Document:

STEPHEN'S COFFEE HOLDING, INC.
                6090 Activity Road, Suite A, San Diego, CA. 92126

           CONFIDENTIAL DISCLOSURE AND CONSENT SOLICITATION STATEMENT
           ----------------------------------------------------------

                    ELECTION OF A NEW BOARD OF DIRECTORS AND
                    ----------------------------------------

       RATIFICATION OF RECAPITALIZATION OF STEPHEN'S COFFEE HOLDING, INC.
       ------------------------------------------------------------------

                                November 24, 1999

     Stephen's Coffee Holding,  Inc., a California  corporation (the "Company"),
is furnishing this Confidential  Disclosure and Consent  Solicitation  Statement
(the  "Disclosure  Statement")  to the  management  holders of the shares of the
issued  and  outstanding  Common  Stock  (the  "Management's  Shares")  and  the
non-management  holders of the shares of the issued and outstanding Common Stock
(the "Investors' Common Shares" or the "Investors' Shares") in order to describe
the terms of a  recapitalization,  merger  and its  effect on the  rights of all
Shareholders  (the  "Shareholders")  and to  obtain  the  ratification  from the
Shareholders and New Board to such  recapitalization and merger. This Disclosure
Statement  and the enclosed  form of Proxy and Consent (the "Proxy and Consent")
are  first  being  mailed  or  delivered  on  or  about  November  24,  1999  to
Shareholders of record as of the close of business on November 23, 1999.

                       I. GENERAL STATEMENT AND BACKGROUND

     The  Chairman of the Company  has  adopted a Plan of  Recapitalization  and
Merger,  a copy of  which is  attached  hereto  as  Exhibit  "A"  (the  "Plan of
Recapitalization  and Merger" or  "Recapitalization  and  Merger"),  pursuant to
which  the  Company  capital  structure  of the  Company  would be  modified  as
described  herein.  The   Recapitalization   and  Merger,  if  ratified  by  the
Shareholders,  as more fully described below, would have the effect of modifying
certain  terms,  rights and  privileges of the  Investors'  Shares and result in
certain management changes and corporate  restructuring.  Capitalized terms used
and not otherwise  defined herein shall have the meanings assigned to such terms
in the Plan of Recapitalization and Merger.

     The primary reasons for the  Recapitalization and Merger, were to effective
June 23, 1999,  are to (a) modify the  Company's  capital  structure in a manner
which will  enable the  Company  to proceed as a public  company,  (b) grow as a
viable business,  (c) preserve  shareholder  value, and (d) eliminate  potential
liabilities which could otherwise deter the interest of prospective underwriters
and  investment  banks in assisting the Company to raise  additional  private or
public  equity  financing.  As you may  have  been  previously  advised,  in its
continuing  effort to take the  Company's  shares  public on a  national  market
exchange  such  as  the  NASDAQ  national  market,   the  Company  entered  into
negotiations  with several  investment  banking firms and advisors,  pursuant to
which such firms or  advisors  have  expressed  their  interest in (a) acting as
managerial  and  financial  consultants  to the  Company in  connection  with an
initial  public  offering of the  Company's  Common  Stock (an  "IPO"),  and (b)
sourcing private equity  investment to be exchanged for  newly-issued  shares of
the Company to be used as a "bridge" financing for an IPO.

     The  Chairman  of  the  Board  believes  that  the  rights  and  privileges
associated with the Investors'  Shares should be modified as described herein in
order to facilitate an IPO. The Plan of  Recapitalization  requires that (a) 51%
of the  holders of  Investors'  Shares  shall  agree in  writing  hereby to have
originally  purchased their shares on the terms offered  pursuant to the form of
amended  Subscription  Agreement attached hereto as

SCH, Inc.
Confidential Disclosure and Consent Solicitation Statement
1998-1999 Annual Meeting of Shareholders
<PAGE>

Exhibit  "B",  and  (b)  51 % of the  holders  of the  Investors'  Shares  shall
expressly consent to the Plan of Recapitalization. The Chairman of the Board has
concluded that the  Recapitalization and Merger are in the best interests of the
Company and its Shareholders. Please note that, except as described herein, none
of these  changes  materially  adversely  affect the rights or privileges of the
holders of the Investors' Shares.

                 II. RECOMMENDATION OF THE CHAIRMAN OF THE BOARD

     The  Chairman of the Board,  having  adopted the Plan of  Recapitalization,
recommends and requests that the  Shareholders  ratify the  restructuring of the
Company as detailed in this Disclosure Statement. Please note that the Company's
Recapitalization  and Merger  requires the consent of the holders of at least 51
percent of the Management's Shares and the holders of at least 51 percent of the
Investors' Shares.

     The chairman of the Board believes that Recapitalization and Merger were in
the best  interests  of the Company and its  Shareholders  because,  among other
things, they have enabled the Company to:

          Capitalize  upon the business  expertise  and  contacts of  investment
     banking  advisors and agents  identified by management and thereby increase
     the  Company's  access to  capital,  as well as its  opportunities  to fund
     future growth, through future offerings of either equity or debt securities
     originated by and through such investment advisors and agents.

          Eliminate any Company liability for potential violations of securities
     laws,  although  the Company  does not  believe  that it has  violated  any
     securities  laws,  and to obtain waivers from the holders of the Investors'
     Shares of their rights and remedies  arising from any potential  violations
     of securities  laws  committed by the Company in  connection  with previous
     offers and sales of the Investors' Shares.

     Please be advised that the decision to ratify the Plan of Recapitalization,
and the specific terms thereof, have been made and structured for the Company by
its Chairman of the Board, and that the holders of the Investors Shares will not
have any right to vote on or approve such decision,  except as provided  hereby.
There can be no assurance  that the Company will succeed in its business even if
the  Shareholders  determine  that it is in the best interests of the Company to
proceed with the Plan of  Recapitalization.  Market conditions and other factors
may  prevent the Company  from  overcoming  current  financial  and  operational
challenges.

III. TERMS OF THE PROPOSED RECAPITALIZATION

     Proposed Terms of Investors' Subscription Agreements

     As part of the Plan of  Recapitalization,  the  Chairman  of the  Board has
approved an Investors' Subscription Agreements (the "Amendment"). Each holder of
the  Investors'   Shares   previously   executed  the  Investors'   Subscription
Agreements. A copy of the subscription agreement substantially as proposed to be
adopted, is attached to this Disclosure  Statement as Exhibit "B." The Amendment
contains  potentially  significant  changes  in the  rights  of  holders  of the
Investors' Shares.

SCH, Inc.
Confidential Disclosure and Consent Solicitation Statement
1998-1999 Annual Meeting of Shareholders

                                      -2-
<PAGE>

     The Chairman of the Board  believes  that the creation of the  Amendment is
desirable in view of the waiver of potential  violations of  securities  laws by
the holders of Investors' Shares,  which would benefit the Company.  Please note
that the proposed form of Amendment, if approved by a majority of the holders of
Investors' Shares, would be binding upon even those holders of Investors' Shares
who elected not to vote or who have voted against it.

Merger

     The Chairman of the Board now requests a ratification  of the merger of the
Company into La Jolla Fresh Squeezed  Coffee(TM)  Company Inc. (LJCC),  formerly
North West Farms, Inc, organized in Washington.

     The  Merger  Agreement  and Plan of  Merger  (the  "Merger  Agreement")  is
attached  hereto as Exhibit "E".  Under the terms of the Merger  Agreement,  the
Company merged with and into LJCC, a Washington corporation ("LJCC or "Surviving
Corporation") as of June 15, 1999. The Surviving  Corporation  assumed the name,
"La Jolla  Fresh  Squeezed  Coffee(TM)  Company,  Inc.",  and the  shares of the
Company in the Surviving  Corporation  are retired,  with the Company's  present
Shareholders  assuming ownership of the Surviving Corporation by converting each
share of Company capital stock into one-forth fully-paid and nonassessable share
of LJCC Common Stock pursuant to the Merger  Agreement.  A list of Shareholders,
and the amount of shares, which they own in LJCC, is attached hereto as Schedule
"A".

                       IV. CONSIDERATIONS FOR SHAREHOLDERS

     In considering  whether or not to ratify the  Recapitalization  and Merger,
Shareholders are urged to give careful  consideration to the following  factors,
in addition to the information  contained elsewhere in this Disclosure Statement
and its Exhibits.

New Shares Received By Investors Shall Be Restricted Securities

     Although  the Company  hopes that it shall soon  proceed with an IPO of its
Common  Stock on a national  market  exchange  for the trading of  publicly-held
shares,  holders of Investors'  Shares should be aware that the shares of Common
Stock  in the  Surviving  Corporation  they  receive  pursuant  to the  Plan  of
Recapitalization,  if ratified,  will be "restricted  securities" from and after
June 15,  1999  within the  meaning  of Rule 144 under the  Securities  Act.  In
general, under Rule 144, as currently in effect, a person (or persons who shares
are required to be  aggregated)  who is not deemed to be an  "affiliate"  of the
Company,  as that term is defined under the Securities Act, and who beneficially
owns restricted  securities for a period of at least one year since the later of
the date such  restricted  securities  were acquired from the Company or from an
affiliate of the Company, is entitled to sell the "restricted  securities" in an
amount calculated as follows. The holder of "restricted  securities" is entitled
to sell,  within a three month  period,  a number of shares that does not exceed
the greater of (a) 1 percent of the then-outstanding  shares of the Common Stock
or (b) the average weekly reported trading volume during the four calendar weeks
preceding the date in which notice of the sale is filed with the  Securities and
Exchange Commission. If the Company engages in an IPO within the next 12 months,
the  Company  believes,  based on the advice of  counsel,  that shares of Common
Stock  to be  issued  upon  the  Plan  of  Recapitalization  to the  holders  of
Investors' Shares will be deemed to have been acquired from the Company pursuant
to Rule  144(d)(3)(i)  on the date a Shareholder  received his or her Investors'
Common Shares for purposes of Rule 144.

SCH, Inc.
Confidential Disclosure and Consent Solicitation Statement
1998-1999 Annual Meeting of Shareholders

                                      -3-
<PAGE>

     Sales under Rule 144 are also subject to certain  manner-of-sale and notice
requirements  and to the  availability of current public  information  about the
Company.  A person (or persons whose shares are  aggregated)  who is not and has
not been an affiliate of the Company at any time during the 3 months immediately
preceding  the  sale of the  restricted  securities  is  entitled  to sell  such
securities pursuant to Rule 144 (k) without regard to the limitations  described
above,  provided  that one year has lapsed  since the later of the date on which
such restricted  securities were acquired from the Company or the date they were
acquired from an affiliate of the Company.

No Appraisal of Current Value of Common Shares

     Management believes that the Plan of  Recapitalization,  as proposed,  will
substantially increase the value of the issued and outstanding Investors' Shares
and Management's  Shares.  However, no appraisals,  independent  valuations,  or
fairness  opinions  from a  financial  point  of view of the  Company  or of the
Company's  assets have been  obtained in  connection  with the  valuation of the
Company,  either for purposes of the Recapitalization or potential  negotiations
of an IPO by management.  The Company has not obtained an independent  appraisal
of the  current  value  of its  Common  Stock.  Therefore,  the  Company  is not
providing  you with any  internal  or external  valuation  report as to the fair
market  value of your shares,  or the expected  value of the Common Stock of the
Surviving Corporation.  There can be no assurance that upon the Recapitalization
and Merger that the new Common Stock would have a value equal to, less than,  or
greater than the "old" Common Stock.

Federal Income Tax Consequences

     The Company believes that the Plan of  Recapitalization  will not result in
any material  adverse  federal income tax  consequences  to a Shareholder.  Each
Shareholder,  however, is strongly urged to, and should, consult with his or her
own tax  advisor  and  attorney  regarding  the  federal  income  and  other tax
implications  and  consequences  to such  Shareholder  of the  proposed  Plan of
Recapitalization.

               V. CERTAIN REPRESENTATIONS, WARRANTIES AND WAIVERS

     As part of the Plan of Recapitalization,  and although the Company does not
believe that it has engaged in any securities law violations,  each  Shareholder
is  being  asked,  to the  extent  allowable  by law,  to  waive  any  potential
securities violations by the Company arising from its previous private offers or
sales of the Common Stock,  including the  Investors'  Shares,  and to execute a
general  release  in  favor  of  the  Company  relating  to any  such  potential
securities  law  violations.  To the  extent  that any such  waiver of rights is
deemed to be  unenforceable,  each Shareholder is being asked to recontribute to
the Company all  proceeds of such an action.  Therefore,  each  Shareholder,  by
execution  of the Proxy and  Consent,  shall  have  agreed  to such  waiver  and
recontribution  as set forth in  Exhibit  "C"  attached  hereto  and made a part
hereof.

     The Chairman of the Board has also determined that in conjunction  with the
Plan of Recapitalization, particularly in connection with the proposed Amendment
to  the  Investors'  Subscription   Agreements,   it  is  appropriate  that  the
Shareholders  affirm certain  representations  and warranties  that were made by
each Investor in connection with the execution of the Subscription  Agreement by
which such holder originally purchased Common Stock.  Therefore,  each holder of
Investors'  Shares,  by  execution  of the  Proxy  and  Consent,  will  make the
representations  and warranties as set forth in Exhibit "C" attached  hereto and
made a part hereof.  The form of Proxy and Consent is attached hereto as Exhibit
"D."

SCH, Inc.
Confidential Disclosure and Consent Solicitation Statement
1998-1999 Annual Meeting of Shareholders

                                      -4-
<PAGE>

                             VI. CONSENT PROCEDURES

Vote Required

     The Plan of  Recapitalization  will not be ratified without the approval of
holders of at least 51 percent in interest of the outstanding  Investors' Shares
and  of  holders  of  at  least  51  percent  in  interest  of  the  outstanding
Management's  Shares.  To this end, the Company is holding an Annual  Meeting of
Shareholders  (the "Annual  Meeting")  on December 7, 1999,  at 10:00 am pacific
standard time, to be held at 9060 Activity Road, Suite A, San Diego, CA. 92126.

     As  of  the  date  hereof  there  are  8,004,000  shares  of  Common  Stock
outstanding,  of which 690,000 shares are Investors' Shares and 7,314,000 shares
are  Management's  Shares.  Accordingly,  the  approval  of  holders of at least
351,900 shares of Investors' Shares and 3,730,140 shares of Management's  Shares
are  required  to  approve  the Plan of  Recapitalization.  Because  holders  of
Management's Shares did not execute the Investors' Subscription Agreements, they
are not being asked to approve the form of Amendment thereto. Unless a Proxy and
Consent returned to the Company  expressly  specifies that not all of the shares
held by such Shareholder are to be voted in a particular  manner,  the Proxy and
Consent  will be deemed to be valid  with  respect  to all  shares  held by such
Shareholder.

Proxy and Consent Solicitation

     Proxies and Consents will be solicited until the commencement of the Annual
Meeting,  but may be requested by the Company subsequent thereto.  The Proxy and
Consents are being solicited by the Board of Directors of the Company. Except as
otherwise described herein, all expenses of the Proxy and Consent  Solicitation,
including the cost of preparing and mailing this Disclosure  Statement,  will be
borne by the Company. In addition to solicitation by the use of the mails, Proxy
and Consents may be solicited by directors,  officers,  employees and affiliates
of  the  Company  in  person  or  by  telephone,  telegram  or  other  means  of
communication.  Such  persons  will  not be  additionally  compensated  for such
solicitation, but may be reimbursed for out-of-pocket expenses arising from such
solicitation.   Arrangements   will  be  made  with  custodians,   nominees  and
fiduciaries  for  forwarding  the consent  solicitation  materials to beneficial
owners of shares held of record by such  custodians,  nominees and  fiduciaries,
and the Company will reimburse such  custodians,  nominees and  fiduciaries  for
reasonable expenses thereby incurred.

Effectiveness, Acceptance and Revocation of Proxy and Consents

     Shareholders   who  elect  to  approve  or   disapprove   of  the  Plan  of
Recapitalization  should so  indicate  by marking  the  appropriate  box on, and
signing and dating,  the form of Proxy and Consent included  herewith and either
(i) mailing it in the self-addressed,  stamped envelope provided, to the Company
as follows:  La Jolla Fresh Squeezed  Coffee,  9060 Activity  Road,  Suite A, La
Jolla, California, Attention: Mr. Stephen Corey, or (ii) delivering it in person
at the Meeting.  If no box on the Proxy and Consent is checked but the Proxy and
Consent is otherwise  properly  completed and signed,  the  Shareholder  will be
deemed to have  approved the Plan of  Recapitalization.  All questions as to the
validity  and  acceptance  of returned  Proxy and  Consents,  unless  revoked as
provided  below,  shall be  determined by the Board of Directors in its sole and
absolute discretion, which determination shall be final and binding.

SCH, Inc.
Confidential Disclosure and Consent Solicitation Statement
1998-1999 Annual Meeting of Shareholders

                                      -5-
<PAGE>

     All Proxy and Consents received by the Company shall be revocable until the
vote  with  respect  to  approval  of  the  Plan  of  Recapitalization  and  the
transactions  contemplated  herein, are taken at the Annual Meeting. A Proxy and
Consent may be revoked by a  Shareholder  by the  subsequent  delivery of a new,
properly-completed  and signed Proxy and Consent by the delivery to Mr.  Stephen
Corey,  as  provided  above,  of a notice of  revocation  or by the  Shareholder
attending   the   Annual   Meeting   and   therein    personally    revoking   a
previously-delivered Proxy and Consent. Any revocation of a previously-delivered
Proxy and Consent shall be effective  only as to those shares  identified in the
revocation.

                     VII ELECTION OF NEW BOARD OF DIRECTORS

     The  Chairman  of  the  Board  has  approved,   and  now  proposes  to  the
Shareholders,  that the following  persons serve on the Board of Directors until
the 1999-2000 Annual Meeting of Shareholders:

                   Stephen F. Corey                   Chairman of the Board
                   Gregory D. Writer, Jr.             Director
                   Kurt B. Toneys                     Director

     YOUR  VOTE  IS  IMPORTANT.  Each  Shareholder's  vote is  important  to the
Company.  The  Chairman of the Board  requests  that you  carefully  review this
Disclosure  Statement  and either  return the enclosed  Proxy and Consent to the
Company or attend the Annual Meeting.

                                      * * *

     Questions may be addressed to the  Company's  legal  counsel,  Robert Blair
Krueger II, Esq. at The Krueger  Group,  LLP,  Los Angeles and San Diego,  (619)
451-0200.

SCH, Inc.
Confidential Disclosure and Consent Solicitation Statement
1998-1999 Annual Meeting of Shareholders

                                      -6-
<PAGE>

                                EXHIBIT INDEX TO

           CONFIDENTIAL DISCLOSURE AND CONSENT SOLICITATION STATEMENT

Exhibit "A"           Plan of Recapitalization

   Schedule "A-1"     Definitions

Exhibit "B"           Form of Proposed First Amendment to Investor Subscription
                      Agreement, substantially as proposed to be adopted

Exhibit "C"           Representations, Warranties and Waivers of Shareholders

Exhibit "D"           Form of Proxy and Consent

Exhibit "E"           Form of Agreement and Plan of Merger

<PAGE>

                                                                     Exhibit "A"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

                         STEPHEN'S COFFEE HOLDING, INC.
                          9060 Activity Road, Suite A.
                           San Diego, California 92126

                       PLAN OF RECAPITALIZATION AND MERGER
                       -----------------------------------

                                November 24, 1999

                                   I. SUMMARY

     The Chairman of the Board of Directors (the "Chairman") of Stephen's Coffee
Company, Inc., a California  corporation,  in order to allow the Company to more
successfully compete and to facilitate a possible initial public offering of its
shares,  has  determined  that it is the best  interests  of the Company and its
Shareholders to modify the capital  structure of the Company as provided herein,
to make  certain  other  changes in its  corporate  governance,  and to pursue a
merger  with  La  Jolla  Fresh  Squeezed  Coffee  Company,  Inc.,  a  Washington
corporation. To that end, the Chairman has adopted this Plan of Recapitalization
and Merger (the "Plan of Recapitalization  and Merger" or the  "Recapitalization
and Merger"). Capitalized terms used and not otherwise defined herein shall have
the   meanings   set  forth  in  Schedule   "A-1"   attached  to  this  Plan  of
Recapitalization  and  made  a part  hereof.  The  Chairman  believes  that  the
Recapitalization  and Merger are in the best  interests  of the  Company and its
Shareholders because, among other things, they enabled the Company to:

          Capitalize  upon the business  expertise  and  contacts of  investment
     banking  advisors and agents  identified by management and thereby increase
     the  Company's  access to  capital,  as well as its  opportunities  to fund
     future growth, through future offerings of either equity or debt securities
     originated by and through such investment advisors and agents.

          Eliminate any Company liability for potential violations of securities
     laws,  although  the Company  does not  believe  that it has  violated  any
     securities  laws,  and to obtain waivers from the holders of the Investors'
     Shares of their rights and remedies  arising from any potential  violations
     of securities  laws  committed by the Company in  connection  with previous
     private offers and sales of the Investors' Shares.

     The decision to attempt to proceed with the Recapitalization, and the terms
thereof,  has been made for the Company by its  Chairman  of the Board,  and the
investors in the Company will not have any right to influence  the terms of such
decision except as provided hereby.
<PAGE>

                                                                     Exhibit "A"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

     The  Chairman  believes  the   Recapitalization  and  Merger  provided  the
framework  for the  Company  to satisfy  its trade  payables,  raise  additional
capital for the Company,  eliminate possible liabilities,  and to meet the other
goals  described  above.  The proposed  Amendment  to the Investor  Subscription
Agreement,  substantially  as  proposed  to  be  adopted,  is  attached  to  the
Disclosure Statement as Exhibit "B" and made a part thereof.

     The Plan of Recapitalization is summarized as follows:

     (1) The Chairman proposes to amend the Subscription  Agreements  previously
     signed by each investor with the Company.  Each investor's  Common Stock in
     the Company would be converted on a one to one half-share basis into Common
     Stock in LJCC.

     (2) The Merger of the Company into LJCC shall be ratified by the  Company's
     shareholders, with LJCC acting as the sole surviving entity.

     The  Recapitalization  would  be  accomplished  by  the  Amendment  to  the
Investors' Subscription Agreement, and such other actions as the Chairman of the
Board of  Directors  of the Company  believes  are  necessary  and  advisable in
connection with the  Recapitalization.  The Recapitalization  will be subject to
the  approval of holders in  interest  of at least 51 percent of the  Investors'
Shares  and  holders  in  interest  of at least 51  percent  of the  outstanding
Management's  Shares at the Annual  Meeting of  Shareholders,  to be held at the
9060 Activity Road, Suite A, San Diego, CA. 92126,  December 7, 1999 at 10:00 am
Pacific  Standard  Time, or at such date and time and at such place as the Board
of Directors may otherwise direct.

<PAGE>

                                                                     Exhibit "A"
                                                                              to
                                                     Confidential Disclosure and

                             II. ADDITIONAL MATTERS

Waiver of Certain Rights

     The Chairman of the Board has determined,  as part of the  Recapitalization
and Merger,  and  although the Company does not believe that it has violated any
securities  law,  that it is  appropriate  to require each  Shareholder,  to the
extent  allowable by law, to waive any potential  securities  laws violations by
the  Company  arising  from its offer or sale of Common  Stock and to  execute a
general  release  in  favor  of  the  Company  relating  to any  such  potential
violations of  securities  laws. To the extent that any such waiver of rights is
deemed unenforceable,  each Shareholder shall be required to recontribute to the
Company all  proceeds of such an action.  Each  Shareholder  will be required to
agree,  by execution of the Proxy and Consent or such other means as  determined
by the Chairman of the Board, to such waiver and recontribution substantially as
set forth in Exhibit "C" to the Disclosure Statement.

Certain Representations and Warranties by Shareholders

     The  Chairman  of the Board has  determined  that in  conjunction  with the
Recapitalization,  specifically  the  Amendment to the  Investors'  Subscription
Agreements, it is appropriate that the holders of the Investors' Shares reaffirm
certain  representations  and warranties  made in connection with the Investors'
Subscription  Agreements  and the  original  purchase of the Common Stock by the
Investors.  Each  Shareholder  will be  required  to verify to the  Company,  by
execution  of the Proxy and  Consent or such other  means as  determined  by the
Chairman of the Board, the representations  and warranties  substantially as set
forth in Exhibit "C" to the  Confidential  Disclosure  and Consent  Solicitation
Statement.

<PAGE>

                                                                     Exhibit "A"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

                                SCHEDULE "A-1" TO
                                -----------------
                            PLAN OF RECAPITALIZATION
                            ------------------------

                                   DEFINITIONS

     "Amendment  to the  Investors'  Subscription  Agreements"  shall  mean  the
proposed Amendment to the Investors'  Subscription  Agreements  substantially in
the form attached as Exhibit "B" to the Disclosure Statement.

     "Annual   Meeting"   shall  mean  the  1998-1999   Annual  Meeting  of  the
Shareholders of the Company  scheduled for December 7, 1999, or such other date,
time and place as the Board of Directors may determine is advisable.

     "Board of  Directors"  or "Board"  shall mean the Board of Directors of the
Company.

     "Chairman of the Board" or "Chairman"  shall mean the Chairman of the Board
of Directors of the Company.

     "Charter"  shall mean the  Articles of  Incorporation  of the  Company,  as
amended or amended and restated.

     "Common  Stock"  shall  mean  the  common  stock  of  the  Company  or  its
successor-in-interest, the Surviving Corporation.

     "Company"  shall  mean  Stephen's   Coffee  Holding,   Inc.,  a  California
corporation.

     "Disclosure Statement" shall mean that Confidential  Disclosure and Consent
Solicitation Statement dated November 24, 1999 provided to the Shareholders.

     "Investors'" shall mean the holders of the outstanding Common Stock who are
not officers, directors or employees of the Company.

     "Investors'  Shares or Investors' Common Shares" shall mean the outstanding
Common Stock owned by Investors.

     "Investors' Subscription Agreements" shall mean the Investors' Subscription
Agreements  pursuant  to which the  Investors  acquired  their  Shares of Common
Stock.

     "Management  Shares"  shall  mean the  outstanding  Common  Stock  owned by
Management and Director of the Company.
<PAGE>

     "Plan of  Recapitalization" or  "Recapitalization"  shall mean this Plan of
Recapitalization as adopted by the Board of Directors of the Company.

     "Proxy and Consent"  shall mean that Form of Proxy and Consent  attached as
Exhibit "D" to the Disclosure Statement.

     "Securities Act" shall mean the federal Securities Act of 1933, as amended.

     "Shareholders"  shall mean all  holders of shares of the  Company's  Common
Stock, including management and the Investors.

     "Surviving  Corporation"  shall mean La Jolla  Fresh  Squeezed  Coffee(TM),
Inc., a successor-in-interest to North West Farms, Inc., and which does business
and operates as "La Jolla Fresh Squeezed Coffee(TM), Inc."

<PAGE>

                                                                     Exhibit "B"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

                        FORM OF PROPOSED FIRST AMENDMENT
                       TO INVESTOR SUBSCRIPTION AGREEMENT

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

<PAGE>

                                                                     Exhibit "B"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

                         STEPHEN'S COFFEE HOLDING, INC.
                         ------------------------------
               FIRST AMENDMENT TO INVESTOR SUBSCRIPTION AGREEMENT

     THIS AGREEMENT is made as of June 15, 1999, by and among  Stephen's  Coffee
Holding,  Inc., a California  corporation  (the  "Company"),  and La Jolla Fresh
Squeezed Coffee Co, Inc., a Washington corporation ("LJCC"), and the persons and
entities listed on the Schedule of Common Stock Purchasers (the "Purchasers") of
the Company (the "Disclosure Statement").  The parties hereby agree to amend and
modify, to the extent contrary, any and all previous subscription  agreements of
the parties, as follows:

     1.   Authorization and Sale of Common Shares.

          1.1 Subject to the terms and conditions hereof, the Company will issue
to each  Purchaser,  and each  Purchaser  will  purchase the number of shares of
Common Stock of the Company and LJCC  (collectively,  the "Shares") set forth in
Exhibit "E" of the Disclosure statement.

     2.   Closing Date: Delivery.

          2.1 Closing  Date.  The  closing of the  issuance of the Shares to the
Purchasers  (the  "Closing")  shall be held at the offices of The Krueger Group,
LLP, 11423 West Bernardo Court, San Diego,  California,  92127 (the "Law Offices
of The Krueger Group") at 1:00 p.m. on December 7, 1999 (the "Closing Date"), or
at such other time and place as the Company,  LJCC and the  Purchasers may agree
in writing,  and shall be subject to the terms and  conditions of this Agreement
and the Exhibits attached hereto.

          2.2 Delivery.  Subject to the terms of this Agreement,  at the Closing
LJCC  and  the  Company  will  deliver  to  each   Purchaser  the   certificates
representing the Shares to be issued to the Purchasers by LJCC at the Closing.

     3.  Representations and Warranties of the Company and LJCC. The Company and
LJCC hereby represent and warrant to the Purchasers that:

          3.1 Organization and Standing:  Articles and By-Laws.  LJCC is now, or
shall be as of the Closing Date, a corporation duly organized,  validly existing
and in good  standing  under  the laws of the  State of  California  and has all
requisite corporate power and authority to carry on its

<PAGE>

businesses as now  conducted and as proposed to be conducted.  LJCC is qualified
or licensed to do business as a foreign  corporation in all jurisdictions  where
such  qualification  or licensing  is  required,  except where the failure to so
qualify would not have a material adverse effect upon LJCC.

          3.2 Corporate  Power.  LJCC has now, or will have at the Closing Date,
all  requisite  corporate  power to enter into this  Agreement  and to issue the
Shares. This Agreement is a valid and binding obligation of LJCC and the Company
enforceable in accordance  with its terms,  except as the same may be limited by
bankruptcy,  insolvency,  moratorium,  and  other  laws of  general  application
affecting the enforcement of creditors' rights.

          3.3 Offering. In reliance on the representations and warranties of the
Purchasers in Section 4 hereof,  the issuance of the Shares in  conformity  with
the terms of this Agreement  will not result in a violation of the  requirements
of Section 5 of the Securities Act of 1933, as amended (the  "Securities  Act"),
or the qualification or registration requirements of the Securities Act or other
applicable blue sky laws.

          3.4 Registration  Rights.  Neither the Company nor LJCC has granted or
agreed to grant to any  person  or entity  any  rights to  register,  any of its
securities, including piggyback registration rights.

     4.  Representations  and  Warranties  of  Purchasers  and  Restrictions  on
Transfer Imposed By the Securities Act.

          4.1  Representations  and  Warranties By the  Purchasers.  Each of the
Purchasers represents and warrants to the Company and LJCC as of the date hereof
and as of the Closing Date as follows:

               (a) Investment Intent.  This Agreement is made with the Purchaser
in  reliance  upon such  Purchaser's  representations  to the  Company and LJCC,
evidenced by the Purchaser's execution of this Agreement or the majority vote of
the  Purchasers at the Company's  1998-1999  Annual Meeting of  Stockholders  on
December  7, 1999 (the  "Annual  Meeting"),  that  Purchaser  is an  "accredited
investor" as defined in Regulation D promulgated under the Securities Act or, if
unaccredited,  has  substantial  business and financial  experience  adequate to
evaluate and  understand the merits and risks of this  investment,  is acquiring
the  Common  Stock  (collectively  the  "Securities")  for  investment  for each
Purchaser's own account, not as nominee or agent, and not with a view to, or for
resale in connection  with, any  distribution or public offering  thereof within
the meaning of the  Securities  Act and the Law.  Purchaser  has the full right,
power and authority to enter into and perform this Agreement, and this Agreement
constitutes a valid and binding obligation on the Purchaser.

               (b) Shares Not Registered. Purchaser understands and acknowledges
that  the  offering  of the  Shares  pursuant  to  this  Agreement  will  not be
registered  under the Securities
<PAGE>

Act or  qualified  under the law on the grounds  that the  offering  and sale of
securities contemplated by this Agreement are exempt from registration under the
Securities  Act pursuant to Section  4(2)  thereof and exempt from  registration
pursuant  to Section  25102(f)  of the  California  Corporations  Code and other
applicable  state securities or blue sky laws, and that the Company's and LJCC's
reliance   upon  such   exemptions   is   predicated   upon   such   Purchaser's
representations  set forth in this  Agreement.  The Purchaser  acknowledges  and
understands that the Securities must be held indefinitely  unless the Securities
are subsequently registered under the Securities Act and qualified under the Law
or an exemption from such registration and such qualification is available.

               (c) No  Transfer.  Purchaser  covenants  that in no event will it
dispose of any of the Securities  (other than in  conjunction  with an effective
registration  statement  for  the  Securities  under  the  Securities  Act or in
compliance with Rule 144 promulgated  under the Securities Act) unless and until
(i) the  Purchaser  shall have  notified  the Company  and LJCC of the  proposed
disposition  and shall have  furnished  the Company and LJCC with a statement of
the circumstances  surrounding the proposed disposition,  and (ii) if reasonably
requested  by the Company  and LJCC,  the  Purchaser  shall have  furnished  the
Company and LJCC with an opinion of counsel  satisfactory  in form and substance
to the Company and LJCC to the effect that (x) such disposition will not require
registration  under the Securities Act and (y) appropriate  action necessary for
compliance  with the  Securities  Act, the Law and any other  applicable  state,
local or foreign law has been taken. It is agreed that the Company and LJCC will
not require opinions of counsel for transactions made pursuant to Rule 144.

               (d) Knowledge and  Experience.  Purchaser (i) has such  knowledge
and experience in financial and business  matters as to be capable of evaluating
the  merits  and  risks  of  the  Purchaser's   prospective  investment  in  the
Securities;  (ii) has the ability to bear the economic risks of the  Purchaser's
prospective investment; (iii) has been furnished with and has had access to such
information as the Purchaser has considered necessary to make a determination as
to the purchase of the Securities  together with such additional  information as
is necessary to verify the accuracy of the  information  supplied;  (iv) has had
all questions which have been asked by the Purchaser  satisfactorily answered by
the Company and LJCC; and (v) has not been offered the Securities by any form of
advertisement,   article,   notice  or  other  communication  published  in  any
newspaper,  magazine, or similar media or broadcast over television or radio, or
any  seminar or meeting  whose  attendees  have been  invited by any such media,
except by means of a public  announcement  pursuant  to Section  25102(n) of the
California Corporations Code.

                                                                     Exhibit "B"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement
<PAGE>

               (e) Not Organized to Purchase.  Purchaser has not been  organized
for the purpose of purchasing the Securities.

               (f)  Holding  Requirements.  Purchaser  understands  that  if the
Company or LJCC does not (i) register its Common Stock with the  Securities  and
Exchange  Commission  ("SEC") pursuant to Section 12 of the Securities  Exchange
Act of 1934, as amended (the  "Exchange  Act"),  (ii) become  subject to Section
15(d) of the Exchange Act, (iii) supply  information  pursuant to Rule 1 5c2- 11
thereunder,  or (iv) have a registration statement covering the Securities (or a
filing  pursuant to the exemption from  registration  under  Regulation A of the
Securities Act covering the Securities)  under the Securities Act in effect when
it desires to sell the  Securities,  the  Purchaser  may be required to hold the
Securities for an indeterminate period. Purchaser also understands that any sale
of the Securities  that might be made by the Purchaser in reliance upon Rule 144
under the Securities Act may be made only in limited  amounts in accordance with
the terms and conditions of that rule.

          4.2 Legends.  Each  certificate  representing  the  Securities  may be
endorsed with the following legends:

               (a) Federal  Legend.  THE SECURITIES  REPRESENTED BY THIS ARTICLE
HAVE NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE
"ACT") AND ARE "RESTRICTED  SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER
THE  ACT.  THE  SECURITIES  MAY NOT BE SOLD OR  OFFERED  FOR  SALE OR  OTHERWISE
DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE  REGISTRATION  STATEMENT
FOR THE  SHARES  UNDER THE ACT OR (ii) IN  COMPLIANCE  WITH  RULE 144,  OR (iii)
PURSUANT  TO AN OPINION  OF  COUNSEL,  SATISFACTORY  TO THE  COMPANY,  THAT SUCH
REGISTRATION  OR  COMPLIANCE  IS  NOT  REQUIRED  AS  TO  SAID  SALE,   OFFER  OR
DISTRIBUTION.

               (b) Other Legends. Any other legends required by the Law or other
applicable state blue sky laws. The Company or LJCC need not register a transfer
of legended Securities, and may also instruct its transfer agent not to register
the transfer of the Securities,  unless the conditions  specified in each of the
foregoing legends are satisfied.

<PAGE>

                                                                     Exhibit "B"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

          4.3 Removal of Legend and Transfer  Restrictions.  Any legend endorsed
on  a  certificate  pursuant  to  subsection  4.2  (a)  and  the  stop  transfer
instructions with respect to such legended Securities shall be removed,  and the
Company or LJCC shall issue a  certificate  without such legend to the holder of
such  Securities if such Securities are registered and sold under the Securities
Act and a prospectus  meeting the  requirements  of Section 10 of the Securities
Act is available or if such holder  satisfies  the  requirements  of Rule 144(k)
and,  where  reasonably  deemed  necessary by the Company or LJCC,  provides the
Company or LJCC with an opinion of counsel  for such  holder of the  Securities,
reasonably  satisfactory  to the  Company or LJCC,  to the effect  that (i) such
holder, meets the requirements of Rule 144(k) or (ii) a public sale, transfer or
assignment of such Securities may be made without registration.

          4.4 Rule 144.  Purchasers are aware of the adoption of Rule 144 by the
SEC  promulgated  under the Securities Act, which permits limited public resales
of securities acquired in a non-public offering,  subject to the satisfaction of
certain  conditions.  Purchasers  understand that under Rule 144, the conditions
include,  among  other  things:  the  availability  of  certain  current  public
information  about the issuer and the  resale  occurring  not less than one year
after the party has purchased and paid for the securities to be sold.

     5.  Conditions  to  Purchasers'  Obligations.   The  Company's  and  LJCC's
obligation  to sell and  issue the  Shares  at the  Closing  is  subject  to the
following conditions:

               (a) Purchasers'  Representations and Warranties True and Correct.
That the  representations  and  warranties  made by the  Purchasers in Section 4
hereof shall be true and correct when made, and shall be true and correct on the
Closing  Date with the same  force and effect as if they had been made on and as
of said date.

     6.  Affirmative  Covenants  of the  Company.  The  Company  and LJCC hereby
covenant and agree as follows:

          6.1  Conflicts of  Interests.  The Company and LJCC shall use its best
     efforts to ensure that the Company's or LJCC's  employees,  during the term
     of their  employment  with the Company or LJCC, do not engage in activities
     which would result in a conflict of interest with the Company or LJCC.  The
     Company's and LJCC's obligations hereunder include, but are not limited to,
     requiring  that the  Company's  and LJCC's  employees  devote their primary
     productive  time,  ability and  attention to the business of the Company or
     LJCC provided; however, the Company's
<PAGE>

     and LJCC's employees may engage in other business activity if such activity
     does not  materially  interfere  with their  obligations  to the Company or
     LJCC,  requiring  that  the  Company's  and  LJCC's  employees  enter  into
     agreements  regarding  proprietary   information  and  confidentiality  and
     preventing   the   Company's   and  LJCC's   employees   from  engaging  or
     participating  in any business that is in competition  with the business of
     the Company or LJCC.

          6.2 Proprietary  Agreements.  The Company and LJCC will use reasonable
     efforts to prevent any employee  from  violating  the  confidentiality  and
     proprietary information agreement entered into between the Company and LJCC
     and each of their employees.

          6.3 Rule 144.  The  Company  and LJCC  covenant  that (i) at all times
     after LJCC first is subject to the reporting  requirements of Section 13 or
     15(d) of the Securities Exchange Act of 1934, the Company and LJCC will use
     its best efforts to comply with the current public information requirements
     of Rule 144(c)(l)  under the Securities  Act; and (ii) at all such times as
     Rule 144 is  available  for use by the  Purchasers,  LJCC will  furnish the
     Purchasers upon request with all information  within the possession of LJCC
     required for the preparation and filing of Form 144.

<PAGE>

                                                                     Exhibit "B"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

     7. Miscellaneous.

          7.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of  California  as such  laws are  applied  to  agreements
between  California  residents entered into and to be performed  entirely within
California.

          7.2  Survival.   The   representations,   warranties,   covenants  and
agreements   made  herein  shall   survive  the  Closing  of  the   transactions
contemplated  hereby,  notwithstanding any investigation made by the Purchasers.
All  statements  as to factual  matters  contained in any  certificate  or other
instrument  delivered by or on behalf of the Company or LJCC pursuant  hereto or
in connection with the  transactions  contemplated  hereby shall be deemed to be
representations  and  warranties by the Company or LJCC hereunder as of the date
of such certificate or instrument.

          7.3 Successors  and Assigns.  Except as otherwise  expressly  provided
herein,  the  provisions  hereof  shall  inure to the benefit of, and be binding
upon,  the  successors,  assigns,  heirs,  executors and  administrators  of the
parties hereto.

          7.4 Entire Agreement. This Agreement and the other documents delivered
pursuant  hereto  constitute  the fill and entire  understanding  and  agreement
between the  parties  with  regard to the  subjects  hereof and thereof and they
supersede,  merge  and  render  void  every  other  prior  written  and or  oral
understanding or agreement among or between the parties hereto.

          7.5  Notices.  All  notices  and  other  communications   required  or
permitted  hereunder  shall be in  writing  and shall be  delivered  personally,
mailed by first  class  mail,  postage  prepaid,  or  delivered  by  courier  or
overnight delivery, addressed (a) if to a Purchaser, at such Purchaser's address
set forth on the  Schedule  of  Purchasers,  or at such  other  address  as such
Purchaser  shall have  furnished to the Company and LJCC in writing or (b) if to
the  Company  and  LJCC,  at its  address  set  forth at the  beginning  of this
Agreement, or at such other address as the Company and LJCC shall have furnished
to the Purchasers in writing.  Notices that are mailed shall be deemed  received
five (5) days after deposit in the United  States mail.  Notices sent by courier
or overnight  delivery shall be deemed  received two (days) after they have been
so sent.

          7.6  Severability.  In case any provision of this  Agreement  shall be
found by a court of law to be invalid,  illegal or unenforceable,  the validity,
legality and enforceability of the remaining  provisions of this Agreement shall
not in any way be affected or impaired thereby.
<PAGE>

                                                                     Exhibit "B"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

          7.7 Finder's Fees and Other Fees.

               (a) The Company and LJCC each (i) represents and warrants that it
has  retained  no  finder  or  broker  in  connection   with  the   transactions
contemplated  by this  Agreement and (ii) hereby agrees to indemnify and to hold
Purchasers   harmless  from  and  against  any   liability  for   commission  or
compensation  in the nature of a finder's  fee to any broker or other  person or
firm (and the costs and expenses of defending against such liability or asserted
liability)  for  which  the  Company  or  LJCC,  or  any  of  its  employees  or
representatives, is responsible.

               (b) Each Purchaser (i) represents and warrants that the Purchaser
has  retained  no  finder  or  broker  in  connection   with  the   transactions
contemplated  by this  Agreement and (ii) hereby agrees to indemnify and to hold
the Company and LJCC harmless from and against any liability for any  commission
or compensation in the nature of a finder's fee to any broker or other person or
firm (and the costs and expenses of defending against such liability or asserted
liability) for which such Purchaser, is responsible.

          7.8 Expenses.  The Company,  LJCC and the  Purchasers  shall each bear
their own expenses and legal fees in connection  with the  consummation  of this
transaction.

          7.9 Titles and Subtitles.  The titles of the sections and  subsections
of this  Agreement  are for  convenience  of  reference  only  and are not to be
considered in construing this Agreement.

          7.10 Counterparts.   This  Agreement  may be executed in any number of
counterparts,  each of which  shall be an  original,  but all of which  together
shall constitute one instrument.

          7.11 Delays or Omissions.  No delay or omission to exercise any right,
power  or  remedy  accruing  to the  Company  or  LJCC or to any  holder  of any
securities  issued or to be issued hereunder shall impair any such right,  power
or remedy of the Company or LJCC or such holder, nor shall it be construed to be
a waiver of any  breach or  default  under this  Agreement,  or an  acquiescence
therein,  or of or in any similar breach or default  thereafter  occurring;  nor
shall any delay or omission to exercise any right, power or remedy or any waiver
of any single breach or default be deemed a waiver of any other right,  power or
remedy or breach or default theretofore or thereafter  occurring.  All remedies,
either under this Agreement, or by law otherwise afforded to the Company or LJCC
or any holder, shall be cumulative and not alternative.
<PAGE>

                                                                     Exhibit "B"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

     IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered  this
Agreement as of the date first written above, with the execution and delivery of
this  Agreement by each Purchaser  evidenced  either by the majority vote of all
Purchasers at the Annual Meeting or the  Purchaser's  signature  below.

                                          LA JOLLA FRESH SQUEEZED COFFE CO, INC.
                                          a  Washington corporation

                                          --------------------------------------
                                          Kurt B. Toneys, President

                                          STEPHEN'S COFFEE HOLDING, INC.
                                          a California corporation

                                          --------------------------------------
                                          Stephen F. Corey, President
<PAGE>

                                                                     Exhibit "C"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

                     REPRESNTATIONS, WARRANTIES AND WAIVERS

     Section 1. Each Shareholder,  by the execution and delivery of his, her and
its Proxy and Consent or by his,  her or its  approval at the Annual  Meeting of
Shareholders with respect to the  Recapitalization  and Merger and certain other
matter,  hereby re presents and warrants as follows  (capitalized terms used and
not  otherwise  defined  herein shall have the meanings  assigned to them in the
Confidential Disclosure and Consent Solicitation Statement):

     A.  Any  shares  of  Common  Stock of the  Company  were  received  for the
Shareholders's own account and not for the account of any person, and not with a
view   toward   distribution,   assignment   or   resale   to   others,   or  to
franctionalization in whole or in part. No other person has a direct or indirect
beneficial  interest  in such  Common  Stock.  The  Shareholder  will not  sell,
hypothecate  or  otherwise  transfer  such  shares  unless  (a) such  shares are
registered under the Securities Act of 1933, as amended (the  "Securities  Act")
and any applicable state securities law, or (b) in the opinion of legal counsel,
with  which  legal  counsel  of the  Company  agrees,  and  exemption  from  the
registration  requirements  of the  Securities  Acts  and  such  state  laws  in
available. Specifically, the Shareholder is ware that the Common Stock issued to
them may not be sold pursuant to Rule 144  promulgated  under the Securities Act
unless all of the  conditions of such Rule are met. Among the conditions for use
of Rule 144 is the  availability of current  information to the public about the
Company.  Such  information  is not  available,  there is no assurance that such
information will be available.

     B.The  Shareholder has been furnished and has carefully read the Disclosure
Statement  and its attached  Schedules  and  Exhibits  and is familiar  with and
understands the terms of the Plan of Recapitalization  and Merger. In evaluating
the suitability of an investment in the Company and in making a determination of
whether or not to approve the Plan of Recapitalization,  the Shareholder has not
relied upon any  representations or other information  (whether oral or written)
from the  Company  or any other  person or entity  whatsoever  other than as set
forth in the materials  described  above and its  Schedules  and Exhibits.  With
respect to tax and other economic  considerations  involved in this  investment,
the  Shareholder  is not  relying  on the  Company.  The  Shareholder  carefully
considered  and,  to  the  extent  the  Shareholder   believed  such  discussion
necessary,  discussed with the Shareholder's professional legal, tax, accounting
and financial  advisors the  suitability of an investment in the Company and the
consequences of the Plan of Recapitalization  for that Shareholder's  particular
tax,  financial and legal  situation.  The  Shareholder  has determined that the
Common  Stock  he,  she or it has  received  is a  suitable  investment  for the
Shareholder.

                                                                     Exhibit "C"
                                                                              to
<PAGE>

                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

     C. The Company has always made available to the  Shareholder  all documents
and information that the Shareholder has requested  relating to an investment in
the Company and to the Plan of Recapitalization.

     D. The  Shareholder has been fully informed to the  Shareholder's  complete
satisfaction  concerning  the  organizational  aspects,  business,   operations,
finances and all other matters with respect to the Company that the  Shareholder
considered  significant  for the purpose of making an  investment  decision with
respect  to the  Company  and in  determining  whether  or  not to  approve  the
Recapitalization.  The Shareholder recognizes that an investment in the Company,
and the  Recapitalization,  involves  substantial  risks,  including loss of the
entire amount of such  investment,  and has taken in to account and  understands
all of these risk factors  including,  but not limited to, those set forth under
the caption "Considerations for Shareholders" in the Disclosure Statement.

     E. If the  Proxy and  Consent  is  executed  and  delivered  on behalf of a
partnership,  corporation,  trust or  retirement  plan:  (I)  such  partnership,
corporation,  trust of  retirement  plan has been  duly  authorized  and is duly
qualified  (a) to  execute  and  deliver  the  Proxy and  Consent  and all other
instruments  executed an delivered on behalf of such  partnership,  corporation,
trust or retirement plan or by use of a power of attorney in connection with the
approval of the Recapitalization,  (b) to delegate authority pursuant to a power
of attorney,  and (c) to purchase and hold such Common Stock; (ii) the signature
of the  party  signing  on  behalf of such  partnership,  corporation,  trust or
retirement  plan has not been formed for the specific  purpose of acquiring  the
Common  Stock,  unless each  beneficial  owner of such  entity is an  accredited
investor ("Accredited Investor") within the meaning of Rule 501(a) of Regulation
D  promulgated  under the  Securities  Act  ("Regulation  D") and has  submitted
information substantiating such qualification.

     F. The  Shareholder  is either an  Accredited  Investor or an investor who,
either  alone  or with  the  Shareholder's  purchaser  representative,  has such
knowledge and experience in financial and business  matters that the Shareholder
is sufficiently  capable of evaluating the merits and risks of the investment in
the Company and the proposed  Recapitalization.  The  Shareholder's net worth or
annual income is such that the loss of the Shareholder's  entire investment,  or
its  unavailability,  will  not  result  in  serious  harm or  detriment  to the
Shareholder.
<PAGE>

     G. The  Shareholder  shall  indemnify and hold harmless the Company and any
officer, director, control person, advisor, attorney,  accountant or other agent
of any such entity who was or is a party or is  threatened to be made a party to
any threatened,  pending or completed action, suit or preceding,  whether civic,
criminal,  administrative  or  investigative,  by reason of or arising  from any
actual or alleged  misrepresentation  or  misstatement  of facts or  omission to
represent or state facts made by the  Shareholder to the Company  concerning the
Shareholder  or the  Shareholder's  financial  position in  connection  with the
Recapitalization,  including  without  limitation,  any such  misrepresentation,
misstatement  or omission  contained in the form of First  Amendment to Investor
Subscription Agreement or in the Proxy and Consent, against losses,  liabilities
and expense for which the Company or any officer,  director or control person of
any such entity has not otherwise been reimbursed  (including  attorney's  fees,
judgment, fines and amounts paid in settlement) actually and reasonably incurred
by such person or entity in connection with such action, suit or proceeding.

     H. If the  Shareholder  is a person  acting  pursuant to  discretionary  or
similar authority with respect to an account beneficially owing its shares, such
Shareholder  represents that to the best of such  Shareholder's  knowledge after
due inquiry each of the  foregoing  representations  and  warranties is true and
correct with respect to each  individual  or entity  having any interest in such
account.

Section 2. Furthermore,  each Shareholder,  by the execution and delivery of its
Proxy and  Consent  or by its  approval  at the  Annual  Meeting  of the Plan of
Recapitalization and Merger hereby agrees that, in the event that the Company is
deemed to have violated any  applicable  federal or stated  securities  law with
respect of he offer or sale of its shares,  to the extent permitted by law, each
Shareholder  hereby  waives his, her or its right of  rescission  to recover the
consideration paid (or interest accrued thereon) for such shares including an ex
press waiver of rights or remedies,  he, she or it may have under  Section 25503
of the Corporate  Securities Law of California.  Each Shareholder,  on behalf of
himself,  herself,  or itself,  and each of his,  her or its  respective  heirs,
personal  representatives,  successors and assigns,  hereby forever releases and
discharges  the  Company,   and  its  past  and  present  officers,   directors,
Shareholders,  principals, joint ventures, partners, employees, agents, personal
representatives, successors and assigns, and all entities presently and formerly
related  to or  affiliated  with the  Company,  of and from all and all  claims,
demands, damages, actions, causes of actin of every kind, in law and equity, and
for the  otherwise  known and unknown,  suspected or  unsuspected,  disclosed or
undisclosed for damages,  actual,  consequential or exemplary,  past, present or
future,  arising  from the offer,  sale of  issuance  of the  shares,  including
without  limitation all claims and demands  arising out of or in any way related
to a claim of a right of  rescission to release  consideration  plus interest in
exchange for the shares.  Each  Shareholder  expressly  hereby waives all rights
under  Section 1542 of the  California  Civil Code,  which  Section  provides as
follows:
<PAGE>

                                                                     Exhibit "C"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

         SECTION  1542.  (GENERAL  RELEASE  -- CLAIMS  EXTINGUISHED).  A GENERAL
                  RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR  DOES NOT
                  KNOW OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF  EXECUTING
                  THE  RELEASE,  WHICH  IF KNOWN  BY HIM  MUST  HAVE  MATERIALLY
                  AFFECTED HIS SETTLEMENT WITH HIS DEBTOR.

     B.   In the event that any of the Shareholders are entitled to a rescission
          of the consideration  paid for the shares arising from the offer, sale
          or  issuance  of such  shares,  and  the  waiver  provided  for in the
          immediately  preceding  section  is  deemed  unenforceable  by a court
          competent jurisdiction or otherwise, each Shareholder hereby expressly
          agrees to  recontribute  any and all  proceeds  which they may receive
          arising from such rescission to the Company and hereby reaffirms their
          subscription for the shares pursuant to the terms of the form of First
          Amendment Investor Subscription.

<PAGE>

                                                                     Exhibit "D"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

                                PROXY AND CONSENT
                                -----------------
                         STEPHEN'S COFFEE HOLDING, INC.
                ANNUAL MEETING OF SHREHOLDERS - DECEMBER 7, 1999

     The undersigned  holder(s) of Common Stock (collectively,  the "Shares") of
Stephen's Coffee Holding, Inc. (the "Company") hereby nominates, constitutes and
appoints Mr. Stephen Corey, a California resident, the attorney, agent and proxy
of the undersigned,  with full power of substitution,  to vote all Shares of the
Company  which the  undersigned  is  entitled  to vote at the  1998-1999  Annual
Meeting  of  Shareholders  of the  Company  (the  "Meeting")  to be held at 9060
Activity Road, Suite A., San Diego,  California  92126,  December 7, 1999, 10:00
a.m.  Pacific  Standard  Time  and  any and all  adjournments  or  postponements
thereof, with respect to the matters described in the accompanying  Confidential
Disclosure and Consent Solicitation  Statement,  and in his discretion,  on such
other matters which properly come before the meeting, as fully and with the same
force and  effect as the  undersigned  might or could do if  personally  present
thereat, as follows:

1.   To ratify the Plan of Recapitalization, including the Merger,
     and Amendment to the Investor's Subscription Agreements

     FOR     AGAINST      ABSTAIN

2.   To vote Stephen F. Corey as Chairman of Board, and
     Gregory D. Writer, Jr. and Kurt B. Toneys as members of
     the Board of Directors until 2000 Annual Meeting of the Shareholders.

     FOR     AGAINST      ABSTAIN

3.   To transact such other business as may properly come before
     the Meeting and any adjournment or adjournments or postponements
     thereof.  Management presently knows of no other business to be
     presented by or on behalf of the Company or its Board of Directors
     at the Meeting.

     FOR     AGAINST      ABSTAIN

     THIS PROXY AND CONSENT IS  SOLICITED ON BEHALF OF THE CHAIRMAN OF THE BOARD
OF  DIRECTORS  AND MAY BE REVOKED  PRIOR TO ITS  EXERCISE.  PLEASE SIGN AND DATE
BELOW.

THE  CHAIRMAN   RECOMMENDS  A  VOTE  OF  "FOR"  THE  ADOPTION  OF  THE  PLAN  OF
RECAPITALIZATION,  INCLUDING THE MERGER,  AND AMENDMENT.  THIS PROXY AND CONSENT
COFERS  AUTHORITY  TO AND  SHALL  BE VOTED  "FOR"  THE  ADOPTION  OF THE PLAN OF
RECAPITALIZATION  UNLESS OTHER  INSTRUCTIONS  ARE  INDICATED,  IN WHICH CASE THE
PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS.
<PAGE>

                                                                     Exhibit "D"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

BY  EXECUTION  AND  DELIVERY  OF THIS PROXY AND  CONSENT  EACH  SHAREHOLDER  WHO
ACQUIRED  SHARES  FROM THE  COMPANY  IN A  PRIVATE  SECURITIES  OFFERING  HEREBY
EXPRESSLY AGREES WITH AND REAFFIRMS THE REPRESENTATIONS,  WARRANTIES AND WAIVERS
CONTAINED IN THE CONFIENTIAL  DISCLOSURE AND CONSENT SOLICITATION  STATEMENT AND
HEREBY EXPRESSLY REPRESENTS,  WARRANTS,  AND WAIVES WITH RESPECT TO SUCH MATTERS
AS CONTAINED IN THE CONFIDENTIAL  DISCLOLSURE AND CONSENT SOLICITATION STATEMENT
AS OF THE DATE HEREOF.

     BY EXECUTION  AND DELIVERY OF THIS PROXY AND CONSENT EACH  SHAREHOLDER  WHO
ACQUIRED  SHARES FROM THE COMPANY IN A P RIVATE  SECURITIES  OFFERING  EXPRESSLY
WAIVES ALL RIGHTS UNDER SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH SECTION
PROVIDES AS FOLLOWS:

          SECTION 1542. (GENERAL RELEASE - EXTENT).
          A GENERAL  RELEASE DOES NOT EXTEND TO CLAIMS  WHICH THE CREDITOR  DOES
          NOT KNOWOR  EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING  THE
          RELEASE,  WHICH  IF KNOWN BY HIM MUST  HAVE  MATERIALLY  AFFECTED  HIS
          SETTLEMENT WITH THE DEBTOR.

                                                -----------------------------
                                                   Initials of Undersigned

     IF ANY OTHER  BUSINESS IS  PRESENTED  AT THE  MEETING,  THIS PROXY SHALL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.

Dated:                                      ------------------------------------
       -----------------------                   (Please print name)

                                            ------------------------------------
                                                 (Signature of Shareholder)

Dated:                                      ------------------------------------
       -----------------------                  (Please print name)

                                            ------------------------------------
                                                 (Signature of Shareholder)

<PAGE>

                                                                     Exhibit "D"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

(Please  date this  Proxy and  Consent  and sign you name as it  appears on your
stock certificates. Executors, administrators, trustees, etc., should give their
full titles. All joints owner should sign).

     I do      do not    expect to attend the Meeting.  Number of Persons:____

     The undersigned's Purchaser Representative, if any, represents as follows:

I have reviewed and discussed the plan of Recapitalization and Merger, including
the Merger,  Recapitalization,  and  Amendment  to the  Investor's  Subscription
Agreements,  with the  undersigned  whose  signature  appears  above with a view
toward   determining   whether  the  undersigned's   approval  of  the  Plan  of
Recapitalization is appropriate in light of the undersigned's circumstances,  as
such circumstances have been disclosed to me by the undersigned.

                                  ----------------------------------------------
                                  Signature of Purchaser Representative (if any)

                                  ----------------------------------------------
                                  Signature of Purchaser Representative (if any)

<PAGE>

                                                                     Exhibit "E"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

                          AGREEMENT AND PLAN OF MERGER

     This  Agreement  and Plan of Merger dated as of June 15, 1999 (this "Merger
Agreement"),  by and  between  LA  JOLLA  FRESH  SQUEEZED  COFFE  CO.,  INC.,  a
Washington  corporation  (the  "Surviving  Corporation"),  and STEPHEN'S  COFFEE
HOLDING  CORP.,  a  California   corporation   ("SCH";  SCH  and  the  Surviving
Corporation  being  hereinafter  collectively  referred  to as the  "Constituent
Corporations").

     INTENTING TO BE LEGALLY  BOUND,  and in  consideration  of the premises and
material covenants and agreements contained herein, the Constituent Corporations
hereby agree as follow:

                                    ARTICLE 1

                                   The Merger

1.1  Merger of SCH With and Into the Surviving Corporation.

     (a) Agreement to Merge. Subject to the terms of this Merger Agreement,  SCH
shall be merged with and into the Surviving Corporation (the "Merger").

     (b) Effective  Time of the Merger.  The Merger shall become  effective upon
June 15,  1999.  The date  that the  Merger  becomes  effective  is  hereinafter
referred  to as the  "Effective  Date of  Merger,"  and the time that the Merger
becomes  effective  is  hereinafter  referred to as the  "Effective  Time of the
Merger".

     (c) Surviving  Corporation.  At the Effective Time of the Merger, SCH shall
be merged with and into the  Surviving  Corporation  and the separate  corporate
existence of SCH shall there upon cease. The Surviving  Corporation shall be the
surviving  corporation in the Merger and the separate corporate existence of the
Surviving  Corporation,  with all its  purposes,  objects,  rights,  privileges,
powers,  immunities and franchises,  shall continue unaffected and unimpaired by
the Merger.

1.2  Effect of the Merger; Additional Actions.

     (a) Effects. The Merger shall have the effects set forth in Section 1107 of
the California Code.
<PAGE>

                                                                     Exhibit "E"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

     (b)  Additional  Actions.  If, at any time after the Effective  Time of the
Merger,  the Surviving  Corporation shall consider or be advised that any deeds,
bills,  of sale,  assignments,  assurances  or any other  actions  or things are
necessary or desirable,  (I) to best,  perfect or confirm of record or otherwise
in the Surviving  Corporation it right, title or interest in, to or under any of
the rights,  properties or assets of either Constituent  Corporation acquired or
to be acquired by the  Surviving  Corporation  as a result of, or in  connection
with,  the Merger or (ii) to  otherwise  carry our the  purposes  of this Merger
Agreement,  each Constituent Corporation and its officers and directors shall be
deemed to have granted to the Surviving  Corporation  and  irrevocable  power of
attorney of execute and deliver all such deeds,  bill of sale,  assignments  and
assurances  and to take and do all  such  other  actions  and  things  as may be
necessary or desirable to best,  perfect or confirm any and all right, title and
interest in, to and under such  rights,  properties  or assets in the  Surviving
Corporation  and  otherwise to carry out the purposes of this Merger  Agreement;
and the officers and directors of the Surviving Corporation are fully authorized
in the name of each  Constituent  Corporation  or  otherwise to take any and all
such actions.

                                    ARTICLE 2

                          The Constituent Corporations

     2.1 Incorporation of the Surviving  Corporation.  The Surviving Corporation
was  originally  incorporated  under  the  laws of the  State of  Washington  on
February 9, 1987.

     2.2 Incorporation of SCH. SCH was incorporated  under the laws of the State
of California on April 17, 1997.

                                    ARTICLE 3

                      Articles of Incorporation, Bylaws and
               Directors and Officers of the Surviving Corporation

     3.1 Articles of  Incorporation  of Surviving  Corporation.  The Articles of
Incorporation of the Surviving Corporation in effect on the Effective Date shall
continue  to be the  Articles of the  Surviving  Corporation  without  change or
amendment  until further  amended,  if ever, in accordance  with the  provisions
hereof and applicable laws.

                                                                     Exhibit "E"
                                                                              to
<PAGE>

                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

     3.2  Bylaws  of  Surviving   Corporation.   The  bylaws  of  the  Surviving
Corporation  in effect on the Effective  Date shall continue to be the bylaws of
the Surviving  Corporation without change or amendment until further amended, if
ever, in accordance with the provisions hereof and applicable laws.

     3.3  Directors  and Officers of Surviving  Corporation.  The  directors and
officers of the Surviving  Corporation  shall  continue and remain as such after
the effective date for the full unexpired terms of their respective  offices, or
until their  successors shall have been elected or qualified our until otherwise
provided by law.

                                    ARTICLE 4

                Effective of the Merger on the Securities of the
                            Constituent Corporations

     4.1 Stock of  SCH. Upon  the Effective  Date,  by virtue of the  Merger and
without any action on the part of the holder thereof,  each share of SCH capital
stock, including all Common Stock outstanding immediately prior thereto shall be
changed and  converted  into 1/4 full-paid  and  nonassessable  shares of Common
Stock of the Surviving Corporation.

     4.2  Stock  Certificates.  On and  after  the  Effective  Date,  all of the
outstanding  certificates  which prior to that time  represented  share of SCH's
Common  Stock shall be deemed for all  purposes to evidence  ownership of and to
represent the shares of the Surviving Corporation stock into which the shares of
SCH Common Stock  represented by such certificates have been converted as herein
provided.  The  registered  owner on the  books  and  records  of the  Surviving
Corporation or its transfer  agent of any such  outstanding  stock  certificates
shall,  until such  certificate  shall have been  surrendered  for  transfer  or
otherwise accounted for to the Surviving Corporation or its transfer agent, have
and be entitled  toe exercise any voting and other rights with respect to and to
receive any  dividend an other  distributions  upon the shares of the  Surviving
Corporation  Common Stock  evidenced by such  outstanding  certificate  as above
described.

     4.3 Other  Employee  Benefit  Plans.  As of the Effective  Date,  Surviving
Corporation  hereby  assumes all  obligations  of SCH under any and all employee
benefit plans in effect as of said date or with respect to which employee rights
or accrued benefits are outstanding as of said date.
<PAGE>

                                                                     Exhibit "E"
                                                                              to
                                                     Confidential Disclosure and
                                                  Consent Solicitation Statement

                                    ARTICLE 5

                               General Provisions

     5.1  Amendment.  This Merger  Agreement may be deemed by the parties hereto
any time  before or after  approval  hereof by the  shareholders  of SCH and the
Surviving Corporation but, after such approval, no amendment shall be made which
by law requires the further  approval of  shareholders  without  obtaining  such
approval.  This Merger  Agreement may not be amended  except by an instrument in
writing signed on behalf of each of the parties hereto.

     5.2  Abandonment.  At any time  before  the  Effective  Date,  this  Merger
Agreement  may be  terminated  and the Merger may be  abandoned  by the Board of
Directors of either SCH or the Surviving  Corporation  or both,  notwithstanding
approval of this  Merger  Agreement  by the sole  stockholder  of the  Surviving
Corporation and the stockholders of SCH.

     5.3  Counterparts. This  Merger Agreement  may be  executed  in one or more
counterparts,  each of which shall be deemed to be an original, but all of which
together shall constitute one agreement.

     5.4 Governing Law. This Merger Agreement shall be governed in all respects,
including  validity,  interpretation  and  effect,  by the laws of the  State of
California without reference to principles of conflicts of law.
<PAGE>

     IN WITNESS WHEREOF, the parties have duly executed this Merger Agreement as
of the date first written above.

                                   La Jolla Fresh Squeezed Coffee Co., Inc.
                                   A Washington corporation

                                   --------------------------------------------
                                   Kurt B. Toneys, President

                                   SCH CORPORATION
                                   A California corporation

                                   --------------------------------------------
                                   Mr. Stephen F. Corey, PresidentJune 15,1999

                    AGREEMENT OF PURCHASE AND SALE OF ASSETS

                    BY AND BETWEEN LA JOLLA COFFEE CO., INC.

                         AND STEPHEN'S COFFEE CO., INC.

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

                                    RECITALS

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

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

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

                                    AGREEMENT

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

                                   DEFINITIONS

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

                                       2
<PAGE>

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

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

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

     Counsel to the Seller: Robert Nostrand, Esq.

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

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

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

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

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

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

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

     IRS: The Internal Revenue Service.

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

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

                                       3
<PAGE>

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

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

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

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

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

     PBGC: The Pension Benefit Guaranty Corporation.

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

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

                                       4
<PAGE>

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

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

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

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

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

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

     SEC: The Securities and Exchange Commission.

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

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

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

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

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

                                        5
<PAGE>

                                    ARTICLE 1

                                 THE TRANSACTION

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

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

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

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

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

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

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

                                       6
<PAGE>

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

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

                                    ARTICLE 2

                                     CLOSING

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

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

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

                                       7
<PAGE>

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

                                    ARTICLE 3

                         REPRESENTATIONS AND WARRANTIES

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

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

     (b) Capitalization and Indebtedness for Borrowed Monies.

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

                                       8
<PAGE>

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

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

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

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

                                       9
<PAGE>

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

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

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

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

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

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

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

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

                                       10
<PAGE>

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

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

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

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

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

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

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

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

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

                                       11
<PAGE>

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

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

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

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

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

                                       12
<PAGE>

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

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

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

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

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

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

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

          (iii) Contract with any labor union;

                                       13
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       14
<PAGE>

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

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

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

                                       15
<PAGE>

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

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

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

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

                                       16
<PAGE>

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

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

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

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

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

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

                                       17
<PAGE>

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

                                       18
<PAGE>

     (b) Capitalization and Indebtedness for Borrowed Monies.

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

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

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

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

                                       19
<PAGE>

     (e) LEFT INTENTIONALLY BLANK

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

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

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

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

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

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

                                       20
<PAGE>

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

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

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

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

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

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

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

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

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

                                       21
<PAGE>

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

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

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

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

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

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

                                       22
<PAGE>

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

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

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

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

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

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

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

          (iii) Contract with any labor union;

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

                                       23
<PAGE>

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

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

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

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

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

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

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

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

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

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

     (n) Inventories. Purchaser has no inventories.

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

                                       24
<PAGE>

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

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

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

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

                                       25
<PAGE>

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

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

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

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

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

                                       26
<PAGE>

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

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

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

                                    ARTICLE 4

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

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

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

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

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

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

                                       27
<PAGE>

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

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

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

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

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

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

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

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

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

                                       28
<PAGE>

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

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

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

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

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

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

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

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

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

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

                                       29
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

                                       30
<PAGE>

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

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

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

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

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

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

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

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

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

                                       31
<PAGE>

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

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

                                       32
<PAGE>

     Section 4.3 Undertakings of the Purchaser and the Seller.

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

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

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

                                       33
<PAGE>

                                    ARTICLE 5

                              CONDITIONS PRECEDENT

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

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

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

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

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

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

                                       34
<PAGE>

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

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

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

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

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

     (g) INTENTIONALLY LEFT BLANK.

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

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

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

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

                                       35
<PAGE>

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

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

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

                                    ARTICLE 6

                             POST-CLOSING COVENANTS

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

                                 INDEMNIFICATION

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

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

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

                                       36
<PAGE>

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

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

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

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

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

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

                                       37
<PAGE>

                                    ARTICLE 8

                       TERMINATION, AMENDMENT AND WAIVER:

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

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

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

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

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

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

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

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

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

                                       38
<PAGE>

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

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

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

                                   ARTICLE 9

                                 MISCELLANEOUS

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

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

                                       39
<PAGE>

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

              with a copy to:

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

     (b)      If to the Seller:

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

              with a copy to:

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

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

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

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

                                       40
<PAGE>

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

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

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

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

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

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

                                       41
<PAGE>

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

                                       42
<PAGE>

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

PURCHASER:

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

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

SELLER:

STEPHEN'S COFFEE, INC.

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

                                       43
<PAGE>

Schedule 1.1

STEPHEN'S COFFEE INC. SCHEDULE OF ASSETS

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

STEPHEN'S COFFEE INC. SCHEDULE OF LIABILITIES

LEASES

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

Forest Financial equipment lease                     #5000530001

LEGAL

Robert M. Nostrand, Esq.                             $30,000

TAXES

Employment taxes, interest and penalties             $9,500

OTHER DEBTS

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

LITIGATION

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

<PAGE>

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

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

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

<PAGE>

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

LONG TERM CONTRACTS
See leases

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

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

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

DEBTS
See attached

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

OPTIONS

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

o    2,000,000 shares on 1st anniversary

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

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

     Based on stock  option/employment  agreement

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

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

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

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

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

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

<PAGE>

Secretary of Corporation
Chris Lucidi

EMPLOYEES

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

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

<PAGE>

                                    ADDENDUM

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

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

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

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

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