of this Agreement and the completion of
the Transaction as being in the best interests of such corporations and their
respective shareholders, subject to the approval of the Transaction by the
shareholders of the Seller.

       E.     The Principal Shareholders have entered into this Agreement to
induce the Buyer and Parent to complete the Transaction and to evidence their
commitment to vote all stock of the Seller owned by them in favor of the
Transaction, subject to the terms and conditions set forth in this Agreement.

       F.     The parties intend that the Transaction shall constitute a
reorganization within the meaning of Section 368(a)(1)(C) of the Code (as
defined in Section 3.19 below).

       NOW, THEREFORE, in consideration of these premises, the covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties agree as
follows:

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                                   Article 1

                          Purchase and Sale of Assets

       1.1    Assets to be Sold. On the Closing Date (as defined in Article 8
hereof), subject to the terms and conditions set forth in this Agreement, Seller
shall sell to the Buyer, and the Buyer shall purchase from Seller, all of the
following categories of assets and properties of the Seller as of the Closing
Date, whether or not reflected on the books and records of the Seller
(collectively, the "Assets"), free and clear of all liens, mortgages, claims and
encumbrances other than Permitted Liens as defined in Section 3.7 below:

              (a)    All inventory of raw materials, work-in-process and
finished goods, and all packaging and shipping inventory of Seller;

              (b)    All accounts receivable and notes receivable of Seller, all
rebates due Seller and all other amounts refundable to or realizable by Seller
in connection with any aspect of its business, whether now existing or hereafter
arising, including without limitation the proceeds of insurance and amounts
receivable under interest rate protection arrangements;

              (c)    Except for a cash reserve (the "Cash Reserve") of $35,000
to be retained by Seller to satisfy the obligations set forth on Schedule 1.1(c)
(which amount and Schedule may be modified by mutual agreement of Seller and
Buyer prior to Closing), all cash, cash equivalents, prepaid expenses and other
current assets of Seller and the rights to any portion of the Cash Reserve
remaining unused after the date of the initial post-Closing adjustment payment
(or date on which it is determined that the adjustment is zero) pursuant to
Section 1.2(c)(ii) below;

              (d)    All machinery, equipment, vehicles, furniture, furnishings,
leasehold improvements, computer equipment and peripherals, and related spare
parts and supplies of Seller, together with all manuals, maintenance records,
written warranties and other similar documents relating thereto;

              (e)    All real property and interests in real property owned by
Seller, if any, together with all improvements, additions and systems attached
thereto or a part thereof;

              (f)    All right, title and interest of Seller in and to all
leases of real property or tangible personal property, if any, to which Seller
is a party and which are disclosed in this Agreement, including the schedules
hereto;

              (g)    All right, title and interest of Seller in and to
agreements by which any current or former employee or other third party agrees
to maintain the confidentiality of nonpublic information concerning Seller, or
to refrain from competing with Seller, or to refrain from soliciting the
employees or customers of Seller;

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              (h)    All right, title and interest of Seller in and to all other
executory contracts and commitments of Seller which are assumed by Buyer in
accordance with Section 2.1 below;

              (i)    All right, title and interest of Seller in and to its
corporate name and derivatives thereof, the "GABCO" name and logo, all
trademarks, trade names, trade dress, patents, copyrights, franchises,
discoveries, recipes, techniques, formulas, product formulations and other
know-how, all applications and licenses therefor, and all goodwill of Seller
relating thereto, used or usable in the Seller's business;

              (j)    All of Seller's designs, models, prototypes, plans,
specifications, drawings and everything related thereto;

              (k)    All of Seller's sales materials, catalogs, and advertising
materials;

              (l)    All records and files pertaining to Seller's business,
customers and suppliers, including, without limitation, sales records,
correspondence with customers, customer files and account histories, and records
of purchases from and correspondence with suppliers;

              (m)    All rights, claims, causes of action, privileges and
defenses of Seller against (i) any present or former insurer of risks relating
to the operations, liabilities, facilities, business or work force of the Seller
or the Acquired Subsidiaries, and (ii) any other third party with respect to any
of the other assets listed in this Section 1.1 and/or any of the Assumed
Liabilities;

              (n)    One hundred percent (100%) of the outstanding common stock
of SevenJNev; and

              (o)    The Seller's one percent (1%) general partnership interest
and related capital account in SevenJTex, together with all right, title and
interest of Seller under the certificate of limited partnership, limited
partnership agreement or other written instrument setting forth the rights and
privileges of the general and limited partners of SevenJTex; and

              (p)    All other assets of Seller of any kind or description,
excluding only the Seller's right to receive the consideration payable by Buyer
and Parent hereunder, and the Seller's right, title and interest in and to this
Agreement and each other agreement or instrument executed and delivered for the
benefit of Seller pursuant to the completion of the Transaction, and the
Seller's right to assert any claim for the enforcement of any of the foregoing.

The Assets identified in paragraphs (f), (g) and (h) are referred to herein
as the "Executory Contracts").

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       1.2    Purchase Price.

              (a)    Amount. The aggregate consideration to be paid by Buyer to
the Seller for the Assets shall consist entirely of (i) one million five hundred
thousand (1,500,000) shares of common stock of Parent, par value $0.001 per
share (the "Parent Common Stock"), subject to reduction by the aggregate effect
of fractions of shares which are paid in cash and by the adjustment set forth in
Section 1.2(c), plus (ii) the additional shares of Parent Common Stock, if any,
issuable under Section 1.5 below, plus (iii) the assumption of the Assumed
Liabilities identified in Section 2.1 below. At the Closing, (A) two hundred
twenty-five thousand (225,000) shares of the Parent Common Stock shall be
delivered to Firstar Bank Missouri N.A. as escrow agent ("Escrow Agent") for the
parties pursuant to an Escrow Agreement substantially in the form attached
hereto as Exhibit A (the "Escrow Agreement"), such shares to be held pending
agreement on or determination by an arbitrator of the adjustment referenced in
Section 1.2(c) below, and ultimately distributed as set forth in the Escrow
Agreement and this Agreement, and (B) the remaining one million two hundred
seventy-five thousand (1,275,000) shares of Parent Common Stock shall be
delivered to the Seller Nominee identified in Section 1.2(b) below.

              (b)    Allocation. At the Closing, Seller shall deliver to Buyer a
list of all shareholders of Seller as of the Closing, which list shall be
certified by Seller's chief executive officer as accurately reflecting the
names, last known addresses and tax identification numbers of all shareholders
of the Seller as of the Closing (the "Shareholder Certification"). Prior to the
Closing, Seller and Buyer shall designate Liberty Transfer Corporation, the
transfer agent for Parent ("Transfer Agent") to receive from Buyer, for the
benefit of the Seller's shareholders, (i) certificates evidencing the shares of
Parent Common Stock required to be delivered hereunder (other than shares being
deposited pursuant to the Escrow Agreement), to be issued in the name of the
shareholders of Seller, and (ii) such amounts of cash as shall be required for
payment in lieu of fractional shares of Parent. Parent hereby undertakes to
deliver or cause to be delivered to the Transfer Agent such shares of Parent
Common Stock and such cash, and such delivery shall constitute delivery by Buyer
for purposes of this Agreement. As soon as practicable after the Closing, the
Transfer Agent shall deliver the cash paid in lieu of fractional shares of
Parent Common Stock to the shareholders of Seller, on behalf of Seller, as a
liquidating distribution, in proportion to their holdings of stock of Seller as
reflected on the Shareholder Certification, and shall hold the certificates
evidencing shares of Parent Common Stock in accordance with the terms of the
Registration Agreement, unless physical delivery of such certificate is
requested by a shareholder of Seller in his or her transmittal letter described
in Section 3(a) below.

              (c)    Adjustments Based on Working Capital Requirements. The
purchase price of the Assets shall be subject to adjustment after the Closing as
set forth in this Section 1.2(c). The definition of Working Capital Deficit is
contained in subsection (viii) of this Section 1.2(c).

                     (i)    Projected Statements and Working Capital Deficit.
              Attached hereto as Schedule 1.2(c) are projected financial
              statements of the Buyer as of and for the fourteen month period
              ending July 31, 2001 (the "Projected Financial

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              Statements"). The Projected Financial Statements have been
              developed jointly by the Seller and the Buyer, assume annualized
              net sales of $24,000,000, and specify the amount of the projected
              Working Capital Deficit as of the end of each calendar month
              during such period. In this Section 1.2(c), the term "Three Month
              Period" refers to the period of three full calendar months
              immediately following the month in which the Closing occurs.

                     (ii)   Initial Postclosing Adjustment. During the thirty
              (30) day period following completion of Buyer's financial
              statements for the Three Month Period, the Buyer and Seller
              Representative, acting in good faith, (A) shall jointly reach
              agreement on the accuracy of such statements (as so agreed, the
              "Actual 3-Month Statements"), and (B) based on the Actual 3-Month
              Statements, shall jointly compute the Working Capital Deficit as
              of the end of the Three Month Period. To the extent the Working
              Capital Deficit determined from the Actual 3-Month Statements
              exceeds the projected Working Capital Deficit for such date on the
              Projected Financial Statements, the purchase price for the Assets
              shall be deemed reduced by an amount equal to such excess. In
              addition, the purchase price shall be subject to reduction to the
              extent provided in Section 6.9 below. To effect such reductions,
              the Buyer shall be entitled to receive from the Escrow Agent a
              number of shares of Parent Common Stock having an aggregate value,
              computed at Three Dollars ($3.00) per share, equal to the
              aggregate reductions in purchase price (or all of the shares held
              by the Escrow Agent, if the reductions exceed the value of the
              shares held by Escrow Agent; in such case that excess is referred
              to below as the "Unrealized Price Reduction"). Shares of Parent
              Common Stock remaining in escrow after such distribution to Buyer,
              if any, shall be distributed by the Escrow Agent to the Transfer
              Agent for the benefit of the Seller's shareholders as their
              interests shall appear, free from escrow but subject to the terms
              of the Registration Agreement. To the extent the Working Capital
              Deficit determined from the Actual 3-Month Statements is less than
              the projected Working Capital Deficit shown on the Projected
              Financial Statements, there shall be no adjustment under this
              subsection (ii) to the purchase price for the Assets, and (subject
              to Section 6.9 below) the shares of Parent Common Stock in escrow
              shall be distributed by the Escrow Agent to the Transfer Agent for
              the benefit of the Seller's shareholders as their interests shall
              appear, free from escrow but subject to the terms of the
              Registration Agreement.

                     (iii)  Subsequent Postclosing Adjustment. During the thirty
              (30) day period following completion of Buyer's financial
              statements for the Measuring Period, the Buyer and Seller
              Representative, acting in good faith, (A) shall jointly reach
              agreement on the accuracy of such statements (as so agreed, the
              "Actual 12-Month Statements"), and (B) based on the Actual
              12-Month Statements, shall jointly compute the Working Capital
              Deficit as of the end of the Measuring Period. To the extent the
              Working Capital Deficit determined from the Actual 12-Month
              Statements exceeds the projected Working Capital Deficit for such
              date in the Projected 12-Month Statements, the purchase price for
              the Assets shall be

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              deemed reduced by an amount equal to such excess. To effect such
              reduction, the Buyer shall be entitled to offset, from the Earnout
              Stock otherwise deliverable to the Seller's shareholders under
              Section 1.5 below, a number of shares of Parent Common Stock
              having an aggregate value, computed at Three Dollars ($3.00) per
              share, equal to such reduction. To the extent the Working Capital
              Deficit determined from the Actual 12-Month Statements is less
              than the projected Working Capital Deficit in the Projected
              Financial Statements, there shall be no adjustment under this
              subsection (iii) to the purchase price for the Assets, and the
              Earnout Stock (net of any adjustment under Section 6.9 and
              indemnity claims by Buyer to the extent provided in this
              Agreement) shall be delivered as provided in this Agreement, but
              subject to the terms of the Registration Agreement.

                     (iv)   Netting of Purchase Price Adjustments.
              Notwithstanding the provisions of subsections 1.2(c)(ii) and (iii)
              above, any Interim Price Reduction shall be credited in full
              toward the 12-Month Price Reduction. For this purpose: the
              "Interim Price Reduction" is that reduction (if any) in the
              purchase price of the Assets taken by Buyer from the Escrow Agent
              in the form of shares of Parent Common Stock based on the Three
              Month Period under subsection 1.2(c)(ii); and the "12-Month Price
              Reduction" is that reduction in purchase price, if any, to be
              taken by Buyer for the Measuring Period under subsection
              1.2(c)(iii). The Interim Price Reduction does not include any
              Unrealized Price Reduction. If an Interim Price Reduction is taken
              by Buyer and such Reduction exceeds the 12-Month Price Reduction,
              then the Seller's shareholders shall be entitled to receive, in
              addition to the Earnout Stock, additional shares of Parent Common
              Stock having an aggregate value, computed at Three Dollars ($3.00)
              per share, equal to the difference between the Interim Price
              Reduction minus the 12-Month Price Reduction.

                     (v)    Interim Financing Requirement; $300,000 PAC Loan. In
              accordance with the cash flow projections included as part of
              Schedule 1.2(c), Parent shall cause not less than $1,000,000 of
              the Interim Financing described in Section 8.14 below to be
              invested in the Buyer and/or the Acquired Subsidiaries. The
              parties acknowledge that Seller has borrowed $300,000 on a
              short-term basis from PAC, Inc. under documents dated May 30, 2000
              (the "$300,000 PAC Loan") previously supplied to Parent, and that
              PAC, Inc. has the right to convert all or part of the principal of
              or interest on that loan into common shares of Seller.

                     (vi)   Accounting Methods and Equitable Adjustments. The
              Projected Financial Statements and all financial statements of
              Buyer for periods relevant under this Section 1.2(c) have been and
              shall be prepared in accordance with generally accepted accounting
              principles consistently applied (but with footnote disclosures
              omitted and monthly accruals made subject to year end adjustment
              in accordance with Seller's past practice). The $3.00 stipulated
              value per share of Parent Common Stock in this Section 1.2(c)
              shall be subject to equitable adjustment for changes in
              capitalization in the same manner as set forth in Section

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              1.7 below, in the event of such a change occurring between the
              Closing Date and the date for settlement of a purchase price
              adjustment under this Section 1.2(c).

                     (vii)  Resolution of Disputes. In the event the Buyer and
              the Seller (prior to Closing) or the Buyer and the Seller
              Representative (after Closing) are unable to agree on any matter
              relevant to the determination of the Actual 3-Month Statements,
              the Actual 12-Month Statements, the Working Capital Deficit as of
              any date or the amount of an adjustment under this Section 1.2(c)
              to the purchase price of the Assets, then the parties shall submit
              their disagreement to binding arbitration before a single
              commercial arbitrator, selected by joint agreement of Buyer and
              Seller (prior to Closing) or Buyer and the Seller Representative
              (after Closing), in St. Louis, Missouri. The costs and expenses of
              such arbitration shall be borne by the party that does not prevail
              in such arbitration, provided that the arbitrator shall be
              empowered to allocate such costs equitably between the parties in
              the event neither party's position is accepted in its entirety.

                     (viii) "Working Capital Deficit" of the Buyer as of any
              date means an amount determined from the following formula:

                     (CL - [0.12 x ES] - EAP) minus (CA + CEX - CINV)

                     CL means the aggregate book value of the inventory
                     operating line, accounts payable and accrued liabilities
                     (excluding liabilities reflecting customer deposits) of
                     Buyer as of such date.

                     ES means the amount by which the net sales of the Buyer for
                     the relevant period ending on such date exceeds the
                     projected net sales of the Buyer reflected in the Projected
                     Financial Statements as of and for the period ending on
                     such date.

                     EAP means the accounts payable of Buyer as of such date for
                     non-financeable capital expenditures which were incurred in
                     order to achieve annual net sales in excess of $24,000,000.

                     CA means the book value of the current assets of Buyer as
                     of such date.

                     CEX means the cash paid by Buyer, during the relevant
                     period ending on such date, for non-financeable capital
                     expenditures to sustain annual net sales in excess of
                     $24,000,000.

                     CINV means the cash invested in Buyer at the request of the
                     Seller Representative, or as reasonably deemed necessary by
                     Parent, during the relevant period ending on such date, in
                     excess of the proceeds of the Interim Financing defined in
                     Section 8.14 of this Agreement, it being

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                     understood that Parent is not obligated to invest more than
                     $1,000,000 during any relevant period.

              The parties acknowledge that in all projections of the Working
              Capital Deficit in the Projected Financial Statements, the
              variables in such formula other than CA and CL have been projected
              at zero. The term "non-financeable capital expenditures" means
              capital expenditures which are paid for in cash, and not
              financeable either through customary long term indebtedness or
              under customary capital lease arrangements.

       1.3    Exchange Procedures.

       (a)    Letter of Transmittal; Representation Letter. At the Closing,
holders of record of certificates representing shares of stock of Seller (the
"Certificates") shall be instructed to tender such Certificates to the Transfer
Agent pursuant to a letter of transmittal that Buyer shall deliver or cause to
be delivered to such holders in a form similar to that attached hereto as
Exhibit B, it being the intent of Buyer that such letters of transmittal shall
be delivered as soon after the Closing Date as is reasonably practicable. In
addition, holders of Certificates shall be instructed to execute a statement of
representations in a form similar to that attached hereto as Exhibit C (the
"Representation Letter"). To the extent such holders have pledged their shares
of Seller and will pledge their shares of Parent Common Stock as substitute
collateral, such holders shall deliver a written acknowledgement of the pledgee,
in form and substance reasonably satisfactory to Parent, to the effect that the
shares of Parent Common Stock have not been registered under applicable
securities laws and may be transferred only in compliance with such laws.

       (b)    Payment. Subject to Section 1.3(c), after the Closing, each
previous holder of a Certificate that surrenders such Certificate to the
Transfer Agent, with a properly completed and executed letter of transmittal and
Representation Letter with respect to such Certificate, will be entitled to
receive from the Transfer Agent, on behalf of Seller, as a liquidating
distribution, (i) a certificate representing such number of whole shares of
Parent Common Stock to which such shareholder is entitled based on the
Shareholder Certification, such certificate to be deliverable as soon as
practicable after such shareholder complies with this Section 1.3(b) (if
physical delivery is requested), or otherwise at the times and in the manner set
forth in the Registration Agreement, and (ii) a cash payment for any fractional
share interest to which such shareholder would have otherwise been entitled.

       (c)    Outstanding Certificates. Each outstanding Certificate held by a
shareholder of Seller shall, until duly surrendered to the Transfer Agent, be
deemed to evidence the right to receive such shareholder's pro rata portion of
the liquidating distribution. After the Closing, holders of Certificates shall
cease to have rights with respect to the stock represented by such Certificates,
and their sole rights shall be to exchange such Certificates for (i) their pro
rata portion of the liquidating distribution as provided in Section 1.2(b) of
this Agreement, and (ii) the additional distributions, if any, to be made as set
forth in Section 1.5. Effective as of the Closing, there shall be no further
transfer of Certificates of Seller, and if such Certificates are

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presented to Seller for transfer, they shall be canceled against delivery of the
pro rata portion of the liquidating distribution to which the stock represented
by such Certificates are entitled as provided in this Agreement. The Transfer
Agent shall not be obligated to deliver the liquidating distribution, on behalf
of Seller, to any holder of stock of Seller until such holder surrenders the
Certificates as provided herein, together with the transmittal letter and
Representation Letter, and subject further to the restrictions set forth in the
Registration Agreement. No dividends declared on the Parent Common Stock, if
any, to be received in the liquidating distribution will be remitted to any
person entitled to receive such Parent Common Stock under this Agreement until
such person surrenders the Certificate representing the right to receive such
Parent Common Stock, at which time such dividends shall be remitted to such
person without interest and less any taxes that may have been imposed thereon.
No party to this Agreement nor any affiliate thereof shall be liable to any
holder of stock represented by any Certificate for any amount paid to a public
official pursuant to applicable abandoned property, escheat or similar laws.
Buyer and the Transfer Agent shall be entitled to rely upon the Shareholder
Certification to establish the identity of those persons entitled to receive the
liquidating distribution specified in Sections 1.2 and 1.5 of this Agreement,
which shall be conclusive with respect thereto. In the event of a dispute with
respect to ownership of stock represented by any Certificate, Buyer or the
Transfer Agent shall be entitled to deposit the liquidating distribution
represented thereby in escrow with an independent third party and thereafter be
relieved with respect to any claims thereto.

       1.4    No Fractional Shares. Notwithstanding any other provision of this
Agreement, neither certificates nor scrip for fractional shares of Parent Common
Stock shall be issued in the Transaction. Each holder who otherwise would have
been entitled to a fraction of a share of Parent Common Stock at Closing shall
receive in lieu thereof cash (without interest) in an amount determined by
multiplying the fractional share interest to which such holder would otherwise
be entitled by the midpoint between the inside closing bid and offer prices of
Parent Common Stock on the OTC Bulletin Board on the second trading day
immediately preceding the date of Closing (the "Closing Share Value"). No such
holder shall be entitled to dividends, voting rights or any other rights in
respect of any fractional share.

       1.5    Earnout Stock. Within thirty (30) days following the completion of
the Buyer's consolidated financial statements for the first twelve full calendar
months after the Closing (the "Measuring Period"), Buyer shall deliver to the
Transfer Agent, for the benefit of the shareholders of Seller (in proportion to
their holdings as reflected on the Shareholder Certification, and as additional
consideration for the Seller's Assets), a number of shares of Parent Common
Stock (the "Earnout Stock") equal to the result of the following formula:

            5  x   [EBITDA - $1,700,000]
            ----------------------------
                        Z

In such formula, the variable "Z" shall mean the average of the published
closing price of the Parent Common Stock on the Parent's then principal stock
exchange or quotation service (currently the OTC Bulletin Board) for all
trading days in the last three (3) calendar months of the Measuring Period,
provided that the Menu Share Price for purposes of such formula shall not be
less than Two Dollars ($2.00) nor more than Five Dollars ($5.00) per share
(such amounts are

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referred to as the "Collars")(such average published closing price and Collars
shall be subject to adjustment as set forth in Section 1.7 below). In such
formula, the term "EBITDA" shall mean the net income of the Buyer from
operations during the Measuring Period (after elimination of gains and losses
resulting from extraordinary transactions and from adjustments made to Buyer's
opening balance sheet as part of the Transaction) as reflected on the Buyer's
consolidated income statement for the Measuring Period prepared in accordance
with generally accepted accounting principles consistently applied (and
separately from Parent's income statement), increased by the sum of (A) Buyer's
income and franchise tax expense during such period, plus (B) Buyer's interest
expense during such period, plus (C) Buyer's depreciation and amortization
expense during such period, plus (D) the excess, if any, of Buyer's so-called
"slotting fees" paid to retail supermarket customers during such period over
$112,000. To the extent any former shareholder of Seller otherwise would receive
a fraction of a share of Earnout Stock, such shareholder instead shall be
entitled to receive from Buyer cash in lieu of such fraction of a share,
calculated at the value ascribed to the variable "Z" above. Notwithstanding the
foregoing provisions of this Section 1.5, (1) the amount of Earnout Stock first
shall be subject to offset and/or adjustment to the extent set forth in Section
1.2(c)(iii) and (iv) above, (2) the amount of Earnout Stock next shall be
subject to offset by the Buyer's or Parent's indemnifiable Damages to the extent
provided in Article 11 below, and (3) the maximum amount of Earnout Stock, after
the adjustments in (1) and (2) of this sentence, shall not exceed 1,500,000
shares of Parent Common Stock (subject to adjustment as provided in Section
1.7). As soon as practicable following its receipt from Buyer of the
certificates evidencing the Earnout Stock and any cash in lieu of fractional
shares, the Seller Nominee shall deliver such cash received by it to the
shareholders of Seller, on behalf of Seller, as a liquidating distribution, in
proportion to their holdings of stock of Seller as reflected on the Shareholder
Certification, and shall hold the certificates evidencing the Earnout Stock
subject to the restrictions contained in the Registration Agreement.

       1.6    Closing of Stock Transfer Books. The stock transfer books of
Seller shall be closed at the end of business on the business day immediately
preceding the Closing Date. In the event of a transfer of ownership of stock of
Seller which is not reflected in the Shareholder Certification prior to the
closing of such record books, the shares of Parent Common Stock issuable with
respect to such stock, as a liquidating distribution, may be delivered to the
transferee to the extent then distributable under the Registration Agreement, if
the Certificate or Certificates representing such stock are presented to the
Transfer Agent accompanied by all documents required by the Transfer Agent to
evidence and effect such transfer and if all applicable stock transfer taxes are
paid.

       1.7    Adjustments for Changes in Capitalization. If, between the date of
this Agreement and the date on which shares of Parent Common Stock are
deliverable hereunder (a "Payment Date"), shares of Parent Common Stock shall be
changed into a different number of shares of Parent Common Stock or a different
class of shares by reason of reclassification, recapitalization, split-up,
spin-off, noncash distribution, exchange of shares or readjustment (including a
merger, consolidation, spin-off or noncash distribution involving Parent in
which the holders of Parent Common Stock receive securities of another entity or
other consideration), or if a stock dividend thereon shall be declared with a
record date within such period, then appropriate and proportionate adjustment or
adjustments will be made to the number of shares of Parent

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Common Stock required to be delivered under this Agreement such that each
shareholder of Seller shall be entitled to receive such number of shares of
Parent Common Stock or other securities as a liquidating distribution as such
shareholder would have received pursuant to such reclassification,
recapitalization, split-up, spin-off, noncash distribution, exchange of shares
or readjustment (including a merger, consolidation, spin-off or noncash
distribution involving Parent in which the holders of Parent Common Stock
receive securities of another entity or other consideration) or as a result of
such stock dividend had the record date therefor been immediately before such
Payment Date. Except as provided in this Section 1.7, no other adjustments shall
be made by reason of any issuance of Parent Common Stock after the date of this
Agreement.

       1.8    Plan of Reorganization. The parties to this Agreement hereby adopt
this Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations. Each of the
parties hereto agrees to file any and all Tax Returns (as hereinafter defined),
in a manner consistent with the qualification of the transaction as a
reorganization under Section 368 of the Code.

       1.9    Seller Representative.

              (a)    Powers. The Seller and the Principal Shareholders hereby
designate James Mueller to serve as representative of the shareholders of Seller
(in such capacity, the "Seller Representative") from and after the Closing of
the Transaction. The Seller Representative shall have power and authority, on
behalf of the shareholders of Seller, (i) to give and receive notices and
communications; (ii) to enter into and to authorize distributions to Buyer or
Parent pursuant to the Escrow Agreement, where Seller's consent is required, or
to object to distributions; (iii) to enter into and to give and receive notices
and communications required of him under the Registration Agreement, (iv) to act
as the observer contemplated by Section 7.5 below; (v) to agree to, negotiate,
defend, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to claims by
Buyer, Parent or any other person against Seller or its shareholders, whether
under this Agreement, the Escrow Agreement, the Registration Agreement or
otherwise; and (vi) to take all actions appropriate in his judgment to
accomplish the foregoing or to represent the financial interest of the Seller's
shareholders as a group. The identity of the Seller Representative may be
changed by the holders of at least sixty percent (60%) of the stock of Seller
(determined from the Shareholder Certification) from time to time upon not less
than 10 days' prior written notice to Parent. No bond shall be required of the
Seller Representative and the Seller Representative shall receive no
compensation for his services. Notices or communications to or from the Seller
Representative shall constitute notice to or from each of the Seller's
shareholders. The Seller Representative shall not be liable for any act done or
omitted hereunder as Seller Representative while acting in good faith and in the
exercise of reasonable judgment and any act done or omitted pursuant to the
advice of counsel shall be presumptive evidence of such good faith. Parent and
Buyer shall have no liability to any shareholder of Seller or otherwise arising
out of the acts or omissions of the Seller Representative or any disputes among
the shareholders of Seller with respect to the duties of the Seller
Representative. Parent and Buyer may rely entirely on their dealings with, and
notices to and from, the Seller Representative with respect to matters for which
the Seller Representative acts on behalf of the Seller's shareholders.

                                      -11-
<PAGE>   12

              (b)    Actions of the Seller Representative. A decision, act,
consent or instruction of the Seller Representative shall constitute a decision
of all the shareholders of Seller for whom shares of Parent Common Stock
otherwise issuable to them are deposited with the Escrow Agent or Transfer Agent
and shall be final, binding and conclusive upon each shareholder of Seller, and
the Escrow Agent, Buyer and Parent may rely upon any decision, act, consent or
instruction of the Seller Representative as being the decision, act, consent or
instruction of each and every such shareholder of Seller. The Escrow Agent,
Transfer Agent, Buyer and Parent are hereby relieved from any liability to any
person for any acts done by them in accordance with such decision, act, consent
or instruction of the Seller Representative.

       (c)    Power to Sell Parent Common Stock; Expense Reserve. The parties
acknowledge that the Registration Agreement, as defined in Section 10.1(j),
provides for a mechanism by which the shareholders of Seller may sell shares of
Parent Common Stock pursuant to a registration statement in transactions through
a named broker. The Seller Representative may direct the Transfer Agent under
the Registration Agreement to establish an "Expense Reserve" from the Parent
Common Stock otherwise deliverable to the Seller's shareholders in the following
amounts: (i) 50,000 shares of Parent Common Stock shall be set aside in the
Expense Reserve at Closing; (ii) up to an additional 20,000 shares of Parent
Common Stock otherwise deliverable to Seller's shareholders following the
adjustment determinations pursuant to Section 1.2(c) shall be added to the
Expense Reserve, in the discretion of the Seller Representative if fewer than
50,000 shares then remain in the Expense Reserve; and (iii) that number of
shares of Parent Common Stock otherwise deliverable under Section 1.5 which is
necessary, after full depletion of the Expense Reserve, to pay any Expenses
which are not covered by the Expense Reserve. "Expenses" are those costs which
are paid or incurred by Seller Representative in connection with the liquidation
and winding up of Seller or the performance of the Seller Representative's
duties on behalf of the Seller's shareholders hereunder or under the
Registration Agreement, including (without limitation) any arbitration,
settlement, negotiation, or litigation of any matter arising hereunder or
thereunder which pursues or defends any interest of such shareholders as a
group. During the Restriction Period, the Seller Representative shall have the
power to instruct the broker under the Registration Agreement to sell shares out
of the Expense Reserve, for the proportionate benefit of the Seller's
shareholders, to fund (directly or by reimbursement) any out-of-pocket Expenses
not paid through the Cash Reserve. After the Restriction Period, the Seller
Representative shall continue to have the power to hold shares in the Expense
Reserve and to direct the sale of such shares to pay Expenses as needed from
time to time. Once the Earnout Stock computation is finally agreed and settled,
the Seller Representative shall pay or provide for any remaining unpaid Expenses
out of proceeds from the sale of shares held in the Expense Reserve, and shall
cause all excess shares remaining in the Expense Reserve to be distributed to
Seller's shareholders pro-rata as their interests shall appear as of that date.
Notwithstanding the foregoing, 10% of the net cash proceeds of any sales of
shares held in the Escrow Reserve shall be remitted pro-rata to the
shareholders, as their interests then shall appear, for the purpose of at least
partially covering any income taxes associated with such sales. If any
shareholder has duly designated to the Transfer Agent or Seller Representative
that proceeds from sales are to be remitted to a lienholder, the 10% cash
remittance due that shareholder shall be remitted to such lienholder, but the
remaining 90% of such proceeds shall be used to pay

                                      -12-
<PAGE>   13

Expenses. The provisions of this Section 1.9(c) shall survive Closing and the
termination of the Restriction Period under the Registration Agreement.

                                   Article 2

                          Assumption of Liabilities

       2.1    Assumed Liabilities. Subject to the terms and conditions of this
Agreement, the Seller hereby agrees to transfer and assign, and Buyer hereby
agrees to assume, pay and perform subsequent to the Closing Date, the following
(collectively, the "Assumed Liabilities"): (a) all accrued expenses, accounts
payable and other current liabilities reflected on the books and records of
Seller as of the date of Closing ("Current Liabilities"), (b) subject to Section
8.16, all notes payable and other indebtedness of Seller for borrowed money
(including without limitation the current portion of long-term debt) reflected
on the books and records of Seller as of Closing ("Indebtedness"), (c) all
obligations of Seller to creditors of the Acquired Subsidiaries under written
guarantees executed for their benefit and disclosed in the schedules to this
Agreement, (d) all liabilities and obligations of the Seller under the Executory
Contracts (provided that such agreements are validly assigned to Buyer on or
after the Closing, and in the event such agreements are so assigned after the
Closing, Buyer shall assume such liabilities and obligations under such
agreements effective as of the Closing), (e) all liabilities and obligations of
Seller as the general partner of SevenJTex, under the LPA (as defined in Section
3.2) or otherwise (the "GP Liability"), and (f) those additional liabilities set
forth on Schedule 2.1 attached to this Agreement.

       2.2    No Other Liabilities Assumed. Except for the liabilities and
obligations of Seller to be assumed by Buyer under Section 2.1, Buyer shall not
assume, and Seller shall remain liable for, any and all of Seller's liabilities,
obligations, claims and commitments which are not specifically set forth herein
as being expressly assumed by Buyer, whether the same are known or unknown,
disclosed or undisclosed, existing as of the Closing Date or contingent upon
future events or circumstances.

                                   Article 3

    Representations and Warranties of the Seller and Principal Shareholders

       To induce the Buyer and Parent to complete the purchase of the Assets and
assumption of the Assumed Liabilities, the Seller and Principal Shareholders
hereby jointly and severally represent and warrant to Buyer as follows:

       3.1    Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Missouri, has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted, and is duly qualified and in good standing as a foreign corporation
in the State of Texas. SevenJNev is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada, and has all
requisite corporate power and

                                      -13-
<PAGE>   14

authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. SevenJTex is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Texas, and
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted. Except as set forth
on Schedule 3.1, neither Acquired Subsidiary is, nor does the nature or extent
of its activities, require it to be, qualified to do business in any
jurisdiction other than its state of organization.

       3.2    Constituent Documents. Attached hereto as Schedule 3.2 are true
and complete copies, with all amendments to date, of each of the following
(collectively, the "Constituent Documents"): (a) the certificate of
incorporation of SevenJNev, (b) the bylaws of SevenJNev, (c) the Certificate of
Limited Partnership of SevenJTex, (d) the Limited Partnership Agreement of
SevenJTex (the "LPA"), (e) the Articles of Incorporation of Seller, and (f) the
Bylaws of Seller.

       3.3    Capitalization and Ownership.

              (a)    SevenJNev. The authorized capital stock of SevenJNev
consists only of 30,000 shares of common stock, par value $1.00 per share. The
issued capital stock of SevenJNev consists only of 1,000 shares of such common
stock (the "SevenJNev Shares"), all of which are outstanding and none of which
are held in treasury. Seller is the only legal and beneficial owner of capital
stock or other securities of any kind or class of SevenJNev, and is transferring
the SevenJNev Shares to Buyer free and clear of all liens, claims, encumbrances
and transfer restrictions, other than restrictions imposed by federal and state
securities laws and legends consistent therewith. All of the SevenJNev Shares
are fully paid and non-assessable. There is no option, warrant, subscription,
put, call or other right, commitment, undertaking or understanding to acquire,
or restrict the transfer of, any capital stock or other securities of any kind
or class of SevenJNev or any rights, obligations or undertakings convertible
into securities of any kind or class of SevenJNev which has been authorized or
which is outstanding other than restrictions imposed by federal and state
securities laws and legends consistent therewith.

              (b)    SevenJTex. The partners of SevenJTex consist solely of
Seller, which owns a 1% general partnership interest in SevenJTex (the "GP
Interest"), and SevenJNev, which owns a 99% limited partnership interest in
SevenJTex (the "LP Interest"). Subject to the terms of the LPA, (i) Seller owns,
and is transferring to Buyer, the GP Interest and Seller's related capital
account free and clear of all liens, claims, encumbrances and transfer
restrictions, and (ii) SevenJTex owns the LP Interest and its related capital
account free and clear of all liens, claims, encumbrances and transfer
restrictions. Except as expressly contained in the LPA, there is no option,
warrant, subscription, put, call or other right, commitment, undertaking or
understanding to acquire, or restrict the transfer of, any general or limited
partnership interest or other profit participation in SevenJTex.

                                      -14-
<PAGE>   15

       3.4    Authorization and Consents.

              (a)    Seller has all requisite corporate power and authority to
own the Assets, to enter into and to consummate the sale of the Assets
contemplated by this Agreement, and otherwise to perform its obligations
hereunder. The execution and delivery of this Agreement by Seller and the
performance by Seller of its obligations hereunder have been duly and
effectively authorized and approved by all requisite corporate action of Seller.
Assuming the shareholders of Seller approve this Agreement pursuant to the BCL
as contemplated by Section 6.5 below, no other corporate or shareholder act or
proceeding on the part of Seller is necessary to authorize Seller's performance
of its obligations hereunder. This Agreement constitutes a valid and legally
binding obligation of Seller, enforceable against Seller in accordance with its
terms.

              (b)    Except as disclosed on Schedule 3.4, neither the execution
and delivery of this Agreement by Seller nor the consummation by Seller of the
transactions contemplated hereby will (i) violate, or conflict with, or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the Assets or any of the properties of the Acquired Subsidiaries
under, any term, condition or provision of the Constituent Documents, or any
note, bond, mortgage indenture, deed of trust, lease, license, agreement or
other instrument or obligation to which Seller or either Acquired Subsidiary is
bound, or by which any of them or their respective properties may be bound or
affected, or (ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Seller or the Assets, or to either Acquired
Subsidiary or its properties. No consent or approval by, notice to or
registration with any governmental authority or other third party, other than
those disclosed on Schedule 3.4, is required on the part of Seller or either
Acquired Subsidiary in connection with the execution and delivery of this
Agreement or the consummation by Seller of the sale of the Assets and the other
transactions contemplated hereby.

       3.5    Financial Statements. Attached hereto as Schedule 3.5 are true and
complete copies of (a) the audited consolidated balance sheets and related
audited consolidated statements of income and cash flows as of and for the
Seller's fiscal years ended October 31, 1997, 1998 and 1999, together with the
auditor's report thereon (collectively, the "Audited Financial Statements"), and
(b) the unaudited consolidated balance sheet and related unaudited consolidated
statement of income of Seller as of, and for the six-month period ended, April
30, 2000 (collectively, the "Interim Financial Statements"). The Audited
Financial Statements and Interim Financial Statements (i) have been prepared
from the books and records of the Seller and Acquired Subsidiaries in accordance
with generally accepted accounting principles consistently applied (except that
the Interim Financial Statements lack of footnotes and are subject to ordinary
year end adjustments), and (ii) fairly present the consolidated financial
position and results of operations of the Seller and Acquired Subsidiaries as of
the dates thereof and for the periods covered thereby.

                                      -15-
<PAGE>   16

       3.6    Absence of Certain Changes or Events. Since October 31, 1999, and
except as disclosed on Schedule 3.6, or in the Audited Financial Statements or
Interim Financial Statements (including the footnotes attached thereto), or as
contemplated by this Agreement, there has not been, with respect to the Seller
or either Acquired Subsidiary:

              (a)    any material adverse change in its assets, operations,
liabilities, earnings, business or condition (financial or otherwise) which is
not fully reflected in the Interim Financial Statements;

              (b)    any damage, destruction or casualty loss (whether or not
covered by insurance) which has been or which can reasonably be expected to have
a material adverse effect on its assets, operations, liabilities, earnings,
business or condition (financial or otherwise);

              (c)    any increase in the compensation payable to any of its
directors, officers, employees or agents other than routine increases made in
the ordinary course of business consistent with past practice, or any bonus,
incentive compensation, service award or other like benefit, granted, made or
accrued, contingently or otherwise, to or to the credit of any of such director,
officer, employee or agent, or any employee welfare, pension, retirement or
similar payment or arrangement made or agreed to with respect to any such
director, officer, employee or agent, other than pursuant to the existing plans
disclosed on Schedule 3.14;

              (d)    any labor controversies or unsettled grievances pending or,
to Seller's knowledge, threatened with any of its employees or a collective
bargaining organization representing or seeking to represent such employees, or
any entrance into any collective bargaining agreement with respect to any such
employees;

              (e)    any addition to, or modification of, any profit sharing,
bonus, deferred compensation, retirement or other employee benefit plan,
arrangement or practice described on Schedule 3.14, other than accruals made for
fiscal year 2000 in accordance with its normal practices;

              (f)    any sale, assignment or transfer (including without
limitation any collateral assignment or the granting or permitting of any lien,
charge or encumbrance) of any material asset, property or right, or any
conducting of its business other than in the ordinary course consistent with
past practice;

              (g)    any amendment, modification, waiver or cancellation of any
material debt owed to, or claim of, Seller or such Acquired Subsidiary, or
settlement of any dispute involving any material payment or other obligation due
to or owed by Seller or such Acquired Subsidiary to be made or performed after
the Closing Date;

              (h)    any new borrowing or increase in any existing indebtedness,
or the incurrence of any obligation or liability (whether absolute or
contingent), other than (i) current liabilities (excluding intercompany debt)
incurred in the ordinary course of business, and (ii) borrowings under existing
Loan Documents which are itemized in Schedule 3.10;

                                      -16-
<PAGE>   17

              (i)    any prepayment of principal or interest on any indebtedness
for borrowed money;

              (j)    any capital expenditure or commitment to make a capital
expenditure (exclusive of expenditures for repair or maintenance of equipment in
the ordinary course of business) or the execution of any lease or similar
arrangement with respect to any aspect of its business, or incurring of
liability therefor;

              (k)    any incurrence of any extraordinary loss or knowing waiver
of any rights of substantial value in connection with an aspect of its business
whether or not in the ordinary course of business;

              (l)    any cancellation, termination or material amendment of any
material contract, agreement, license or other instrument to which it is a party
or by which it or any of its properties is bound;

              (m)    any lending or advance of money in connection with any
aspect of its business, except normal and reasonable expense advances to any
employee of Company in the ordinary course of business;

              (n)    any direct or indirect declaration, reservation, setting
aside or payment of any dividend, distribution or return of capital of any kind,
or any split, reverse split, combination, reclassification, repurchase or
redemption of any stock or other equity interest;

              (o)    any distributions, fees or other payments of any kind to or
for the benefit of any officer, director or shareholder of Seller or either
Acquired Subsidiary, except only payments of regular salary for services
rendered at the salary rate specified for such person in Schedule 3.14;

              (p)    any change in its system of accounting employed in
preparing the Audited Financial Statements;

              (q)    any agreement by, or commitment of, Seller or an Acquired
Subsidiary to do or permit any of the foregoing; or

              (r)    any other event or condition of any character which, in any
one case or in the aggregate, has materially adversely affected, or can
reasonably be expected to materially adversely affect in the future, the assets,
operations, liabilities, earnings, business or condition of the Seller or either
Acquired Subsidiary.

       3.7    Title to Assets; Condition of Equipment.

              (a)    Except as set forth in Schedule 3.7, the Seller does not
own any real property, leasehold in real property or other interest of any kind
with respect to real property.

                                      -17-
<PAGE>   18

Schedule 3.7(a) contains a description of all items of tangible personal
property owned by Seller or leased by Seller from third parties. The Seller has
good and marketable title to all such tangible personal property, free and clear
of all liens, security interests, claims and encumbrances other than Permitted
Liens.

              (b)    SevenJNev does not own any real property, leasehold in real
property or other interest of any kind with respect to real property. Schedule
3.7(b) contains a description of all items of tangible personal property owned
by SevenJNev or leased by SevenJNev from third parties. SevenJNev has good and
marketable title to all such tangible personal property, free and clear of all
liens, security interests, claims and encumbrances other than Permitted Liens.

              (c)    Schedule 3.7(c) contains a true and complete list of all
real property owned by SevenJTex (with an accurate legal description and a
description of the buildings and other improvements thereon). Schedule 3.7(c)
contains a description of all items of tangible personal property (excluding
inventory) owned by SevenJTex or leased by SevenJTex from third parties ("Fixed
Assets"). SevenJTex has good and marketable title to all of its owned assets and
properties, and has a valid first leasehold interest in all assets and
properties leased by it from third parties. Except for Permitted Liens, none of
the assets or properties of SevenJTex is subject to any lease, lien, security
interest, mortgage, charge, easement or encumbrance, right of first refusal,
option or other restriction of any nature whatsoever, nor subject to any pending
or, to Seller's knowledge, threatened condemnation proceedings. None of the
plants, buildings, structures and appurtenances of SevenJTex or the operation or
maintenance thereof as now operated and maintained, contravenes any applicable
zoning ordinance or other administrative regulation or violates any restrictive
covenant or any provision of law. Except as set forth in Schedule 3.7(c), all of
the plants, buildings, structures, appurtenances and Fixed Assets of SevenJTex
are in good operating condition, subject to ordinary wear and tear.

       3.8    Inventory. All items of inventory of SevenJTex are priced at the
lower of cost on a first-in first-out basis or market, and, if purchased on or
before April 30, 2000, were so reflected on the Interim Financial Statements.
The inventory reflected on the books and records of SevenJTex is usable or
salable in the ordinary course of its business, except only to the extent of the
reserves for obsolescence and excess inventory reflected on such books and
records. SevenJTex holds no inventory of third parties on consignment and no
inventory of SevenJTex is in the possession or control of any other person.

       3.9    Cash and Receivables.

              (a)    Set forth on Schedule 3.9(a) are (i) a list of all bank
lines, credit arrangements, bank accounts, money market and securities brokerage
accounts, and safe deposit boxes maintained by the Seller and each Acquired
Subsidiary together with the names of all authorized signatories on each such
arrangement or account, and (ii) a list of all certificates of deposit, money
market fund investments, other cash equivalents, marketable securities of other
persons and investment companies and similar temporary investments.

                                      -18-
<PAGE>   19

              (b)    All of the accounts receivable of the Seller and each
Acquired Subsidiary reflected on the Interim Balance Sheet, and all accounts
receivable arising subsequent to the date thereof and prior to the date of this
Agreement, (i) represent actual indebtedness incurred by the applicable
licensees or account debtors, (ii) have arisen in the ordinary course of the
Seller's or such Acquired Subsidiary's business, and (iii) are collectible in
the ordinary course of business, except only to the extent of the allowance for
doubtful accounts reflected on the books and records of Seller and the Acquired
Subsidiaries.

       3.10   Executory Contracts; Absence of Defaults. Except as disclosed on
Schedule 3.10, neither the Seller nor either Acquired Subsidiary (or its assets
and properties) is a party to or bound by: (a) any loan agreement, note,
mortgage, deed of trust, security agreement, conditional sales agreement,
capital lease, guaranty, letter of credit arrangement or other document or
instrument reflecting present or contingent indebtedness or for which any of its
properties are mortgaged or pledged as collateral (all such items are referred
to collectively as the "Loan Documents"); (b) any employment agreement,
consulting agreement, sales agency agreement, distributor agreement or other
contractual arrangement for its receipt of services or for the sale of its
products; (c) any collective bargaining agreement covering any of its employees;
(d) any contract, agreement, lease, license, outstanding bid or offer or other
commitment (whether formal or informal, written or oral) calling for the payment
or receipt of property or services valued at $10,000 or more (and the aggregate
value of all such items described in this clause (d) which are not required to
be disclosed on Schedule 3.10 is less than $50,000); or (e) any other contract,
agreement, lease, license, outstanding bid or offer or other commitment (whether
formal or informal, written or oral), the loss of which would have a material
adverse effect on the Seller's or such Acquired Subsidiary's assets, operations,
liabilities, earnings, business or condition. Seller has made available for
inspection by Buyer a true and complete copy of each agreement, instrument or
other document (as amended) referenced or cross-referenced in Schedule 3.10.
Except as disclosed on Schedule 3.10, neither the Seller nor either Acquired
Subsidiary is in default under any Loan Document, contract, agreement, lease,
license, outstanding bid or offer or other commitment (whether formal or
informal, written or oral) required to be listed on Schedule 3.10, nor has any
event occurred which, upon notice or passage of time or both, will result in
such a default. Except as disclosed on Schedule 3.10, all payments required to
be made by the Seller or either Acquired Subsidiary pursuant to the Loan
Documents on or prior to the date hereof have been paid in full.

       3.11   Intellectual Property.

              (a)    Disclosure. Schedule 3.11 identifies each patent or
registered Intellectual Property owned by the Seller or either Acquired
Subsidiary and pending applications therefor, and each written license agreement
(excluding off-the-shelf software license agreements) pursuant to which the
Seller or either Acquired Subsidiary have granted to any third party, or
received from any third party a grant of, any rights in any of the Intellectual
Property which it owns or uses. Each item of Intellectual Property owned or used
by the Seller or either Acquired Subsidiary immediately prior to the Closing
hereunder will be owned or available for use on identical terms and conditions
immediately subsequent to the Closing hereunder. The Seller has

                                      -19-
<PAGE>   20

made available to the Buyer correct and complete copies of all items required to
be identified on Schedule 3.11.

              (b)    Adverse Claims. Except as set forth on Schedule 3.11, with
respect to each item of Intellectual Property required to be identified therein:

                     (i)    Seller and Acquired Subsidiaries possess all right,
              title and interest thereto, free and clear of any lien, claim,
              security interest, encumbrance, license or other restriction;

                     (ii)   Such Intellectual Property is not subject to any
              outstanding injunction, judgment, order, decree, ruling or charge;

                     (iii)  No action, suit, proceeding, hearing, investigation,
              written claim or written demand against the Seller or either
              Acquired Subsidiary is pending or, to the knowledge of Seller is
              threatened, which challenges the legality, validity,
              enforceability, use or ownership of such Intellectual Property;
              and

                     (iv)   To the knowledge of the Seller, no party to any
              license agreement relating thereto is in breach or default, and no
              event has occurred which with notice or lapse of time would
              constitute a material breach or default or permit termination,
              modification or acceleration thereunder.

       (c)    Specific Intellectual Property. Without limiting the generality of
the foregoing provisions of this Section 3.11:

                     (i)    All computer software owned or used by the Seller or
              either Acquired Subsidiary in its business is either (A) owned
              free and clear of any claims by persons contributing the
              development of such software, or (B) validly licensed from third
              parties on terms which are commercially reasonable and do not
              require the payment of any royalty, license fee or other charge
              for the continued use thereof. Schedule 3.11 contains a true and
              complete list or description of all software used by Seller or
              either Acquired Subsidiary in the conduct of its business.

                     (ii)   All recipes and formulations used by the Seller or
              either Acquired Subsidiary in the manufacture of its products or
              in connection with its business are in written form and itemized
              on Schedule 3.11. Seller has delivered to Buyer a true and
              complete copy of each such recipe and formulation. All such
              recipes and formulations are owned by Seller or an Acquired
              Subsidiary and were developed by employees of Seller or an
              Acquired Subsidiary, or developed by a consultant under an
              appropriate work-for-hire agreement set forth in Schedule 3.11, in
              each case without infringing on the intellectual property rights
              of any other person.

                                      -20-
<PAGE>   21

       3.12   No Violation of Statute, Decree or Order. Except as disclosed on
Schedule 3.12 or Schedule 3.17, neither the Seller nor either Acquired
Subsidiary is in default under or in breach or violation of any statute, law,
ordinance, decree, order, rule or regulation of any governmental body applicable
to it or its properties. The sale of the Assets to Buyer and the consummation of
the other transactions contemplated by this Agreement will not constitute or
result in any default under or breach or violation of any statute, law,
ordinance, decree, order, rule or regulation of any governmental body applicable
to Seller or either Acquired Subsidiary or their respective properties.

       3.13   Litigation. Except as listed in Schedule 3.13, there is not, and
during the three (3) years preceding the date of this Agreement there has not
been, any suit, claim, action, proceeding or governmental investigation against
or involving the Seller or either Acquired Subsidiary or its business or
properties ("Third Party Litigation") pending; and, to Seller's and the
Principal Shareholders' knowledge, there is no Third Party litigation threatened
and there is no condition or set of facts which can reasonably be expected to
give rise to any Third Party Litigation. There are no decrees, injunctions or
orders of any court, administrative or regulatory body, arbitration panel or
governmental agency outstanding against the Seller or either Acquired
Subsidiary. There is no suit, claim, action, proceeding or governmental
investigation now pending or, to Seller's knowledge, threatened against Seller
which contests the validity of this Agreement or the ability of the Seller to
sell the Assets and to consummate the other transactions contemplated by this
Agreement. Seller has delivered to Buyer true and correct copies of all audit
response letters received by the Seller for its most recent full fiscal year
from legal counsel devoting substantive attention to matters which may result in
any liability or obligation of the Seller or either Acquired Subsidiary.

              3.14   Employee Benefit Plans; Recent Employment History. Attached
as Schedule 3.14 hereto is a complete list of each "employee welfare benefit
plan" as defined in Section 3(1) of the Employee Retirement Income Security Act
of 1974 ("ERISA") (collectively, the "Employee Welfare Plans"), each "employee
pension benefit plan" as defined in Section 3(2) of ERISA (collectively, the
"Employee Pension Plans"), and all deferred compensation arrangements in which
any employees of the Seller or either Acquired Subsidiary are participants. Each
of the Employee Welfare Plans and Employee Benefit Plans is maintained in
compliance with the applicable provisions of ERISA, the Code (as defined in
Section 3.19) and any other applicable laws. Neither the Seller nor either
Acquired Subsidiary contributes, or has any obligation to contribute, to any
Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA) on behalf of any
of its employees. There is no pending or, to Seller's and the Principal
Shareholders' knowledge, threatened action, claim, suit or proceeding by any
person or governmental instrumentality concerning any Employee Pension Plan or
Employee Welfare Plan. Except as set forth on Schedule 3.14, all payments due
from the Seller or either Acquired Subsidiary (on account of employment
contracts or otherwise) for Employee Pension Plans and Employee Welfare Plans
have been paid for all periods ended on or prior to the Closing Date. Schedule
3.14 contains a true and complete list of the employees of the Seller and each
Acquired Subsidiary on the date of this Agreement together with their wage rates
and/or salary, which list identifies the plans in which they are entitled to
participate and any other employment benefits to which they are entitled. Except
as noted on Schedule 3.14, all of such employees are employees

                                      -21-
<PAGE>   22
at will or for periods not exceeding the frequency of payment whose employment
may be terminated without liability for severance or termination pay or any
similar payment.

       3.15   Discrimination, Occupational Safety, Labor and Other Statutes and
Regulations. Except as disclosed on Schedule 3.15, no person, party or labor
organization (including, but not limited to, governmental agencies of any kind)
has any claim, action or proceeding pending or, to Seller's and the Principal
Shareholders' knowledge, threatened or available to it against the Seller or
either Acquired Subsidiary arising out of any statute, ordinance or regulation
relating to the payment of wages or benefits, plant closing laws, discrimination
in employment, employment practices, immigration, continuation of health
insurance benefits or occupational safety and health standards (including, but
without limiting the foregoing, any applicable state statutes, the Fair Labor
Standards Act, National Labor Relations Act, Title VII of the Civil Rights Act
of 1964, as amended, or the Age Discrimination in Employment Act of 1967, as
amended). Except as disclosed on Schedule 3.15, there is not presently pending
or, to Seller's and the Principal Shareholders' knowledge, threatened any
proceeding, hearing or investigation with respect to the adoption by any state,
county or municipality where a facility of the Seller or either Acquired
Subsidiary, of amendments or modifications to existing local or municipal laws,
ordinances, regulations or restrictions with respect to such matters which, if
adopted, would have a material adverse effect on its present business or
operations. In the three (3) years preceding the date of this Agreement, neither
the Seller nor either Acquired Subsidiary has violated, and is presently not in
violation of, any rules, regulations or other similar standards of the
Occupational Health and Safety Administration.

       3.16   Insurance Policies. Set forth on Schedule 3.16 is a list of
insurance policies and bonds in force covering the Seller and each Acquired
Subsidiary and their respective properties, operations and personnel. Upon
request, each of said policies, together with all records and documents relating
to insured losses and claims (other than under any group health insurance
policy) paid or made during the past three years will be made available to Buyer
for its review. Unless otherwise disclosed on Schedule 3.16, all such policies
are in full force and effect, neither the Seller nor either Acquired Subsidiary
is in default of its obligations thereunder, and no insurer has given notice of
cancellation, any material increase in premiums or any material reduction of
coverage. Schedule 3.16 contains a true and complete list of all worker's
compensation claims which are pending or which have been settled under terms
which obligate the Seller, either Acquired Subsidiary or any insurer to make
future payments in respect of claims.

       3.17   Environmental Matters.

              (a)    Except as disclosed on Schedule 3.17, no person or party
(including, but not limited to, governmental agencies of any kind) has asserted
any claim, or to Seller's knowledge has any basis for any action or proceeding,
against the Company relating to any Environmental Matter, and the Seller has not
received oral or written notice of, nor does Seller have reason to believe there
is, any existing or pending violation, citation, claim or complaint relating to
the business of the Seller or either Acquired Subsidiary or any facility now or
previously owned or operated by any of them arising under the Resource
Conservation and

                                      -22-
<PAGE>   23

Recovery Act, the Comprehensive Environmental Response Compensation and
Liability Act, the Superfund Amendments and Reauthorization Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, the Federal Water Pollution
Control Act (Clean Water Act), the Clean Air Act, the Powerplant and Industrial
Fuel Use Act of 1978, the National Environmental Policy Act (Environmental
Impact Statement) and antipollution, waste control and disposal and
environmental "clean-up" provisions of similar statutes of any federal, state or
local governmental authorities, and all regulations and standards enacted
pursuant thereto and all permits and authorizations issued in connection
therewith (collectively, "Environmental Matters"). Schedule 3.17 sets forth all
Environmental Matters and all such violations, citations, claims and complaints.

              (b)    Except as set forth in Schedule 3.17, no underground tanks
are now or have been located at any facility now or previously owned or operated
by the Seller or either Acquired Subsidiary. Except as set forth in Schedule
3.17, no toxic or hazardous substances have been generated, treated, stored,
disposed of on or from or otherwise deposited in or on, located at or allowed to
emanate from any such facility (irrespective of whether such substances remain
at the facility or were transferred to or otherwise disposed of off site),
including, without limitation, the surface waters and subsurface waters thereof,
which may support a claim or cause of action under any federal, state or local
environmental statutes, ordinances, regulations or guidelines.

              (c)    Seller has delivered to Buyer a true and complete copy of
each environmental assessment, appraisal, study, compliance report, or other
document of any kind in the possession of Seller or either Acquired Subsidiary
which relates to the environmental condition of any present or former facility
of an Acquired Subsidiary. Unless otherwise disclosed on Schedule 3.17, Seller
is not aware of any other assessment, appraisal, study, compliance report, or
other document of any kind that has been prepared in the last ten (10) years
with respect to any such facility. Seller has never applied for and been denied
environmental impairment coverage relating to any present or former facility of
an Acquired Subsidiary.

       3.18   Licenses and Permits. Schedule 3.18 contains a listing of all
licenses, franchises, permits (including without limitation environmental
permits) and other governmental authorizations held by the Seller or either
Acquired Subsidiary. All of such licenses, franchises, permits and governmental
authorizations are in full force and effect, and there is no basis for any
governmental body to deny or rescind any such license, franchise, permit or
governmental authorization. The respective businesses of the Seller and each
Acquired Subsidiary as presently conducted do not require any other license,
franchise, permit or other governmental authorization from any governmental
body, whether federal, state, local or foreign.

       3.19   Taxes.

              (a)    Definitions. For purposes of this Agreement:

                     (i)    the term "Code" shall mean the Internal Revenue Code
              of 1986, as amended. All citations to the Code or to the
              regulations promulgated

                                      -23-
<PAGE>   24

              thereunder shall include any amendments or any substitute or
              successor provisions thereto.

                     (ii)   the term "Group" shall mean, individually and
              collectively, (A) Seller, (B) each Acquired Subsidiary, and (C)
              any individual, trust, corporation, partnership, limited liability
              company or any other entity as to which either Acquired Subsidiary
              is or may be liable for Taxes incurred by such individual or
              entity as a partner or member or as a transferee, or pursuant to
              Treasury Regulations Section 1.1502-6, or pursuant to any other
              provision of Federal, territorial, state, local or foreign law or
              regulations.

                     (iii)  the term "Returns" shall mean, collectively, all
              reports, declarations, estimates, returns, information statements,
              and similar documents relating to, or required to be filed in
              respect of, any Taxes, including information returns or reports
              with respect to backup withholding or other payments to (or from)
              third parties, and the term "Return" means any one of the
              foregoing Returns.

                     (iv)   the term "Taxes" shall mean (A) all taxes measured
              with respect to net income, gross income, gross receipts or
              taxable income, and all sales, use, ad valorem, transfer,
              franchise, profits, license, registration, lease, service, service
              use, withholding, employment, payroll, excise, severance, stamp,
              occupation, environmental, premium, property, windfall, profits,
              customs, duties, and other taxes, fees, assessments or charges of
              any kind whatever, together with any interest, penalties and other
              additions with respect thereto, imposed by any Federal,
              territorial, state, local or foreign government; (B) any
              penalties, interest, or other additions to tax for the failure to
              collect, withhold, or pay over any of the foregoing, or to
              accurately file any Return; and (C) other taxes, fees, assessments
              and charges of the same or of a similar nature to any of the
              foregoing, and the term "Tax" mean any one of the foregoing Taxes.

                     (b)    Returns Filed and Taxes Paid. Except as set forth in
Schedule 3.19, (i) each of Seller, the Acquired Subsidiaries and Group has duly
filed or caused to be filed, in a timely manner, with the appropriate taxing
authorities, all Returns required to be filed on or before the date hereof; (ii)
each such Return is true, correct, and complete in all material respects; and,
(iii) all Taxes due with respect to, or shown to be due on, Returns (or in
respect of subsequent assessments with regard thereto), have been timely paid,
or an adequate reserve has been established therefor in the Interim Financial
Statements. Seller has delivered to Buyer true copies of the federal, state and
local income, sales, use and employment tax Returns (and amended Returns,
revenue agents' reports, and other notices from state taxing authorities) of
Seller and each Acquired Subsidiary for the last four taxable years.

                     (c)    Tax Reserves and Tax Liabilities. The amount of
Group's liability for unpaid Taxes for all periods ending on or before the date
of the Interim Balance Sheet does not, in the aggregate, exceed the amount of
the current liability accruals for Taxes (excluding

                                      -24-
<PAGE>   25

reserves for deferred Taxes), as such accruals are reflected on the Interim
Balance Sheet, and the amount of Group's liability for unpaid Taxes for all
periods ending on or before the Closing Date shall not, in the aggregate, exceed
the amount of the current liability accruals for Taxes (excluding reserves for
deferred Taxes), as such accruals are reflected on the books and records of
Seller on the Closing Date. No other Taxes or amounts in respect of Taxes for
which Company is or becomes liable, whether to taxing authorities (as, for
example, under law), or to other persons or entities (as, for example, under tax
allocation agreements), are due or payable with respect to any taxable periods
or portions of periods ending on or before the date hereof. Neither the Seller
nor either Acquired Subsidiary is a party to or bound by any Tax indemnity, Tax
sharing, Tax allocation or distribution agreement, except as otherwise set forth
in Schedule 3.19.

                     (d)    Audit History. Except as set forth in Schedule 3.19,
there are no pending or, to Seller's and the Principal Shareholders' knowledge,
threatened audits, investigations, claims, proposals or assessments for or
relating to any material liability in respect of Taxes, and there are no matters
under discussion with any governmental authorities with respect to Taxes that
could result in any additional amount of Taxes. No audit of Federal, state or
local Returns for Taxes by any relevant taxing authority has been conducted for
any Tax period beginning after December 31, 1996. Except as set forth in
Schedule 3.19, no extension of a statute of limitations relating to Taxes is in
effect.

                     (e)    Claims. Except as set forth in Schedule 3.19, no
claim has ever been made by any authority in any jurisdiction where the Seller
or the Group does not file Returns that it is or may be subject to taxation by
that jurisdiction. There are no liens on any of the Seller's or the Group's
assets that have arisen in connection with any failure (or alleged failure) to
pay any Taxes. The Seller and the Group have no knowledge of any basis for the
assertion of any claim which, if adversely determined, would result in liens on
any of the Seller's or the Group's assets relating to Taxes.

                     (f)    Tax Elections.

                     (i)    Except as set forth in Schedule 3.19 or as reflected
              in Seller's consolidated federal income tax Returns, there are no
              material elections with respect to Taxes affecting Seller or
              either Acquired Subsidiary as of the date hereof.

                     (ii)   No member of the Group: (A) has agreed to make any
              adjustment under section 481(a) of the Code by reason of a change
              in accounting method or otherwise; (B) has made an election, or is
              required, to treat any of its assets as owned by another person
              for Federal income tax purposes or as tax-exempt bond financed
              property or tax-exempt use property within the meaning of section
              168 of the Code; (C) has made any payments, is obligated to make
              any payments, or is a party to any agreement that could obligate
              it to make any payments that will not be deductible under section
              280G, 162, or 404 of the Code; (D) has been a United States real
              property holding corporation within the meaning

                                      -25-
<PAGE>   26

              of section 897(c)(2) of the Code during the applicable periods
              specified in section 897(c)(1)(A)(ii) of the Code; (E) has
              violated any of the COBRA continuation coverage requirements set
              forth in section 4980B of the Code; (F) has failed to disclose on
              its federal income Tax Return all positions taken therein that
              could give rise to substantial understatement of federal income
              Taxes within the meaning of section 6662 of the Code; or (G)
              holds, or has acquired, any "section 197 intangible" within the
              meaning of section 197(c) of the Code that is not amortizable in
              the hands of such member by reason of having been acquired by such
              member pursuant to the nonrecognition transactions described in
              section 197(f)(2)(B) of the Code or the anti-churning rules of
              section 197(f)(9) of the Code and the regulations thereunder.

                     (g)    Miscellaneous. SevenJTex has been properly
classified as a partnership for all federal and state income Tax purposes for
all periods since its inception, and SevenJTex has never realized any income
that is subject to Tax at the SevenJTex level by any state or other jurisdiction
that imposes a Tax on the gross receipts income, net income or taxable income of
a business. Since its inception, SevenJTex has never had any partners other than
SevenJNev and Seller. Except as otherwise set forth in Schedule 3.19, (A) the
net carrying value of all assets of the Acquired Subsidiaries are equal in all
material respects to the adjusted bases of those assets for federal income tax
purposes; (B) except as part of the Group, SevenJNev has never been a member of
an affiliated group of corporations within the meaning of Section 1504 of the
Code; and (C) except as part of the Group, neither Acquired Subsidiary has ever
been a member of any combined, consolidated, or unitary group for state income
or franchise tax purposes, or is required to file combined, consolidated, or
unitary Returns for state income or franchise tax purposes. The transactions
contemplated by this Agreement are not subject to the Tax withholding provisions
of Code section 3406, or of subchapter A of Chapter 3 of the Code, or of any
other comparable provision of law.

       3.20   Subsidiaries and Investments. Except for Seller's ownership of the
SevnJNev Stock and the GP Interest in SevenJTex, and SevenJNev's ownership of
the LP Interest in SevenJTex, neither the Seller nor either Acquired Subsidiary
has any subsidiary or holds any equity or debt security, profit participation or
other interest in any other corporation, partnership, limited liability company,
joint venture or other business enterprise.

       3.21   Corporate Minutes and Stock Transfer Records; Stock Ownership.
Seller has furnished to Buyer for review the corporate minutes of the Seller and
SevenJNev, in each case which are current, complete and correct and which
contain a complete and accurate record of all actions taken by their respective
Boards of Directors and shareholders. Seller has furnished to Buyer for review
the stock ledger and stock records of the Seller and SevenJNev, which are
current, complete and correct and which accurately reflect all transactions
involving equity securities of each corporation and any options, warrants, and
other securities exercisable for or convertible into equity securities of either
corporation. Schedule 3.21 contains a true and complete list of the shareholders
of Seller and the holders of any outstanding option, warrant, convertible
instrument or other security or right exercisable for or convertible into stock
of

                                      -26-
<PAGE>   27

Seller, with the current state of residence of each such holder as far as is
known to Seller. No more than 35 of such holders is not an "accredited investor"
for purposes of Regulation D under the Securities Act of 1933, as amended.
SevenJTex does not maintain its own records of the actions taken by Seller on
behalf of SevenJTex as its general partner, and no formal actions have been
taken by its limited partner.

       3.22   Suppliers and Customers. Schedule 3.22 contains, with respect to
the most recent fiscal year, a true and complete list of the ten largest
suppliers and customers (in dollar volume) of SevenJTex. SevenJTex has not
received any oral or written indication from any of such suppliers or customers
of an intention to terminate or adversely modify its relationship with
SevenJTex.

       3.23   Transactions With Affiliates. Except as disclosed on Schedule
3.23, in the last three full fiscal years, neither the Seller, either Acquired
Subsidiary, or any Principal Shareholder, officer, director, or employee of
Seller or either Acquired Subsidiary (a) has had any direct or indirect
interest, except through ownership of less than two percent (2%) of the
outstanding securities of corporations listed on a national securities exchange
or registered under the Securities Exchange Act of 1934, in any entity which
does business or competes with SevenJTex or in any property, asset or right
which is used by SevenJTex in the conduct of its business, or (b) has been a
party to any transaction with SevenJTex relating to any aspect of its business,
including, without limitation, any contract, agreement or other arrangement (i)
providing for the furnishing or services, by, (ii) providing for lease,
management, rental or purchase or real or personal property to or from, or (iii)
otherwise requiring payments to (other than for services as employees, officers
or directors) any such person, any member of the immediate family of any such
person or any corporation, partnership, limited liability company, trust or
other entity in which any such person has a substantial interest or is an
officer, director, partner or trustee.

       3.24   Assurances Regarding Tax Matters. To induce Buyer to enter into
this Agreement and to complete the Transaction, the Seller and Principal
Shareholders hereby jointly and severally warrant that:

              (a)    Liquidation. Immediately after the transfer of Assets
contemplated by Section 1.1, Seller will cease engaging in any business
activities, except for paying its liabilities, and will immediately liquidate
and distribute all Parent Common Stock and rights thereto received or receivable
in the Transaction and any other Assets not transferred to Buyer pursuant to
this Agreement, provided that Seller may, in its discretion, establish a
liquidating trust, having a term of less than three years, reserving a
reasonable fund for the purpose of satisfying obligations owed to creditors of
Seller with unliquidated claims, provided that such trust is treated as such for
federal income tax purposes.

              (b)    Continuity. Pursuant to the Transaction, Seller will
transfer to Buyer at least ninety percent (90%) of the fair market value of the
net assets and at least seventy percent (70%) of the fair market value of the
gross assets held by Seller immediately prior to the Transaction. For the
purpose of determining the percentage of Seller's net and gross assets

                                      -27-
<PAGE>   28

acquired by Buyer pursuant to the Transaction, the following assets will be
treated as assets held by Seller immediately prior to the Transaction: (i)
assets disposed of by Seller prior to the Transaction and in contemplation
thereof; (ii) assets used by Seller to pay shareholders perfecting dissenters'
rights or other expenses or liabilities incurred in connection with the
Transaction; (iii) assets used by Seller to pay the expenses of entering into
the Transaction; and (iv) assets used to make payments in respect of stock of
the Seller or warrants or other rights to acquire such stock (including payments
treated as such for Tax purposes) that are made in contemplation of the
transaction or that are related thereto.

Seller shall certify these facts and warranties as of Closing as reasonably
requested by Thompson Coburn LLP.

       3.25   No Broker. No person, firm or corporation other than Wedbush
Morgan Securities has acted in the capacity of broker, advisor, investment
banker or finder on behalf of Seller to bring about the negotiation or
consummation of this Agreement or the purchase of any of the Assets.

       3.26   Accuracy of Statements. Neither this Agreement nor any Schedule
hereto nor any certificate furnished by Seller or the Principal Shareholders to
Buyer in connection with this Agreement or any of the transactions contemplated
hereby (including, without limitation, information furnished by Seller for use
by Parent in any proxy statement or offering memorandum used in connection with
obtaining the approval of the Seller's shareholders for the Transaction and
other matters contemplated hereby) contains or will contain an untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
in which they are made, not misleading.

                                   Article 4

              Representations and Warranties of Buyer and Parent

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

       4.1    Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Missouri. Parent is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada.

       4.2    Authorization and Consents. Each of Buyer and Parent has all
requisite corporate power and authority to own or lease and use its properties
and assets, to carry on its business as proposed to be conducted, to own enter
into and to consummate the transactions contemplated by this Agreement and to
perform its obligations hereunder. Upon approval of this Agreement by the Board
of Directors of Parent, the execution, delivery and performance of this
Agreement by Buyer and Parent shall have been duly and effectively authorized
and approved by all requisite corporate action of Buyer and Parent, and no other
corporate or shareholder act or proceeding on the part of either Buyer or Parent
shall be necessary to authorize this Agreement

                                      -28-
<PAGE>   29

or the transactions contemplated hereby. This Agreement constitutes a valid and
legally binding obligation of the Buyer and Parent, enforceable against each of
them in accordance with its terms. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by Buyer or Parent with any of the provisions hereof will violate or
conflict with any of the terms, conditions or provisions of the Certificate or
Articles of Incorporation or Bylaws of Buyer or Parent, or violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Buyer or
Parent. Except as set forth in Schedule 4.2, no consent or approval by, notice
to or registration with any governmental authority or other third party is
required on the part of the Buyer or Parent in connection with the execution and
delivery of this Agreement or the consummation by Buyer or Parent of the
transactions contemplated hereby.

       4.3    Parent Common Stock. All shares of Parent Common Stock to be
issued to the shareholders of Seller pursuant to this Agreement at the Closing
or thereafter are and shall be duly authorized, validly issued, fully paid and
non-assessable.

       4.4    Information Regarding Parent. Buyer has delivered or made
available to Seller true and complete copies of all reports filed by Parent with
the Securities and Exchange Commission (the "SEC") pursuant to the Exchange Act
within the last two (2) years, commencing with its Annual Report on Form 10-SB,
as amended. To the best of Parent's knowledge and belief, none of the foregoing
reports, nor any other filing made by Parent with the SEC, contained, at the
time thereof, any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading.

       4.5    Litigation. Except as set forth on Schedule 4.5, there are no
actions, suits, proceedings, claims, investigations or inquiries of any kind
pending or, to the knowledge of Buyer and Parent, threatened against Buyer or
Parent before any court, commission, agency or other administrative or judicial
authority which could have a material adverse effect on the financial condition,
results of operations, assets, liabilities or business of Buyer or Parent.
Neither Buyer nor Parent is the subject of any judicial or governmental order or
decree, other than those of general application.

       4.6    Parent Financial Statements. Parent's audited financial statements
as at December 31, 1999 contained in its Form 10-KSB, and Parent's unaudited
financial statements as at March 31, 2000 contained in its Form 10-Q SB
(collectively, the "Parent Financial Statements") are true and complete copies
of such statements. The Parent Financial Statements, taken together with the
other disclosures in those filings, present fairly in all material respects the
consolidated financial position and consolidated results of operations of Buyer
as of the respective dates and for the respective periods indicated, and have
been prepared in conformity with generally accepted accounting principles
applied on a basis consistent (except as otherwise noted) with prior periods,
except that the unaudited statements lack full footnote disclosures and are
subject to year end adjustment. Since December 31, 1999, there has been no
material adverse change in the financial condition, results of operations,
assets, liabilities or business of Parent and its subsidiaries, taken as a
whole.

                                      -29-
<PAGE>   30

       4.7    Transactional Approvals. Except as set forth on Schedule 4.7, no
approval, authorization, order, license, permit, franchise or consent of, or
registration, qualification or filing with, or notice to, any judicial or
governmental agency or authority, or any other person or entity, is required in
connection with the execution, delivery or performance by Buyer and Parent of
this Agreement.

       4.8    Assurances Regarding Tax Matters. To induce Seller and the
Principal Shareholders to enter into this Agreement, Parent and Buyer hereby
represent and warrant that:

              (a)    Prior to the Closing, Parent will be in control of Buyer,
i.e., will own at least 80 percent of the total combined voting power of all
classes of Buyer stock entitled to vote and at least 80 percent of the total
number of shares of all other classes of Buyer stock ("Control").

              (b)    Following the Closing, Buyer shall not issue additional
shares of its stock that would result in Parent losing Control of the Buyer.

              (c)    Following the Closing, Buyer shall continue the historic
business of Seller or use a significant portion of Seller's business assets in a
business.

Parent and Buyer shall certify these facts and warranties as of Closing as
reasonably requested by Thompson Coburn LLP.

       4.9    Litigation. There is no suit, claim, action, proceeding or
governmental investigation now pending or, to Buyer's and Parent's knowledge,
threatened against Buyer or Parent which contests the validity of this Agreement
or the ability of the Buyer or Parent to consummate the transactions
contemplated by this Agreement.

       4.10   No Broker. Except for Wedbush Morgan Securities, no person, firm
or corporation has acted in the capacity of broker, advisor, investment banker
or finder on behalf of the Buyer or Parent to bring about the negotiation or
consummation of this Agreement, the sale of the Parent Common Stock or the
purchase of the Assets of Seller.

       4.11   Accuracy of Statements. Neither this Agreement nor any Schedule
hereto nor any certificate furnished by Buyer or Parent to Seller or the
Principal Shareholders in connection this Agreement or any of the transactions
contemplated hereby (including, without limitation, information furnished in any
proxy statement or offering memorandum used in connection with obtaining the
approval of the Seller's shareholders for the Transaction and other matters
contemplated hereby, but excluding information furnished by Seller) contains or
will contain an untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they are made, not misleading.

                                      -30-
<PAGE>   31

                                  Article 5

                           Closing and Closing Date

       The closing of the transactions contemplated by this Agreement
("Closing") shall take place at the office of Thompson Coburn LLP, One Firstar
Plaza, St. Louis, Missouri, commencing at 9:00 a.m. local time on July 17, 2000
(the "Closing Date"), or at such other time and place as the Seller and Buyer
shall agree in writing. To the extent conditions to Closing have not been
fulfilled or waived as of the scheduled Closing Date, the Closing Date shall
automatically be extended to the first business day after which such conditions
have been satisfied or waived on or before July 29, 2000.

                                   Article 6

                              Covenants of Seller

       6.1    Conduct of Business. The Seller and the Principal Shareholders
hereby covenant, warrant and agree that from the date hereof to the Closing
Date, except for transactions which are expressly approved in writing by the
Buyer:

              (a)    Neither the Seller nor either Acquired Subsidiary shall
subject any of the Assets or other properties to any lien, charge or encumbrance
of any kind, except in the ordinary course of business and for Permitted Liens;

              (b)    Neither the Seller nor either Acquired Subsidiary shall
sell, assign, transfer or otherwise dispose of any of the Assets or its
properties, except inventory held for sale in the ordinary course of business
and tangible personal property being replaced in the ordinary course of
business;

              (c)    Neither the Seller nor either Acquired Subsidiary shall
modify, amend, alter or terminate (whether by written or oral agreement, or any
manner of action or inaction) any of the Executory Contracts or any of the
Constituent Documents, except in the ordinary course of business for reasonably
equivalent consideration;

              (d)    Neither the Seller nor either Acquired Subsidiary shall
make any material change in the number of its employees or any change in their
compensation or benefits which is outside of the ordinary course of business;

              (e)    Neither the Seller nor either Acquired Subsidiary shall
declare or pay any dividend, distribution or other return of capital to its
partners or shareholders; and

              (f)    Neither the Seller, either Acquired Subsidiary nor any
Principal Shareholder shall negotiate, discuss, solicit or contract with any
person (except Buyer and its designees) with respect to a transaction involving
the sale of any of the assets or stock (whether

                                      -31-
<PAGE>   32

or not outstanding) of, or other equity interests in, the Seller or either
Acquired Subsidiary; provided that Seller may, without the Buyer's approval, (i)
issue its common stock pursuant to the exercise of any option disclosed in this
Agreement, including the Schedules hereto, and (ii) issue its common stock in
connection with the resolution of any disputes between Seller and holders of any
class of Seller's stock, or any security convertible into or exercisable for
Seller's stock.

       6.2    Affirmative Covenants. The Seller and the Principal Shareholders
hereby covenant, warrant and agree that from the date hereof to the Closing
Date, unless otherwise expressly approved in writing by the Buyer:

              (a)    The Seller and the Acquired Subsidiaries shall keep their
respective properties continuously insured in amounts and with coverage at least
as great as the amounts and coverage in effect on the date of this Agreement;

              (b)    The Seller and the Acquired Subsidiaries shall maintain and
use diligent efforts to preserve their possession and control of their
respective properties consistent with past practice, and shall use diligent
efforts to keep in faithful service their respective employees and to preserve
the goodwill of customers, suppliers and others having business relations with
them;

              (c)    The Seller and the Acquired Subsidiaries shall maintain
their books, accounts and records in a manner consistent with past practice;

              (d)    The Seller and the Acquired Subsidiaries shall allow, at
all reasonable times, Buyer's employees, attorneys, auditors, accountants and
other authorized representatives, reasonable full access to the land, plants,
properties, books, records, documents and correspondence of the Seller and each
Acquired Subsidiary, in order that Buyer may have full opportunity to make such
investigation as it may desire of their respective businesses;

              (e)    The Seller and each Acquired Subsidiary shall comply with
all laws applicable to them or to the conduct of their respective businesses,
and shall use diligent efforts to conduct their businesses in such a manner so
that on the Closing Date the representations and warranties contained in this
Agreement shall be true as though such representations and warranties were made
on and as of such date;

              (f)    The Seller shall provide Buyer with prompt written notice
of (i) any material adverse change the Assets, properties, liabilities,
earnings, business or condition (financial or otherwise) of the Seller or either
Acquired Subsidiary, and (ii) any event or circumstance which causes, or can
reasonably be expected to cause, any of the representations and warranties in
Article 3 to be inaccurate;

              (g)    The Seller shall deliver its regularly prepared monthly
financial statements to Buyer promptly following completion thereof, and in any
event no later than 45 days after the end of each month; and

                                      -32-
<PAGE>   33

              (h)    The Seller and Principal Shareholders shall use diligent
efforts (i) to obtain such consents from third parties as may be required in
order to fulfill the conditions to Closing which are reasonably within Seller's
or the Principal Shareholders' control, and (ii) to cause the representations
and warranties in Article 3 to be true and correct on the Closing Date.

       6.3    Clearance Certificates. On or prior to the Closing Date, the
Seller shall deliver to Buyer such clearance certificates or similar document(s)
of any state taxing authority that Buyer shall reasonably designate, in order to
relieve Buyer of any duty to withhold any portion of the consideration payable
pursuant to this Agreement.

       6.4    No Solicitation. From the date hereof until the Closing or the
valid termination of this Agreement, Seller and the Principal Shareholders shall
not, directly or indirectly, through any officer, director, agent or
representative (including without limitation investment bankers, attorneys,
accountants and consultants) solicit, initiate or further the submission of
proposals or offers from negotiate with or enter into any agreement with, any
firm, corporation, partnership, association, group (as defined in Section
13(d)(3) of the Securities and Exchange Act of 1934 (the "Exchange Act")) or
other person or entity, individually or collectively, other than Buyer (a "Third
Party"), relating to any direct or indirect acquisition or purchase of all or
substantially all of the assets of, or any equity interest in, Seller or either
Acquired Subsidiary, or any merger, consolidation or business combination with
Seller or either Acquired Subsidiary.

       6.5    Shareholders Meeting. Promptly following the execution of this
Agreement, the Seller will duly call, give notice of, and convene and hold a
special meeting of shareholders on or before July 17, 2000, for the purpose of,
among other things, considering the approval of the Transaction as set forth in
this Agreement and resolving to dissolve the Seller under the BCL. The Seller
will, through its Board of Directors, recommend to its shareholders adoption or
approval of such matters, as the case may be, shall use all reasonable efforts
to solicit such approvals by its shareholders and shall not withdraw such
recommendation. Each Principal Shareholder agrees to attend such meeting and any
adjournment thereof and to vote all shares owned or controlled by such Principal
Shareholder in favor of the Transaction and the dissolution of Seller.

       6.6    Representation Letters; Residency. Concurrently with their
execution of this Agreement, each Principal Shareholder shall execute and
deliver to Parent a Representation Letter in the form attached as Exhibit C.

       6.7    Employees. Effective as of Closing, Seller shall release all of
its employees from their employment with Seller, in order that Buyer may extend
offers of employment to such employees as Buyer shall deem appropriate. Prior to
Closing, Seller shall make its employees available to, and otherwise shall
cooperate with, Buyer in connection with the Buyer's interview process.

                                      -33-
<PAGE>   34

       6.8    Tax Matters.

              (a)    The Seller shall, at the Seller's expense, timely prepare
and file (or cause to be prepared and filed) with the appropriate Tax
authorities all Returns for the Seller and the Group for all taxable periods
ending on or before the Closing and the portion ending on the Closing of any
taxable period that includes (but does not end on) such day (the "Pre-Closing
Tax Period") whether such Returns are required to be filed on or before or after
the Closing; and the Seller shall pay all Taxes due prior to the Closing with
respect to all such Returns. All Returns filed by the Seller or the Group
pursuant to the preceding sentence shall be prepared using accounting methods
that were used in preparing the relevant Returns for prior taxable periods and
in a manner which does not have the effect of distorting Taxes due for any such
period. All such Returns shall be made available to Buyer for review a
reasonable period of time prior to filing.

              (b)    To the extent not prepared and filed by the Seller or
Group, Buyer, consistent with past practice of the Seller and the Group, shall
timely prepare and file (or cause to be prepared and filed) with the appropriate
Tax authorities, at Seller's or the Principal Shareholders' expense, all Returns
for the Seller and Group that the Seller or Group is required to file prior to
the Closing for any Pre-Closing Tax Period, and, to the extent not required to
be paid prior to the Closing as described in this Section 6.8(a), shall cause
the Seller or Principal Shareholders to pay all Taxes due with respect thereto
(to the extent the Buyer is liable therefor); and provided further, if any such
Return will cause the Principal Shareholders to incur any obligation to
indemnify Parent in accordance with Section 11.1 hereof, Buyer shall provide the
Principal Shareholders with copies of such returns within a reasonable time
prior to filing and shall provide the Principal Shareholders a reasonable
opportunity to comment thereon. Buyer and the Principal Shareholders shall
attempt in good faith mutually to resolve any disagreements regarding such
Returns prior to the due date for filing thereof.

              (c)    As soon as practicable, but in any event within 15 days
after a request of a party to this Agreement (the "Requesting Party"), from and
after the Closing, the other parties shall use all reasonable efforts to
cooperate with the Requesting Party and to deliver to the Requesting Party such
information and data concerning the Pre-Closing operations of the Seller and the
Group as it shall have and shall use all reasonable efforts to make available
such knowledgeable persons as may be requested in order to enable the Requesting
Party to complete and file all Returns which it may be required to file or to
respond to audits by any taxing authorities with respect to such period. Such
cooperation and information shall include provision of powers of attorney for
the purpose of signing Returns and defending audits of the Seller and the Group
and promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any taxing authority which relate to the
Seller and the Group and providing copies of all relevant Returns, together with
accompanying schedules and related workpapers, documents relating to rulings or
other determinations by any taxing authority and records concerning the
ownership and tax basis of property of the Seller and the Group.

              (d)    All Tax sharing or Tax indemnity agreements to which the
Seller or the Group is a party shall be terminated prior to the Closing.

                                      -34-
<PAGE>   35

              (e)    In the event the Seller or Buyer receive notice of any
audit, examination, proceeding or litigation with respect to any Tax for any
Pre-Closing Tax period which will or may result in the Seller or the Principal
Shareholders incurring any indemnity obligation pursuant to Section 11.1 hereof
(a "Tax Contest"), Buyer shall immediately notify the Principal Shareholders of
such Tax Contest at such time and in such manner as will enable the Principal
Shareholders to exercise the rights created hereunder, provided that any failure
or delay in providing such notice shall not limit the obligations of the
Principal Shareholders to indemnify Buyer under this Agreement if such failure
or delay does not have a material adverse affect on the ability of the Principal
Shareholders to exercise the rights granted herein. The Principal Shareholders,
shall assume the responsibility of conducting any audit, examination, proceeding
or litigation with respect to any Tax (a "Tax Contest") involving a Tax Return
for a period which ends prior to the Closing if the Principal Shareholders would
be liable, or obligated to reimburse Buyer, for any Taxes determined to be due
as a result of the Tax Contest, and Buyer shall have the responsibility, at its
expense, for conducting any other Tax Contest. The Principal Shareholders and
Buyer shall keep the other informed with respect to all matters relating to any
Tax Contest. Notwithstanding the foregoing, if any issue raised in a Tax Contest
would have a material adverse impact on the party other than the one responsible
for conducting such Tax Contest, such other party shall be entitled, at its
expense, to participate in such Tax Contest and such Tax Contest shall not be
settled, compromised or otherwise conceded without the written consent of both
parties, which consent shall not be unreasonably withheld. Each of the Principal
Shareholders and Buyer agree to cooperate fully and in good faith in the conduct
of any Tax Contest. Any expenses of the Principal Shareholders which are
attributable to that portion of any Tax Contest for which the Principal
Shareholders are ultimately required to indemnify Parent pursuant to Section
11.1 hereof shall be treated as part of the loss incurred by Buyer for which it
is entitled to indemnification.

       6.9    Certain Environmental Matters. Included on Schedule 3.17 to this
Agreement is a list of environmental issues being addressed by Seller, and it is
anticipated that such environmental issues shall continue to be addressed by the
Buyer or Acquired Subsidiaries after the Closing. Buyer accepts the risk that
the aggregate expense associated with the resolution of such issues (including
any fines or penalties for noncompliance through periods prior to Closing) will
be up to $25,000. To the extent the resolution of such issues requires incurring
expense greater than $25,000, such excess shall result in a reduction of
purchase price for the Assets, to be effected by offset against the amount of
Parent Shares otherwise distributable under Section 1.2(c)(ii) above, and the
Buyer shall be entitled to instruct the Escrow Agent to return shares of Parent
Stock to Buyer in order to effect such reduction. To the extent such
environmental issues have not been resolved by the date of the distribution from
escrow pursuant to Section 1.2(c)(ii) above, then the Buyer and Seller
Representative shall jointly instruct the Escrow Agent to withhold 25,000 Parent
Shares (or such lesser amount as Buyer and Seller Representative, acting in good
faith, shall jointly approve as being a reasonable estimate of that the
aggregate remaining expense of resolving such issues) pending resolution of such
issues. Thereafter, Buyer shall be entitled (a) to instruct the Escrow Agent to
return to Buyer shares of Parent Stock, and/or (b) to offset its unrealized
purchase price reduction against the Earnout Stock otherwise deliverable under
Section 1.5. Any such shares retained by Escrow Agent under

                                      -35-
<PAGE>   36

this Section and not to be returned to Buyer in reduction of the purchase price
under this Section shall be distributed by Escrow Agent for the benefit of the
Seller Shareholders promptly following resolution of such environmental issues,
and in no event later than the time for the distribution under Section
1.2(c)(iii) above. No further reserve of Parent Shares shall be made for
estimated expenses of resolving any then unresolved environmental issues. All
offsets and distributions of Parent Stock and Earnout Stock under this Section
shall be at a value of Three Dollars ($3.00) per share, subject to adjustment as
set forth in Section 1.7.

                                   Article 7

                         Covenants of Buyer and Parent

       Buyer and Parent hereby jointly and severally covenant, warrant and agree
as follows:

       7.1    Confidentiality of Information. Prior to the Closing Date, Buyer,
Parent and their employees, agents, auditors, attorneys and other authorized
representatives shall not, without the prior written consent of the Seller,
communicate or divulge to any person or entity or use for its benefit any
information, other than information becoming public other than by action of the
Buyer or Parent, concerning any confidential business information possessed,
owned or used by the Seller or the Acquired Subsidiaries that may be
communicated to, acquired by or learned by Buyer and Parent pursuant to this
Agreement or their investigations contemplated hereby.

       7.2    Consents. Buyer and Parent shall use their reasonable best efforts
(i) to obtain such consents from third parties as may be required in order to
fulfill the conditions to Closing which are reasonably within their control, and
(ii) to cause the representations and warranties in Article 4 to be true and
correct on the Closing Date.

       7.3    Blue Sky Approvals. Parent shall use its best efforts to take such
steps as may be required and complete all filings to obtain approvals required
under state securities or "blue sky" laws of the states of residence of the
shareholders of Seller for the issuance of the Parent Common Stock in connection
with the Transaction.

       7.4    Rule 144. Parent will use commercially reasonable efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder to the extent
required from time to time to enable each shareholder of Seller to sell Parent
Common Stock without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 or (b) any similar rule or regulation
hereinafter adopted by the SEC. If any Parent Common Stock is disposed of in
accordance with Rule 144 under the Securities Act, Parent may require that each
shareholder disposing of such shares shall deliver to Parent at or prior to the
time of such disposition an executed copy of Form 144 (if required by Rule 144)
and such other documentation as Parent reasonably requires in connection with
such disposition.

                                      -36-
<PAGE>   37

       7.5    Observer Rights. For a period of one (1) year after the Closing, a
representative of the shareholders of Seller (initially Scott Underwood) shall
be entitled to attend regularly scheduled meetings of the Board of Directors of
Parent as an observer (or to designate an alternate acceptable to Parent, if he
is unavailable), provided such representative (and any alternate) shall execute
such documents as the Parent shall reasonably require to assure the
confidentiality of matters discussed and materials distributed during such
meetings. Attendance by conference telephone shall be permissible only if the
meeting is to be conducted in such manner according to the notice of meeting. It
is understood that such documents shall prohibit the disclosure of nonpublic
information concerning Parent and its subsidiaries to the shareholders of
Seller.

       7.6    Operations After Closing. From the date of the Closing through the
end of the Measuring Period, Buyer shall, and Parent shall cause Buyer to, (a)
operate the business comprised of the Assets in the ordinary course of business
in a manner no less diligent than Seller's past practice, and (b) maintain
separate accounting records with respect to such business, in order for the
parties to accurately compute the EBITDA of Buyer as required by Section 1.5
above. After the Closing, any transactions between Buyer, on the one hand, and
Parent or any subsidiary or affiliate of Parent, on the other hand, shall be on
terms not materially less favorable to Buyer than can be obtained in
transactions between Buyer and a third party not affiliated with Parent.
Specifically, and without limiting the generality of the foregoing, Parent shall
not permit the transfer of any products or product lines of Seller out of Buyer
without appropriately crediting Buyer with the income from such products or
product lines or as otherwise agreed by Parent and the Seller Representative.

       7.7    Sales Representatives. Without limiting in any way the right of
Buyer or either Acquired Subsidiary to terminate the employment of any person in
the ordinary course of Buyer's business, the Buyer shall cause the Acquired
Subsidiaries following the Closing to continue the employment of the existing
sales representatives identified on Schedule 7.7 attached to this Agreement, and
shall empower such sales representatives to market the products of Parent, in
addition to the historical products of Seller to be offered by Buyer. At the
sole discretion of Buyer, during the Measuring Period, it is understood that
Buyer shall have the option of either (a) purchasing product from Parent or
Parent's subsidiaries for resale to food service suppliers, or (b) marketing
such product to supermarket retailers and receiving a commission equal to 2% of
the total sales price. In the event that Buyer elects to purchase product from
Parent, no commission shall be paid by Parent and Buyer shall be responsible for
all sales expenses associated with the marketing and representation of Parent
products. Furthermore, Buyer shall purchase Parent's products on a negotiated
basis, and shall be responsible for all billing, sales and marketing expenses.
In the event Buyer elects to market such products to supermarket retailers,
Parent shall be responsible for reimbursing Buyer for all pre-approved sales
expenses associated with representation of Parent's or Parent's subsidiaries'
Products. All products or services that are coordinated, marketed, and sold by
Sales Representatives listed in Schedule 7.7 and any current or future employees
of Buyer shall be credited to Buyer during the Measuring Period. Parent shall
agree that all Sales Representatives listed in Schedule 7.7 shall only be
compensated by Buyer during the Measuring Period, with the exception of a stock
pool or bonus program granted to multiple Buyer employees. During the

                                      -37-
<PAGE>   38

Measuring Period, Buyer shall not materially reduce, increase or alter the
compensation or size of the sales force of the Buyer or either Acquired
Subsidiary without the prior written approval of the Seller Representative.

       7.8    Wedbush Fee. The fee(s) and expenses of Wedbush Morgan Securities
relating to the Transaction, whether in representing Seller, Parent or Buyer,
shall be paid by Parent and not charged to Buyer during the Measuring Period.
The parties acknowledge that at the date of this Agreement the unpaid fee still
owed to Wedbush is $170,000.

                                   Article 8

                  Buyer's and Parent's Conditions to Closing

       The obligations of Buyer and Parent to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment to Buyer's
and Parent's reasonable satisfaction of each of the following conditions, unless
waived in writing by Buyer or Parent:

       8.1    Continued Truth of Warranties. The representations and warranties
of the Seller and Principal Shareholders contained herein shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made as of such date, except for any variations permitted by this
Agreement.

       8.2    Performance of Covenants. The Seller and Principal Shareholders
shall in all material respects have performed all covenants and obligations and
complied with all conditions required by this Agreement to be performed or
complied with by them on or prior to the Closing Date.

       8.3    No Adverse Change. There shall not have been any:

              (a)    material adverse change in the condition, quantity or value
of the Assets or properties of the Seller or either Acquired Subsidiary since
the date of this Agreement;

              (b)    material adverse change in the financial condition or
prospects of the Seller or either Acquired Subsidiary since the date of this
Agreement;

              (c)    litigation or claim pending or threatened against either of
the Acquired Subsidiaries; or

              (d)    failure on the part of Seller or either Acquired Subsidiary
to operate in the ordinary course of business.

       8.4    Permits and Consents. In the case of governmental authorities, the
parties hereto shall have secured all appropriate orders, consents, approvals
and clearances, in form and substance satisfactory to Buyer and Parent, by and
from all parties, including, but not limited to, regulatory agencies and other
governmental authorities and agencies, whose order, consent and

                                      -38-
<PAGE>   39

approval or clearance is required by contract or law for the consummation of the
transactions herein contemplated. In the case of other third parties, the
parties hereto shall have secured all consents, approvals, waivers and estoppels
as Buyer shall reasonably deem necessary and in form and substance satisfactory
to Buyer, to consummate the purchase of the Assets and assumption of Assumed
Liabilities of Seller.

       8.5    Full Investigation. Buyer and its employees, attorneys,
accountants and other agents shall have been permitted to conduct a full
investigation of the books, records, assets, liabilities, operations, business
and condition of the Seller and Acquired Subsidiaries, including environmental
assessments if Buyer deems it appropriate to obtain the same, and Buyer shall
not have discovered any condition or set of facts which (a) in the reasonable
judgment of Buyer represents a material environmental liability or risk of
environmental liability, or (b) in the reasonable judgment of Buyer is in
material violation of one or more of the covenants, representations and
warranties of Seller set forth herein, and which is not remedied to Buyer's
satisfaction prior to the Closing Date.

       8.6    Closing Documents. The Seller shall have delivered all documents
required to be delivered by Seller at Closing, as more specifically set forth in
Article 10 of this Agreement, in each case in form and substance reasonably
satisfactory to Buyer.

       8.7    Employment Agreements. Buyer shall have received from each of the
employees identified on Schedule 8.7, an employment agreement with
noncompetition obligations extending beyond the period of employment, in form
and substance satisfactory to Buyer.

       8.8    Noncompetition Agreements. Buyer shall have received (a) from John
Mueller a noncompetition agreement substantially in the form attached hereto as
Exhibit I, and (b) from James Mueller a noncompetition and nonsolicitation
agreement substantially in the form attached hereto as Exhibit J (collectively,
the "Noncompetition Agreements").

       8.9    Legal Opinion. Buyer shall have received a legal opinion from The
Stolar Partnership, as to the matters set forth in Exhibit D attached hereto.

       8.10   Absence of Litigation. No suit, claim, action, proceeding or
governmental investigation shall have been commenced or threatened against any
of the parties to this Agreement which challenges the validity, legality or
enforceability of this Agreement or the performance by the parties hereto of
their respective obligations hereunder, or which, if determined adversely to the
defendant(s), could have a material adverse effect on Buyer, Parent, either of
the Acquired Subsidiaries, or the business comprised of the Assets.

       8.11   Audited Financial Statements. Parent shall have received
unqualified audited financial statements for the Seller for the three fiscal
years ended October 31, 1999, 1998 and 1997, and any other such three-year
fiscal period (of Seller or any other person acquired by Seller), which
financial statements shall satisfy the requirements of the SEC and the audit
report which shall report financial statements which are the same in all
material respects to the financial

                                      -39-
<PAGE>   40

statements of Seller, including the Seller's proxy statement used in connection
with obtaining shareholder approval of the Transaction.

       8.12   Lender Approval. Parent's current senior lenders shall have
approved the structure of the Transaction as reflected in this Agreement,
including without limitation, the Buyer's assumption of the Assumed Liabilities
and, if necessary, the Parent's guaranty of certain of the Assumed Liabilities.

       8.13   Board Approval. No later than the date of the shareholder meeting
to be called pursuant to Section 6.5 above, the Board of Directors of Buyer
shall have approved the Transaction and the other matters contemplated by this
Agreement.

       8.14   Additional Investment. An investor acceptable to Parent shall have
completed a debt or equity transaction providing for not less than $1,000,000 of
funding for Buyer during at least the Measuring Period, on terms satisfactory to
Buyer (the "Interim Financing").

       8.15   Agreements with Seller's Lenders.

              (a)    Buyer shall have received an agreement with Civic Ventures
Investment Fund, L.P. on the assumption of Seller's debentures held by them and
the immediate redemption thereof for common stock, and/or warrants for common
stock, of Parent, on terms satisfactory to Buyer.

              (b)    Buyer shall have reached an agreement with Bank of America
N.A. and First National Bank of Eagle Lake on the assumption of Seller's
indebtedness to them, on terms satisfactory to Buyer.

       8.16   PAC, Inc. PAC, Inc. shall have converted the $300,000 PAC Loan to
equity of Seller as part of the Closing, in accordance with the terms of such
Loan.

       8.17   Approval. The shareholders of Seller shall have approved the
Transaction and the dissolution of Seller at the meeting called pursuant to
Section 6.5 above.

       8.18   Estoppel Letters. Buyer and Parent shall have received from each
of the Principal Shareholders and the current officers and directors of Seller
estoppel letters reasonably satisfactory to Buyer to the effect that such
persons have no undisclosed claims or rights against the Acquired Subsidiaries
and are not parties to any undisclosed contract or agreement with the Acquired
Subsidiaries.

                                      -40-
<PAGE>   41

                                  Article 9

                        Seller's Conditions to Closing

       The obligation of the Seller to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment to the Seller's reasonable
satisfaction of the following conditions, unless waived in writing by the
Seller:

       9.1    Continued Truth of Warranties. The representations and warranties
of Buyer and Parent herein contained shall be true in all material respects on
and as of the Closing Date with the same force and effect as though made as of
such date, except for any variations permitted by this Agreement.

       9.2    Performance of Covenants. Buyer and Parent shall in all material
respects have performed all covenants and obligations and complied with all
conditions required by this Agreement to be performed or complied with by Buyer
or Parent on or prior to the Closing Date.

       9.3    Closing Documents. Buyer shall have delivered all documents
required to be delivered by Buyer at Closing, as more specifically set forth in
Article 10 hereof, in each case in form and substance reasonably satisfactory to
the Seller.

       9.4    Absence of Litigation. No suit, claim, action, proceeding or
governmental investigation shall have been commenced or threatened against any
of the parties to this Agreement which challenges the validity, legality or
enforceability of this Agreement or the performance by the parties hereto of
their respective obligations hereunder.

       9.5    Approval. The shareholders of Seller shall have approved the
Transaction and the dissolution of Seller at the shareholder meeting called
pursuant to Section 6.5 above.

       9.6    Board Approval. No later than the date of the shareholder meeting
called pursuant to Section 6.5 above, the Board of Directors of Parent shall
have approved the Transaction and the other matters contemplated by this
Agreement.

       9.7    Tax Opinion. The Seller shall have received an opinion of Thompson
Coburn LLP dated as of the Closing, to the effect that the Transaction will
constitute a reorganization for federal income tax purposes within the meaning
of Section 368 of the Code and which opines on the tax consequences to the
Seller. In rendering its opinion, such firm may reasonably require and rely upon
factual representations contained in certificates of officers of Buyer, Seller
and the Group dated on or before the date of such opinion.

                                      -41-
<PAGE>   42

                                  Article 10

                     Documents to be Delivered at Closing

       10.1   Documents to be Delivered by Seller. At the Closing:

              (a)    Seller shall execute and deliver to Buyer a warranty Bill
of Sale, substantially in the form attached hereto as Exhibit E, conveying to
Buyer good and marketable title to the Assets;

              (b)    Seller shall execute and deliver to Buyer an Assignment and
Assumption Agreement substantially in the form of Exhibit F attached hereto and
made a part hereof;

              (c)    Seller shall execute and deliver (i) an assignment of the
GP Interest, and (ii) one or more original certificates evidencing the
Subsidiary Stock, each in form reasonably satisfactory to Buyer;

              (d)    Seller shall execute and deliver to Buyer such other
documents, including instruments of sale, transfer and assignment transferring,
assigning and conveying the Assets being purchased as shall be reasonably
requested by Buyer to permit Buyer to use Seller's corporate name or to evidence
the transfer of any of the Assets or to vest in the Buyer good, marketable,
indefeasible and recordable title to the Assets, free and clear of all liens,
claims and encumbrances of third parties except for Permitted Liens;

              (e)    Seller shall execute and deliver the Escrow Agreement and
the Shareholder Certification, as contemplated by Section 1.2 hereof;

              (f)    Seller shall deliver a certified copy of the resolutions
adopted by its Boards of Directors and by its shareholders authorizing the
execution and delivery of this Agreement and the consummation of the Transaction
contemplated hereby (including the dissolution of Seller), duly certified as of
the Closing Date by the Secretary or any Assistant Secretary of Seller;

              (g)    Seller shall deliver Certificates of Good Standing or their
equivalent, dated not more than ten days prior to the Closing Date, attesting to
the good standing of Seller as a corporation under the laws of the State of
Missouri and as a foreign corporation in the State of Texas, and attesting to
the good standing of SevenJNev and SevenJTex in the States of Nevada and Texas,
respectively;

              (h)    Seller shall deliver a certificate, executed by the
President or any Vice President on behalf of Seller, dated as of the Closing
Date, certifying (i) that all of the representations and warranties of Seller
herein contained are true and correct on the Closing Date, and (ii) that the
audited financial statements delivered under Section 8.11 comport with the
warranties made with respect to the Unaudited Financial Statements in Section
3.5;

                                      -42-
<PAGE>   43

              (i)    To the extent any consents or approvals shall be necessary
to the Transaction herein contemplated, or to the effective transfer or
assignment of any of the Assets being purchased by Buyer from Seller, the Seller
shall deliver to Buyer copies of all such consents or approvals as obtained by
the Seller;

              (j)    The Seller shall execute and deliver a Registration Rights
Agreement substantially in the form of Exhibit G attached hereto and made a part
hereof (the "Registration Agreement");

              (k)    Seller shall deliver to Buyer the opinion of The Stolar
Partnership as provided in Section 8.9 above;

              (l)    The Seller shall deliver to Buyer the resignations of such
officers and directors of the Acquired Subsidiaries as Buyer shall request;

              (m)    The Seller shall execute and deliver (i) appropriate
articles of dissolution, in form acceptable for filing with the Missouri
Secretary of State, by which the Seller shall dissolve its corporate existence,
and (ii) appropriate notices or certificates of withdrawal in form acceptable
for filing in each other jurisdiction in which Seller is qualified to do
business; and

              (n)    Seller shall deliver to Buyer the original corporate minute
books, stock transfer books and corporate seal of SevenJNev, and any other
business records or property of SevenJNev and SevenJTex that is in the
possession of Seller.

       10.2   Documents to be Delivered by Buyer. At the Closing, the Buyer
shall:

              (a)    Deliver to the Seller certified copies of the resolutions
adopted by the Boards of Directors of Buyer and of Parent, authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, duly certified as of the Closing Date by the
Secretary of Buyer and Secretary of Parent, respectively;

              (b)    Deliver to the Seller Certificate of Good Standing or their
equivalent, dated not more than ten days prior to the Closing Date, attesting to
the good standing of Buyer as a corporation under the laws of the State of
Delaware and as a foreign corporation under the laws of the State of Texas, and
attesting to the good standing of Parent in the State of Nevada;

              (c)    Deliver to the Seller certificates, respectively executed
by an officer or any Vice President of Buyer and Parent, dated as of the Closing
Date, certifying that all of the representations and warranties of Buyer and
Parent contained herein are true and correct on the Closing Date;

                                      -43-
<PAGE>   44

              (d)    To the extent any consents or approvals shall be necessary
to any of the transactions herein contemplated, or to the effective transfer of
any of the Assets, deliver to the Seller copies of all such consents or
approvals as obtained by Buyer;

              (e)    Execute and deliver the Escrow Agreement, the Registration
Agreement and the Noncompetition Agreements;

              (f)    Deliver the applicable number of shares of Parent Common
Stock to the Escrow Agent and Transfer Agent, respectively, as required by
Section 1.2 hereof; and

              (g)    Deliver to the Seller opinions of Thompson Coburn LLP and
of Nevada counsel to the Parent, in form reasonably satisfactory to the Seller
as to the matters set forth in Exhibit H attached hereto and made a part hereof.

                                  Article 11

                                Indemnification

       11.1   General Indemnification by Seller. Subject to the other provisions
of this Article 11, by execution of this Agreement, the Seller hereby agrees to
indemnify the Buyer, the Parent and their respective successors and assigns and
hold them harmless against and in respect of:

              (a)    any and all loss, liability, cost, expense or damage
(including judgments and settlement payments) incurred by Buyer or Parent
incident to, arising in connection with or resulting from (i) any breach,
nonperformance or inaccuracy of any representation, warranty, or covenant by the
Seller or Principal Shareholders made or contained in this Agreement or in any
Schedule hereto or any certificate or other document executed by Seller or any
Principal Shareholder and delivered to Buyer or Parent pursuant to this
Agreement or the transactions contemplated herein (all of which survive the
Closing for the period during which a claim may be asserted under Section 11.5
below); (ii) any Environmental Matter set forth on Schedule 3.17 or which is
based on conditions existing or events occurring immediately preceding the
Closing to the extent such loss, liability, cost, expense or damage exceeds
$25,000; and/or (iii) any liability or obligations of Seller, known or unknown,
existing or hereafter arising, which is not among the Assumed Liabilities;

              (b)    any and all loss, liability, cost, expense or damage (i)
arising out of any Taxes of Seller or either Acquired Subsidiary (A) with
respect to any Pre-Closing Tax Period, or (B) resulting, directly or indirectly,
from any transaction contemplated in this Agreement, or (C) resulting, directly
or indirectly, from a material breach of any representation, warranty or
covenant set forth in Section 3.19 of this Agreement; and (ii) and any
reasonable cost or expense or professional fee incurred in connection with any
examination or investigation by a taxing authority or any administrative or
judicial proceeding involving a Tax period (or part of a Tax period) ending on
or before the Closing Date; and

                                      -44-
<PAGE>   45

              (c)    any and all reasonable costs, expenses and all other actual
damages incurred by Buyer or Parent in enforcing this indemnity or in remedying
any breach, misrepresentation, non-performance or inaccuracy described above,
including, by way of illustration and not limitation, all reasonable legal and
accounting fees, other reasonable professional expenses and all filing fees, and
collection costs incident thereto and all such fees, costs and expenses incurred
in defending claims which, if successfully prosecuted, would have resulted in
Damages (as defined herein).

Any and all of the items set forth in clauses (a) through (c) for which Buyer
or Parent is entitled to be indemnified hereunder are called "Damages."

       11.2   General Indemnification by Buyer and Parent. Subject to the other
provisions of this Article 11, by execution of this Agreement, the Buyer and
Parent hereby agree, jointly and severally, to indemnify the Seller and its
successors and assigns and hold them harmless against and in respect of:

              (a)    any and all loss, liability, cost, expense or damage
(including judgments and settlement payments) incurred by Seller incident to,
arising in connection with or resulting from (i) any breach, nonperformance or
inaccuracy of any representation, warranty, or covenant by the Buyer or Parent
made or contained in this Agreement or in any Schedule hereto or any certificate
or other document executed by Buyer or Parent and delivered to Seller pursuant
to this Agreement or the transactions contemplated herein (all of which survive
the Closing for the period during which a claim may be asserted under Section
11.5 below), and/or (ii) any liability or obligations of Seller included among
the Assumed Liabilities (provided that the assumption of the GP Liability shall
not vitiate, limit or affect the right of Buyer or Parent to be indemnified
under Section 11.1 with respect to the matters described therein); and

              (b)    any and all reasonable costs, expenses and all other actual
damages incurred by Seller in enforcing this indemnity or in remedying any
breach, misrepresentation, non-performance or inaccuracy described above,
including, by way of illustration and not limitation, all reasonable legal and
accounting fees, other reasonable professional expenses and all filing fees, and
collection costs incident thereto and all such fees, costs and expenses incurred
in defending claims which, if successfully prosecuted, would have resulted in
Damages (as defined herein).

Any and all of the items set forth in clauses (a) through (c) of Section 11.1
or (a) and (b) of Section 11.2 for which a party is entitled to be
indemnified hereunder are called "Damages."

       11.3   Notice of, and Procedures for, Collecting Indemnification.

              (a)    Initial Notice. When a party becomes aware of a matter
which may result in Damages for which it would be entitled to be indemnified
hereunder, such party (the "Indemnitee") shall deliver a written notice to such
effect to each party with the indemnification obligation ("Indemnitor") with
reasonable promptness after it first becomes aware of such matter, and shall
furnish the Indemnitor with such information as it has available

                                      -45-
<PAGE>   46

demonstrating its right or possible right to receive indemnity. Such notice
shall, if feasible, contain a reasonable estimate by the Indemnitee of the
losses, costs, liabilities and expenses (including, but not limited to, costs
and expenses of litigation and attorneys' fees) which the Indemnitee may incur.
If the potential claim is predicated on legal action by a third party, such
notice shall name, when known, the person or persons making the assertions which
are the basis for such claim. Failure by the Indemnitee to deliver such notice
or an update thereof in a timely manner shall not relieve the Indemnitor of any
of its obligations under this Agreement except to the extent that actual
monetary prejudice can be demonstrated.

              (b)    Statement of Damages. At such time as Damages for which an
Indemnitor is liable hereunder are incurred by Indemnitee by actual payment
thereof or by entry of a final award or judgment, Indemnitee shall forward a
written statement to the Indemnitor setting forth the amount of such Damages in
reasonable detail on an itemized basis, which Damages shall be net of insurance
proceeds received by Indemnitee on such claim under policies of insurance on
which premiums were paid by such Indemnitee. Indemnitee shall supplement the
written statement with appropriate supporting proof of loss (e.g. vouchers,
canceled checks, accounting summaries, judgments, settlement agreement, etc.).

       11.4   Satisfaction of Indemnity; Basket. In no event shall any
Indemnitee be entitled to indemnification under this Article 11 unless and until
the aggregate amount of otherwise indemnifiable Damages sustained by such
Indemnitee (with respect to all indemnifiable matters) exceeds $50,000 (the
"Basket"), and at such time as Damages in excess of the Basket are sustained,
the Indemnitor shall be responsible for all Damages sustained without regard to
the Basket. The shareholders of Seller, following Seller's dissolution, shall be
treated as one Indemnitee for purposes of the Basket, and shall bear the
economic loss represented by the Basket ratably in accordance with their
holdings of stock of Seller. Where the Seller is the Indemnitor, the Buyer or
Parent shall be entitled to offset against the Earnout Stock a number of shares
of stock of Parent having an aggregate value, based on the Closing Share Value,
equal to the Damages for which it is entitled to be indemnified. Where the Buyer
or Parent is the Indemnitor, the amounts reflected on such statement shall be
paid to Indemnitee by the Indemnitor within thirty (30) days after receipt of
the written statement and all supporting documentation.

       11.5   Time and Amount Limitations. Any claim for indemnification under
this Agreement must first be asserted in writing to the Indemnitor no later than
the date on which the number of shares of Earnout Stock, net of indemnifiable
Damages sustained by Parent and/or Buyer, has been agreed to by the parties or
determined by arbitration as set forth in Section 1.2(c) of this Agreement. Any
claim for indemnification not asserted in writing before such time shall be
barred. The aggregate indemnification liability of Seller, on the one hand, and
the Parent and Buyer, on the other hand, under Sections 11.1 and 11.2 shall not
exceed an amount equal to the value of the Earnout Stock ultimately issuable to
Seller's shareholders in accordance with this Agreement.

                                      -46-
<PAGE>   47

                                  Article 12

                                  Termination

       12.1   Basis for Termination. Prior to the Closing, this Agreement may be
terminated as follows:

              (a)    By mutual written consent of Parent and Seller;

              (b)    By Buyer, pursuant to written notice by Buyer to Seller, if
either (i) any condition set forth in Article 8 above has not been fulfilled or
waived by July 29, 2000 through no fault of Buyer or Parent, which notice shall
set forth the conditions not yet satisfied, or (ii) Seller or the Principal
Shareholders are in default under this Agreement, which default has continued
for a period of more than ten (10) business days after written notice of default
has been delivered to Seller;

              (c)    By Seller, pursuant to written notice by Seller to Buyer
and Parent, if either (i) any condition set forth in Article 9 above has not
been fulfilled or waived by July 29, 2000 through no fault of Seller or the
Principal Shareholders, which notice shall set forth the conditions not yet
satisfied, or (ii) Buyer or Parent is in default under this Agreement, which
default has continued for a period of more than ten (10) business days after
written notice of default has been delivered to Buyer and Parent.

       12.2   Effect of Termination. Upon any termination of this Agreement
pursuant to Section 12.1, all obligations of the parties to proceed with the
Transaction shall terminate; provided, however, that the provisions of Section
7.1, this Article 12 and Article 13 shall survive termination of this Agreement.
The termination of this Agreement shall not affect or impair the right of any
party to bring an action for a breach of this Agreement that occurred prior to
or in connection with such termination. Promptly following termination, the
Parent shall cause the Buyer's corporate name to be changed to a name that bears
no similarity to Seller's corporate name.

                                  Article 13

                                 Miscellaneous

       13.1   Notices. Any notices or other communications required or permitted
hereunder (including, by way of illustration and not limitation, any notice
permitted or required under Article 11 hereof) to any party hereto shall be
sufficiently given if delivered in person or sent by certified or registered
mail, postage prepaid, addressed as follows:

                                      -47-
<PAGE>   48

      In the case of Buyer or Parent:

            International Menu Solutions Corporation
            350 Creditstone Road
            Concord, Ontario L4K 3Z2
            Canada
            Attn: Michael Steele, President
            Telephone: (416) 366-6368
            Fax: (905) 760-9443

      With a copy to:

            Thomas D. Beynon, Q.C.
            McCarter Grespan Robson Beynon Thompson LLP
            675 Riverbend Drive
            Kitchener, Ontario N2K 3S3
            Canada
            Telephone: (519) 571-8800
            Fax:  (519) 742-1841

      And with a copy to:

            Thompson Coburn LLP
            One Firstar Plaza
            St. Louis, Missouri  63101
            Attention:  Thomas A. Litz
            Telephone: (519) 571-8800
            Fax:  (519) 742-1841

      In the case of the Seller:

            James Mueller
            1330 Boly Lane
            St. Louis, Missouri 63021
            Telephone:
            Fax:

                                      -48-
<PAGE>   49

      With a copy to:

            The Stolar Partnership
            911 Washington Avenue
            St. Louis, Missouri  63101
            Attention:  John Niemoeller
            Telephone: (314) 231-2800
            Fax: (314) 436-8400

or such substituted address as any party shall have given notice to the others
in writing in the manner set forth in this Section 13.1.

       13.2   Amendment. This Agreement may be amended or modified in whole or
in part only by an agreement in writing executed by all parties hereto and
making specific reference to this Agreement.

       13.3   Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.

       13.4   Binding on Successors and Assigns. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by and against the parties
hereto and their respective successors and assigns in accordance with the terms
hereof. The Seller may not assign its rights their respective interests under
this Agreement except only in connection with its dissolution. Buyer shall have
the right to assign its rights under this Agreement, in whole or in part, to
Parent or any direct subsidiary of Parent, provided such assignee assumes at its
primary obligation all obligations of the Buyer under this Agreement. Parent may
assign its rights under this Agreement at any time in connection with any sale,
disposition, business combination, merger or similar transaction involving
Parent.

       13.5   Severability. In the event that any provision contained in this
Agreement or any application thereof shall be invalid, illegal or unenforceable
in any respect, the validity, legality or enforceability of the remaining
provisions of this Agreement and any other application thereof shall not in any
way be affected or impaired thereby; provided, however, that to the extent
permitted by applicable law, any invalid, illegal, or unenforceable provision
may be considered for the purpose of determining the intent of the parties in
connection with the other provisions of this Agreement.

       13.6   Headings. The headings in the sections and subsections of this
Agreement and in the Schedules are inserted for convenience only and in no way
alter, amend, modify, limit or restrict the contractual obligations of the
parties.

       13.7   Expenses. Except to the extent otherwise provided in this
Agreement (including the schedules hereto), each party to this Agreement shall
bear its own expenses incurred in connection with this Agreement and the
transactions herein contemplated, including,

                                      -49-
<PAGE>   50

but not limited to, legal and accounting fees and expenses. It is understood
that the legal and accounting expenses incurred by Seller in this transaction
shall be accrued as accounts payable and be part of the Assumed Liabilities (to
the extent not exceeding the limits committed to by those vendors), and
therefore have been taken into account in developing the Projected Financial
Statements described in Section 1.2(c).

       13.8   Entire Agreement; Law Governing. All prior negotiations and
agreements between the parties hereto are superseded by this Agreement, and
there are no representations, warranties, understandings or agreements other
than those expressly set forth herein or in an Exhibit or Schedule delivered
pursuant hereto, except as modified in writing concurrently herewith or
subsequent hereto. This Agreement shall be governed by and construed and
interpreted according to the internal laws of the State of Missouri, determined
without reference to conflicts of law principles.

       13.9   Shareholder Authorization. If the shareholders of Seller approve
this Agreement and the transactions contemplated thereby, such approval shall
constitute authorization by the shareholders of Seller and its Board of
Directors and management to waive any condition to Closing, to negotiate and
settle with lenders and other third parties to satisfy conditions to Closing
required by Parent, and to modify Schedule 1.1(c) and the Cash Reserve, all
without further approval or re-approval of the shareholders.

        [THE BALANCE OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

                                      -50-
<PAGE>   51

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement
and Plan of Reorganization to be executed by their duly authorized
representatives on the day and year first above written.

                                    GREAT AMERICAN BARBECUE COMPANY

                                    By
                                       ---------------------------------------

                                       -----------------,---------------------
                                       (Name, Title)

                                    THE GREAT AMERICAN BARBECUE FOOD
                                      COMPANY

                                    By
                                       ---------------------------------------

                                       -----------------,---------------------
                                       (Name, Title)

                                    INTERNATIONAL MENU SOLUTIONS
                                      CORPORATION

                                    By
                                       ---------------------------------------

                                       -----------------,---------------------
                                       (Name, Title)

                                    PRINCIPAL SHAREHOLDERS:

                                    ------------------------------------------
                                       Blake Ashby

                                    ------------------------------------------
                                       Scott Foelsch

                                    ------------------------------------------
                                       James Mueller

                                    ------------------------------------------
                                       John Mueller

                                    PAC, INC.

                                    By
                                      ----------------------------------------
                                       Authorized Officer

                                      -51-<PAGE>   1

                                                                  EXHIBIT 4.1

--------------------------------------------------------------------------------

                          SECURITIES PURCHASE AGREEMENT

                                      Among

                  CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.

                                       and

                         THE INVESTORS SIGNATORY HERETO

                           Dated as of August 16, 2000

--------------------------------------------------------------------------------

<PAGE>   2

       SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of August 16,
2000, among Chromatics Color Sciences International, Inc., a New York
corporation (the "Company"), and the investors signatory hereto (each such
investor is a "Purchaser" and all such investors are, collectively, the
"Purchasers").

       WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to issue and sell to the Purchasers and the Purchasers,
severally and not jointly, desire to purchase from the Company, shares of the
Company's common stock, $.001 par value per share (the "Common Stock"), and
certain other securities of the Company as more fully described in this
Agreement.

       NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:

                                    ARTICLE I
                                PURCHASE AND SALE

       1.1    The Closing.

              (a)    The Closing. (i) Subject to the terms and conditions set
forth in this Agreement, the Company shall issue and sell to the Purchasers and
the Purchasers shall, severally and not jointly, purchase an aggregate of
854,701 shares of Common Stock (the "Shares") for an aggregate purchase price of
$4,000,000. The closing of the purchase and sale of the Shares (the "Closing")
shall take place at the offices of Robinson Silverman Pearce Aronsohn & Berman
LLP ("Robinson Silverman"), 1290 Avenue of the Americas, New York, New York
10104, immediately following the execution hereof or such later date as the
parties shall agree. The date of the Closing is hereinafter referred to as the
"Closing Date."

                     (ii)   At the Closing, the parties shall deliver or shall
cause to be delivered the following: (A) the Company shall deliver to each
Purchaser (1) a stock certificate representing 75% of the number of Shares
indicated below such Purchaser's name on the signature page of this Agreement,
registered in the name of such Purchaser, (2) a Common Stock purchase warrant,
in the form of Exhibit A, registered in the name of such Purchaser, pursuant to
which such Purchaser shall have the right to acquire shares of Common Stock upon
the terms and in such number as set forth therein (each an "Adjustable
Warrant"), (3) a Common Stock purchase warrant, in the form of Exhibit B,
registered in the name of such Purchaser, pursuant to which such Purchaser shall
have the right to acquire 75% of the number of shares of Common Stock indicated
below such Purchaser's name on the signature page of this Agreement, upon the
terms and at the exercise price set forth therein (each, a "Closing Warrant" and
together with the Adjustable Warrants, the "Warrants"), (4) the legal opinion of
Patterson, Belknap, Webb & Tyler LLP, outside counsel to the Company,
substantially in the form of Exhibit E, (5) an executed Registration Rights
Agreement, dated the date hereof, among the Company and the Purchasers, in the
form of Exhibit C (the "Registration Rights Agreement") and (6) the Transfer
Agent Instructions, in the form of Exhibit D, executed by the Company and
delivered to and acknowledged by the Company's transfer agent (the "Transfer
Agent Instructions"); and (B) each Purchaser shall deliver: (1) 75% of the
purchase price indicated below

<PAGE>   3

such Purchaser's name on the signature page to this Agreement in United States
dollars in immediately available funds by wire transfer to an account designated
in writing by the Company for such purpose and (2) an executed Registration
Rights Agreement.

                     (iii)  Within five Trading Days following the date that the
Underlying Shares Registration Statement (as defined herein) is declared
effective by the Commission (as defined herein) and the Company has complied
with its obligations under Section 3.1(b), (A) the Company will, against
delivery of the amounts set forth in clause (B) in this paragraph, deliver to
each Purchaser, (x) a stock certificate free of all restrictive legends
representing 25% of the number of Shares indicated below such Purchaser's name
on the signature page of this Agreement (subject to equitable adjustment for
stock splits, recombinations and similar events), registered in the name of such
Purchaser and (y) a Common Stock purchase warrant, in the form of Exhibit B,
registered in the name of such Purchaser, pursuant to which such Purchaser shall
have the right to acquire 25% of the number of shares of Common Stock indicated
below such Purchaser's name on the signature page of this Agreement, upon the
terms and at the exercise price set forth therein and (B) each Purchaser will
deliver to the Company, 25% of the purchase price indicated below such
Purchaser's name on the signature page to this Agreement in United States
dollars in immediately available funds by wire transfer to an account designated
in writing by the Company for such purpose. Notwithstanding the foregoing, the
Purchasers shall not be obligated to acquire the Shares described in this
Section 1.1(a)(iii) if the closing sales price of the Common Stock as reported
by Bloomberg, L.P. for any of the three Trading Days following the date that the
Underlying Shares Registration Statement is first declared effective by the
Commission is less than $4.01 per share (subject to equitable adjustment for
stock splits, recombinations and similar events), which condition may be waived
in whole or in part at the sole option of each Purchaser.

       1.2    Certain Defined Terms. For purposes of this Agreement,"Trading
Day" and "Per Share Market Value" shall have the meanings set forth in Exhibit A
and "Business Day" shall mean any day except Saturday, Sunday and any day which
shall be a federal legal holiday or a day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close. A "Person" means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

       2.1    Representations and Warranties of the Company. The Company hereby
makes the following representations and warranties to the Purchasers:

              (a)    Organization and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of New York, with the requisite corporate power and authority
to own and use its properties and assets and to carry on its business as
currently conducted. The Company has no subsidiaries other than as set forth in
Schedule 2.1(a) (collectively, the "Subsidiaries"). Each of the Subsidiaries is
an entity, duly

                                      -2-
<PAGE>   4

incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. Each
of the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (x)
adversely affect the legality, validity or enforceability of the Securities (as
defined below) or any of this Agreement, the Registration Rights Agreement, the
Transfer Agent Instructions or the Warrants (collectively, the "Transaction
Documents"), (y) have or result in a material adverse effect on the results of
operations, assets, prospects, or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, or (z) adversely impair the
Company's ability to perform fully on a timely basis its obligations under any
of the Transaction Documents (any of (x), (y) or (z), a "Material Adverse
Effect").

              (b)    Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company. Each of
the Transaction Documents has been duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate or articles of incorporation,
by-laws or other organizational or charter documents.

              (c)    Capitalization. The number of authorized, issued and
outstanding capital stock of the Company is set forth in Schedule 2.1(c). Except
as disclosed in Schedule 2.1(c), the Company owns all of the capital stock of
each Subsidiary. No shares of Common Stock are entitled to preemptive or similar
rights, nor is any holder of the securities of the Company entitled to
preemptive or similar rights arising out of any agreement or understanding with
the Company or any Subsidiary by virtue of any of the Transaction Documents.
Except as a result of the purchase and sale of the Shares and the Warrants and
except as disclosed in Schedule 2.1(c), there are no outstanding options,
warrants, script rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings, or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. Except as disclosed in Schedule
2.1(c), the issue and sale of the Shares, Warrants or Underlying Shares (as
hereinafter defined) will not obligate the Company to issue shares of Common
Stock or other securities to any Person other than the Purchaser and will not
result in a right of any holder of Company securities to adjust the exercise or
conversion or reset price under such securities.

              (d)    Issuance of the Securities. The Securities are duly
authorized and, when issued and paid for in accordance with the terms hereof and
the Warrants, shall have been duly and

                                      -3-
<PAGE>   5

validly issued, fully paid and nonassessable, free and clear of all liens,
encumbrances and rights of first refusal of any kind (collectively, "Liens").
The Company has reserved a number of duly authorized shares of Common Stock for
issuance hereunder upon exercise of the Warrants that is not less than the sum
of (i) the Shares to be issued hereunder; (ii) the number of shares of Common
Stock issuable upon exercise of the Adjustable Warrants on the First Vesting
Date (as defined in the Adjustable Warrant), assuming for such purposes that, on
the First Vesting Date, (A) the Applicable Share Number (as defined in the
Adjustable Warrant) equals the entire number of Shares purchased hereunder and
(B) the Adjustment Price (as defined in the Adjustable Warrant) equals 50% of
the Per Share Market Value on the Trading Day immediately preceding the Closing
Date and (iii) the number of shares of Common Stock as are issuable upon
exercise in full of the Closing Warrants (the number of shares of Common Stock
contemplated in (i), (ii) and (iii), the "Initial Minimum"). The shares of
Common Stock issuable upon exercise of the Warrants are referred to herein as
the "Underlying Shares." The Shares, the Warrants and the Underlying Shares are
collectively referred to herein as, the "Securities."

              (e)    No Conflicts. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required Approvals
(as defined below), conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise)
or other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could
not have or result in a Material Adverse Effect.

              (f)    Filings, Consents and Approvals. Neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filings required pursuant to Section
3.10, (ii) the filing with the Securities and Exchange Commission (the
"Commission") of a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale of the Shares and the
Underlying Shares by the Purchasers (the "Underlying Shares Registration
Statement"), (iii) the application(s) to the Nasdaq Smallcap Market ("NASDAQ")
for the listing of the Underlying Shares for trading on the NASDAQ (and with any
other national securities exchange or market on which the Common Stock is then
listed) in the time and manner required thereby, (iv) applicable Blue Sky
filings, and (v) in all other cases where the failure to obtain such

                                      -4-
<PAGE>   6

consent, waiver, authorization or order, or to give such notice or make such
filing or registration could not have or result in, individually or in the
aggregate, a Material Adverse Effect (collectively, the "Required Approvals").

              (g)    Litigation; Proceedings. There is no action, suit, inquiry,
notice of violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an "Action") which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, individually or in the aggregate, have or result in a
Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
(A) a claim of violation of or liability under federal or state securities laws
or (B) a claim of breach of fiduciary duty; (iv) the Company does not have
pending before the Commission any request for confidential treatment of
information and the Company has no knowledge of any expected such request that
would be made prior to the Effectiveness Date (as defined in the Registration
Rights Agreement); and (v) there has not been, and to the best of the Company's
knowledge there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of
the Company.

              (h)    No Default or Violation. Neither the Company nor any
Subsidiary (i) is in default under or in violation of (and no event has occurred
which has not been waived which, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has the Company
or any Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound, (ii) is in violation of any order of any court, arbitrator
or governmental body, or (iii) is in violation of any statute, rule or
regulation of any governmental authority, in each case of clauses (i), (ii) or
(iii) above, except as could not individually or in the aggregate, have or
result in a Material Adverse Effect.

              (i)    Private Offering. Assuming the accuracy of the
representations and warranties of the Purchasers set forth in Sections
2.2(b)-(g), the offer, issuance and sale of the Securities to the Purchasers as
contemplated hereby are exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"). Neither the Company
nor any Person acting on its behalf has taken or is, to the knowledge of the
Company, contemplating taking any action which could subject the offering,
issuance or sale of the Securities by the Company to the Purchasers hereunder to
the registration requirements of the Securities Act including soliciting any
offer to buy or sell the Securities by means of any form of general solicitation
or advertising.

              (j)    SEC Reports; Financial Statements. The Company has filed
all reports required to be filed by it under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law to file such material) (the foregoing
materials being collectively referred to herein as the "SEC Reports" and,
together with the Schedules to this Agreement, the "Disclosure Materials") on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any

                                      -5-
<PAGE>   7

such extension. As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject have been filed as exhibits to the SEC Reports as
required under the Exchange Act. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved ("GAAP"), except as
may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of the
Company and its consolidated subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments. Since March 31, 2000, except as specifically disclosed in the SEC
Reports, (a) there has been no event, occurrence or development that has or that
could result in a Material Adverse Effect, (b) the Company has not incurred any
liabilities (contingent or otherwise) other than (x) liabilities incurred in the
ordinary course of business consistent with past practice and (y) liabilities
not required to be reflected in the Company's financial statements pursuant to
GAAP or required to be disclosed in filings made with the Commission, (c) the
Company has not altered its method of accounting or the identity of its auditors
and (d) the Company has not declared or made any payment or distribution of cash
or other property to its stockholders or officers or directors (other than in
compliance with existing Company stock option plans) with respect to its capital
stock, or purchased, redeemed (or made any agreements to purchase or redeem) any
shares of its capital stock.

              (k)    Investment Company. The Company is not, and is not an
Affiliate (as defined in Rule 405 under the Securities Act) of, an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.

              (l)    Certain Fees. Except for certain fees payable to Wharton
Capital Partners, Ltd. and Wharton Capital Markets, LLC, no fees or commissions
will be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by this Agreement. The
Company shall indemnify and hold harmless the Purchasers, their employees,
officers, directors, agents, and partners, and their respective Affiliates, from
and against all claims, losses, damages, costs (including the costs of
preparation and attorney's fees) and expenses suffered in respect of any such
claimed or existing fees, as such fees and expenses are incurred.

              (m)    Solicitation Materials. Neither the Company nor any Person
acting on the Company's behalf has solicited any offer to buy or sell the
Securities by means of any form of general solicitation or advertising.

                                      -6-
<PAGE>   8

              (n)    Form S-3 Eligibility. The Company is eligible to register
its Common Stock for resale under Form S-3 promulgated under the Securities Act.

              (o)    Listing and Maintenance Requirements. Except as set forth
in the SEC Reports, the Company has not, in the two years preceding the date
hereof received notice (written or oral) from the NASDAQ, any stock exchange,
market or trading facility on which the Common Stock is or has been listed (or
on which it has been quoted) to the effect that the Company is not in compliance
with the listing or maintenance requirements of such exchange, market or trading
facility. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements.

              (p)    Patents and Trademarks. The Company and its Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
rights which are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have would have a Material Adverse Effect (collectively, the "Intellectual
Property Rights"). Neither the Company nor any Subsidiary has received a written
notice that the Intellectual Property Rights used by the Company or its
Subsidiaries violates or infringes upon the rights of any Person. To the best
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights.

              (q)    Registration Rights; Rights of Participation. Except as set
forth on Schedule 6(b) to the Registration Rights Agreement, the Company has not
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority which has not been satisfied.
Except as set forth on Schedule 6(b) to the Registration Rights Agreement, no
Person has any right of first refusal, preemptive right, right of participation,
or any similar right to participate in the transactions contemplated by the
Transaction Documents.

              (r)    Regulatory Permits. The Company and its Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
result in a Material Adverse Effect ("Material Permits"), and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any Material Permit.

              (s)    Title. Except as set forth on Schedule 2.1(s), the Company
and the Subsidiaries have good and marketable title in fee simple to all real
property owned by them which is material to the business of the Company and its
Subsidiaries and good and marketable title in all personal property owned by
them which is material to the business of the Company and its Subsidiaries, in
each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its Subsidiaries. Any
real property and facilities held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable leases of
which the Company and its Subsidiaries are in compliance and do not interfere
with the use made

                                      -7-
<PAGE>   9

and proposed to be made of such property and buildings by the Company and its
Subsidiaries.

              (t)    Labor Relations. No material labor problem exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company.

              (u)    Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers or its
agents or counsel with any information that constitutes or might constitute
material non-public information. The Company understands and confirms that the
Purchasers shall be relying on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the
Purchasers regarding the Company, its business and the transactions contemplated
hereby, including the Schedules to this Agreement, furnished by or on behalf of
the Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.

              (v)    Shareholders Rights Plan. Neither the consummation of the
transactions contemplated hereby nor the issuance of the Underlying Shares will
cause the Purchasers to be deemed an "Acquiring Person" under the Company's
shareholders rights plan.

              (w)    No Prior Registration Statement. The Company covenants that
it will not file a registration statement to register the securities of any
Person prior to the date on which the Company files a registration statement
covering the Registrable Securities. The restriction contained in this Section
21.(w) shall not affect the provisions of Section 3.9(a).

       2.2    Representations and Warranties of the Purchasers. Each Purchaser
hereby for itself and for no other Purchaser, represents and warrants to the
Company as follows:

              (a)    Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder. The purchase by such Purchaser of the Securities
hereunder has been duly authorized by all necessary action on the part of such
Purchaser. Each of this Agreement and the Registration Rights Agreement has been
duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms.

              (b)    Investment Intent. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Purchaser's right, subject to the
provisions of this Agreement, the Registration Rights Agreement and the
Warrants, at all times to sell or otherwise dispose of all or any part of such
Securities pursuant to an effective registration statement under the Securities
Act or under an exemption from such registration and in compliance with
applicable federal and state securities laws. Nothing contained herein shall be
deemed a representation or warranty by such Purchaser to hold Securities for any
period of time. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. Such

                                      -8-
<PAGE>   10

Purchaser does not have any agreement or understanding, directly or indirectly,
with any Person to distribute the Securities.

              (c)    Purchaser Status. At the time such Purchaser was offered
the Securities, it was, and at the date hereof it is, and at each exercise date
under its respective Warrants, it will be, an "accredited investor" as defined
in Rule 501(a) under the Securities Act.

              (d)    Experience of such Purchaser. Such Purchaser, either alone
or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.

              (e)    Ability of such Purchaser to Bear Risk of Investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.

              (f)    Access to Information. Such Purchaser acknowledges that it
has reviewed the Disclosure Materials and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Company's
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment and to verify the
accuracy and completeness of the information contained in the Disclosure
Materials. Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its representatives or counsel shall modify, amend
or affect such Purchaser's right to rely on the truth, accuracy and completeness
of the Disclosure Materials and the Company's representations and warranties
contained in the Transaction Documents.

              (g)    General Solicitation. Such Purchaser is not purchasing the
Securities as a result of or subsequent to any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.

              (h)    Reliance. Such Purchaser understands and acknowledges that
(i) the Securities are being offered and sold to it without registration under
the Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and the Company will rely upon the accuracy and truthfulness
of, the representations set forth in Section 2.2(b)-(g) and such Purchaser
hereby consents to such reliance.

              The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 2.2.

                                      -9-
<PAGE>   11

                                   ARTICLE III
                         OTHER AGREEMENTS OF THE PARTIES

       3.1    Transfer Restrictions. (a) Securities may only be disposed of
pursuant to an effective registration statement under the Securities Act, to the
Company or pursuant to an available exemption from or in a transaction not
subject to the registration requirements of the Securities Act, and in
compliance with any applicable federal and state securities laws. In connection
with any transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act. Any such transferee shall agree in writing to be bound by the
terms of this Agreement and shall have the rights of a Purchaser under this
Agreement and the Registration Rights Agreement.

              (b)    The Purchasers agree to the imprinting, so long as is
required by this Section 3.1(b), of the following legend on the Securities:

              THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
       EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
       UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
       AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
       SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
       SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
       TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
       SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
       EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
       THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

              Neither the Shares nor the Underlying Shares shall contain the
legend set forth above nor any other legend while an Underlying Shares
Registration Statement is effective under the Securities Act or the holder is
relying on paragraph (k) of Rule 144 promulgated under the Securities Act ("Rule
144") in connection with the resale of such Underlying Shares, or in the event
there is not an effective Underlying Shares Registration Statement and paragraph
(k) of Rule 144 is not then available for resale of the Underlying Shares, at
such time, as such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the Commission). Accordingly, the Shares issuable pursuant to
Section 1.1(a)(iii) shall be issued free of all legends and the Company shall
exchange the Shares issued at the Closing with Shares free of all legends within
four Trading Days of the Effective Date (as defined below). The Company shall
cause its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Company's transfer agent on the date that an Underlying
Shares Registration Statement is declared effective by the Commission (such
date, the "Effective Date"). The Company agrees that following the Effective
Date, it will, no later than three (3) Trading Days following the delivery by a
Purchaser to the Company of a certificate or certificates representing Shares or
Underlying Shares issued with a restrictive legend, deliver to such Purchaser
certificates

                                      -10-
<PAGE>   12

representing such Shares which shall be free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to any transfer agent of the Company which enlarge the restrictions
of transfer set forth in this Section.

       3.2    Acknowledgment of Dilution. The Company acknowledges that the
issuance of Underlying Shares upon exercise of the Warrants will result in
dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges
that its obligation to issue Underlying Shares upon exercise of the Warrants
pursuant to the terms thereof is unconditional and absolute, subject to the
limitations set forth in the Warrants, regardless of the effect of any such
dilution.

       3.3    Furnishing of Information. As long as the Purchasers own
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act. As long as the Purchasers own Securities, if
the Company is not required to file reports pursuant to such sections, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) promulgated under the Securities Act such information as is
required for the Purchasers to sell the Securities under Rule 144 promulgated
under the Securities Act. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell Underlying
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act,
including causing its attorneys to render and deliver any legal opinion required
in order to permit a Purchaser to receive Underlying Shares free of all
restrictive legends and to subsequently sell Underlying Shares under Rule 144
upon receipt of a notice of an intention to sell or other form of notice having
a similar effect. Upon the request of any such Person, the Company shall deliver
to such Person a written certification of a duly authorized officer as to
whether it has complied with such requirements.

       3.4    Integration. The Company shall not, and shall use its best efforts
to ensure that, no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers, or
that would be integrated with the offer or sale of the Securities for the
purposes of the rules and regulations of NASDAQ.

       3.5    Increase in Authorized Shares. If on any date the Company would
be, if a notice of exercise were to be delivered on such date, precluded from
issuing the sum of (i) 200% of the number of Underlying Shares then issuable
upon exercise in full of the Adjustable Warrants and (ii) the number of
Underlying Shares issuable upon exercise in full of the Closing Warrants (the
"Current Required Minimum") due to the unavailability of a sufficient number of
authorized but unissued or reserved shares of Common Stock, then the Board of
Directors of the Company shall promptly (and in any case, within 30 Business
Days from such date) prepare and mail to the stockholders of the Company proxy
materials requesting authorization to amend the Company's certificate or
articles of incorporation to increase the number of shares of Common Stock which
the Company is authorized to issue to at least such number of shares as
reasonably requested by the Purchasers in order to provide for such number of
authorized and unissued shares of Common Stock to enable the Company to comply
with its issuance, exercise and reservation of shares obligations

                                      -11-
<PAGE>   13

as set forth in this Agreement and the Warrants (the sum of (x) the number of
shares of Common Stock then outstanding plus all shares of Common Stock issuable
upon exercise of all outstanding options, warrants and convertible instruments
other than the Warrants and (y) the Current Required Minimum, shall be a
reasonable number). In connection therewith, the Board of Directors shall (a)
adopt proper resolutions authorizing such increase, (b) recommend to and
otherwise use its best efforts to promptly and duly obtain stockholder approval
to carry out such resolutions (and hold a special meeting of the stockholders no
later than the earlier to occur of the 60th day after delivery of the proxy
materials relating to such meeting and the 90th day after request by a holder of
Warrants to issue the number of Underlying Shares in accordance with the terms
hereof) and (c) within five Business Days of obtaining such stockholder
authorization, file an appropriate amendment to the Company's certificate or
articles of incorporation to evidence such increase.

       3.6    Reservation and Listing of Underlying Shares. (a) The Company
shall (i) in the time and manner required by NASDAQ and such other exchange,
market or quotation facility on which the Common Stock is traded, prepare and
file with NASDAQ (and such national securities exchange, market or trading or
quotation facility on which the Common Stock is then traded) an additional
shares listing application covering a number of shares of Common Stock which is
not less than the Initial Minimum, (ii) take all steps necessary to cause such
shares of Common Stock to be approved for listing on the NASDAQ (as well as on
any such other national securities exchange or market or trading or quotation
facility on which the Common Stock is then listed) as soon as possible
thereafter, and (iii) provide to the Purchasers evidence of such listing, and
the Company shall maintain the listing of its Common Stock thereon. If the
number of Underlying Shares issuable upon exercise of the then unexercised
portion of the Warrants exceeds 85% of the number of Underlying Shares
previously listed on account thereof with NASDAQ (and any such other required
exchanges), then the Company shall take the necessary actions to immediately
list a number of Underlying Shares as equals no less than the then Current
Required Minimum.

              (b)    The Company shall maintain a reserve of shares of Common
Stock for issuance upon exercise in full of the Warrants in accordance with this
Agreement and the Warrants, respectively, in such amount as may be required to
fulfill its obligations in full under the Transaction Documents, which reserve
shall equal no less than the then Current Required Minimum.

       3.7    Exercise Procedures. The Transfer Agent Instructions and Form of
Election to Purchase under the Warrants set forth the totality of the procedures
with respect to the exercise of the Warrants, including the form of legal
opinion, if necessary, that shall be rendered to the Company's transfer agent
and such other information and instructions as may be reasonably necessary to
enable the Purchasers to exercise their Warrants.

       3.8    Exercise Obligations. The Company shall honor exercises of the
Warrants and shall deliver Underlying Shares in accordance with the terms,
conditions and time periods set forth in the Warrants.

       3.9    Limitation on Registration.

              (a)    Except for (x) Underlying Shares, (y) other "Registrable
Securities" (as such term is defined in the Registration Rights Agreement) to be
registered, and securities of the Company permitted pursuant to Section 6(c) of
the Registration Rights Agreement to be registered,

                                      -12-
<PAGE>   14

in the Underlying Shares Registration Statement in accordance with the
Registration Rights Agreement, and (z) Common Stock permitted to be issued
pursuant to Section 3.9 (b), the Company shall not, until the 120th calendar day
after the Effective Date, without the prior written consent of the Purchasers
(i) issue or sell any of its or any of its Affiliates' equity or
equity-equivalent securities pursuant to Regulation S promulgated under the
Securities Act, or (ii) register any securities of the Company. Any days after
the Effective Date that a Purchaser is unable to sell Underlying Shares under
the Underlying Shares Registration Statement shall be added to such 120 calendar
day period.

              (b)    The Company may engage in (i) the granting of options or
warrants to employees, officers, consultants and directors of the Company, and
the issuance of Common Stock upon exercise of such options or warrants granted
under any stock option plan heretofore or hereinafter duly adopted by the
Company and (ii) issuances of Common Stock pursuant to a Strategic Transaction
(as defined herein). A "Strategic Transaction" shall mean a transaction or
relationship in which the Company issues shares of Common Stock to a Person
which is, itself or through its subsidiaries, an operating company in a business
related to the business of the Company and in which the Company receives
material benefits in addition to the investment of funds, but shall not include
a transaction in which the Company is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business is investing
in securities.

       3.10   Certain Securities Laws Disclosures; Publicity. The Company shall:
(i) on the Closing Date issue a press release reasonably acceptable to the
Purchasers disclosing the transactions contemplated hereby, (ii) file with the
Commission a Report on Form 8-K disclosing the transactions contemplated hereby
within ten Business Days after the Closing Date, and (iii) timely file with the
Commission a Form D promulgated under the Securities Act. The Company shall, no
less than two Business Days prior to the filing of any disclosure required by
clauses (ii) and (iii) above, provide a copy thereof to the Purchasers for their
review. The Company and the Purchasers shall consult with each other in issuing
any other press releases or otherwise making public statements or filings and
other communications with the Commission or any regulatory agency or stock
market or trading facility with respect to the transactions contemplated hereby
and neither party shall issue any such press release or otherwise make any such
public statement, filings or other communications without the prior written
consent of the other, except if such disclosure is required by law or stock
market regulation, in which such case the disclosing party shall promptly
provide the other party with prior notice of such public statement, filing or
other communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the names of the Purchasers, or include the names of the
Purchasers in any filing with the Commission, or any regulatory agency, trading
facility or stock market without the prior written consent of the Purchasers,
except to the extent such disclosure (but not any disclosure as to the
controlling Persons thereof) is required by law or stock market regulations, in
which case the Company shall provide the Purchasers with prior notice of such
disclosure.

       3.11   Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company's debt (other than payment of trade
payables in the ordinary course of the Company's business and prior practices),
to redeem any Company equity or equity-equivalent securities or to settle any
outstanding litigation.

                                      -13-
<PAGE>   15

       3.12   Shareholders Rights Plan No claim will be made or enforced by the
Company or any other Person that any Purchaser is an "Acquiring Person" under
any shareholders rights plan or similar arrangement or in any way could be
deemed to trigger the provisions of such plan by virtue of receiving Securities
under the Transaction Documents.

       3.13   Reimbursement. If any Purchaser becomes involved in any capacity
in any action, proceeding or investigation brought by or against any Person,
including stockholders of the Company, solely as a result of acquiring the
Securities under this Agreement and the Warrants, the Company will reimburse
such Purchaser for its reasonable legal and other expenses (including the cost
of any investigation preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Purchasers who are actually named in
such action, proceeding or investigation, and partners, directors, agents,
employees and controlling persons (if any), as the case may be, of the
Purchasers and any such Affiliate, and shall be binding upon and inure to the
benefit of any successors, assigns, heirs and personal representatives of the
Company, the Purchasers and any such Affiliate and any such Person. The Company
also agrees that neither the Purchasers nor any such Affiliates, partners,
directors, agents, employees or controlling persons shall have any liability to
the Company or any Person asserting claims on behalf of or in right of the
Company solely as a result of acquiring the Securities under this Agreement and
the Warrants.

       3.14   Put event. Following the occurrence of any of the following events
(each, an "Event") the Purchasers may provide the Company with a notice (an
"Event Notice ") requiring the Company to reacquire all or a portion of the
Shares which the Purchasers acquired hereunder at the put price ("Put Price")
per share equal to the sum of (i) 125% multiplied by the greater of the average
of the Per Share Market Values for the five (5) Trading Days preceding the (A)
date of the delivery of the Event Notice, and (B) date the Put Price is paid in
full, and (ii) all other amounts, costs, expenses and liquidated damages due in
respect of such Shares:

                     (a)    upon the occurrence of any of (i) an acquisition
after the date hereof by an individual or legal entity or "group" (as described
in Rule 13d-5(b)(1) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of in excess of 1/3 of the voting securities of
the Company, (ii) a replacement of more than one-half of the members of the
Company's board of directors which is not approved by those individuals who are
members of the board of directors on the date hereof in one or a series of
related transactions, (iii) the merger of the Company with or into another
entity, consolidation or sale of all or substantially all of the assets of the
Company in one or a series of related transactions, unless following such
transaction or series of transactions, the holders of the Company's securities
prior to the first such transaction continue to hold at least 2/3 of the
securities of the surviving entity or acquirer of such assets or (iv) the
execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth above in (i), (ii)
or (iii);

                     (b)    immediately prior to an assignment by the Company
for the benefit of creditors or commencement of a voluntary case under Title 11
of the United States Code, or an entering into of an order for relief in an
involuntary case under Title 11 of the United States Code, or adoption by the
Company of a plan of liquidation or dissolution;

                                      -14-
<PAGE>   16

                     (c)    five Business Days prior to the proposed
consummation with respect to the Company of a "Rule 13e-3 transaction" as
defined in Rule 13e-3 under the Exchange Act (or, if necessary, such earlier
date as the Company shall determine in good faith to be required in order for
the Holder to be able to participate in such transaction), it being agreed that
the Holder will receive actual notice of the 13e-3 Statement filed with the
Commission;

                     (d)    For any period of five consecutive Trading Days
commencing on or after the Closing Date, there shall be no closing bid price on
the Common Stock on the Nasdaq (as defined in Exhibit A) or a Subsequent Market
(as defined in Exhibit A);

                     (e)    The Common Stock fails to be listed or quoted for
trading on the Nasdaq or a Subsequent Market or for an aggregate of five or more
consecutive Trading Days;

                     (f)    The daily trading volume of the Common Stock on the
Nasdaq or a Subsequent Market for an aggregate of five consecutive Trading Days
is less than 10,000 shares;

                     (g)    After the Effective Date, a holder of Registrable
Securities (as defined in the Registration Rights Agreement) is not permitted to
sell Registrable Securities under the Underlying Shares Registration Statement
for any reason for an aggregate of ten or more Trading Days (which need not be
consecutive Trading Days);

                     (h)    The Underlying Shares Registration Statement shall
not be declared effective by the Commission on or prior to the 180th day
following the Closing Date;

                     (i)    The Company shall fail for any reason to deliver
certificates to a Purchaser by the fifth day in accordance with Section 3.1(b)
of this Agreement; or

                     (j)    The Company shall fail or default in the timely
performance of any material obligation under the Transaction Documents and such
failure or default shall continue uncured for a period of ten Business Days
after the date on which notice of such failure or default is first given to the
Company;

              If a Purchaser shall have elected to require the Company to
reacquire all or a portion of the Shares pursuant to the terms hereof, the
Company shall pay the Put Price no later than the fifth Trading Day following
the date of the delivery of the Event Notice. Interest shall accrue on the Put
Price from the date such amount is due until paid in full at the rate of 18% per
annum (or such lesser maximum amount that is permitted to be paid by applicable
law), to accrue daily from the date such payment is due hereunder through and
including the date of payment.

                                      -15-
<PAGE>   17

                                   ARTICLE IV
                                  MISCELLANEOUS

       4.1    Fees and Expenses. At the Closing the Company shall reimburse the
Purchasers for their legal fees and expenses incurred in connection with the
preparation and negotiation of the Transaction Documents by paying to Robinson
Silverman $35,000 for the preparation and negotiation of the Transaction
Documents. The amount contemplated by the immediately preceding sentence shall
be retained by the Purchasers and shall not be delivered to the Company at the
Closing. Other than the amount contemplated herein and except as otherwise set
forth in the Registration Rights Agreement, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
issuance of the Securities.

       4.2    Entire Agreement; Amendments. The Transaction Documents, together
with the Exhibits and Schedules thereto and Transfer Agent Instructions, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.

       4.3    Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Business Day, (ii) the Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York City
time) on any date and earlier than 11:59 p.m. (New York City time) on such date,
(iii) the Business Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and
communications shall be as follows:

       If to the Company:         Chromatics Color Sciences International, Inc.
                                  5 East 80th Street
                                  New York, New York 10021
                                  Facsimile No.: 212-717-6675
                                  Attn: Darby S. Macfarlane, Chairperson

       With a copy to:            Patterson, Belknap, Webb & Tyler LLP
                                  1133 6TH Avenue, 22nd Floor
                                  New York, New York 10036
                                  Facsimile No.: (212) 336-2222
                                  Attn:  Jeff LaGueux

       If to a Purchaser:         To the address set forth under such
                                  Purchaser's name on the signature

                                      -16-
<PAGE>   18

                                  pages hereto

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

       4.4    Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by both the Company and each of the Purchasers or, in the case of a waiver, by
the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right accruing to it thereafter.

       4.5    Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

       4.6    Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Except as set forth in
Section 3.1(a), the Purchasers may not assign this Agreement or any of the
rights or obligations hereunder without the consent of the Company. This
provision shall not limit any Purchaser's right to transfer securities or
transfer or assign rights under the Registration Rights Agreement.

       4.7    No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.

       4.8    Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.

       4.9    Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery and
exercise of the Warrants.

                                      -17-
<PAGE>   19

       4.10   Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.

       4.11   Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affecting or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Agreement.

       4.12   Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance of the each
others obligations under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations described in the foregoing sentence and
hereby agrees to waive in any action for specific performance of any such
obligation the defense that a remedy at law would be adequate.

       4.13   Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document is several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such obligations or
the transactions contemplated by the Transaction Document. Each Purchaser shall
be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                            SIGNATURE PAGES FOLLOWS]

                                      -18-
<PAGE>   20

              IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

                                   CHROMATICS COLOR SCIENCES
                                   INTERNATIONAL, INC.

                                   By:
                                      -------------------------------------
                                      Name:
                                      Title:

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

<PAGE>   21

                            MILLENNIUM PARTNERS, L.P.

                            By:
                               -------------------------------------
                               Name:
                               Title:

                            <TABLE>
                            <S>                                              <C>
                            Purchase Price for Shares                        $4,000,000

                            Number of Shares to be acquired                     854,701

                            Warrant Shares subject to Closing Warrant:          200,000
                            </TABLE>

                            Address for Notice:

                            Millennium Partners, L.P.
                            c/o Millennium Management, L.L.C.
                            666 Fifth Avenue,
                            New York, New York 10103
                            Facsimile No.: (212) 841-6302
                            Attn: Daniel Cardella

       With copies to:      Robinson Silverman Pearce Aronsohn & Berman LLP
                            1290 Avenue of the Americas
                            New York, NY  10104
                            Facsimile No.:  (212) 541-4630 and (212) 541-1432
                            Attn: Eric L. Cohen, Esq.

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