Coastal Foods Signs $750,000 Contract With VIP Sales Company Inc.; Agreement Aids in Financial Turnaround.

HOUSTON--(BUSINESS WIRE)--Dec. 18, 1998--Coastal Foods Inc. (OTC BB:XPIE) today announced it has signed a three-year contract with VIP Sales Company Inc. of Tulsa, Okla., for a minimum of $750,000 per year. The announcement precedes a contract signed earlier this week with Sweet Goods L.L.C. of Tarzana, Calif. for $4.2 million. Under this agreement, Coastal Foods will manufacture a private label of a frozen pastry tort shell for VIP, which will in turn manage marketing and sales of the product.

"With this contract, Coastal Foods hopes to begin its financial turnaround," said W. Cecil Ferguson, president of Coastal Foods. "This agreement is an opportunity for us to work with an international frozen food company and establish a long-term relationship. We're excited about the strategic partnership and look forward to exploring additional opportunities with VIP."

In the past eight years, Coastal Foods has supplied pastry products to restaurant chains and grocery stores throughout the United States. Under this agreement, the product can be found in frozen food aisles in major grocery store chains.

Founded in 1990, Coastal Foods Inc. manufactures frozen and baked pastry products, such as muffins, crusts and cobblers, and has sold nationally to several major restaurant chains including KFC, Ryan's Steak House and Shoney's Restaurants Inc.

With more than 30 years experience in the frozen food business, VIP Sales Company supplies retail grocery, food service and O.E.M. companies with a variety of frozen fruits, vegetables, home meal replacement and pastries under a proprietary and private label.

Forward-looking statements made herein are based on current expectations of the company that involve a number of risks and uncertainties and should not be considered as guarantees of future performance. These statements are made under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. The factors that could cause actual results to differ materially include: interruptions or cancellation of the contract with VIP Sales Company or other existing contracts, impact of competitive products and pricing, product demand and market acceptance risks, the presence of competitors with greater financial resources than the company, product development and commercialization risks and an inability to deal with outstanding creditors, including judgment creditors, and to arrange additional debt or equity financing.