TENDER OFFER AGREEMENT


          THIS  TENDER  OFFER  AGREEMENT  ("Agreement")   dated  as  of the 28th
     day of December 2000, by and among The Langer  Biomechanics  Group, Inc., a
New York  corporation  (the "Company"),  and  OrthoStrategies,  Inc., a New York
corporation ("OS") and OrthoStrategies Acquisition Corp., a New York corporation
and wholly owned subsidiary of OS ("Purchaser").

                                    RECITALS

          WHEREAS,  the  respective  Boards of  Directors  of OS,  Purchaser and
the  Company  have  determined  that it  is  in  the  best  interests  of  their
respective  shareholders  for  Purchaser  to acquire  majority  ownership of the
Company on the terms and condition set forth herein;

          WHEREAS, it is intended that  such   acquisition  be  accomplished  by
Purchaser's  effecting a cash  tender  offer to purchase up to 75% of the issued
and outstanding shares of common stock, $.02 par value per share, of the Company
(the "Shares"); and

          WHEREAS, the Company,  OS  and   Purchaser   desire  to  make  certain
representations,  warranties,  covenants and agreements in connection  with this
Agreement.

          NOW, THEREFORE, in consideration of the foregoing  and the  respective
representations,  warranties,  covenants and  agreements  set forth herein,  the
parties hereto agree as follows:

                                    SECTION I

                                THE TENDER OFFER

          A. Tender  Offer.  (i)  Provided  that this  Agreement  shall not have
been   terminated  in  accordance  with  Section  X   hereof,  as   promptly  as
practicable  (but in no event later than eight (8) business  days  following the
execution and delivery of this  Agreement,  unless the Company and the Purchaser
have otherwise agreed), Purchaser will commence a tender offer (the "Offer") for
up to 1,959,886 Shares (representing 75% of the Shares currently  outstanding as
represented by the Company in Section III.D) at a price of $1.525 per Share, net
to the seller in cash (as such Offer may be amended in accordance with the terms
of this  Agreement)  (the  "Offer  Price"),  which Offer shall be subject to the
terms and conditions set forth in Annex A hereto (the "Offer  Conditions").  The
initial expiration date of the Offer shall be the date 20 business days from and
including  the  date  (the  "Commencement  Date")  the  Offer is  commenced  (in
accordance with the applicable  regulations).  Purchaser  expressly reserves the
right, in its sole discretion, to waive any condition and to set forth or change
any other term or  condition  of the Offer,  provided  that,  unless  previously
approved  by the Company in writing,  no  provision  may be set forth or changed
which  decreases the price per Share  payable in the Offer,  changes the form of
consideration  payable in the Offer  (other  than by adding  consideration),  or
imposes conditions to the Offer in addition to those set forth herein that are

<PAGE>


materially  adverse  to  holders  of  the Shares. Purchaser covenants and agrees
that,  subject  to the terms and  conditions  of the  Offer,  including  but not
limited to the Offer  Conditions and the provisions  regarding  proration of the
Shares to be  purchased,  it will  accept  for  payment  and pay for all  Shares
validly tendered and not withdrawn that it is obligated to purchase (i.e., if at
least 1,959,886  Shares are tendered,  then 1,959,886 Shares will be purchased),
as soon as it is permitted to do so under  applicable law.  Purchaser shall have
the  right,  in its sole  discretion,  to extend  the  Offer  from time to time;
provided,  however, that, without the written consent of the Company,  Purchaser
cannot extend the Offer for more than five business days unless  applicable laws
or regulations so require or a condition  which is a prerequisite  to fixing the
Closing  Date has not been  satisfied.  In  addition,  the  Offer  Price  may be
increased  and the  Offer  may be  extended  to the  extent  required  by law in
connection with such increase in each case without the consent of the Company.

          (ii) The  Company  hereby  approves  of and  consents to the Offer and
represents and warrants  that:  (i) its Board of Directors  (the "Board"),  at a
meeting duly called and held on December 19, 2000,  unanimously  (A)  determined
that this  Agreement and the  transactions  contemplated  hereby,  including the
Offer,  are fair to and in the best  interests  of the  holders of  Shares,  (B)
approved this Agreement and the transactions  contemplated hereby, including the
Offer, and (C) resolved to recommend, subject to its continued fiduciary duties,
that the stockholders of the Company accept the Offer and tender their Shares to
Purchaser;  and (ii) Cronkite & Kissell (the "Financial  Advisor")  delivered to
the Board on  December  28,  2000,  its  opinion  that the  consideration  to be
received by holders of Shares  pursuant to the Offer is fair to such holders and
the Company from a financial point of view and such opinion has not been revoked
or withdrawn.  The Company has been  authorized  by the Financial  Advisor (such
consent not to be  unreasonably  withdrawn),  to include a copy of such fairness
opinion (or a reference thereto) in a  Solicitation/Recommendation  Statement on
Schedule  14D-9  (the  "Schedule  14D-9") to be filed  with the  Securities  and
Exchange  Commission  ("SEC") upon commencement of the Offer. The Company hereby
consents  to the  inclusion  in the  Offer  Documents  (as  defined  in  Section
1.A(iii)) of the recommendations of the Board described herein.

          (iii) On the date the Offer is  commenced,  Purchaser  shall file with
the SEC a Tender  Offer  Statement  on  Schedule  TO with  respect  to the Offer
(together with all amendments and supplements thereto and including the exhibits
thereto,  the "Schedule  TO").  The Schedule TO will include,  as exhibits,  the
Offer to Purchase and a form of letter of transmittal and summary  advertisement
(collectively,  together with any amendments and supplements thereto, the "Offer
Documents").  The Offer Documents will comply in all material  respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC  and  on  the  date  first  published,   sent  or  given  to  the  Company's
shareholders,  shall not contain any untrue statement of a material fact or omit
to state any material fact  required to be stated  therein or necessary in order
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading.  Notwithstanding the foregoing,  no representation is
made by  Purchaser  with respect to the  information  supplied by the Company in
writing for inclusion in the Offer  Documents.  Purchaser  further agrees to use
commercially  reasonable  efforts to cause the Offer  Documents to be filed with
the SEC and to be disseminated to holders of Shares,  in each case as and to the
extent required by applicable  federal  securities laws.  Purchaser,  on the one
hand,  and the  Company,  on the other  hand,  agree  promptly  to  correct  any
information  provided by it for use in the Offer  Documents if and to the extent
that it shall have  become  false and  misleading  in any  material  respect and
Purchaser

                                      -2-
<PAGE>

further  agrees  to  use  commercially  reasonable  efforts  to  cause the Offer
Documents  as so corrected  to be filed with the SEC and to be  disseminated  to
holders of the Shares,  in each case as and to the extent required by applicable
federal  securities  laws.  The  Company  and its  counsel  shall be  given  the
opportunity  to review  the  initial  Schedule  TO,  and any and all  amendments
thereto,  before they are filed with the SEC. In addition,  Purchaser  agrees to
provide  the Company  and its  counsel  copies of any written  comments or other
communications  that Purchaser or its counsel may receive from time to time from
the SEC or its staff with  respect  to the Offer  Documents  promptly  after the
receipt of such comments or other communications.

          (iv)  Concurrently  with the  commencement  of the Offer,  the Company
shall  file with the SEC a  Solicitation/Recommendation  Statement  on  Schedule
14D-9  which,  subject  to the  terms  of  this  Agreement,  shall  contain  the
recommendation referred to in clause (C) of Section 1.A(ii) hereof. The Schedule
14D-9 will comply in all material  respects  with the  provisions  of applicable
federal  securities  laws and,  on the date  filed  with the SEC and on the date
first published, sent or given to the Company's stockholders,  shall not contain
any untrue  statement  of a  material  fact or omit to state any  material  fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  Notwithstanding  the foregoing,  no  representation  is made by the
Company  with  respect to  information  supplied  by  Purchaser  in writing  for
inclusion in the Schedule 14D-9.  The Company further agrees to use commercially
reasonable  efforts to cause the Schedule  14D-9 to be filed with the SEC and to
be disseminated to holders of Shares, in each case as and to the extent required
by  applicable  federal  securities  laws.  The  Company,  on the one hand,  and
Purchaser, on the other hand, agree promptly to correct any information provided
by it for use in the  Schedule  14D-9 if and to the  extent  that it shall  have
become  false and  misleading  in any material  respect and the Company  further
agrees to use commercially  reasonable efforts to cause the Schedule 14D-9 as so
corrected  to be filed  with the SEC and to be  disseminated  to  holders of the
Shares,  in each  case  as and to the  extent  required  by  applicable  federal
securities  laws.  Purchaser and its counsel shall be given the  opportunity  to
review the initial  Schedule 14D-9, and any and all amendments  thereto,  before
they are  filed  with the SEC.  In  addition,  the  Company  agrees  to  provide
Purchaser and its counsel copies of any written comments or other communications
that the Company or its  counsel  may receive  from time to time from the SEC or
its staff with respect to the Schedule  14D-9 promptly after the receipt of such
comments or other communications.

          (v) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to Purchaser, security position listings and any available
listing  or  computer  file  containing  the names and  addresses  of the record
holders of the Shares as of the most recent  practicable date, and shall furnish
Purchaser  with such  information  and assistance as Purchaser or its agents may
reasonably  request  in  communicating  the  Offer  to the  stockholders  of the
Company.


                                      -3-

<PAGE>

                                   SECTION II

                              CLOSING; CLOSING DATE

          The  closing  of the  purchase  of Shares  pursuant  to the Offer (the
"Closing")  shall take place at the  offices of Herrick,  Feinstein  LLP, 2 Park
Avenue,  New York, New York 10016 at 10:00 a.m. (i) on the first business day on
which the last to be fulfilled or waived of the  conditions set forth in Section
IX hereof shall be fulfilled or waived in accordance with this Agreement or (ii)
on such other date as the Company and Purchaser may agree (the "Closing Date").


                                   SECTION III

                         REPRESENTATIONS AND WARRANTIES
                                 OF THE COMPANY

          The Company hereby represents and warrants to OS and Purchaser that as
of the date  hereof  and as of the  Closing  Date,  except as  disclosed  on the
Company Disclosure Schedule (the "Company Disclosure Schedule") delivered by the
Company to OS simultaneously  with the execution and delivery hereof (although a
disclosure in response to any Section on the Company  Disclosure  Schedule shall
be deemed a disclosure in response to all other relevant  Sections,  the Company
will endeavor to provide appropriate cross references):

          A.  Organization  and  Qualification.  The Company is duly  organized,
validly  existing and in good  standing  under the laws of the State of New York
and has full corporate  power and authority to own its properties and to conduct
the  businesses  in  which it is now  engaged.  The  Company  is  authorized  or
qualified to do business and is in good standing in each other  jurisdiction  in
which the character of the property owned, leased or operated by the Company, or
the nature of the business or  activities  conducted  by the Company,  make such
authorization or qualification  necessary.  The Company Disclosure Schedule sets
forth all  jurisdictions  in which the Company is  authorized or qualified to do
business. Except for the Subsidiaries (as defined in III.E.), the Company has no
subsidiaries,  owns no capital stock or other proprietary interest,  directly or
indirectly, in any other corporation,  association, trust, partnership,  limited
liability company, joint venture or other entity ("Entity") and has no agreement
with  any  person,  firm,  corporation  group  or  other  Entity  (collectively,
"Person") to acquire any such capital stock or other proprietary  interest.  The
Company has full power,  authority and legal right, and all necessary approvals,
permits,  licenses and  authorizations  to own its properties and to conduct its
business in the manner in which it is  presently  operated and to enter into and
consummate the transactions contemplated under this Agreement. The copies of the
articles  of  incorporation   and  by-laws  of  the  Company  and  each  of  the
Subsidiaries  ("Charter  Documents")  and minute books and stock  ledgers of the
Company  and the  Subsidiaries,  all of which  have  been  delivered  to or made
available to OS, are complete and correct, in all material respects, and neither
the Company nor any Subsidiaries are in violation of any Charter Documents.

                                      -4-
<PAGE>

          B.  Authority.  The Company has the full legal right,  corporate power
and  authority  to enter  into  this  Agreement  and  perform  the  transactions
contemplated hereby and to perform its obligations pursuant to the terms of this
Agreement.  The  execution  and delivery of this  Agreement by the Company,  the
performance  by the Company of its  covenants and  agreements  hereunder and the
consummation by the Company of the  transactions  contemplated  hereby have been
duly authorized by all necessary corporate action. This Agreement  constitutes a
valid and legally  binding  obligation of the Company,  enforceable  against the
Company in  accordance  with its terms,  except that the  enforceability  may be
limited by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or
similar laws,  affecting  creditors' rights generally and general  principles of
equity.

          C. No Legal Bar; Conflicts. Neither the execution and delivery of this
Agreement,  nor  the  consummation  of  the  transactions  contemplated  hereby,
violates  any  provision  of the  articles  of  incorporation  or by-laws of the
Company or, assuming  compliance with applicable  requirements of the Securities
Exchange Act of 1934 and the rules and regulations  promulgated  thereunder (the
"Exchange Act"), any statute, ordinance,  regulation,  order, judgment or decree
of any court or  governmental  agency or board, or conflicts with or will result
in any breach of any of the terms of or  constitutes  a default under or results
in the  termination  of or the creation of any lien pursuant to the terms of any
contract or  agreement to which the Company or any  Subsidiary  is a party or by
which the Company or any  Subsidiary  or any of the assets of the Company or any
Subsidiary is bound.  Other than compliance with applicable  requirements of the
Exchange Act and the applicable  provisions of the New York Business Corporation
Law (BCL 1600 et. seq.), no consents, approvals or authorizations of, or filings
with, any  governmental  authority or any other person or entity are required in
connection   with  the  execution  and  delivery  of  this   Agreement  and  the
consummation  of the  transactions  contemplated  hereby,  except  for  required
consents, if any, to assignment of permits, certificates,  contracts, leases and
other agreements as set forth in the Company Disclosure Schedule.

          D.  Capitalization.  The  authorized  capital  stock  of  the  Company
consists of (i) 10,000,000  shares of common stock, par value $.02 per share (as
previously defined,  the "Shares"),  and (ii) 250,000 shares of preferred stock,
$1.00  par  value per  share,  of which  1,306  shares  were  issued as Series A
Preferred  Stock and later converted into Shares.  As of the date hereof,  there
are outstanding (w) 2,613,181  Shares,  (x) no shares of preferred stock and (y)
options to purchase an aggregate of 301,000 Shares(collectively, the "Options").
All outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and  nonassessable  and free of preemptive
rights.  Except as set forth in this Section III.D. there are outstanding (1) no
shares of  capital  stock or other  voting  securities  of the  Company,  (2) no
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company, and (3) no options, warrants or other
rights to acquire from the Company,  and no  obligation of the Company to issue,
any  capital  stock,  voting  securities  or  securities   convertible  into  or
exchangeable  for  capital  stock or voting  securities  of the Company (as used
herein,  the term "Company  Securities" shall be deemed to include (i) shares of
capital stock or other voting securities of the Company,  (ii) securities of the
Company  convertible  into or exchangeable for shares of capital stock or voting
securities  of the  Company,  and (iii)  options,  warrants  and other rights to
acquire from the Company any capital  stock,  voting  securities  or  securities
convertible into or exchangeable  for capital stock or voting  securities of the
Company).  There are no  outstanding  obligations  of the  Company or any of its
Subsidiaries to repurchase,  redeem or otherwise acquire any Company Securities.
As of the

                                      -5-
<PAGE>


date  of  this  Agreement,  (i)  the  Company is a NASDAQ small-cap  company and
to its knowledge is in compliance  with the rules and  regulations  governing or
relating  to a NASDAQ  small-cap  listing  company,  and  (ii) has not  received
notification  that (a) it is in violation of the rules or  regulations of NASDAQ
or (b) is being considered for delisting of its shares.

          E.  Subsidiaries.  (i) Each Subsidiary of the Company is a corporation
duly  incorporated,  validly existing and in good standing under the laws of its
jurisdiction of  incorporation.  Each Subsidiary has all corporate power and all
governmental licenses, permits, authorizations,  consents and approvals required
to carry on its business as now conducted  and is duly  qualified to do business
as a foreign  corporation  and in good standing in each  jurisdiction  where the
character of the property  owned or leased by it or the nature of its activities
makes such qualification necessary. For purposes of this Agreement, "Subsidiary"
of the  Company  means  any  corporation  or other  entity  of which  all of the
outstanding  securities  or other  ownership  interests  are owned  directly  or
indirectly  by the  Company.  Unless  otherwise  noted or as the  context  shall
otherwise  require,  references  herein to the Company shall include the Company
and each of the Subsidiaries.

          (ii) All of the  outstanding  capital stock of each  Subsidiary of the
Company is owned by the Company,  directly or indirectly,  free and clear of any
lien, encumbrance, security interest or claim whatsoever. The Company Disclosure
Schedule  sets  forth,  for each  Subsidiary,  the  outstanding  capital  stock,
jurisdiction of incorporation  and all jurisdictions in which it is qualified to
do business as a foreign corporation. There are no outstanding (a) securities of
the Company or any of its  Subsidiaries  convertible  into or  exchangeable  for
shares of capital stock or other voting securities or ownership interests in any
Subsidiary of the Company,  or (b) options,  warrants or other rights to acquire
from the Company or any of its Subsidiaries, and there is no other obligation of
the  Company or any of its  Subsidiaries  to issue,  any capital  stock,  voting
securities or other ownership  interests in, or any securities  convertible into
or exchangeable for any capital stock,  voting securities or ownership interests
in, any Subsidiary of the Company (as used herein, the term "Company  Subsidiary
Securities"  shall be deemed to include  (i)  shares of  capital  stock or other
voting  securities  of any  Subsidiary,  (ii)  securities  of the Company or any
Subsidiary convertible into or exchangeable for shares of capital stock or other
voting securities of any Subsidiary,  or (iii) options, warrants or other rights
to acquire from the Company or any Subsidiary any capital stock, voting security
or other security  convertible  into or exchangeable for capital stock or voting
securities  of any  Subsidiary).  There are no  outstanding  obligations  of the
Company or any of its  Subsidiaries to repurchase,  redeem or otherwise  acquire
any outstanding  Company  Subsidiary  Securities.  The Company has completed the
purchase of the minority interests in its UK Subsidiary and now owns 100% of the
outstanding capital stock of such Subsidiary.

          F. Corporate Records.  The corporate record books (including the stock
records)  of the  Company  and the  Subsidiaries  have  been made  available  to
Purchaser  and are  complete,  accurate and up to date in all material  respects
with all  necessary  signatures  and set forth all meetings and actions taken by
the  shareholders and directors of the Company as required by law or the Company
By-Laws and all transactions involving the Shares.

          G. SEC Filings; Financial Statements. (i) The Company has delivered to
OS (a) the  Company's  annual  report on Form  10-K for the  fiscal  year  ended
February 29, 2000 (the "Company 10-K"),  (b) its quarterly  reports on Form 10-Q
for its fiscal  quarters ended May 27, 2000

                                      -6-
<PAGE>

and  August  26,  2000,  (c)  its  current  reports on Form 8-K dated  September
21, 2000,  Form 8-K/A dated  September 22, 2000 and Form 8-K dated  November 17,
2000,  (d) its proxy or  information  statements  relating  to  meetings  of, or
actions  taken  without a meeting  by, the  stockholders  of the  Company  since
February 29, 2000, and (e) all of its other reports,  statements,  schedules and
registration  statements  filed with the SEC since  February 29,  2000,  and all
materials  incorporated therein by reference (the filings referred to in clauses
(a) through (e) and  delivered to OS prior to the date hereof being  hereinafter
referred to as the "Company Reports").

          (ii) As of their respective filing dates, the Company Reports complied
with  the  requirements  of the  Exchange  Act and  the  rules  and  regulations
promulgated thereunder. As of their respective filing dates, the Company Reports
did not  contain  any untrue  statement  of a  material  fact or omit to state a
material fact required to be stated  therein or necessary to make the statements
made  therein,  in light of the  circumstances  in which  they  were  made,  not
misleading.   The  audited  consolidated   financial  statements  and  unaudited
consolidated  interim  financial  statements of the Company and its Subsidiaries
included in the Company 10-K and the quarterly  reports on Form 10-Q referred to
in Section III. G(i) (collectively,  the "Financial Statements") fairly present,
in  conformity  with  generally  accepted  accounting  principles  applied  on a
consistent  basis  (except  as  may be  indicated  in the  notes  thereto),  the
consolidated  financial  position of the Company and its  Subsidiaries as of the
dates thereof and their  consolidated  results of operations  and cash flows for
the periods then ended (subject,  in the case of any unaudited interim financial
statements,  to normal year-end adjustments,  none of which,  individually or in
the aggregate,  would have a material adverse effect on the financial condition,
business or results of operations of the Company and the Subsidiaries taken as a
whole (a "Company Material Adverse Effect").

          (iii) All issued and  outstanding  Company  Securities  were  offered,
issued,  sold and  delivered by the Company in  compliance  with all  applicable
federal and state laws concerning the issuance of securities.

          (iv)  The  Company  is not a  party  to any  agreement  or  commitment
obligating it to register or offer for sale any Company Securities.

          (v) Since January 1, 1997, the Company has made all necessary  filings
with the SEC required of it under the Exchange Act and other federal  securities
laws.

          H. Absence of Certain Changes. Except as contemplated hereby or as set
forth on the Company Disclosure  Schedule,  subsequent to August 26, 2000, there
has not been any (i) material  adverse  change in the  condition of the Company,
financial or otherwise, or in the results of the operations of the Company; (ii)
material damage or destruction (whether or not insured) affecting the properties
or business  operations of the Company;  (iii) labor dispute or threatened labor
dispute  involving  the  employees  of the  Company or notice that any groups of
employees  or  executive  employees  of the  Company  intend  to take  leaves of
absence,  with or without  pay;  (iv)  actual or, to the best  knowledge  of the
Company,  threatened disputes pertaining to the business of the Company with any
Significant  Customers of the Company,  or, except as noted in Section III.O(b),
actual  or, to the best  knowledge  of the  Company,  threatened  loss of all or
substantially  all the business from any  Significant  Customers of the Company;
(v) changes in the methods or  procedures  for billing or collection of customer
accounts or recording of customer  accounts  receivable or reserves for doubtful

                                      -7-

<PAGE>

accounts  with  respect  to  the  Company;  (vi)  sale,  transfer,   license  or
disposition of tangible or intangible assets other than the sale of inventory in
the ordinary  course of business,  or any  purchase,  acquisition  or license of
tangible  or  intangible  assets  other than the  purchase of  inventory  in the
ordinary  course of  business;  (vii)  transaction  by the  Company  outside the
ordinary  course of business  other than  transactions  involving  only  nominal
amounts;  (viii)  declaration  or payment of any  dividend  or  distribution  in
respect of the capital stock, or any direct or indirect redemption, purchase, or
other  acquisition  of  any  capital  stock,  of the  Company;  (ix)  change  in
accounting  methods  or  practices  (including  any  change in  depreciation  or
amortization policies or rates) by the Company or any revaluation by the Company
of any of its assets;  (x) cancellation,  termination,  waiver,  non- renewal or
breach of any material contract,  agreement,  license, permit or other rights to
which  the  Company  is a party  (including  without  limitation,  any  material
modification,  alteration  or  cancellation  of the Company's  insurance  policy
coverages);  or (xi) other event or  condition  of any  character,  known to the
Company or which in the exercise of reasonable  diligence should be known to the
Company,  not disclosed in this Agreement pertaining to and materially adversely
affecting the Company, its business or the assets of the Company. As of the date
of this Agreement,  the Company is in compliance with the covenants set forth in
Sections 6.6, 6.7 and 6.8 of its loan agreement with American National Bank.

          I.  Liabilities.  Except  as  set  forth  on  the  Company  Disclosure
Schedule,  subsequent  to August 26, 2000,  the Company has not (i) incurred any
bank or  other  indebtedness  for  borrowed  money,  entered  into  any  leases,
licenses,  notes,  loan  agreements,  or contracts,  guarantees,  obligations or
arrangements  of any kind,  including,  without  limitation,  for the payment of
money or  property  to any  person  except  for (x)  contracts,  obligations  or
arrangements  entered into in the ordinary  course of business  consistent  with
past  practices or (y) contracts and  agreements  specifically  contemplated  or
required by the terms and conditions of this Agreement, (ii) permitted any liens
or  encumbrances to attach to any of the assets of the Company or (iii) provided
any loan,  advance,  guaranty  or other  financial  accommodation  to or for the
benefit of any other person or entity.  The Company is not liable for or subject
to any liabilities  except (x) those liabilities  reflected on the balance sheet
contained in the Company's  quarterly report on Form 10-Q for its fiscal quarter
ended August 26, 2000 (the "Interim Balance Sheet"); (y) trade accounts payable,
accrued  payroll,  accrued payroll taxes,  and other current  liabilities of the
Company arising in the ordinary course of business consistent with past practice
since such date;  and (z) those  liabilities  arising in the ordinary  course of
business  consistent  with past  practice  under  any  contract,  commitment  or
agreement set forth on the Company Disclosure  Schedule.  The Company Disclosure
Schedule  sets  forth a detailed  budget of all  capital  expenditures,  hiring,
compensation  increases,  contracts  (providing for payments from or receipts by
the  Company in excess of  $12,500),  leases and other  commitments  incurred or
planned by the Company since the date of the Interim Balance Sheet.

          J. Real  Property  Owned or Leased.  The Company does not own any real
property.  A list and  description  of all  real  property  leased  to or by the
Company or in which the  Company  has any  interest  is set forth in the Company
Disclosure  Schedule  ("Company  Premises").  All leased  real  property is held
subject to written leases or other  agreements  which are valid and effective in
accordance  with their  respective  terms,  and,  to the best  knowledge  of the
Company,  except for  "Immaterial  Defaults"  (as  defined  below)  there are no
existing defaults or events of default,  or events which with notice or lapse of
time  or  both  would  constitute  defaults,  other  than  Immaterial  Defaults,
thereunder  on  the  part  of the  Company.  For  purposes  of  this  Agreement,

                                      -8-
<PAGE>

Immaterial Defaults are defaults which do not, individually or in the aggregate,
cause the Company to fail to comply in all material  respects with the terms and
conditions of the applicable lease, contract,  agreement or instrument. All rent
and other  charges due and owing by the Company under any lease has been paid in
full and there are no disputes or claims between the Company and any other party
to any lease.  No  construction,  improvements,  or alterations  are in process,
under  construction or planned at any Company Premises,  other than the movement
of  partitions  and similar  activities  in  connection  with the  relocation of
Company  personnel.  The Company has no  knowledge  of any  material  default or
claimed or  purported or alleged  material  default or state of facts which with
notice or lapse of time or both would  constitute a material default on the part
of any other party in the  performance of any obligation to be performed or paid
by such  other  party  under any lease  referred  to in the  Company  Disclosure
Schedule.  The Company has not received any written or oral notice to the effect
that any lease  will not be renewed at the  termination  of the term  thereof or
that any such lease will be renewed only at a substantially higher rent.

          All structural,  mechanical and other physical systems,  including but
not limited to heating,  ventilating,  air conditioning,  plumbing,  electrical,
mechanical, sewer and drainage systems at Company Premises are in good operating
condition and repair. All water, sewer, gas, electric,  telephone,  drainage and
other  utilities  required  for use and  operation  of the Company  Premises are
connected  to municipal or public  utility  services and are fully  operable and
adequate to service the  operation of the business of the Company at the Company
Premises.  The Company  Premises  and all  present  uses and  operations  at the
Company  Premises,  including  the  conduct of the  business  of the Company and
related  manufacturing  activity,  comply  in all  material  respects  with  all
statutes, rules, regulations, ordinances, orders, judgments, and restrictions of
any government entity having jurisdiction thereon (including without limitation,
applicable  zoning,  land  use,  fire,  building  codes,   safety,   health  and
handicapped  access  requirements),  as  well  as  all  covenants,   conditions,
restrictions,  easements and similar matters affecting the Company Premises. The
Company has obtained all  Certificates of Use and Occupancy and similar licenses
and permits  required in connection with the use of the Company Premises for the
conduct of the business of the Company. To the Company's knowledge, there are no
pending or threatened condemnation, fire, health, safety, building, zoning, land
use, assessment,  or similar proceedings relating to the Company Premises. There
are no parties other than the Company in possession of any Company  Premises and
there are no sublease,  concession,  occupancy,  license or similar arrangements
affecting the Company Premises.

          K. Title to Assets;  Condition of  Property.  The Company has good and
valid title to the assets owned by the Company,  including,  without limitation,
the  properties  and assets  reflected in the Interim  Balance Sheet (except for
assets  leased  under  leases  set  forth in the  Company  Disclosure  Schedule,
inventory  and other  assets sold or retired and accounts  receivable  collected
upon, since August 26, 2000, in the ordinary course of business  consistent with
past practices).  The Company leases, licenses or owns all properties and assets
used or  necessary  for  use in the  operations  of its  business  as  currently
conducted  other than  inventory  and supplies  which need to be  purchased  and
replenished  in the  ordinary  course of  business;  except for motor  vehicles,
inventory held by certain of the Company's suppliers and personal items assigned
to individual employees, such as mobile phones, pagers and laptop computers, all
of such assets are located on Company  Premises.  All such properties and assets
are in all material  respects in good  condition  and repair,  ordinary wear and
tear excepted,  consistent with their  respective ages, and have been maintained
and  serviced  in

                                       -9-

<PAGE>

accordance  with  the  normal  practices  of the Company and as necessary in the
normal course of business.  None of the assets of the Company are subject to any
liens,  charges,  encumbrances or security  interests except as set forth in the
agreements listed in the Company Disclosure Schedule and for liens for taxes not
yet due and payable or which are being  contested  in good  faith;  and liens of
mechanics, materialmen,  warehouseman,  carriers, landlords and other like liens
securing  obligations  incurred in the ordinary  course of business that are not
yet due and  payable or which are being  contested  in good  faith.  None of the
assets of the Company (or uses to which they are put) fails to conform  with any
applicable  agreement,  law, ordinance or regulation in a manner which is likely
to be materially  adverse to the operations of the business of the Company.  The
Company  Disclosure  Schedule  sets forth a complete and  accurate  Depreciation
Lapse Schedule as of November 25, 2000,  with respect to the Company's  personal
property.  All leases of personal  property used by the Company and set forth on
the Company  Disclosure  Schedule  are in full force and effect and all rent and
other charges thereunder have been paid by the Company.

          L. Taxes.  The Company and each  Subsidiary  has filed or caused to be
filed on a timely  basis  all  federal,  state,  local,  foreign  and  other tax
returns, reports and declarations  (collectively,  "Tax Returns") required to be
filed by it.  All Tax  Returns  filed by or on  behalf of the  Company  and each
Subsidiary are true, complete and correct in all material respects.  The Company
and each Subsidiary has paid all income,  estimated,  excise,  franchise,  gross
receipts, capital stock, profits, stamp, occupation, sales, use, transfer, value
added,  property  (whether  real,  personal  or  mixed),  payroll,   employment,
unemployment,  disability,  withholding,  social security, workers' compensation
and  other  taxes,  and  interest,   penalties,  fines,  costs  and  assessments
(collectively, "Taxes"), reflected as due and payable on such Tax Returns. There
are no tax liens on any of the  properties or assets,  real,  personal or mixed,
tangible or  intangible,  of the Company or any of the  Subsidiaries  except for
liens for Taxes not yet due and  payable  or which are being  contested  in good
faith.  The accrual for Taxes reflected in the Financial  Statements  accurately
reflects  the total  amount of all unpaid  Taxes,  whether or not  disputed  and
whether or not presently due and payable,  of the Company and each Subsidiary as
of the close of the periods covered by the Financial Statements,  and the amount
of the Company's and each Subsidiary's  unpaid Taxes on August 26, 2000 does not
exceed in any material  respect the accrual for Taxes reflected in the Financial
Statements  for the period ended August 26,  2000.  The amount of the  Company's
liability for unpaid Taxes for all periods or portions thereof ending August 26,
2000 did not exceed in any material respect the amount of the current  liability
accruals for Taxes,  as such accruals were reflected on the books and records of
the Company on August 26, 2000.  Since August 26, 2000,  neither the Company nor
any of the  Subsidiaries  has  incurred  any  Tax  liability  other  than in the
ordinary  course of  business.  No  deficiency  in Taxes for any period has been
asserted by any taxing  authority  which remains  unpaid at the date hereof (the
results of any settlement being set forth in the Company  Disclosure  Schedule),
no written  inquiries or notices have been received by the Company or any of the
Subsidiaries  from any taxing  authority  with  respect to  possible  claims for
Taxes,  and neither the  Company nor any of the  Subsidiaries  has any reason to
believe  that such an inquiry or notice is pending or  threatened,  and,  to the
best knowledge of the Company,  there is no basis for any  additional  claims or
assessments  for Taxes.  Neither  the Company  nor any of the  Subsidiaries  has
agreed to the  extension of the statute of  limitations  with respect to any Tax
Return or Tax period. The Company and each Subsidiary has delivered to OS copies
of the  federal  and state  income Tax  Returns  filed by the  Company  and each
Subsidiary  for the past three years and for all other past  periods as to which
the appropriate statute of limitations has not lapsed.

                                      -10-

<PAGE>

          None of the Company's  assets are treated as "tax exempt use property"
within the meaning of Section  168(h) of the Internal  Revenue Code of 1986,  as
amended (the "Code"). There are no contracts, agreements, plans or arrangements,
covering any employee or former  employee of the Company,  that  individually or
collectively,  could give rise to the payment of any amount (or portion thereof)
that could not be deductible  pursuant to Section 280G,  404 or 162 of the Code.
The Company has not filed any consent agreement under Section 341(f) of the Code
or agreed to have 341(f) of the Code apply to  disposition of any asset owned by
the Company.  The Company's  tax basis in its assets is accurately  reflected on
the Company's tax books and records.  The Company Disclosure Schedule sets forth
the  Company's  federal and state "Net  Operating  Losses" and tax credits as of
February 29, 2000.

          M.   Permits; Compliance with Applicable Law.

          (i) General. The Company is not in default under any, and has complied
in all material respects with all, federal,  state,  local and foreign statutes,
ordinances, regulations and laws (including, but not limited to, all federal and
state  fraud and abuse,  "anti-kickback"  and "self-  referral"  laws),  and all
orders,  judgments  and decrees of any court or  governmental  entity or agency,
relating to the Company,  its business or any of the assets of the Company.  The
Company has no  knowledge  of any basis for  assertion  of any  violation of the
foregoing or for any claim for compensation or damages or otherwise  arising out
of any violation of the foregoing. The Company has not received any notification
of any asserted present or past failure to comply with any of the foregoing.

          (ii)  Permits.  Set  forth in the  Company  Disclosure  Schedule  is a
complete and  accurate  list of all permits,  licenses,  approvals,  franchises,
notices and authorizations  issued by governmental  entities or other regulatory
authorities,  federal, state or local (collectively the "Permits"),  held by the
Company in connection  with its business.  To the best knowledge of the Company,
the  Permits set forth in the Company  Disclosure  Schedule  are all the Permits
required or  appropriate  for the conduct of its  business.  All the Permits set
forth in the Company  Disclosure  Schedule are in full force and effect, and the
Company has not engaged in any activity  which would cause or permit  revocation
or  suspension  of any such Permit,  and no action or  proceeding  looking to or
contemplating  the revocation or suspension of any such Permit is pending or, to
the best knowledge of the Company,  threatened.  There are no existing  material
defaults  or events of default or event or state of facts  which with  notice or
lapse of time or both would  constitute a material  default by the Company under
any such  Permit.  The  Company  has no  knowledge  of any default or claimed or
purported  or alleged  default or state of facts  which with  notice or lapse of
time or both would  constitute  a default on the part of any other  party in the
performance  of any  obligation to be performed or paid by any other party under
any Permits set forth in the Company Disclosure Schedule. The use by the Company
of any  proprietary  rights  relating to any Permit does not involve any claimed
infringement of such Permit or rights.

          (iii)     Environmental.

               (a)  The Company has no liability under, has never violated, and
is presently in compliance in all material respects with all environmental,
health or safety-related laws,

                                      -11-
<PAGE>

regulations,   ordinances  or  by-laws  at  the  federal,  state and local level
(the "Environmental Laws") applicable to the Company Premises and any facilities
and operations thereon, except as listed in the Company Disclosure Schedule.

               (b) There exist no conditions  with respect to the environment on
the  Company  Premises,  that  could or do result  in any  damage,  loss,  cost,
expense,  claim,  demand,  order or  liability  to or against the Company by any
third party  including,  without  limitation,  any condition  resulting from the
operation  of the  business of the  Company,  except as set forth in the Company
Disclosure Schedule or except for such conditions which,  individually or in the
aggregate,  do not cause the Company to fail to comply in all material  respects
with applicable Environmental Laws and contractual obligations.

               (c)  The  Company  has  not  generated,  manufactured,   refined,
transported,  treated,  stored,  handled,  disposed,  transferred,  produced, or
processed any pollutant,  toxic substance,  hazardous waste, hazardous material,
hazardous substance,  or oil as defined in or pursuant to any Environmental Laws
("Hazardous  Material")  or any solid waste at the Company  Premises,  or at any
other location,  except in compliance with all applicable Environmental Laws and
except as listed in the Company Disclosure Schedule.

               (d) The  Company has no  knowledge  of the  releasing,  spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching,  disposing,  or  dumping  of any  Hazardous  Materials  into the soil,
surface waters,  ground waters,  land, stream  sediments,  surface or subsurface
strata,  ambient air, sewer system, or any environmental  medium with respect to
the  Company  Premises  ("Environmental  Condition"),  except  as  listed in the
Company Disclosure Schedule.

               (e)  No lien has been imposed on the Company Premises by any
governmental entity at the federal, state, or local level in connection with the
presence on or off the Company  Premises of any  Hazardous  Material,  except as
listed in the Company Disclosure Schedule.

               (f) The Company has not (i) entered  into or been  subject to any
consent decree,  compliance order, or  administrative  order with respect to the
Company Premises or any facilities or operations  thereon;  (ii) received notice
under the citizen suit provision of any of the Environmental  Laws in connection
with the  Company  Premises  or any  facilities  or  operations  thereon;  (iii)
received any request for  information,  notice,  demand  letter,  administrative
inquiry,  or  formal  or  informal  complaint  or  claim  with  respect  to  any
Environmental  Condition  relating to the Company  Premises or any facilities or
operations  thereon; or (iv) been subject to or threatened with any governmental
or citizen  enforcement  action  with  respect to the  Company  Premises  or any
facilities or operations thereon,  except as set forth in the Company Disclosure
Schedule;  and the  Company  has no  knowledge  that  any of the  above  will be
forthcoming.

               (g)  The   Company  has  all   permits   necessary   pursuant  to
Environmental Laws for the conduct of the Company's activities and operations at
the Company Premises and for any past or ongoing  alterations or improvements by
the Company at the  Company  Premises,  which  permits are listed in the Company
Disclosure Schedule.

                                      -12-
<PAGE>

               (h) None of the  following  exists  at the  Company  Premises  in
amounts or conditions which, individually or in the aggregate, cause the Company
to fail to comply in all material respects with applicable  Environmental  Laws:
(1) underground storage tanks, (2) asbestos-containing  materials in any form or
condition, (3) materials or equipment containing  polychlorinated biphenyls, (4)
lead paint, pipes or solder, or (5) landfills,  surface impoundments or disposal
areas, except as listed in the Company Disclosure Schedule.

               (i) The  Company  has  provided  to OS copies  of all  documents,
records and information in its possession or control or available to the Company
concerning  Environmental  Conditions  relevant to the  Company  Premises or any
facilities  or  operations  thereon,  whether  generated  by  Company or others,
including,   without  limitation,   environmental  audits,   environmental  risk
assessments,  or  site  assessments  of  the  Company  Premises,   documentation
regarding  off-site  disposal of Hazardous  Materials,  spill control plans, and
environmental agency reports and correspondence.

               (j) The  Company  has taken or  caused  to be taken  all  actions
necessary  to  ensure  that as of the  consummation  of the  Offer  the  Company
Premises,  all  activities  and  operations  thereon,  and all  alterations  and
improvements  thereto,  comply  in all  material  respects  with all  applicable
Environmental  Laws and with any and all agreements with governmental  entities,
court orders, and administrative orders regarding Environmental Conditions.

          (iv)  Product  Requirements.  Except  as  set  forth  on  the  Company
Disclosure  Schedule,  the  manufacture,   distribution  and  marketing  of  the
Company's  products  does not require the consent or approval  of, or any filing
with, the United States Food and Drug  Administration or any other  governmental
agency.  The Company sells its products at wholesale to distributors,  retailers
and  professionals  for use by their  customers and patients and, except for its
Protect  and  Repairs  program,  does not sell any of its  products at retail or
directly to consumers or patients. The Company does not look to any governmental
agency  (Medicare,  Medicaid,  etc.) or  insurance  carrier  for payment for its
products.  Accordingly,  the Company does not require any  Medicare/Medicaid  or
similar  vendor numbers or  registrations.  The activities of the Company do not
require that it or any of its  employees  qualify or maintain  any  professional
license  or  require  that  the  Company  or  any of its  employees  obtain  any
certification from a trade group or similar self-regulatory body.

          (v) Government  Relations.  The Company has not,  offered or agreed to
offer  anything  of  value  to any  governmental  official,  political  party or
candidate  for  government  office,  nor has it otherwise  taken any action that
would cause the Company to be in violation of the Foreign Corrupt  Practices Act
of 1977, as amended,  or any law of similar  effect.  Except as set forth on the
Company  Disclosure  Schedule,  the  Company  is not a party  to any  government
contracts.  The  Company has not been  suspended  or  debarred  from  bidding on
contracts  or  subcontracts  for any agency or  instrumentality  of any federal,
state,  local or foreign  government.  The Company has never been the subject of
any  regulatory or  disciplinary  proceeding by the United States  Department of
Health and Human  Services  or any other  federal or state  agency  relating  to
Medicare, Medicaid or other health care reimbursement or insurance programs.

          (vi) OSHA. The Company and the Company Premises comply in all material
respects with the Occupational Health and Safety Act ("OSHA") and the Company is
not subject to

                                      -13-
<PAGE>

any  consent  decree,   compliance  order,   administrative   order,  or  a
Cooperative Compliance Plan with respect to OSHA.

          N.   Inventories; Accounts Payable; Accounts Receivable.

          (i) Inventory.  The Company's  Disclosure Schedule includes a complete
and accurate list of the Company's inventory, other than work in progress, as of
November 25, 2000 (the  "Run").  The  inventory  of the Company  consists of raw
materials and supplies,  manufactured and purchased parts,  goods in process and
finished goods, all of which are merchantable and fit for the purposes for which
they were procured or manufactured,  and none of which is slow moving, obsolete,
damaged,  or  defective,  subject  to a  reserve  for  inventory  calculated  in
accordance  with generally  accepted  accounting  principles  applied on a basis
consistent with the past practices of the Company.  The inventory of the Company
is valued in accordance with generally accepted accounting principles applied on
a basis consistent with the past practices of the Company.

          (ii)  Accounts  Payable.  The  accounts  and notes  payable  and other
accrued  expenses  reflected on the Interim Balance Sheet,  and the accounts and
notes payable and accrued expenses incurred by the Company  subsequent to August
26, 2000, are in all respects  valid payables that arose in the ordinary  course
of business.  Since August 26,  2000,  the accounts and notes  payable and other
accrued expenses of the Company have been paid in a manner  consistent with past
practice.

          (iii) Accounts and Notes Receivable. The Company has delivered to OS a
complete and accurate  list,  as of November 25, 2000, of the accounts and notes
receivable of the Company  (including  without  limitation  receivables from and
advances to employees,  officers, directors and consultants),  which includes an
aging of all accounts and notes  receivable  showing  amounts due in thirty (30)
day  aging  categories.  All  accounts  and  notes  receivable  of  the  Company
(collectively,  the "Accounts  Receivable")  represent valid obligations arising
from sales actually made or services  actually  performed in the ordinary course
of business.  The Company has no reason to believe that its Accounts  Receivable
will not be collected in the ordinary  course,  net of any  respective  reserves
shown on the  Company's  books and records  (which  reserves  are  adequate  and
calculated consistent with past practice). There currently is no contest, claim,
or right of setoff,  other than  rebates and returns in the  ordinary  course of
business,  under any contract with any obligor of an Account Receivable relating
to the amount or validity of such Account Receivable.

          O. Contractual and Other Obligations; Significant Customers. Set forth
in the Company Disclosure Schedule is a list as of the date of this Agreement of
all (i) contracts,  agreements, licenses, leases, arrangements (written or oral)
and other  documents  to which the Company is a party or by which the Company or
any of the  assets  of the  Company  is  bound  (including,  in the case of loan
agreements,   a  description  of  the  amounts  of  any  outstanding  borrowings
thereunder and the collateral, if any, for such borrowings) other than contracts
or  agreements  under which the  consideration  to be paid by or received by the
Company is less than $12,500;  (ii)  obligations  and liabilities of the Company
pursuant  to  uncompleted  orders  for  the  purchase  of  materials,  supplies,
equipment and services for the  requirements of the business of the Company with
respect  to which  the  remaining  obligation  of the  Company  is in  excess of
$12,500;  (iii) all open purchase orders by the Company for the purchase or sale
of  inventory,  supplies and

                                      -14-
<PAGE>


equipment;  and  (iv)  contingent  obligations  and  liabilities of the Company;
all of the foregoing being  hereinafter  referred to as the "Contracts".  All of
the  Contracts  are in full force and effect and (A) neither the Company nor, to
the best  knowledge  of the  Company,  any  other  party is in  default,  in any
material  respect,  in the  performance  of any covenant or condition  under any
Contract and no claim of such a default has been made, (B) to the best knowledge
of the  Company,  no event has  occurred  which with the giving of notice or the
lapse of time  would  constitute  a  material  default  under  any  covenant  or
condition  under any  Contract,  (C) the Company has  complied,  in all material
respects,  with all of its commitments and obligations and is not in default, in
any material respect,  under any of the Contracts,  and no notice of default has
been received with respect to any thereof, (D) to the Company's knowledge,  each
party to a  Contract  other  than the  Company  has  complied,  in all  material
respects,  with all of its commitments  and obligations  with respect to, and is
not in default, in any material respect, under any Contract and (E) there are no
Contracts that were not  negotiated at arm's length.  The Company is not a party
to any  Contract  which  would  terminate  or be  violated  or under  which  its
obligations  would  be  accelerated  as a  result  of  the  consummation  of the
transactions  contemplated  by this  Agreement.  Originals or true,  correct and
complete copies of all Contracts have been provided to OS.

               (a) The Company  Disclosure  Schedule  sets forth a complete  and
accurate  list of all  Significant  Customers  and  Significant  Suppliers.  For
purposes  of  this  Agreement,  "Significant  Customers"  are  the  twenty  (20)
customers that effected the most  purchases,  in dollar terms,  from the Company
during the year ended  August 26,  2000,  and  "Significant  Suppliers"  are the
twenty  (20)  suppliers  who  supplied  the largest  amount by dollar  volume of
products or services to the Company during the year ended August 26, 2000.

               (b)  Except to the  extent  set forth on the  Company  Disclosure
Schedule and except for normal  attrition  which has not had a material  adverse
effect on the Company's  customer  base,  (i) none of the Company's  Significant
Customers  has  canceled or  substantially  reduced or, to the  knowledge of the
Company,  is currently  attempting  or  threatening  to cancel or  substantially
reduce,  any  purchases  from  the  Company  and  (ii)  none  of  the  Company's
Significant Suppliers has canceled or substantially reduced or, to the knowledge
of the Company, is currently  attempting to cancel or substantially  reduce, the
supply of products or services to the Company.  The Company has not received any
material customer complaints concerning its products and/or services, nor has it
had any of its  products  returned  by a  purchaser  thereof  except  for normal
warranty  returns  consistent with past history and those returns that would not
result in a reversal of any material revenue.

          P.  Compensation.  Set forth in the Company  Disclosure  Schedule is a
list of all  agreements  between  the  Company  and each  person  employed by or
independently contracting with the Company with regard to compensation,  whether
individually or collectively,  and set forth in the Company Disclosure  Schedule
is a list of all employees or independent contractors of the Company entitled to
receive annual compensation in excess of $40,000 and their respective  salaries.
Except as provided in Section VIII. G and the Company Disclosure  Schedule,  the
transactions contemplated by this Agreement will not result in any liability for
severance pay to any employee or independent  contractor of the Company.  Except
as set forth on the Company  Disclosure  Schedule,  since August 26,  2000,  the
Company has not  informed  any  employee  or  independent  contractor  providing
services to the Company  who is  entitled to receive  compensation  in excess of
$40,000 per annum, that such

                                      -15-
<PAGE>

person   will   receive   any   increase   in  compensation  or  benefits or any
ownership interest in the Company.

          Q.  Employee  Benefit  Plans.  Except  as set  forth  in  the  Company
Disclosure Schedule, the Company does not maintain or sponsor, or contribute to,
any pension, profit-sharing, savings, bonus, incentive or deferred compensation,
severance pay, medical, life insurance,  welfare or other employee benefit plan.
All pension, profit-sharing, savings, bonus, incentive or deferred compensation,
severance pay, medical, life insurance,  welfare or other employee benefit plans
within the meaning of Section 3(3) of the Employee  Retirement  Income  Security
Act of 1974,  as amended  (hereinafter  referred  to as  "ERISA"),  in which the
Company's  employees  participate  are  hereinafter  referred to as the "Benefit
Plans".  All Benefit Plans comply in all material respects with all requirements
of the Department of Labor and the Internal Revenue Service,  and with all other
applicable laws and regulations and the constituent  documents and terms of such
Benefit  Plans,  and the Company has not taken or failed to take any action with
respect to the Benefit Plans which might create any liability on the part of the
Company  except for claims in the ordinary  course for benefits  with respect to
the Benefit Plans and any requirements of the Company to contribute to a Benefit
Plan as set  forth in the terms  and  conditions  of such  Benefit  Plan.  True,
correct and  complete  copies of the  following  documents  with respect to each
Benefit  Plan  have been  delivered  by the  Company  to OS:  (A) all  documents
constituting the Benefit Plan,  including but not limited to, trust  agreements,
plan documents,  insurance policies and amendments thereto,  (B) the most recent
Forms 5500 or 5500 C/R and any financial  statements  attached thereto and those
for the prior three (3) years;  (C) the Internal  Revenue Service  determination
letters;  (D) the  most  recent  Summary  Plan  Description;  (E) all  actuarial
valuations for the three (3) years preceding the date of this Agreement; (F) all
notices  that have been given to the Company or such  Benefit  Plans  within the
three (3) years  preceding the date of this Agreement by the IRS,  Department of
Labor,  or any other  governmental  agency with respect to any Benefit Plan, and
(G) all employee manuals or handbooks containing personnel or employee relations
policies of the Company. No Benefit Plan contains any provision or is subject to
any legal requirement that would prohibit the transactions  contemplated by this
Agreement  or that  would  give  rise to any  vesting  of  benefits,  severance,
termination or other  payments or  liabilities  as a result of the  transactions
contemplated by this Agreement.  The Benefit Plans are not presently under audit
or  examination   (nor  has  notice  been  received  of  a  potential  audit  or
examination)  by the IRS,  the  Department  of Labor or any  other  governmental
agency.  With respect to each Benefit  Plan,  there has occurred no  "prohibited
transaction" within the meaning of the Code or ERISA. In addition:

          (i) Each Benefit Plan intended to qualify under Section  401(a) of the
Code has received a favorable  determination  letter from the  Internal  Revenue
Service as to its qualification;

          (ii)  Except  as set forth in the  Company  Disclosure  Schedule,  the
Company does not maintain,  sponsor or contribute to, and has never  maintained,
sponsored or  contributed  to, a "defined  benefit  plan" (within the meaning of
Section 3(35) of ERISA) or a "multiemployer plan" (within the meaning of Section
3(37) of ERISA);

          (iii) Except as set forth in the Company  Disclosure  Schedule,  there
are no  contributions  which are or hereafter will be required to have been made
to trusts in connection  with

                                      -16-
<PAGE>

any   Benefit  Plan  that  would  constitute   a  "defined  contribution   plan"
(within the meaning of Section 3(34) of ERISA);

          (iv) Other  than  claims in the  ordinary  course  for  benefits  with
respect to the Benefit Plans,  there are no actions,  suits or claims (including
claims for income Taxes, interest, penalties, fines or excise Taxes with respect
thereto)  pending with respect to any Benefit Plan, or, to the best knowledge of
the Company, any circumstances which might give rise to any such action, suit or
claim (including claims for income Taxes, interest,  penalties,  fines or excise
Taxes with respect thereto); and

          (v) The Company has no obligation  to provide  health or other welfare
benefits to former,  retired or  terminated  employees,  except as  specifically
required  under Section  4980B of the Code or Section 601 of ERISA.  The Company
has complied with the notice and  continuation  requirements of Section 4980B of
the Code and Section 601 of ERISA and the regulations thereunder.

          R. Labor Relations. Since January 1, 1995, the Company has complied in
all  material  respects  with  all  federal,  state  or  local  statutes,  laws,
ordinances,  rules,  regulations,  orders  or  directives  with  respect  to the
employment of individuals by, or the employment practices or work conditions of,
the Company,  or the terms and  conditions of employment,  wages and hours.  The
Company is not engaged in any unfair labor practice or other unlawful employment
practice  and  there  are  no  charges  of  unfair  labor   practices  or  other
employee-related  complaints  pending or, to the best  knowledge of the Company,
threatened  against the Company before the National Labor Relations  Board,  the
Equal Employment  Opportunity  Commission,  the  Occupational  Safety and Health
Review Commission, the Department of Labor or any other federal, state, local or
other governmental authority.  There is no strike,  picketing,  slowdown or work
stoppage or  organizational  attempt  pending,  threatened  against (to the best
knowledge  of the Company) or  involving  the business of the Company.  No issue
with respect to union representation is pending or, to the best knowledge of the
Company,  threatened  with respect to the employees of the Company.  No union or
collective  bargaining unit or other labor  organization has ever been certified
or  recognized by the Company as the  representative  of any of the employees of
the Company.

          S.  Increases in  Compensation  or Benefits.  Subsequent to August 26,
2000,  there have been no  increases  in the  compensation  payable or to become
payable to any of the employees of the Company  earning in excess of $40,000 per
annum and there have been no payments  or  provisions  for any awards,  bonuses,
loans, profit sharing, pension,  retirement or welfare plans or similar or other
disbursements  or  arrangements  for or on behalf of such  employees (or related
parties  thereof),  in  each  case,  other  than  as set  forth  in the  Company
Disclosure  Schedule.  Except for bonuses  that may be due to  employees  of the
Company for the current  year as set forth in the Company  Disclosure  Schedule,
all bonuses  heretofore  granted to  employees  of the Company have been paid in
full to such employees.  Pursuant to the Company's  vacation  policy,  employees
earn three weeks  vacation per year which can be carried  forward for two years.
No employee of the Company is entitled to vacation time in excess of three weeks
in respect of the current  calendar year and no employee of the Company has more
than six weeks  accrued  vacation  time in respect of prior years or any accrued
sick time with respect to any prior year which can be carried forward.

                                      -17-
<PAGE>

          T. Insurance.  A list of each of the insurance policies  maintained by
the  Company is set forth in the Company  Disclosure  Schedule.  Such  insurance
policies are in full force and effect and all  premiums due thereon  prior to or
at the date hereof have been paid.  The  Company  has  complied in all  material
respects with the provisions of such  policies.  Such insurance is of comparable
amounts  and  coverage  as that which  companies  engaged in similar  businesses
maintain in accordance with good business practices.  Except as set forth on the
Company Disclosure  Schedule,  there are no notices of any pending or threatened
termination or premium  increases  (other than normal increases due on renewal),
with respect to any such policies. The Company has not had any material casualty
loss or  occurrence  which may give rise to any claim of any kind not covered by
insurance and the Company is not aware of any occurrence  which may give rise to
any  material  claim of any kind not  covered by  insurance.  No third party has
filed any claim against the Company for personal  injury or property damage of a
kind for which  liability  insurance is generally  available  which is not fully
insured, subject only to the standard deductible. All claims against the Company
covered by insurance  have been  reported to the  insurance  carrier on a timely
basis.  The  Company  Disclosure  Schedule  sets forth a list of all claims made
against  such  policies  during the three (3) years  preceding  the date of this
Agreement  as well as  Workman's  Compensation  claims made within the three (3)
years preceding the date of this Agreement.

          U.   Conduct of Business.    The   Company   is  not  restricted  from
conducting business in any location by agreement or court decree.

          V.   Products.

          (i)  The  Company  Disclosure   Schedule  sets  forth  a  listing  and
description  of  the  Company's  products.   Current  catalogues  and  marketing
materials for all of the Company's current products,  as well as descriptions of
all product  research  and  development  activities  of the  Company,  have been
provided to OS. The  Company's  products have never been subject to any "recall"
whether initiated by the Company or by any governmental authority.

          (ii) The Company has no obligation  outside of the ordinary  course of
business or pursuant to the terms and  conditions  of managed care  contracts to
make allowances to any customers.

          (iii)  The  Company  Disclosure  Schedule  sets  forth  the  Company's
standard product  warranties and Company policies  regarding  warranty,  refund,
replacement  or  adjustment  of  products.  Except as set  forth on the  Company
Disclosure  Schedule,  within the past four  years,  the Company has not had any
products liability claims.

          W. Use of Names.  (i) All names  under  which  the  Company  currently
conducts  business  and all  names,  trademarks  and  service  marks by which it
identifies  it products are listed in the Company  Disclosure  Schedule.  To the
knowledge  of the  Company,  except  as set  forth  in  the  Company  Disclosure
Schedule, there are no other persons or businesses conducting businesses similar
to those of the Company in the States of New York,  New Jersey and California or
in the  United  Kingdom  having the right to use or using the names set forth in
the Company  Disclosure  Schedule or any variants of such names;  and within the
past three years no person or business  has  attempted  to restrain  the Company
from using such names or any variant thereof. Except as

                                      -18-


<PAGE>

indicated  in  the  Company  Disclosure  Schedule,  none  of  such   names   are
registered trademarks, trade names, service marks or service names under federal
or state law.

          (ii) All websites,  URL's,  domain names and related  registrations of
the  Company are  identified  on the Company  Disclosure  Schedule.  The Company
Disclosure Schedule  identifies the hosting agency of all Company websites.  The
Company owns or validly  licenses all  Intellectual  Property (as defined below)
relating to its Websites and all software and web development  vendors  utilized
by the Company in the development of its websites have been paid in full.

          X.   Power of Attorney.  The  Company  has  not  granted  any power of
attorney  or proxy (revocable or irrevocable) to any person, firm or corporation
for any purpose whatsoever.

          Y.   Intellectual Property.

               (a) The  Company is the true and lawful  owner of, or is licensed
or otherwise possesses legally enforceable rights to use, the registered and, to
its knowledge,  the unregistered  Marks (as defined below) listed on the Company
Disclosure Schedule.  Such Schedule lists (i) all of the Marks registered in the
United States Patent and Trademark  Office ("PTO") or the equivalent  thereof in
any state of the United  States or in any foreign  country,  and (ii) all of the
unregistered  Marks,  that the Company now owns or uses in  connection  with its
business.  Except  with  respect to those Marks shown as licensed on the Company
Disclosure Schedule,  the Company owns all of the Marks. The Marks listed on the
Company Disclosure  Schedule will not cease to be valid rights of the Company by
reason of the  execution,  delivery  and  performance  of this  Agreement or the
consummation  of the  transactions  contemplated  hereby.  For  purposes of this
Agreement,  the term "Mark"  shall mean all right,  title and interest in and to
any United States or foreign trademarks,  service marks and trade names now held
by the Company,  including any  registration or application for  registration of
any trademarks  and services  marks in the PTO or the equivalent  thereof in any
state  of  the  United  States  or in  any  foreign  country,  as  well  as  any
unregistered  marks used by the Company,  and any trade dress (including  logos,
designs,  company names,  business  names,  fictitious  names and other business
identifiers) used by the Company in the United States or any foreign country.

               (b) The  Company is the true and lawful  owner of, or is licensed
or  otherwise  possesses  legally  enforceable  rights to use, all rights in the
Patents (as defined below) listed on the Company Disclosure  Schedule and in the
Copyright  (as defined  below)  registrations  listed on the Company  Disclosure
Schedule.  Such  Patents  and  Copyrights  constitute  all  of the  Patents  and
Copyrights  that the Company now owns or is licensed to use. The Company owns or
is licensed to practice under all Patents and Copyright  registrations  that the
Company now owns or uses in connection  with its business.  For purposes of this
Agreement,  the term "Patent"  shall mean any United States or foreign patent to
which the  Company  has title as of the date of this  Agreement,  as well as any
application for a United States or foreign patent made by the Company;  the term
"Copyright"  shall mean any  United  States or  foreign  copyright  owned by the
Company  as of the  date  of  this  Agreement,  including  any  registration  of
copyrights,  in the United States Copyright Office or the equivalent  thereof in
any foreign  country,  as well as any application for a United States or foreign
copyright registration made by the Company.

                                      -19-
<PAGE>

               (c) The  Company  owns  or is  licensed  to  practice  under  all
technology,  inventions, know how, trade secrets,  franchises, or similar rights
(collectively, "Other Rights") that it owns, uses or practices under, except for
such Other Rights that are not material to its business.

               (d) The  Marks,  Patents  and  Copyrights  listed on the  Company
Disclosure  Schedule and the Other Rights are referred to collectively herein as
the "Intellectual  Property." The Intellectual  Property owned by the Company is
referred to herein  collectively  as the "Company  Intellectual  Property."  All
other Intellectual  Property is referred to herein  collectively as "Third Party
Intellectual  Property." Except as indicated on the Company Disclosure Schedule,
the  Company  has no  obligations  to  compensate  any person for the use of any
Intellectual  Property  nor has the Company  granted to any person any  license,
option or other rights to use in any manner any Intellectual  Property,  whether
requiring the payment of royalties or not.

               (e)  The  Company  is not,  nor  will  it be as a  result  of the
execution and delivery of this Agreement or the  performance of its  obligations
hereunder,  in  violation  of any Third  Party  Intellectual  Property  license,
sublicense  or  agreement.  No claims with  respect to the Company  Intellectual
Property or Third Party  Intellectual  Property are currently pending or, to the
knowledge of the Company,  threatened against the Company by any person, nor, to
the Company's knowledge,  do any grounds for any claims exist: (i) to the effect
that the manufacture, sale, licensing or use of any product as now used, sold or
licensed or proposed  for use,  sale or license by the Company  infringes on any
copyright, patent, trademark, service mark or trade secret; (ii) against the use
by the  Company of any  trademarks,  trade  names,  trade  secrets,  copyrights,
patents,  technology,  know-how or computer  software  programs and applications
used in the  Company's  business as currently  conducted  by the Company;  (iii)
challenging  the  ownership,  validity  or  effectiveness  of any of the Company
Intellectual  Property or other trade secret  material of the  Company;  or (iv)
challenging the Company's  license or legally  enforceable right to use of Third
Party  Intellectual   Property.   To  the  Company's  knowledge,   there  is  no
unauthorized  use,  infringement  or  misappropriation  of any  of  the  Company
Intellectual  Property  by any third  party.  Neither the Company nor any of its
Subsidiaries  (x) has been sued or  charged in  writing  as a  defendant  in any
claim,  suit,  action or proceeding  which involves a claim or  infringement  of
trade secrets, any patents,  trademarks,  service marks, or copyrights and which
has not been finally  terminated or been informed or notified by any third party
that the Company may be engaged in such infringement or (y) has knowledge of any
infringement  liability with respect to, or infringement  by, the Company or any
of its  Subsidiaries of any trade secret,  patent,  trademark,  service mark, or
copyright of another.

               (f) Except as set forth on the Company Disclosure  Schedule,  all
Intellectual  Property  relating to the business of the Company which originated
with  employees,  officers,  directors and  consultants  of the Company has been
validly transferred,  licensed and assigned to the Company and is not separately
owned or retained by such persons or entities.

          Z. Litigation; Disputes. Except as set forth on the Company Disclosure
Schedule, (i) there is no litigation,  action, suit or proceeding pending or, to
the best knowledge of the Company,  threatened against or affecting the Company,
its  business or any of the assets of the Company and (ii) to the  knowledge  of
the Company there is no basis for any litigation, action, suit or proceeding for
an amount in excess of $12,500,  against or affecting the Company,  its business
or any of the assets of the Company. The Company has no knowledge of any default
under any such

                                      -20-
<PAGE>


action,  suit  or  proceeding  set  forth  in the Company  Disclosure  Schedule.
The  Company  is  not in  default  in  respect  of any  judgment,  order,  writ,
injunction or decree of any court or of any federal,  state,  municipal or other
government  department,  commission,  bureau,  agency or  instrumentality or any
arbitrator.

          AA. Computer  Software.  The Company has the right to use all computer
software,  including  all  property  rights  constituting  part of the  computer
software,  used in  connection  with  the  Company's  business  operations  (the
"Computer  Software")  except  where the lack of such rights in  "off-the-shelf"
software,  individually  or in the  aggregate,  are  not  material.  Except  for
Immaterial  Defaults there are no existing  defaults or events which with notice
or  lapse  of time  or both  would  constitute  defaults  under  the  terms  and
conditions  of the  applicable  agreements  under  which  the  Company  uses the
Computer  Software.  A list of all written  licenses  pertaining to the Computer
Software is set forth in the Company Disclosure  Schedule (the "Licenses").  The
Company  has no  knowledge  that  any of  the  Licenses  may  not  be  valid  or
enforceable  by the Company or that the use of the  Computer  Software or any of
the Licenses may infringe  upon or conflict  with the rights of any third party.
The Company has not granted  any  licenses to use the  Computer  Software or any
sub- licenses with respect to any of the Licenses.

          BB. Finders' Fees. There is no investment  banker,  broker,  finder or
other  intermediary which has been retained by or is authorized to act on behalf
of the Company or any  Subsidiary who might be entitled to any fee or commission
in connection with the transactions  contemplated by this Agreement,  except for
the Financial Advisor which will receive a fee for rendering its opinion.

          CC. Books and Records. The Company has made and kept books and records
and accounts,  which,  in reasonable  detail,  accurately and fairly reflect the
activities  of the  Company.  The Company  has not  engaged in any  transaction,
maintained   any  bank  account,   or  used  any  corporate   funds  except  for
transactions,  bank accounts, and funds which have been and are reflected in its
normally maintained books and records.

          DD.  Bank  Accounts.  The  Company  Disclosure  Schedule  sets forth a
complete  and  accurate  list as of the  date of this  Agreement,  of all  bank,
investment,  brokerage,  money market and related accounts or safe deposit boxes
of the Company and the name of each person  authorized  to draw  thereon or have
access thereto.

          EE.  Disclosure.  No representation or warranty made under any Section
hereof and none of the information set forth herein or in the Company Disclosure
Schedule  contains any untrue  statement of a material  fact or omits to state a
material fact necessary to make the statements herein or therein not misleading.
No  representations or warranties are made by the Company except as set forth in
this Agreement or in the Company Disclosure Schedule.

                                      -21-
<PAGE>

                                   SECTION IV

                         REPRESENTATIONS AND WARRANTIES,
                               OF OS AND PURCHASER

          Each of OS and Purchaser  hereby  represents and warrants  jointly and
severally to the Company that as of the date hereof and as of the Closing Date:

          A.   Organization.  Each  of  OS  and  Purchaser is a corporation duly
organized, validly existing and in good standing under the  laws of the State of
New York and has full corporate power and authority to own its properties and to
conduct the businesses in which it is now engaged.

          B.  Authority.  Each of OS and  Purchaser  has the full  legal  right,
corporate   power  and  authority  to  enter  this  Agreement  and  perform  the
transactions  contemplated  hereby and to perform their  respective  obligations
pursuant to the Agreement.  The execution and delivery of this Agreement by each
of OS  and  Purchaser,  the  performance  by  each  of OS and  Purchaser  of its
respective covenants and agreements hereunder and the consummation by each of OS
and Purchaser of the transactions  contemplated hereby have been duly authorized
by all necessary  corporate action,  and this Agreement  constitutes a valid and
legally  binding  obligation  of OS  and  Purchaser,  respectively,  enforceable
against  each  of  them  in   accordance   with  its  terms,   except  that  the
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,   moratorium  or  similar  laws,   affecting   creditors  rights
generally, and general principles of equity.

          C. No Legal Bar; Conflicts. Neither the execution and delivery of this
Agreement,  nor  the  consummation  of  the  transactions  contemplated  hereby,
violates any provision of the certificate of  incorporation or by-laws of either
OS or Purchaser or any statute, ordinance, regulation, order, judgment or decree
of any court or  governmental  agency or board, or conflicts with or will result
in any  breach of any of the  terms of or will  constitute  a  default  under or
result in the  termination  of or the creation of any lien pursuant to the terms
of any  contract or  agreement  to which either OS or Purchaser is a party or by
which either OS or Purchaser or any of their assets is bound.

          D.   Ownership.  OS owns  100%  of  the issued and outstanding capital
stock of Purchaser.

          E.  Corporate  Affiliations.  Set forth on the OS Disclosure  Schedule
(the "OS  Disclosure  Schedule")  are lists of the  officers  and  directors  of
Purchaser  and OS, and the identity of all  shareholders  of  Purchaser  and OS.
Except for shares of capital stock of OS owned by the shareholders identified on
the OS  Disclosure  Schedule,  there are  outstanding,  (1) no shares of capital
stock or other voting securities of OS or Purchaser,  (2) no securities of OS or
Purchaser convertible into or exchangeable for shares of capital stock or voting
securities of OS or Purchaser,  and (3) no options,  warrants or other rights to
acquire from OS or Purchaser, and no obligation of OS or Purchaser to issue, any
capital stock, voting securities or securities  convertible into or exchangeable
for capital stock or voting securities of OS or Purchaser.

                                      -22-
<PAGE>

          F. Prior Activities. Each of Purchaser and OS was organized no earlier
than September,  2000. Except for its  organizational  activities and activities
related  to the  negotiation,  delivery  and  consummation  of  this  Agreement,
including  activities related to the financing of the transactions  contemplated
hereby,  neither  OS nor  Purchaser  has  engaged  in any  substantive  business
activities.  OS and  Purchaser  have not  incurred any  liabilities  or have any
commitments other than in connection with the transactions  contemplated by this
Agreement.

          G.   Litigation.  There is no action or proceeding pending, or to the
best  knowledge  of  OS   and  Purchaser   and  related  investors,   threatened
against or affecting OS or Purchaser  and to the  knowledge of OS and  Purchaser
there is no basis for any such action or proceeding.

          H. Funds. Purchaser has received binding commitments from shareholders
of OS and related  investors  to deliver to  Purchaser  at the Closing the funds
necessary to consummate the purchase of the Shares in accordance with the Offer,
or to purchase the Shares to be acquired  pursuant to the Offer,  and to pay the
expenses of OS and Purchaser in connection  with the  transactions  contemplated
hereby.  Such shareholders and related investors have the financial  wherewithal
to provide the funding to which they are committed.

          I. Contractual Obligations. Set forth on the OS Disclosure Schedule is
a list of all contracts,  agreements, licenses, leases, arrangements (written or
oral) and other documents to which either OS or Purchaser is a party or by which
OS or Purchaser or any of their respective  assets is bound other than contracts
or  agreements  under  which the  consideration  to be paid or received by OS or
Purchaser is less than $12,500.

          J. Disclosure.  No  representation or warranty made by OS or Purchaser
under any Section hereof and none of the  information set forth herein or in the
OS  Disclosure  Schedule by OS or Purchaser  contains any untrue  statement of a
material fact or omits to state a material fact necessary to make the statements
herein or therein not misleading.  No  representations or warranties are made by
OS or Purchaser  except as set forth in this  Agreement or in the OS  Disclosure
Schedule.


                                    SECTION V

                            COVENANTS OF THE COMPANY

          The Company agrees that:

          A. Interim Operations of the Company. The Company covenants and agrees
that,  prior to the earlier of the purchase of the Shares  pursuant to the Offer
or the  termination  of this  Agreement  in  accordance  with its terms  (unless
Purchaser  or OS shall  otherwise  agree in  writing  and  except  as  otherwise
expressly contemplated by this Agreement):

               (a) the  business of the Company  and its  Subsidiaries  shall be
conducted  only in the ordinary and usual course and the Company and each of its
Subsidiaries shall use commercially  reasonable efforts to preserve its business
organization   intact  and  maintain  its  existing

                                      -23-
<PAGE>

relations   with   customers,  suppliers,  employees,  creditors  and   business
associates in the ordinary and usual course of business;

               (b) the Company  shall not (i) sell or pledge or agree to sell or
pledge  any  stock  owned  by it in any  of its  Subsidiaries;  (ii)  amend  its
Certificate of Incorporation or By-Laws;  (iii) split, combine or reclassify the
outstanding  Shares;  or (iv) declare,  set aside or pay any dividend payable in
cash, stock or property with respect to the Shares;

               (c) neither the  Company  nor any of its  Subsidiaries  shall (i)
issue,  sell,  pledge,  dispose  of or  encumber  any  additional  shares of, or
securities  convertible  or  exchangeable  for,  or  options,  warrants,  calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or any  Subsidiary  or any other  property or assets (other
than,  in the case of the  Company,  Shares  issuable  pursuant  to the  Options
outstanding on the date hereof which are not to be redeemed  pursuant to Section
V.G.); (ii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose
of or  encumber  any  assets  other than the sale of  inventory  and the sale or
disposal of assets of  insignificant  value in the  ordinary and usual course of
business;  (iii) incur or modify any indebtedness;  provided,  however, that the
Company's  loan  agreement  with  American  National  Bank  (as  extended)  will
terminate  on the earlier to occur of February  28, 2001 or the Closing Date and
at such time the  Company  will  repay the  approximately  $90,000  owed to such
institution;  (iv) acquire directly or indirectly by redemption or otherwise any
shares  of the  capital  stock of the  Company;  (v) make or  authorize  capital
expenditures  other than in the  ordinary  and usual  course of business  and in
amounts not  exceeding  those  contemplated  by the  Company's  current  capital
expenditure budget set forth in the Company Disclosure Schedule; or (vi) make or
authorize any  acquisition  of, or  investment  in, assets or stock of any other
person or entity or merge or consolidate with any person or entity;

               (d) except as provided in Sections  VIII. F and VIII. G or on the
Company  Disclosure  Schedule,  neither the Company nor any of its  Subsidiaries
shall grant any severance or termination pay to, or enter into any employment or
severance agreement with, any director,  officer,  employee or consultant of the
Company or its Subsidiaries; and neither the Company nor any of its Subsidiaries
shall  establish,  adopt,  enter  into,  make any new grants or awards  under or
amend, any collective bargaining,  bonus, profit sharing, thrift,  compensation,
stock option, restricted stock, pension,  retirement,  employee stock ownership,
deferred  compensation,   employment,  termination,  severance  or  other  plan,
agreement,  trust, fund, policy or arrangement or any other benefit plan for the
benefit of any directors, officers or employees;

               (e)  except  as set  forth on the  Company  Disclosure  Schedule,
neither the Company nor any of its  Subsidiaries  shall (i) settle or compromise
any claims or litigation  (including any claims for Taxes made by a Governmental
Entity)  whereby  the  Company  would be liable for in excess of  $12,500,  (ii)
modify,  amend or terminate any of its material  contracts or waive,  release or
assign any material rights or claims,  (iii) cancel or forgive any  indebtedness
owed  to  the  Company  or any of its  Subsidiaries  by any  officer,  director,
employee or consultant of the Company or any of its Subsidiaries, or (iv) cancel
or forgive any other indebtedness owed to the Company or any of its Subsidiaries
other than inter-company debt;

                                      -24-
<PAGE>

               (f) neither the  Company nor any of its  Subsidiaries  shall make
any Tax Election for a Tax Return or permit any insurance  policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated;

               (g) neither the Company nor any of its  Subsidiaries  shall enter
into any  contract  or  agreement  under which the  consideration  to be paid or
received by the Company  exceeds  $15,000  other than open  purchase  orders for
materials or inventory in the ordinary course of business;

               (h) neither the  Company  nor any of its  Subsidiaries  knowingly
shall take or fail to take any action that (i) is reasonably likely to result in
any  failure  of the  Offer,  unless  such  action is taken by the  Board  after
consultation  with Company  counsel to fulfill its fiduciary  obligations to the
Company's shareholders;  or (ii) is reasonably likely to make any representation
or warranty of the Company  contained  herein  inaccurate  at, or as of any time
prior to, Purchaser's purchase of Shares pursuant to the Offer; and

               (i)   neither  the  Company  nor  any  of  its  Subsidiaries will
authorize or enter into an agreement to do any of the foregoing.

          B. Access to  Information.  From the date hereof  until the earlier of
the purchase of the Shares or the  termination  of this  Agreement in accordance
with its terms,  upon reasonable  prior notice during normal business hours, the
Company will give OS, its counsel,  financial  advisors,  accountants  and other
authorized representatives reasonable access to the offices,  properties,  books
and  records  of the  Company  and its  Subsidiaries,  will  furnish  to OS, its
counsel,  financial advisors,  accountants and other authorized  representatives
such  financial and  operating  data and other  information  as such persons may
reasonably  request  and will  instruct  the  Company's  employees,  counsel and
financial  advisors to cooperate with OS in its investigation of the business of
the Company and its  Subsidiaries;  provided that no  investigation  pursuant to
this Section shall affect any representation or warranty given by the Company to
OS hereunder.

          C.  Other  Offers.  From the date  hereof  until  the  earlier  of the
purchase of the Shares or the  termination of this Agreement in accordance  with
its  terms,  the  Company  and its  Subsidiaries  and the  officers,  directors,
employees  or other  agents of the  Company and its  Subsidiaries  and any other
related party will not, directly or indirectly,  (i) take any action to solicit,
initiate or encourage  any Company  Acquisition  Proposal (as defined  below) or
(ii) unless  otherwise  required in accordance with the fiduciary  duties of the
Board  under  applicable  law as advised by  counsel to the  Company,  engage in
discussions or negotiations with, or disclose any nonpublic information relating
to the Company or any of its  Subsidiaries  or afford access to the  properties,
books or records of the Company or any of its  Subsidiaries  to, any Person that
may be considering  making,  or has made, a Company  Acquisition  Proposal.  The
Company  will  promptly  notify  OS after  receipt  of any  Company  Acquisition
Proposal or any request for nonpublic information relating to the Company or any
of its  Subsidiaries  or for access to the  properties,  books or records of the
Company or any of its Subsidiaries by any Person that may be considering making,
or has made, a Company  Acquisition  Proposal.  For purposes of this  Agreement,
"Company  Acquisition  Proposal"  means  any  offer  or  proposal  for,  or  any
indication   of   interest   in,  a   merger,   consolidation,   reorganization,
recapitalization or other business  combination  involving the Company or any of
its

                                      -25-

<PAGE>

Subsidiaries  or  the  acquisition  of  any equity interest in, or a substantial
portion  of the  assets of,  the  Company  or any of its  Subsidiaries,  whether
pursuant  to  a  tender  offer  or  otherwise,   other  than  the   transactions
contemplated by this Agreement.

          D.   Notices of Certain Events.  The Company shall promptly  notify OS
of, and  in  the  case  of  the  items  in  clauses (i) through  (v) provide, if
applicable, OS with copies of:

          (i) any notice or other  communication  from any Person  alleging that
the  consent  of such  Person  (or  another  Person)  is or may be  required  in
connection with the transactions contemplated by this Agreement;

          (ii) any  notice  or other  communication  from  any  governmental  or
regulatory agency or authority in connection with the transactions  contemplated
by this Agreement;

          (iii)  any  actions,  suits,  claims,  investigations  or  proceedings
commenced or, to the best of its knowledge,  threatened against,  relating to or
involving or otherwise  affecting the Company or any of its Subsidiaries  which,
if pending on the date of this Agreement,  would have been required to have been
disclosed  pursuant to the terms hereof or which relate to the  consummation  of
the transactions contemplated by this Agreement; and

          (iv)  the   receipt  by  the  Company  of  any   documents,   records,
environmental  agency  reports and  correspondence  related to or concerning any
Environmental  Condition  relevant to the Company  Premises or any facilities or
operations thereon, or any off-site disposal of Hazardous Wastes; and

          (v)  the occurrence of any Company Material Adverse Effect.

          E. Financial Reports.  No later than fifteen days (22 days in the case
of December,  2000) after the end of each fiscal month  commencing with November
2000 and  continuing  through the  earlier of the  purchase of the Shares or the
termination  of this Agreement in accordance  with its terms,  the Company shall
deliver to OS unaudited,  consolidated and  consolidating  financial  statements
(without  footnotes)  as at the end of such  month,  including  balance  sheets,
statements  of  operations  and  statements  of cash  flows  (collectively,  the
"Financials"), which Financials shall in the case of each month which is the end
of a fiscal quarter of the Company be prepared also on a quarterly basis.

          F. Takeover Statute. If any "fair price", "moratorium", "control share
acquisition",  "business combination," "interested stockholder" or other similar
antitakeover statute, regulation or provision contained in the New York Business
Corporation Law ("BCL") or the Company's  Certificate of Incorporation or Bylaws
(each a "Takeover Statute") becomes applicable to the transactions  contemplated
hereby,  the Company,  to the extent  reasonably  possible,  and consistent with
fiduciary  duties and  applicable  law, shall grant such approvals and take such
actions and execute and deliver such documents and  instruments as are necessary
so that the transactions  contemplated  hereby may be consummated as promptly as
practicable on the terms  contemplated  hereby and otherwise act to eliminate or
minimize  the  effects  of  such  statute  or  regulation  on  the  transactions
contemplated hereby.

                                      -26-

<PAGE>

          G.   Existing Options.  Prior  to  the  purchase  of  the  Shares  the
Company will redeem from each of the individuals set forth on Schedule V. G  the
Options to  purchase  Shares  set  forth  opposite  their respective names.  The
aggregate  redemption  price  to  be  paid to each individual will be the amount
indicated on Schedule V. G.

          H.   Provision  of Information. During the period commencing as of the
date hereof and ending on the Closing  Date, Andrew  H.  Meyers, the Chairman of
OS, and Stephen V.  Ardia, the Chairman of the Company, will coordinate so as to
provide Mr. Meyers with data and information on the Company's operations.

          I. Interim Employment. From the date hereof through the earlier of the
Closing Date or the termination of this Agreement,  Mr. Meyers shall be employed
by the Company in an advisory  capacity and be appointed  an  "Observer"  to the
Board with the right to receive all  notices  and reports  provided to the Board
and to attend  all  meetings  of the Board  except  that he shall not be able to
receive  reports  or vote,  and  shall  recuse  himself  from all  deliberations
regarding  the  transactions  contemplated  by this  Agreement or the  Company's
relationship  with Mr. Meyers,  OS or Purchaser (if a meeting  relates solely to
the  transactions  contemplated by this Agreement,  it is contemplated  that Mr.
Meyers will not be invited to attend such meeting). Mr. Meyers shall not receive
any compensation  for services  rendered prior to the consummation of the Offer,
but shall be reimbursed for agreed upon expenses.

          J. Individual Options.  The Stock Option Agreement between the Company
and Mr.  Meyers dated the date hereof in the form of Exhibit V. J(i)  (providing
for the grant of options concurrently herewith),  shall be effective on the date
hereof.  Such  Stock  Options  shall  not  become  exercisable  until,   without
limitation, the Closing Date and the approval by the Stockholders of the Company
of an increase in the shares  underlying  the Stock Option  Plan.  The Board has
confirmed  its  acceptance of the terms of the Stock Option  Agreement  with Mr.
Meyers in a resolution  adopted by the Board. The Company shall not be deemed in
violation  of the  covenants in this  Section V. J if Mr.  Meyers  elects not to
serve the Company or the Company has the right to terminate his  employment  and
Stock Option Agreement for "Cause" as reasonably determined by the Board.

          K. Option Grant.  To enable OS to fund the growth of the Company,  the
Company will grant to OS or its  designees  effective the Closing Date an option
to purchase up to 1,400,000  Shares (the "OS Options").  The OS Options shall be
exercisable  for a period of one- hundred eighty days  commencing on the Closing
Date. The exercise price of the OS Options shall  initially be $1.525 per share;
shall increase to $1.550 per share ninety-one days after the Closing Date, shall
increase to $1.575 per share one-hundred  twenty one days after the Closing Date
and shall be $1.60  per share  from the  one-hundred  fifty  first day after the
Closing Date until the  expiration  of the OS Options.  The OS Options  shall be
evidenced by an Option Agreement in the form of Exhibit V. K.

          The Offer  Documents  will disclose that the OS Options may or may not
be  exercised;  that the Company may need  additional  financing  to achieve its
growth  objectives  and that,  subject to  approval of the then  current  Board,
financing  may be  provided by OS or other  related  parties  upon other  terms,
including by the purchase of convertible notes or preferred stock of the Company
or

                                      -27-
<PAGE>

other  methods  and  the  sale  prices,  conversion   prices,  or  the  exercise
prices of such  securities may be lower or higher than the exercise price of the
OS Options or the then current market price of the Shares.

          L. Transaction Costs. It is estimated that the legal fees and fairness
opinion  costs  incurred  by the  Company in  connection  with the  negotiation,
documentation   and  consummation  of  the  transactions   contemplated   hereby
(collectively,  the  "Transaction  Costs") shall be $150,000.  The Company shall
notify  OS if the  Transaction  Costs are  reasonably  expected  to exceed  that
amount.

          M.  Filings.  The Company shall comply with all  requirements  imposed
upon  it  by  the  Exchange  Act  and  the  rules  and  regulations  promulgated
thereunder.  All  reports  required  by the  Exchange  Act and  such  rules  and
regulations  will be timely  filed,  will  comply with the  requirements  of the
Exchange Act and the rules and regulations promulgated thereunder,  and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements  made therein,
in light of the circumstances in which they were made, not misleading.


                                   SECTION VI

                            DIRECTORS OF THE COMPANY

          The Company  will use its best efforts to  facilitate  the election to
the Board, effective as of the purchase of (i) at least a majority of the issued
and  outstanding  Shares and, (ii) subject to the  conditions of the Offer,  all
Shares  tendered  pursuant to the Offer, of Andrew H. Meyers and, at Purchaser's
option,   four  additional  persons  designated  by  Purchaser  subject  to  the
reasonable approval by the Board of each designee. Further, the Company will use
its best efforts to facilitate the resignation,  effective as of the purchase of
(i) at least a majority of the issued and  outstanding  Shares and, (ii) subject
to the conditions of the Offer,  all Shares  tendered  pursuant to the Offer, of
Kenneth  Granat,  Thomas  Altholz  and  Stephen  Ardia from the Board.  Upon the
purchase of Shares  pursuant  to the Offer,  the  Company,  if so  requested  by
Purchaser,  will use reasonable  efforts to facilitate  the  appointment of such
persons  designated by Purchaser  necessary to constitute the same proportionate
representation  of each committee of the Board,  each board of directors of each
Subsidiary  and each committee of each such board (in each case to the extent of
the  Company's  ability to elect such  persons) as  Purchaser's  representatives
constitute of the Board. The Company's obligations to facilitate the appointment
of designees of Purchaser to the Board shall be subject to Section  14(f) of the
Exchange Act and Rule 14f-1 promulgated  thereunder.  The Company shall promptly
take all actions required  pursuant to such Section and Rule in order to fulfill
its  obligations  under this Section and shall include in the Schedule 14D-9, or
in a separate Rule 14f-1 information  statement  provided to stockholders,  such
information  with respect to the Company and its  officers  and  directors as is
required  under  Section 14(f) and Rule 14f-1 to fulfill its  obligations  under
this  Article.  Purchaser  will  supply  to  the  Company  and  will  be  solely
responsible  for any  information  with respect to Purchaser  and its  nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.

                                      -28-
<PAGE>

                                   SECTION VII

                          COVENANTS OF OS AND PURCHASER

          OS and Purchaser each agree that:

          A. Access to  Information.  From the date hereof  until the earlier of
the purchase of the Shares or the  termination  of this  Agreement in accordance
with its terms, OS and Purchaser will give the Company,  its counsel,  financial
advisors,  accountants and other authorized representatives reasonable access to
the  properties,  books and records of OS and  Purchaser and will furnish to the
Company,  its counsel,  financial  advisors,  accountants  and other  authorized
representatives  such financial  data and other  information as such persons may
reasonably  request to confirm  the ability of OS and  Purchaser  to comply with
their agreements herein; provided that no investigation pursuant to this Section
shall  affect any  representation  or warranty  given by OS or  Purchaser to the
Company.

          B.  Purchase of Shares.  Subject to the terms and  conditions  of this
Agreement  each  of OS and  Purchaser  agrees  that  it will  take  all  actions
necessary  to  perform  its  obligations  hereunder  and to cause  Purchaser  to
purchase the Shares on the terms and conditions of the Offer, including, but not
limited  to  such  actions  as are  necessary  or  appropriate  to  ensure  that
Purchaser, on a timely basis, has the funds necessary to purchase the Shares.

          C. Takeover Statute. If any Takeover Statute becomes applicable to the
transactions  contemplated  hereby,  each of OS,  Purchaser and their respective
Board of Directors,  to the extent  reasonably  possible,  and  consistent  with
fiduciary  duties and  applicable  law, shall grant such approvals and take such
actions and execute and deliver such documents and  instruments as are necessary
so that the transactions  contemplated  hereby may be consummated as promptly as
practicable on the terms  contemplated  hereby and otherwise act to eliminate or
minimize  the  effects  of  such  statute  or  regulation  on  the  transactions
contemplated hereby.


                                  SECTION VIII

                   COVENANTS OF OS, PURCHASER AND THE COMPANY

          The parties hereto agree that:

          A.  Best  Efforts.  Subject  to  the  terms  and  conditions  of  this
Agreement,  each party will use its best efforts to take,  or cause to be taken,
all  actions  and to do, or cause to be done,  all things  necessary,  proper or
advisable under  applicable laws and regulations to consummate the  transactions
contemplated by this Agreement.

          B. Public  Announcements.  The initial press  release  relating to the
execution of this  Agreement  shall be a joint press release and  thereafter the
Company  and  Purchaser,  unless they have  previously  agreed in writing to the
contrary,  will not issue any press release or otherwise make a public statement
with respect to the  transactions  contemplated  hereby or make any filings with
any

                                      -29-

<PAGE>

governmental authority  or  with  any  national securities exchange with respect
thereto,  unless in the opinion of the party  desiring to make such  disclosure,
such  disclosure is required by or consistent with applicable law or NASDAQ rule
or  regulation,  and in such event the party making the press  release or public
statement  shall provide a draft to the other party hereto and provide the other
party the  opportunity to comment thereon in a timely manner,  unless  emergency
circumstances preclude such procedure.

          C. Confidentiality. In the course of the discussions, negotiations and
due diligence conducted in furtherance of the transactions  contemplated hereby,
each party (on its own or through its agents) has and may  disclose to the other
certain   proprietary,   confidential   or   other   non-   public   information
(collectively,  the  "Information")  relating to its  respective  business,  the
proprietary,  confidential  and  non-public  nature  of which  information  both
parties desire to maintain.  Except as herein set forth, neither party shall (a)
reveal or make known to any person,  firm,  corporation or entity or (b) utilize
in its own business or (c) make any other usage of, any  Information  heretofore
or hereafter  disclosed to it by the other (on its own or through its agents) in
connection with the discussions, negotiations and due diligence activities above
mentioned.  A  party's  obligations  with  respect  to any  item of  Information
disclosed to it shall terminate if that item of Information becomes disclosed in
published  literature or otherwise  becomes  generally  available to the public;
provided,  however,  that such public  disclosure  did not  result,  directly or
indirectly,  from any act,  omission or fault of such party with respect to that
item of  Information.  Further,  this  paragraph  shall not apply to any item of
Information which at the time of disclosure was already  generally  available to
the public or which,  prior to July 26, 2000,  was already in the  possession of
the party  intending to utilize the item of Information  and was not acquired by
such party, directly or indirectly,  from the other party to this Agreement,  or
is required to be disclosed  under court order,  subpoena or other legal process
or disclosure  required  pursuant to applicable law. Both parties agree that the
Information  it either has  received or may receive  from the other has been and
will be used by the  receiving  party  solely  for the  limited  purpose  of its
investigation and evaluation of the other party in connection with the potential
Offer.

          Notwithstanding  this Section,  the Company  acknowledges  that OS has
disclosed and may need to disclose Information of the Company to the individuals
or entities  providing the financing to enable  Purchaser to purchase the Shares
and their  representatives as well as to governmental agencies under federal and
state securities laws and the Company hereby consents to the same; provided that
any such  disclosure  is  accompanied  by a copy of these  provisions  regarding
confidentiality  concerning the  transaction  contemplated  herein and the party
receiving  the  Information  agrees to abide by the terms  hereof.  The  Company
further agrees that OS can disclose such Information as OS, in consultation with
its counsel, determines it is necessary or appropriate to disclose in connection
with any filing  required  by the SEC,  including  the Offer  Documents  and any
filing  made  subsequent  thereto to advise the  shareholders  of the Company of
material  information  related to the Offer,  and any related  press  release in
connection with the transactions contemplated hereby. OS and the Purchaser agree
that the Company can disclose such Information and such information regarding OS
and Purchaser,  as the Company, in consultation with its counsel,  determines it
is necessary or appropriate to disclose in connection  with any filing  required
by the SEC, including the Offer Documents and any filing made subsequent thereto
to advise the shareholders of the Company of material information related to the
Offer,  and any  related  press  release  in  connection  with the  transactions
contemplated hereby.

                                      -30-
<PAGE>

          D.   Certain Filings; Other Actions.

          (i) Subject to the terms and conditions herein provided,  the Company,
OS and Purchaser shall: (i) promptly make their  respective  regulatory  filings
with respect to the Offer; and (ii) use all reasonable efforts to promptly take,
or cause to be taken,  all other  action and do, or cause to be done,  all other
things necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the  transactions  contemplated by this Agreement,
including but not limited to  cooperating in the  preparation  and filing of the
Offer  Documents,  the Schedule  14D-9 and any  amendments  to any thereof.  The
Company  shall use all  reasonable  efforts  to obtain  all  licenses,  permits,
consents, approvals,  authorizations,  qualifications and orders of governmental
authorities  and parties to contracts with the Company and the  Subsidiaries  as
are  necessary  for  the  Company  and  the   Subsidiaries   to  consummate  the
transactions contemplated by this Agreement and to fulfill the conditions to the
Offer. OS and Purchaser shall use all reasonable efforts to obtain all licenses,
permits,  consents,  approvals,  authorizations,  qualifications  and  orders of
governmental  authorities  and parties to contracts with OS and Purchaser as are
necessary for OS and Purchaser to consummate the  transactions  contemplated  by
this  Agreement.  Notwithstanding  anything  contained  herein to the  contrary,
Purchaser shall be under no obligation whatsoever to make or accept or engage in
negotiations  for any  settlement  with any  governmental  entity  or any  other
arrangement involving the sale,  disposition,  or separate holding,  through the
establishment of a trust, or otherwise,  of the business or any of the assets of
the Company or the  Subsidiaries  acquired  pursuant to this  Agreement,  or any
portion thereof,  or particular assets of Purchaser or its subsidiaries in order
to complete the transactions contemplated herein.

          (ii) The Company, on the one hand, and Purchaser and OS, on the other,
each  shall  keep the other  apprised  of the  status  of  matters  relating  to
completion  of  the  transactions   contemplated   hereby,   including  promptly
furnishing the other with copies of notices or other communications  received by
Purchaser,  OS or the Company, as the case may be, or any of their subsidiaries,
from any  governmental  entity  with  respect  to the  Offer or any of the other
transactions contemplated by this Agreement.

          E.  Directors' and Officers'  Insurance.  After the purchase of Shares
pursuant to the Offer,  the Company  shall  continue to maintain  the  Company's
existing  officers' and directors'  liability  insurance ("D&O Insurance") for a
period of three years,  provided,  however,  that (x) the Company may substitute
therefor  policies (which may be "tail" policies)  containing terms with respect
to  coverage  and  amount no less  favorable  in any  material  respect  to such
directors  and  officers,  and (y) if the existing  D&O  Insurance  expires,  is
terminated  or canceled  during such three- year  period,  the Company  will use
commercially reasonable efforts to obtain similar D&O Insurance.

          F.   Certain Compensation.  Notwithstanding anything in this Agreement
to  the contrary, the Company is permitted to pay up to $25,000 in the aggregate
to its  directors for services rendered in their active roles in connection with
the  negotiation  of  the  transactions contemplated by this Agreement, of which
$12,500 was paid prior to the date hereof.

          G. Bonus.  If the Net Worth and the Net Working Capital (as such terms
are defined  below) of the Company as of the end of the  Company's  fiscal month
immediately  preceding

                                      -31-
<PAGE>


the  month  during  which  the  Closing  occurs (the "Target Date") are equal to
or greater than $2,522,500 and $1,917,500  respectively  (the "Target Net Worth"
and "Target  Working  Capital") the Company shall pay to Daniel  Gorney,  Ronald
Spinelli and Thomas Archbold $10,000,  $15,000 and $10,000 respectively.  If the
Net Worth as of the Target Date exceeds the Target Net Worth and the Net Working
Capital as of the Target  Date  exceeds  the Target  Working  Capital  then,  in
addition to the amounts provided in the immediately preceding sentence,  Messrs.
Gorney, Spinelli and Archbold will each be paid 10% of the lesser of (x) the Net
Worth as of the Target  Date over the  Target Net Worth and (y) the Net  Working
Capital as of the Target Date over the Target Working Capital, up to the maximum
additional amount of $10,000 each. Notwithstanding the foregoing, and subject to
the following sentence, the bonuses paid under this Section to Messrs.  Archbold
and Spinelli will be a guaranteed  minimum of $5,000 each. The bonuses  provided
for in this  Section  will be  payable to any of Messrs.  Gorney,  Spinelli  and
Archbold  only if the  Closing  occurs  under  this  Agreement  and only if such
individual  is employed by the Company for at least  ninety days  following  the
purchase of the Shares (or is terminated  prior to such date without  cause) and
will be paid,  less applicable  withholding  taxes, no later than 120 days after
such date.

          For purposes of this agreement,  "Net Working  Capital" of the Company
as of the  Target  Date is  defined  as the  excess of the  inventory,  accounts
receivable and cash of the Company as of the Target Date over the trade accounts
payable,   accrued  payroll,   accrued  payroll  taxes  and  the  other  current
liabilities  of  the  Company  as of the  Target  Date.  For  purposes  of  this
Agreement,  the "Net  Worth" of the Company as of the Target Date shall mean the
excess of the total  assets of the  Company  over the total  liabilities  of the
Company, in each case as of the Target Date.

          The Net Worth and Net Working Capital of the Company shall be computed
by the Company's Chief Financial Officer and verified by Purchaser's accountants
in accordance with generally accepted  accounting  principles applied on a basis
consistent  with the past  practices  of the  Company,  except  as  specifically
provided herein.

          In  computing  the  Company's  Net Worth and Net Working  Capital,  no
accrual  shall be taken or amounts  otherwise  deducted for the bonuses  payable
pursuant to this Section or for the legal, accounting, printing, transfer agent,
fairness  opinion and other expenses  incurred by the Company in connection with
the transactions contemplated hereby.


                                   SECTION IX

                             CONDITIONS TO THE OFFER

          A.   Conditions   to   the   Obligations   of   OS and Purchaser.  The
obligations of  OS  and  Purchaser  to  consummate the purchase  of  the  Shares
pursuant to the Offer are subject to the satisfaction or waiver of the following
conditions:

          (i) Effective on the Closing Date,  Mr. Meyers shall have been elected
President  and Chief  Executive  Officer of the  Company  (unless he declines to
serve as such) and the  employment of Mr. Meyers shall not have been  terminated
by the  Company  without  "Cause,"  as  reasonably  determined  by the  Board of
Directors;

                                      -32-
<PAGE>

          (ii) The Company or the Board, shall have received the written opinion
of the Financial Advisor, that the terms of the Offer are fair, from a financial
point of view,  to the  stockholders  of the Company and such opinion  shall not
have been withdrawn;

          (iii) Stephen V. Ardia,  Kenneth Granat,  Thomas I. Altholz and Justin
Wernick shall have resigned  from the  Company's  Board of Directors,  provided,
however, that Purchaser has designated Andrew H. Meyers, and/or another director
who shall be reasonably acceptable to the Board, willing to serve as a director.
Andrew H. Meyers and up to four additional  individuals  designated by Purchaser
and  reasonably  acceptable to the Board shall have been appointed to the Board.
The  Company  shall  not be deemed to have  failed  to meet  this  condition  if
Purchaser fails to timely designate its nominees for election to the Board, such
nominees are, in the reasonable judgment of the Board, not qualified to serve as
members of the Board or Andrew H. Meyers or such  designees  resign or otherwise
refuse to serve as directors of the Company.

          (iv)  Purchaser  shall have  received  the legal  opinion of Kaufman &
Moomjian,  LLC,  counsel to the Company,  in the form attached hereto as Exhibit
IX.(A)(iv).

          (v) The  Shareholders  Agreement  dated  the  date  hereof  among  OS,
Purchaser,  the Company,  Kenneth Granat,  Stephen V. Ardia,  Thomas I. Altholz,
Justin Wernick,  Daniel Gorney,  Donald Cecil,  Trigran  Investments,  L.P., The
Granat  Family  Limited  Partnership  and Kenneth  Granat 1990 Family Trust (the
"Shareholders Agreement") providing among other things, for the tender of Shares
pursuant to the Offer shall remain in full force and effect  unless  breached or
terminated by OS or Purchaser;

          (vi) No change shall have occurred in any  governmental  regulation of
and  reimbursement  rules  relating to business of the Company,  or the products
sold by the Company, which has a Company Material Adverse Effect;

          (vii) The  Company  shall have  obtained  and OS shall  have  received
copies of all  consents,  agreements  and  governmental  approvals  necessary or
appropriate for consummation of the transaction  contemplated hereby,  including
any consent, which if not obtained, would give the other party to any agreement,
license or lease with the Company,  the right to terminate  such  agreement,  or
accelerate  any  obligation of the Company  thereunder or which would  otherwise
constitute a default  thereunder by the Company provided,  the Company shall not
be  required to obtain the  consent of the other  party to any  agreement  which
provides  for receipt of or  repayment  by the  Company of less than  $12,500 or
which is set forth on the Company Disclosure Schedule;

          (viii) Except for the bonuses required pursuant to Section VIII.G., or
otherwise  set forth on the Company  Disclosure  Schedule,  consummation  of the
Offer will not give rise to any obligation for any severance,  bonus,  change of
control or "golden parachute" payments to any employees of the Company;

          (ix) As of the  Closing  Date,  the  Company  shall  have  issued  and
outstanding no more than  2,613,181  Shares plus such number of Shares as may be
issued pursuant to the exercise of Options  outstanding as of the date hereof as
indicated  on the  Company  Disclosure  Schedule.  As

                                      -33-
<PAGE>


of  the  Closing  Date,  the  Company  shall have no options,  warrants or other
rights  to  purchase  or  acquire  Shares  outstanding  other  than the  Options
indicated on the Company Disclosure Schedule,  less those which are exercised or
redeemed subsequent to the date hereof;

          (x) The  representations  and  warranties  made by the Company  herein
shall  have  been  correct  as of the date of this  Agreement,  except  for such
exceptions,  which  individually  or in the  aggregate,  would not  constitute a
material  breach of any  representation  or warranty  of the  Company  contained
herein. The  representations  and warranties made by the Company herein shall be
correct as of the Closing Date in all respects with the same force and effect as
though such representations and warranties had been made as of the Closing Date,
except for such exceptions  which,  individually or in the aggregate,  would not
constitute a Company Material Adverse Effect;

          (xi) The  Agreement  evidencing  the OS Options and the  corresponding
Registration  Rights  Agreement  with  respect to the shares  underlying  the OS
Options  shall have been  executed  and  delivered  by the  Company  and such OS
Options shall have been granted;

          (xii) The Company's loan  agreements  with American  National Bank and
the  extension  thereof to the  earlier  to occur of  February  28,  2001 or the
Closing Date shall remain in full force and effect;

          (xiii) The Stock Option  Agreement  dated the date hereof  between the
Company and Mr.  Meyers shall  remain in full force and effect  (unless he shall
have  declined  to  accept  or  continue  employment  with  the  Company  or was
terminated by the Company for cause);

          (xiv)     Each of the Offer Conditions shall have been satisfied.

          B.   Conditions to the Obligations of the Company.  The obligations of
the Company to take any of the actions required to be taken by it at Closing are
subject to the satisfaction of the following conditions:

          (i) The Company or the Board shall have  received the written  opinion
of the Financial Advisor, that the terms of the Offer are fair, from a financial
point of view,  to the  stockholders  of the Company and such opinion  shall not
have been withdrawn;

          (ii)  The  Company  shall  have received the legal opinion of Herrick,
Feinstein LP, counsel to OS  and  Purchaser, in  the  form  attached  hereto  as
Exhibit IX. B(ii);

          (iii) OS and Purchaser  shall have obtained and the Company shall have
received copies of all consents, agreements and governmental approvals necessary
or appropriate for consummation of the transaction contemplated hereby by OS and
Purchaser;

          (iv)  The  representations  and  warranties  made by OS and  Purchaser
herein  shall be correct as of the Closing  Date in all  respects  with the same
force and effect as though such  representations and warranties had been made as
of the Closing Date,  except for such exceptions  which,  individually or in the
aggregate,  would not have a material adverse effect on the financial condition,
business, assets or results of operations of the Purchaser and OS.

                                      -34-
<PAGE>

          (v) Purchaser or its assignees shall, at the Closing,  have sufficient
funds to purchase,  subject to the terms and conditions of the Offer, all Shares
(up to 1,959,886) tendered and not withdrawn.


                                    SECTION X

                                   TERMINATION

          A.   Termination.  This Agreement  may be terminated and the Offer may
be abandoned at any time prior to the purchase of Shares pursuant thereto:

          (i)  by  mutual  written  consent of the Company and OS upon a vote of
their respective Boards of Directors;

          (ii) by either  the  Company or OS, if there  shall be any  applicable
domestic law, rule or regulation that makes consummation of the Offer illegal or
otherwise prohibited or if any judgment,  injunction, order or decree of a court
of competent  jurisdiction  shall restrain or prohibit the  consummation  of the
Offer,  and such  judgment,  injunction,  order or decree shall become final and
nonappealable;

          (iii) by Purchaser by action of the Board of Directors of Purchaser at
any time prior to the time Purchaser  purchases Shares pursuant to the Offer, if
(w) the Company shall have failed to comply in any material  respect with any of
the covenants or agreements  contained in this  Agreement to be complied with or
performed  by the Company,  and such failure  shall not have been cured prior to
the earlier of (A) five (5) business days following the giving of written notice
to the  Company  of such  failure or (B) the  business  day prior to the date on
which the Offer is then scheduled to expire, (x) the Board shall have amended or
modified in a manner adverse to Purchaser its approval or  recommendation of the
Offer,  shall have  withdrawn  such  recommendation  or shall have,  approved or
recommended any other Company Acquisition Proposal, or shall have resolved to do
any of the foregoing, or (y) the shareholders of the Company shall have tendered
less than  1,332,722  of the Shares or the  shareholders  which are party to the
Shareholders  Agreement shall have tendered in the aggregate less than 1,305,606
of their Shares in  accordance  with the  Shareholders  Agreement;  and, in each
case, OS and Purchaser are not in violation of Section IX. B(iv).

          (iv) by the  Company  by action of the Board at any time  prior to the
time Purchaser  purchases  Shares  pursuant to the Offer, if Purchaser (x) shall
have  failed to comply in any  material  respect  with any of the  covenants  or
agreements  contained  in this  Agreement  to be complied  with or  performed by
Purchaser,  and such  failure  shall not have been cured prior to the earlier of
(A) five (5) business days  following the giving of written  notice to Purchaser
of such  failure or (B) the business day prior to the date on which the Offer is
then  scheduled  to expire or (y) shall have failed to commence the Offer within
the time required in Section I.A. and the Company is not in violation of Section
IX. A(x).

                                      -35-
<PAGE>

          (v) by the  Company by action of the Board,  if the Board  receives or
there is publicly  announced a bona fide written  Company  Acquisition  Proposal
(which Company Acquisition Proposal was unsolicited and did not otherwise result
from a breach of Section  V.C.) and the Board  determines in good faith (i) that
such Company  Acquisition  Proposal is reasonably  likely,  if  consummated,  to
result in a  transaction  more  favorable to the Company's  shareholders  from a
financial point of view than the  transaction  contemplated by this Agreement (a
"Superior  Proposal") and (ii) after  consultation  with outside  counsel,  that
approval,  acceptance or recommendation of such Company Acquisition  Proposal or
tender or exchange  offer is necessary in order for its directors to comply with
their  respective   fiduciary  duties,  and  the  Company  shall   substantially
concurrently with such termination enter into a definitive  agreement containing
the terms of a Superior Proposal;  provided, however, that the Company shall not
exercise its right to terminate this Agreement  pursuant to this Section X.A.(v)
until after three (3) days  following  Purchaser's  receipt of written notice (a
"Notice of Superior  Proposal")  from the Company  advising  Purchaser  that the
Company's Board of Directors has received a Superior  Proposal (or that a tender
or exchange  offer with respect to the Shares has been  commenced)  and that the
Board will,  subject to any action taken by Purchaser pursuant to this sentence,
cause the Company to accept such Superior  Proposal (or recommend such tender or
exchange  offer),  and  specifying  the  material  terms and  conditions  of the
Superior  Proposal and identifying the person making such Superior  Proposal (it
being  understood  and  agreed  that any  amendment  to the  price or any  other
material  term of a Superior  Proposal  shall  require an  additional  Notice of
Superior Proposal and a new three day period).

          (vi) by either  the  Company  or OS if the  Offer  shall not have been
consummated  by March 31,  2001  (other  than  through  the failure of the party
seeking termination to comply with its obligations under this Agreement).

          B.   Effect of Termination.

          If this  Agreement is  terminated  pursuant to Article  X.A., no party
hereto (or any of its directors or officers) shall have any liability or further
obligation  to any other  party to this  Agreement,  except as  provided in this
Section X.B and Section XI below.

          (i) If this Agreement  shall be terminated by the Company  pursuant to
Section X. A. (v), then the Company shall  promptly,  but in no event later than
ten days after receipt of a statement,  reimburse Purchaser's  reasonable out of
pocket costs and expenses  actually  incurred in connection  with this Agreement
and the transactions contemplated hereby.

          (ii) If (X) the Purchaser shall  terminate this Agreement  pursuant to
clause (x) of Section  X.A.(iii),  or the  Company  shall have  terminated  this
Agreement  when it did not  have a right  to do so  under  Section  X.A.,  then,
notwithstanding the fact that grounds may also exist to terminate this Agreement
under clause (w) or (y) of Section X.A. (iii),  the Company shall promptly,  but
in no  event  later  than ten  days  after  receipt  of a  statement,  reimburse
Purchaser's  reasonable  out-of-pocket  costs and expenses  actually incurred in
connection with this Agreement and the transactions contemplated hereby; and (Y)
the Purchaser  shall  terminate this Agreement  pursuant to clause (w) or (y) of
Sections X.A. (iii), then the Company shall promptly, but in no event later than
ten  days  after  receipt  of  a  statement,  reimburse  Purchaser's  reasonable
out-of-pocket  expenses  actually incurred in connection with this Agreement and
the transactions  contemplated hereby up to a

                                      -36-


<PAGE>

maximum  of  $325,000,  of  which  the  first $250,000 would be paid in cash and
the excess over $250,000 paid in Shares valued at $1.525 per share.

          (iii) If the  Company  shall  terminate  this  Agreement  pursuant  to
Section X.A.(iv),  or the Purchaser shall have terminated this Agreement when it
did not have a right to do so under Section X.A., then Purchaser shall promptly,
but in no event later than ten days after receipt of a statement,  reimburse the
Company's  reasonable  out-of-pocket  costs and  expenses  actually  incurred in
connection with this Agreement and the transactions  contemplated hereby up to a
maximum of $150,000.

          The  parties  agree that the  amounts  provided  for in the  preceding
clauses (i)  through  (iii)  constitute  a fair and  reasonable  estimate of the
damages  to the  intended  recipient  thereof  resulting  from  the  failure  to
consummate  the Offer and that upon  payment of the  specified  amount,  neither
party shall have any further  liability to the others under this Agreement or in
connection with the transactions contemplated hereby.

          Each of the parties acknowledges that the agreements contained in this
Section to reimburse  the other for its  expenses  are an integral  part of this
Agreement and that without these agreements neither would have entered into this
Agreement.  Accordingly,  if either  party fails to promptly  pay the amount due
pursuant to clauses (i) through  (iii) of this  Section  and, in order to obtain
payment the aggrieved party commences a suit which results in a judgment against
the defaulting  party for the fee provided above, the defaulting party shall pay
to the aggrieved party its costs and expenses (including  reasonable  attorneys'
fees) in  connection  with such suit and  interest on the amount due at the base
rate of Citibank, N.A. on the date such payment was required to be made.



                                   SECTION XI

                                  MISCELLANEOUS

          A.   Notices.  All notices,  requests  or instructions hereunder shall
be in writing and delivered personally, sent by telecopy,  nationally recognized
overnight courier, or registered or certified mail, postage prepaid, as follows:

               (1)  If to the Company:

                    The Langer Biomechanics Group, Inc.
                    450 Commack Road
                    Deer Park, New York 11729
                    Attn: Thomas G. Archbold

                                      -37-
<PAGE>

                    with a copy to:

                    Kaufman & Moomjian, LLC
                    Suite 206
                    50 Charles Lindbergh Blvd.
                    Mitchel Field, New York 11553
                    Attention: Gary T. Moomjian, Esq.

               (2)  If to OS:

                    OrthoStrategies, Inc.
                    c/o Andrew H. Meyers
                    31 The Birches
                    Roslyn Estates, NY 11576


                    with a copy to:

                    Herrick, Feinstein LLP
                    2 Park Avenue
                    New York, New York  10016
                    Attention:  Lawrence M. Levinson, Esq.
                    Telecopy No.:  (212) 889-7577

               (3)  If to the Purchaser:

                    OrthoStrategies Acquisition Corp.
                    c/o Andrew H. Meyers
                    31 The Birches
                    Roslyn Estates, NY 11576

                    with a copy to:

                    Herrick, Feinstein LLP
                    2 Park Avenue
                    New York, New York  10016
                    Attention:  Lawrence M. Levinson, Esq.
                    Telecopy No.:  (212) 889-7577

Any of the  above  addresses  may be  changed  at any  time by  notice  given as
provided  above;  provided,  however,  that any such notice of change of address
shall be effective  only upon  receipt.  All notices,  requests or  instructions
given in accordance  herewith shall be deemed  received on the date of delivery,
if hand delivered or telecopied, with a confirmation copy delivered by overnight
courier,  one  business  day after  delivery  to an  overnight  courier  and two
business days after the date of mailing, if mailed.

                                      -38-
<PAGE>
-p

          B. Survival  of  Representations. The  covenants and agreements of the
parties  contained  in  Sections  VIII.C.,  VIII.E., VIII.F,  VIII.G, X.B and XI
shall  survive  the  purchase  of  Shares  pursuant  to the  Offer or any  other
termination  of  this  Agreement.  All  other  representations,  warranties  and
agreements  contained  herein and in any certificate or other writing  delivered
pursuant hereto shall not survive the purchase of the Shares in the Offer.

          C.   Expenses.  Except  as  otherwise  provided  herein,  each  of the
parties hereto shall bear such party's  own  expenses  in  connection  with this
Agreement and the transactions contemplated hereby.

          D.  Invalidity.  Should any  provision of this  Agreement be held by a
court of competent jurisdiction to be enforceable only if modified, such holding
shall not affect the validity of the remainder of this Agreement, the balance of
which  shall  continue  to be  binding  upon the  parties  hereto  with any such
modification to become a part hereof and treated as though  originally set forth
in this  Agreement.  The parties  further agree that any such court is expressly
authorized to modify any such unenforceable  provision of this Agreement in lieu
of severing such  unenforceable  provision  from this Agreement in its entirety,
whether  by  rewriting  the  offending  provision,  deleting  any  or all of the
offending provision,  adding additional language to this Agreement, or by making
such  other  modifications  as it deems  warranted  to carry out the  intent and
agreement of the parties as embodied  herein to the maximum extent  permitted by
law. The parties  expressly  agree that this  Agreement as modified by the court
shall be binding upon and enforceable against each of them. In any event, should
one or more of the provisions of this  Agreement be held to be invalid,  illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall  not  affect  any  other  provisions  hereof,  and if  such  provision  or
provisions are not modified as provided above, this Agreement shall be construed
as if such invalid, illegal or unenforceable provisions had never been set forth
herein.

          E. Successors and Assigns. Purchaser shall have the right, at Closing,
to assign the right to  purchase  the  Shares,  in whole or in part,  to another
entity controlled by OS or to any of the shareholders of OS or related investors
which have  committed  to fund  Purchaser  (or  designees  thereof)  as noted in
Section IV.H,  provided that no such  assignment  shall relieve  Purchaser or OS
from any of its  obligations  hereunder.  Such  designees  shall at the  Closing
deliver  affirmative  representations  as  to  their  organization,   authority,
capacity,  and lack of  conflicts  in  purchasing  the  Shares.  Subject  to the
limitations of the first  sentence of this  paragraph,  this Agreement  shall be
binding  upon and inure to the  benefit  of the  successors  and  assigns of the
Company, Purchaser and OS, respectively.

          F.   Governing Law.   The validity of this Agreement and of any of its
terms or provisions, as well as the  rights and duties of the parties under this
Agreement, shall be governed by and construed pursuant to and in accordance with
the  laws  of  the  State  of  New  York, without regard to its conflict of laws
principles.

          G.   Counterparts.   This  Agreement  may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.

                                      -39-
<PAGE>

          H. Entire  Agreement;  Amendments.  This  Agreement  and the documents
referred  to herein  constitute  the entire  agreement  among the  parties  with
respect to the subject  matter  hereof.  Any provision of this  Agreement may be
amended or waived prior to the purchase of Shares  pursuant to the Offer if, and
only if, such  amendment  or waiver is in writing and signed,  in the case of an
amendment,  by the Company, OS and Purchaser or, in the case of a waiver, by the
party against whom the waiver is to be effective.


                                      -40-
<PAGE>


          IN WITNESS WHEREOF, this Tender Offer Agreement has been duly executed
by the parties hereto as of the date first above written.

                                   ORTHOSTRATEGIES, INC.


                                   By:  /s/ Andrew H. Meyers
                                      ----------------------------------------
                                      Name:  Andrew H. Meyers
                                      Title: President



                                   ORTHOSTRATEGIES ACQUISITION CORP.


                                   By:  /s/ Andrew H. Meyers
                                      ----------------------------------------
                                      Name:  Andrew H. Meyers
                                      Title: President


                                   THE LANGER BIOMECHANICS GROUP, INC.


                                   By:  /s/ Steven V. Ardia
                                      ----------------------------------------
                                      Name:  Steven V. Ardia
                                      Title: Chairman

                                      -41-

<PAGE>


                                                                         Annex A

          I.   Certain Conditions of the Offer.

          (i) The  capitalized  terms used in this Annex A have the meanings set
forth  in  the  attached  Tender  Offer  Agreement.  Notwithstanding  any  other
provision  of the Offer,  Purchaser  shall not be required to accept for payment
or, subject to any applicable  rules and regulations of the SEC,  including Rule
14e-l(c) under the Exchange Act (relating to  Purchaser's  obligation to pay for
or return  tendered  Shares  promptly  after  termination  or  withdrawal of the
Offer),  pay for, or may delay the acceptance for payment of or payment for, any
tendered Shares, or may, in its sole discretion, terminate or amend the offer as
to any Shares not then paid for if,  (i) prior to the  expiration  of the Offer,
(x) less  than  1,332,722  Shares  shall  have  been  validly  tendered  and not
withdrawn prior to the expiration of the Offer (the "Minimum  Condition") or (y)
any  necessary  or  required   consent,   registration,   approval,   permit  or
authorization of any governmental  entity applicable to the Offer shall not have
been obtained or (ii) on or after December 29, 2000 and at or before the time of
payment for any of such Shares (whether or not any Shares have  theretofore been
accepted for payment), any of the following events shall occur:

               (a) there shall have occurred (i) any general  suspension  of, or
limitation on prices for,  trading in securities on the NASDAQ  SmallCap  Market
for a period in excess of three hours  (other than a  suspension  or  limitation
triggered by price  fluctuations  and suspensions or limitations  resulting from
physical  damage to or  interference  with the systems of NASDAQ  provided  such
interference  is not  related to market  conditions),  (ii) a  declaration  of a
banking moratorium in the United States or any suspension of payments in respect
of banks in the United  States,  (iii) a  commencement  or  escalation of a war,
armed  hostilities or other  international or national  calamity  resulting in a
general  mobilization of a substantial portion of the armed forces of the United
States;  (iv) the  imposition  by the  Federal  Reserve of a  limitation  on the
extension  of  credit  by United  States  banks or a decline  of at least 30% in
either the Dow Jones Average of  Industrial  Stocks or the Standard & Poor's 500
index from the date of the Tender Offer Agreement;

               (b) the Company  shall have  breached or failed to perform in any
material  respect any of its obligations,  covenants or agreements  contained in
the Tender Offer Agreement;  any  representation or warranty made by the Company
in the Tender Offer Agreement shall have been inaccurate or incomplete as of the
date  of  the  Tender  Offer  Agreement,  except  for  such  exceptions,   which
individually or in the aggregate,  would not constitute a material breach of any
representation  or  warranty  of  the  Company  contained  in the  Tender  Offer
Agreement;  or any  representation  or  warranty of the Company set forth in the
Tender  Offer  Agreement  shall have been  inaccurate  or  incomplete  as of the
Closing  Date,  except  for  such  exceptions  as of  the  Closing  Date  which,
individually  or in the  aggregate,  would not  constitute  a  Company  Material
Adverse Effect.

               (c) there shall be instituted or pending any action,  litigation,
proceeding,  investigation or other application  (herein an "Action") before any
court  or  other  governmental   authority  by  any  governmental  authority  or
instituted or pending any action by any other person,  domestic or foreign:  (i)
challenging  the  acquisition  by  Purchaser  of Shares,  seeking to restrain or
prohibit the consummation of the transactions contemplated by the Offer, seeking
to obtain any material damages or otherwise  directly or indirectly  relating to
the transactions  contemplated by the

                                      -42-
<PAGE>

Offer;  (ii)  seeking  to  prohibit,  or  impose  any material  limitations  on,
Purchaser's ownership or operation of all or any portion of its or the Company's
business  or assets  (including  the  business  or  assets  of their  respective
affiliates  and  subsidiaries),  or to compel  Purchaser  to  dispose of or hold
separate all or any portion of Purchaser's  or the Company's  business or assets
(including   the  business  or  assets  of  their   respective   affiliates  and
subsidiaries) as a result of the transactions  contemplated by the Offer;  (iii)
seeking to make the acceptance for payment, purchase of, or payment for, some or
all of the Shares  illegal or render  Purchaser  unable to, or result in a delay
in, or restrict,  the ability of Purchaser to,  accept for payment,  purchase or
pay for some or all of the Shares;  (iv) seeking to impose material  limitations
on the ability of Purchaser  effectively  to acquire or hold or to exercise full
rights of ownership of the Shares including,  without  limitation,  the right to
vote the Shares  purchased  by it on an equal basis with all other Shares on all
matters properly  presented to the  stockholders;  or (v) that, in any event, is
reasonably likely to have a Company Material Adverse Effect.

               (d) any statute, rule,  regulation,  order or injunction shall be
enacted,  promulgated,  entered,  enforced or deemed applicable to the Offer, or
any other action shall have been taken, proposed or threatened,  by any court or
other  Governmental  Entity that could be expected to,  directly or  indirectly,
result in any of the  effects of, or have any of the  consequences  sought to be
obtained  or achieved  in, any action  referred to in clauses (i) through (v) of
paragraph (c) above;

               (e) any  person,  entity  or  group  shall  have  entered  into a
definitive agreement or an agreement in principle with respect to a tender offer
or  exchange  offer  for  some  portion  or  all  of  the  Shares  or a  merger,
consolidation,  acquisition, reorganization,  recapitalization or other business
combination with or involving the Company;

               (f) the Board of Directors of the Company (or a special committee
thereof)   shall  have   amended,   modified  or   withdrawn   its  approval  or
recommendation  of the  Offer  or the  Tender  Offer  Agreement  or  shall  have
endorsed,  approved or recommended any other Company  Acquisition  Proposal,  or
shall have resolved to do any of the foregoing; or

               (g) the  Agreement  shall have been  terminated by the Company or
Purchaser  in  accordance  with its terms or  Purchaser  shall  have  reached an
agreement or understanding in writing with the Company providing for termination
or amendment of the Offer or delay in payment for the Shares;

which in the  reasonable  judgment  of  Purchaser,  in any such  case,  makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment of
or payment for Shares.

          The foregoing conditions are for the sole benefit of Purchaser and may
be asserted by Purchaser  regardless  of the  circumstances  giving rise to such
condition or may be waived by Purchaser,  by express and specific action to that
effect,  in  whole  or in part at any  time  and  from  time to time in its sole
discretion.

          The failure by Purchaser at any time to exercise any of the  foregoing
rights  shall not be deemed a waiver of any such  right,  the waiver of any such
right with  respect to  particular  facts and other  circumstances  shall not be
deemed a waiver with respect to any other facts and circumstances, and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.

                                      -43-

<PAGE>


               EXHIBITS TO TENDER OFFER AGREEMENT

Annex A        Tender Conditions
V.G.           Option Redemption Schedule
V.J.           Form of Option Agreement -
               Andrew Meyers
V.K.           Form of Option Agreement -
               OS Options; form of Registration Rights Agreement
IX(A)(iv)      Kaufman & Moomjian Opinion Letter
IX(B)(ii)      Herrick, Feinstein LLP Opinion Letter

                                      -44-