Execution
      Version

     

     

     

    
      

      

    

    
 

    


    ASSET
      PURCHASE AGREEMENT

     

    BY
      AND AMONG

     

    LANGER,
      INC.,

     

    REGAL
      ACQUISITION CO.,

     

    REGAL
      MEDICAL SUPPLY, LLC,

     

    JOHN
      ERIC SHERO, WILLIAM JOSEPH WARNING, 

     

    JOHN
      P KENNEY, RICHARD ALAN NACE, 

     

    LINDA
      ANN LEE, CARL DAVID RAY, and ROY KELLEY 

     

    


    DATED
      AS OF December 15, 2006

     

    


    
      

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    



    ASSET
      PURCHASE AGREEMENT
      (the
“Agreement”),
      dated
      as of December 15, 2006, by and among Langer,
      Inc.,
      a
      Delaware corporation (“Langer”), Regal
      Acquisition Co.,
      a
      Delaware corporation and a wholly-owned subsidiary of Langer (the “Purchaser”),
Regal
      Medical Supply LLC,
      a North
      Carolina limited liability company (the “Seller”); and John Eric
      Shero, an individual, William Joseph Warning, an individual, John P Kenney,
      an
      individual, Richard Alan Nace, an individual, Linda Ann Lee, an individual,
      Carl
      David Ray, an individual, and Roy Kelley an individual (collectively, the
“Principal Shareholders”).

     

    PREAMBLE

     

    WHEREAS,
      Seller
      engaged in the business of providing contracture management products and
      services (the “Business”); and

     

    WHEREAS,
      Seller
      desires to sell to the Purchaser, and the Purchaser desires to purchase from
      the
      Seller, on a going concern basis, substantially all of the assets, properties,
      and business of Seller, and assume certain of the liabilities of the Seller,
      all
      on the terms and subject to the conditions set forth herein.

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and the respective mutual covenants,
      representations and warranties herein contained, the parties hereto hereby
      agree
      as follows:

     

    ARTICLE
      I. 

     

    DEFINITIONS

     

    1.1
       Definitions. In
      addition to terms defined elsewhere in this Agreement, the following terms
      when
      used in this Agreement shall have the meanings indicated below and shall be
      equally applicable to both the singular and the plural:

     

    “Affiliate”
shall
      mean with respect to a specified Person, any other Person which directly or
      indirectly controls, is controlled by, or is under common control with such
      Person.

     

    “Affiliate
      Payables”
shall
      mean the Seller’s payables owed to Affiliates of the Seller or the Principal
      Shareholders, each as identified on Schedule
      A.

     

    “Agreement”
shall
      mean this Asset Purchase Agreement together with all exhibits and schedules
      referred to herein.

     

    “Applicable
      Law”
shall
      mean, with respect to any Person, any international, national, regional, state
      or local treaty, statute, law, ordinance, rule, administrative action,
      regulation, order, writ, injunction, judgment, decree or other requirement
      of
      any Governmental Authority and any requirements imposed by common law or case
      law, applicable to such Person or any of its Affiliates or any of their
      respective properties, assets, officers, directors, employees, consultants
      or
      agents (in connection with their activities on behalf of such Person or any
      of
      its Affiliates). Applicable Law includes, without limitation, Environmental
      and
      Safety Requirements, and state and local zoning and building laws.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    “Assignment
      and Assumption of the Office Lease”
shall
      have the meaning set forth in Section 6.1(p).

     

    “Average
      Closing Price”
shall
      mean the average closing price of the Langer Common Stock on the NASDAQ Global
      Market for a ten (10) consecutive trading day period ending four (4) trading
      days prior to the Closing Date.

     

    “Bill
      of Sale”
shall
      have the meaning set forth in Section 6.1(d).

     

    “CERCLA”
shall
      mean the Comprehensive Environmental Response, Compensation and Liability Act
      of
      1980, as amended.

     

    “Closing”
shall
      have the meaning set forth in Section 2.10.

     

    “Closing
      Date”
shall
      have the meaning set forth in Section 2.10.

     

    “Closing
      Date Balance Sheet”
shall
      have the meaning in set forth in Section 2.6(b)

     

    “Code”
shall
      mean the Internal Revenue Code of 1986, as amended, or any successor
      law.

     

    “Competitive
      Business”
shall
      have the meaning set forth in Section 7.1.

     

    “Consideration
      Shares”
shall
      have the meaning set forth in Section 2.5(a)(iii).

     

    “Current
      Assets”
shall
      mean the Seller’s cash, cash equivalents, accounts receivable (net of
      allowances), prepaid expenses and security deposits, other receivables, and
      inventory, each as identified on Schedule
      B.

     

    “Current
      Liabilities”
shall
      mean the Seller’s payables (excluding Affiliate Payables), each as identified on
Schedule
      B.
      

     

    “Determination
      Date”
shall
      have the meaning set forth in Section 2.6(d).

     

    “Determining
      Accountants”
shall
      have the meaning set forth in Section 2.6(c).

     

    “Encumbrance”
shall
      mean any claim, lien, charge, security interest, pledge, mortgage, or any other
      restriction or encumbrance of any kind or nature.

     

    “Environmental
      Lien”
shall
      mean any lien, whether recorded or unrecorded, in favor of any Governmental
      Authority, relating to any liability of the Seller, arising under any
      Environmental and Safety Requirements.

     

    “Environmental
      and Safety Requirements”
shall
      mean all federal, state, local and foreign statutes, regulations, ordinances
      and
      other provisions having the force or effect of law, all judicial and
      administrative orders and determinations, all contractual obligations and all
      common law, in each case concerning public health and safety, worker health
      and
      safety and pollution or protection of the environment (including, without
      limitation, all those relating to the presence, use, production, generation,
      handling, transport, treatment, storage, disposal, distribution, labeling,
      testing, processing, discharge, Release, threatened Release, control or cleanup
      of any hazardous or otherwise regulated materials, substances or wastes,
      chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
      chemicals, petroleum products or byproducts, asbestos, polychlorinated
      biphenyls, noise or radiation).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “ERISA”
shall
      mean the Employee Retirement Income Security Act of 1974, as
      amended.

     

    “Exchange
      Act”
shall
      mean the Securities Exchange Act of 1934, as amended.

     

    “Financial
      Statements”
shall
      mean the combined balance sheets and the combined statements of income, cash
      flows and retained earnings of the Seller as of and for the fiscal years ended
      December 31, 2004, 2005 and 2006, including the notes thereto and the reports
      thereon of the Seller. 

     

    “Funded
      Indebtedness”
shall
      mean the indebtedness set forth on Schedule
      6.1(m)

     

    “GAAP”
shall
      mean United States generally accepted accounting principles.

     

    “Governmental
      Authority”
shall
      mean any domestic, international, national, territorial, regional, state or
      local governmental authority, quasi-governmental authority, instrumentality,
      court, commission or tribunal or any regulatory, administrative or other agency,
      or any political or other subdivision, department or branch of any of the
      foregoing or any arbitrator or mediator.

     

    “Governmental
      Authorizations”
shall
      mean all authorizations, consents, approvals, franchises, licenses and permits
      required under Applicable Law for the operation of the Business as presently
      operated.

     

    “Guaranty”
shall
      mean, as to any Person, all liabilities or obligations of such Person, with
      respect to any indebtedness or other obligations of any other person, which
      have
      been guaranteed, directly or indirectly, in any manner by such Person, through
      an agreement, contingent or otherwise, to purchase such indebtedness or
      obligation, or to purchase or sell property or services, primarily for the
      purpose of enabling the debtor to make payment of such indebtedness or
      obligation or to guarantee the payment to the owner of such indebtedness or
      obligation against loss, or to supply funds to or in any manner invest in the
      debtor, or otherwise.

     

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5.3(c).

     

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5.3(c).

     

    “Intellectual
      Property”
shall
      mean any United States, foreign, international and state patents and patent
      applications, and continuations, reissues, divisions, or disclosures relating
      thereto, industrial design registrations, inventions, certificates of invention
      and utility models (collectively, “Patents”); trademarks, service marks,
      trademark or service mark registrations and applications, trade names, trade
      dress, fictitious names, assumed names, logos, slogans, and general intangibles
      of like nature, together with all goodwill related to the foregoing
      (collectively, “Trademarks”); Internet domain names; copyrights, copyright
      registrations, renewals and applications for copyright registrations, and mask
      works (collectively, “Copyrights”); Software, technology, trade secrets and
      other confidential information, know-how, proprietary processes, formulae,
      algorithms, models, concepts, and methodologies (collectively, “Trade Secrets”);
      rights of privacy and publicity, including, but not limited to, the names,
      likenesses, voices, and biographical information of real persons, and all
      license agreements and other agreements granting rights relating to any of
      the
      foregoing.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Investments”
shall
      mean, with respect to any Person, all advances, loans or extensions of credit
      to
      any other Person, all purchases or commitments to purchase any stock, bonds,
      notes, debentures or other securities of any other Person, and any other
      investment in any other Person, including partnerships or joint ventures
      (whether by capital contribution or otherwise) or other similar arrangement
      (whether written or oral) with any Person, including but not limited to
      arrangements in which (i) the Person shares profits and losses, (ii) any such
      other Person has the right to obligate or bind the Person to any third party,
      or
      (iii) the Person may be wholly or partially liable for the debts or obligations
      of such partnership, joint venture or other arrangement.

     

    “Knowledge”,
      whether capitalized or lower case, when used with respect to Seller, shall
      mean
      the knowledge of the officers and directors of the Seller, after due
      inquiry.

     

    “Langer”
shall
      have the meaning set forth in the preamble hereof.

     

    “Langer
      Affiliates”
shall
      mean Langer and its Affiliates.

     

    “Langer
      Ancillary Agreements”
shall
      mean the Registration Rights Agreement.

     

    “Langer
      Common Stock”
shall
      mean the common stock, par value $.02 per share, of Langer.

     

    “Langer
      10-K”
shall
      have the meaning set forth in Section 3.8.

     

    “Leased
      Property”
shall
      have the meaning set forth in Section 4.14.

     

    “Leases”
shall
      have the meaning set forth in Section 4.14.

     

    “Liabilities”
shall
      have the meaning set forth in Section 4.11.

     

    “Litigation”
shall
      have the meaning set forth in Section 4.6.

     

    “Losses”
shall
      have the meaning set forth in Section 5.3(a).

     

    “Material
      Agreements”
shall
      have the meaning set forth in Section 4.23.

     

    “Material
      Adverse Change”
or
      “Material
      Adverse Effect”
shall
      mean any change, event or condition of any character which has had or could
      have
      a material adverse effect on (i) the condition (financial or otherwise), results
      of operations, assets, liabilities, or properties of the Seller, taken as a
      whole, (ii) the Business, or (iii) the Purchased Assets.

     

    “Net
      Current Assets”
shall
      mean the Current Assets (excluding any prepaid expenses and security deposits,
      other receivables, and inventory), minus
      25% of
      the pending unbilled account receivables identified on Schedule
      C,
      less
      the
      Current Liabilities.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Office
      Lease”
shall
      mean the Lease Agreement between Seller and RLK Urban Management for the
      premises located at 401 Temple Hall Highway, Suite 5, Granbury, TX 76049, dated
      January 1, 2006.

     

    “Other
      Liabilities”
shall
      mean (i) product warranties, (ii) the warranty reserves, (iii) obligations
      relating to product returns and exchanges, and (iv) unearned revenue (short
      term
      and long term)

     

    “Person,”
      whether or not capitalized, shall mean any natural person, corporation,
      unincorporated organization, partnership, limited liability company,
      association, joint stock company, joint venture, trust or government, or any
      agency or political subdivision of any government or any other
      entity.

     

    “Post-Closing
      Settlement”
shall
      have the meaning set forth in Section 2.6(d).

     

    “Principal
      Shareholders”
shall
      have the meaning set forth in the preamble hereof.

     

    “Product”
shall
      have the meaning set forth in Section 4.24.

     

    “Purchase
      Price”
shall
      have the meaning set forth in Section 2.5 hereof.

     

    “Purchaser”
shall
      have the meaning set forth in the preamble hereof.

     

    “Purchaser
      Ancillary Agreements”
shall
      mean the Bill of Sale.

     

    “Purchaser
      Indemnified Parties”
shall
      have the meaning set forth in Section 5.3(a).

     

    “Real
      Property Permits”
shall
      have the meaning set forth in Section 4.16(d).

     

    “Registration
      Rights Agreement”
shall
      have the meaning set forth in Section 6.1.

     

    “Related
      Party”
shall
      have the meaning set forth in Section 4.19.

     

    “Release”
shall
      have the meaning set forth in CERCLA.

     

    “Review
      Period”
shall
      have the meaning set forth in Section 2.6(b).

     

    “SEC”
shall
      mean the Securities and Exchange Commission of the United States.

     

    “Securities
      Act”
shall
      mean the Securities Act of 1933, as amended.

     

    “Seller”
shall
      have the meaning set forth in the preamble hereof.

     

    “Seller
      Ancillary Agreements”
shall
      mean the Bill of Sale, the Lock-Up Agreement, and the Registration Rights
      Agreement.

     

    “Seller
      Indemnified Parties”
shall
      have the meaning set forth in Section 5.3(b).

     

    “Seller
      Leases”
shall
      mean the Office Lease and the leases set forth on Schedule
      4.23(a).
      

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Shero
      Employment Agreement”
shall
      have the meaning set forth in Section 6.1.

     

    “Software”
shall
      mean any and all (i) computer programs, including any and all software
      implementations of algorithms, models and methodologies, whether in source
      code
      or object code form, (ii) databases, compilations, and any other electronic
      data
      files, including any and all collections of data, whether machine readable
      or
      otherwise, (iii) descriptions, flow-charts, technical and functional
      specifications, and other work product used to design, plan, organize, develop,
      test, troubleshoot and maintain any of the foregoing, (iv) without limitation
      to
      the foregoing, the software technology supporting any functionality contained
      on
      the Seller’s Internet site(s), and (v) all documentation, including technical,
      end-user, training and troubleshooting manuals and materials, relating to any
      of
      the foregoing.

     

    “Subsidiary”
of
      any
      Person shall mean any Person, whether or not capitalized, in which such Person
      owns, directly or indirectly, an equity interest of at least fifty percent
      (50%), or which may be controlled, directly or indirectly, by such
      Person.

     

    “Tangible
      Property”
shall
      have the meaning set forth in Section 4.13.

     

    “Tax”
means
      any federal, state, local, or foreign income, gross receipts, license, payroll,
      employment, excise, severance, stamp, occupation, premium, windfall profits,
      environmental (including taxes under Code Section 59A), customs duties, capital
      stock, franchise, profits, withholding, social security (or similar),
      unemployment, disability, real property, personal property, sales, use,
      transfer, registration, value added, alternative or add-on minimum, estimated,
      or other tax of any kind whatsoever, including any interest, penalty, or
      addition thereto, whether disputed or not.

     

    “Tax
      Authority”
means,
      with respect to any Tax, the Governmental Authority that imposes such Tax,
      and
      the agency (if any) charged with the collection of such Tax for such
      Governmental Authority.

     

    “Tax
      Group”
shall
      have the meaning set forth in Section 4.22.

     

    “Tax
      Return”
means
      any return, report or similar statement required to be filed with respect to
      any
      Taxes (including any attached schedules), including, any information return,
      claim for refund, amended return or declaration of estimated Tax.

     

    1.2
       Interpretation. For
      purposes of this Agreement, (i) the words “include,” “includes” and “including”
shall be deemed to be followed by the words “without limitation”, (ii) the words
“herein”, “hereof”, “hereby”, “hereto” and “hereunder” refer to this Agreement
      as a whole, including the Exhibits and Schedules, and (iii) the use of any
      gender shall be construed to include all other genders, unless the context
      clearly indicates that less than all the genders is intended. References herein
      to Articles, Sections,
      Exhibits and Schedules mean the Articles and Sections of, and the Exhibits
      and
      Schedules attached to, this Agreement.

     

    ARTICLE
      II. 

     

    PURCHASE
      OF PURCHASED ASSETS; CONSIDERATION

     

    2.1
       Purchased
      Assets. Upon
      the
      terms and subject to the conditions of this Agreement, on the Closing Date,
      Seller shall sell, transfer, assign, convey and deliver to Purchaser, and
      Purchaser shall purchase from Seller, on a going concern basis, free and clear
      of all Encumbrances, good and marketable title to all of the Business and
      operations of Seller and the goodwill associated therewith and all right, title,
      and interest in, to and under all of the assets and properties of Seller of
      every kind and description, wherever located, real, personal or mixed, tangible
      or intangible, used in connection with the Business as the same shall exist
      on
      the Closing Date (herein collectively called the “Purchased Assets”), including,
      but not limited to, all right, title and interest of Seller in, to and
      under:

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (a) the
      Current Assets;

     

    (b) Federal
      Tax Identification Number 562273936 to which all of the Company’s Medicare,
      Medicaid and other billing codes are attached together with such billing codes,
      all as identified on Schedule
      2.1(b);

     

    (c) all
      transferable governmental approvals, authorizations, consents, licenses, orders,
      franchises, and other permits of all Governmental Authorities owned, held,
      or
      utilized by Seller in connection with the Business, including the Governmental
      Authorizations listed on Schedule 4.16;

     

    (d) the
      machinery, equipment, vehicles (except to the extent that they constitute
      Excluded Assets), office equipment, furniture, fixtures, computer hardware
      and
      software and other personal property of every kind and description, owned,
      leased, or held by Seller, including the Tangible Property listed or referred
      to
      on Schedule 4.13(a);

     

    (e) all
      Intellectual Property (and all goodwill associated therewith), and the
      agreements, contracts, licenses, sublicenses, assignments and indemnities listed
      on Schedule 4.19,
      including the right to sue for and seek remedies against past, present, and
      future infringements thereof;

     

    (f) all
      raw
      materials, work in process, supplies, spare parts, and shipping and packing
      materials;

     

    (g) the
      Material Agreements and the leases, contracts, agreements, understandings,
      licenses, supply and distribution agreements, commitments, orders, or purchase
      orders with respect to the Purchased Assets not required by the terms of
Section
      4.23
      to be
      listed or described in a schedule to this Agreement; 

     

    (h) all
      of
      Seller’s rights, claims or causes of action of whatever nature, contingent, or
      otherwise against third parties relating to the Purchased Assets or the Business
      arising out of transactions occurring prior to the Closing Date;

     

    (i) all
      books, records, files, and papers (including all data and other information
      stored on discs, tapes or other media) of Seller relating to the Business,
      including without limitation engineering or manufacturing information, lists
      of
      present of former suppliers, lists of present and former customers, personnel
      and employment records, and any information relating to Taxes imposed on the
      Purchased Assets;

     

    (j) all
      sales, promotion, advertising, and marketing materials of whatever form or
      nature owned or licensed by the Seller relating to the Business or the Purchased
      Assets;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (k) all
      corporate names, including the name “Regal”, telephone, telex and telephone
      facsimile numbers and other directory listings and Internet and other electronic
      addresses utilized in connection with the Business;

     

    (l) the
      exclusive right of Purchaser to represent itself as carrying on the Business
      in
      continuation thereof; 

     

    (m) all
      right, title and interest in the Office Lease;

     

    (n) 
      the
      security deposit relating to the Office Lease; and

     

    (o) all
      goodwill and all other rights, properties, and assets of any kind or character
      whatsoever directly or indirectly relating to the conduct of the Business,
      whether tangible or intangible, owned, licensed, or held by the Seller,
      including, without limitation, the full benefit of all third party
      representations, warranties, guarantees, indemnities, undertakings,
      certificates, covenants, agreements and the like and all security received
      by
      the Seller for the purchase or other acquisition of any part of the Purchased
      Assets, except to the extent such rights, properties, or assets comprise a
      part
      of an Excluded Asset or are expressly excluded by the terms of this
      Agreement.

     

    2.2
       Excluded
      Assets. Notwithstanding
      the provisions of Section 2.1, the Purchased Assets shall not include the
      following (herein referred to as the “Excluded Assets”):

     

    (a) all
      right, title and interest in all leases for real property to which the Seller
      is
      a party, other than the Office Lease;

     

    (b) any
      prepaid expenses relating to an Excluded Asset;

     

    (c) Seller’s
      rights, claims or causes of action against third parties relating to the
      Business which might arise from or in connection with the Excluded Assets or
      the
      discharge by Seller of the Excluded Liabilities;

     

    (d) all
      claims, rights, and interests in and to any refunds for Taxes paid by Seller
      for
      periods prior to the Closing Date;

     

    (e) all
      insurance and other claims or rights to recoveries and similar benefits of
      the
      Seller which are not related to or derived from the Assumed Liabilities;


     

    (f) the
      articles of incorporation and by-laws of the Seller and all corporate minute
      books, stock books, corporate seals, stock transfer books, and other corporate
      records relating to the corporate organization and capitalization of the Seller;
      and

     

    (g)
      any
      asset listed on Schedule
      2.2(g).

    


    2.3
       Assumed
      Liabilities. On
      the
      Closing Date, the Purchaser shall assume and agree to discharge the following
      obligations and liabilities of Seller in accordance with their respective terms
      and subject to the respective conditions thereof (herein referred to as the
      “Assumed Liabilities”):

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (a) the
      Current Liabilities;

     

    (b) the
      Other
      Liabilities; and

     

    (c) liabilities
      and obligations of Seller to be paid or performed after the Closing Date under
      (x) the Material Agreements, (y) the Office Lease, and (z) the contracts and
      other agreements with respect to the Business to which Seller is a party not
      required by the terms of Section 4.23
      to be
      listed in a schedule to this Agreement, except in each case, to the extent
      such
      liabilities and obligations, but for a breach or default by Seller, would have
      been paid, performed or otherwise discharged on or prior to the Closing Date
      or
      to the extent the same arise out of any such breach or default.

     

    2.4
       Excluded
      Liabilities. The
      Purchaser expressly does not, and shall not, assume, be deemed to assume, or
      be
      obligated to pay, perform or otherwise discharge any liability, obligation,
      or
      commitment of Seller, the shareholders of the Seller, or their Affiliates,
      direct or indirect, known or unknown, absolute or contingent, not specifically
      identified as an Assumed Liability (all such liabilities and obligations not
      being assumed being herein called the “Excluded
      Liabilities”) and,
      notwithstanding anything to the contrary in Section 2.3, none of the
      following shall be Assumed Liabilities for purposes of this
      Agreement:

     

    (a)  all
      costs
      and expenses incurred by Seller or the Principal Shareholders incident to their
      negotiation and preparation of this Agreement and its performance and compliance
      with the agreements and conditions contained herein;

     

    (b)  all
      liabilities or obligations in respect of any Excluded Assets;

     

    (c)  all
      other
      liabilities or obligations of the Seller, except for the Current Liabilities,
      the Other Liabilities, and the liabilities and obligations assumed pursuant
      to
      Section 2.3(d);

     

    (d)  all
      liabilities or obligations in respect of Taxes (whether imposed on the Seller,
      shareholders of the Seller, or any of their Affiliates) arising with respect
      to
      the Business or the Purchased Assets on or before the Closing Date, or the
      sale
      of the Purchased Assets to the Purchaser, including sales or other transfer
      Tax,
      whenever such Taxes become due or payable;

     

    (e)  all
      liabilities and obligations, including damages, fines, and penalties, with
      respect to pending or threatened litigation, suits, claims, demands, or
      investigations or proceedings by Governmental Authorities to the extent they
      relate to or arise from occurrences, actions, or non-actions prior to the
      Closing Date;

     

    (f)  all
      liabilities or obligations imposed by Applicable Law or associated with, arising
      out of or arising from (i) noncompliance by the Seller with any Applicable
      Law,
      including, but not limited to, those relating to employment practices and
      Environmental and Safety Requirements prior to the Closing Date, (ii) the
      occupancy, operation, use or control of any of the business property of the
      Seller prior to the Closing Date, or (iii) the operation of the Business prior
      to the Closing Date;

     

    (g)  all
      claims, demands, liabilities, obligations, or litigation of any nature
      whatsoever arising out of or based upon events occurring or conditions existing
      on or before the Closing Date which relate to products sold or services
      performed by Seller on or before the Closing Date or any other action or
      inaction of Seller, whether founded upon negligence, breach of warranty, strict
      liability in tort and/or other legal theory seeking compensation or recovery
      for
      or relating to injury to persons or damage to property, notwithstanding that
      the
      date on which the injury, claim, demand, liability, or obligation was or is
      either before or after the Closing Date, other than a claim or liability
      included as an Assumed Liability;

     

    
      
        
        

      

      
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    (h)  all
      claims, demands, obligations or liabilities, including the cost and expenses
      of
      defense thereof, whether arising out of, based upon, or related to workers’
compensation or employer’s liability claims, negligence, strict liability in
      tort and/or other legal theory seeking compensation and/or recovery and arising
      out of injuries and occupational diseases sustained by employees of Seller
      on or
      before the Closing Date;

     

    (i)  all
      liabilities and obligations arising from the breach or default by Seller, prior
      to the Closing Date, of any lease, contract, engagement, or commitment,
      including the Seller Leases and the Material Agreements;

     

    (j)  all
      wages, compensation, premiums for medical and health insurance, severance
      premiums, deferred compensation, profit-sharing, pension contributions, or
      other
      welfare or benefit programs relating to the employees of the Seller accruing
      or
      arising on or prior to the Closing Date;

     

    (k)  all
      liabilities for compensation (including salaries, wages, and benefits) and
      claims for severance and for payments in lieu of notice of termination made
      by
      employees of Seller who are not employed by Purchaser as of the Closing Date,
      including, without limitation, by reason of Seller’s failure to comply with the
      Worker Adjustment and Restraining Notification Act (“WARN”), other than a
      liability included as an Assumed Liability; 

     

    (l)  all
      liabilities, debts, and obligations relating to any employee profit sharing
      plans and savings and stock ownership plans and pension or retirement plans,
      health, and other employee plans, including, without limitation, any defined
      benefit pension plan or 401(k) plan; and 

     

    (m)
       the
      Affiliate Payables and the Funded Indebtedness.

    


    2.5
       Consideration. Subject
      to adjustment as set forth in Section 2.6, the aggregate purchase price for
      the
      Purchased Assets shall be One Million Two Hundred Thirty-Seven Thousand Five
      Hundred Dollars ($1,237,500), plus
      an
      amount equal to the Affiliate Payables (the “Purchase Price”), payable by
      Purchaser to the Seller through
      the issuance of such number of shares of Langer Common Stock having a value
      equal to the Purchase Price, valued based upon the Average Closing Price (the
      “Consideration Shares”). 

     

    2.6
       Certain
      Closing Adjustments and Covenants. The
      Purchase Price shall be decreased dollar for dollar to the extent that the
      Net
      Current Assets, as included in the Closing Date Balance Sheet, are less than
      $675,000 on the Closing Date.  

     

    
      
        
        

      

      
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    (c) For
      purposes of calculating the Net Current Assets, the Seller’s independent
      accountants shall conduct an audit of the closing date balance sheet of the
      Seller promptly after the Closing, and- within 45 days following the Closing
      Date, the Seller shall deliver to the Purchaser (i) a balance sheet of the
      Seller as at the Closing Date (the “Closing Date Balance Sheet”) prepared in
      accordance with GAAP applied on a basis consistent with the Financial
      Statements, and (ii) an unaudited statement of Net Current Assets, derived
      from
      the items set forth on the Closing Date Balance Sheet. Notwithstanding the
      immediately preceding sentence, if the accounting policies and procedures
      applied by Seller in the preparation of the Financial Statements are not in
      accordance with GAAP, the Closing Date Balance Sheet shall nevertheless be
      prepared in accordance with GAAP. The Closing Date Balance Sheet and such
      statement of Net Current Assets shall exclude any adjustments or modification
      to
      the historical carrying values of assets and liabilities resulting from the
      recording of the transactions contemplated hereby. The Purchaser and its
      accountants shall be afforded access to and shall review the workpapers of
      the
      Seller and its accountants in connection with the preparation of the Closing
      Date Balance Sheet and such statement of Net Current Assets. The Closing Date
      Balance Sheet shall become final and binding upon the parties unless, within
      30
      days following delivery to the Purchaser (such 30 day period hereinafter
      referred to as the “Review Period”), notice is given by the Purchaser to the
      Seller of the Purchaser’s dispute of the Closing Date Balance Sheet, setting
      forth in reasonable detail the Purchaser’s basis for such objection. If notice
      of dispute is timely given by the Purchaser, the parties shall work together
      in
      good faith to resolve such dispute.

     

    (d) If
      the
      parties are unable to reach agreement within 30 days after notice of dispute
      has
      been received by the Seller, the dispute shall be referred for resolution to
      BDO
      Seidman, LLP (the “Determining Accountants”) as promptly as practicable. The
      Determining Accountants shall make a determination as to each item in dispute,
      which determination shall be (i) in writing, (ii) furnished to Langer, the
      Purchaser, the Seller, and the Principal Shareholders as promptly as practicable
      after the items in dispute have been referred to the Determining Accountants,
      (iii) made in accordance with this Agreement, and (iv) conclusive and binding
      upon each party hereto. Each of Purchaser and the Seller shall use reasonable
      efforts to cause the Determining Accountants to render their decision as soon
      as
      reasonably practicable, including without limitation by promptly complying
      with
      all reasonable requests by the Determining Accountants for information, books,
      records and similar items.

     

    (e) If
      any
      post-closing adjustment is required or permitted to be made pursuant hereto,
      the
      settlement thereof (the “Post-Closing Settlement”) shall take place at the
      offices of Kane Kessler, P.C. at 10:00 a.m. local time on the fifth business
      day
      following the end of the Review Period, or in the event such matter has been
      referred to the Determining Accountants, on the fifth business day following
      the
      date upon which the written determination of the Determining Accountants becomes
      final and binding upon the parties, or at such other time and place as the
      Purchaser and the Seller may mutually agree in writing (the “Determination
      Date”). If at the Post-Closing Settlement the Purchase Price is decreased, such
      decrease shall be paid by canceling such number of shares of Consideration
      Shares received by the Seller at Closing equal to the balance of such decrease,
      valued at the average closing price of the Langer Common Stock on the NASDAQ
      Global Market for the ten (10) consecutive trading day period ending four (4)
      trading days prior to the Determination Date. The fees and expenses of each
      party’s respective accountants shall be borne by such party; provided;
      however,
      the
      Purchaser shall pay the initial $10,000 of the cost incurred by the Seller
      for
      the preparation of the Closing Date Balance Sheet. The fees and expenses of
      the
      Determining Accountants incurred in connection with its review and determination
      shall be borne one-half by the Purchaser and one-half by the
      Seller.

     

    
      
        
        

      

      
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    2.7
       Allocation
      of the Purchase Price. 

     

    Within
      90 days following the Closing Date, the Purchaser shall deliver to the
      Seller a schedule (the “Allocation Schedule”) allocating the Purchase Price
      (including, for purposes of this Section 2.7, the Assumed Liabilities)
      among the Purchased Assets and restrictive covenants and prepared in accordance
      with Section 1060 of the Code and the regulations thereunder. The Seller
      agrees that promptly after receiving the Allocation Schedule, it shall sign
      the
      Allocation Schedule and return an executed copy thereof to the Purchaser. The
      Purchaser and the Seller each agrees to file IRS Form 8594, and all
      federal, state, local and foreign Tax Returns, in accordance with the Allocation
      Schedule, and no party shall take any position inconsistent with the Allocation
      Schedule upon examination of any such Tax Return, in any claim, or otherwise.
      The Purchaser and the Seller each agrees to provide the other promptly with
      any
      other information required to complete IRS Form 8594.

     

    2.8
       Delivery
      and Assignment of Purchased Assets; Attorney-in-Fact. (a)
      Promptly following the Closing, Seller will put the Purchaser into full physical
      possession and enjoyment of the Purchased Assets. With respect to the Purchased
      Assets listed on Schedule
      4.13
      that
      cannot be physically delivered to the Purchaser because they are in the
      possession of third parties or
      otherwise, the Seller shall give irrevocable instructions to the party in
      possession thereof, promptly following the Closing, with copies to the
      Purchaser, that all right, title, and interest therein have been vested in
      the
      Purchaser and that the same are to be held for the Purchaser’s exclusive use and
      benefit.

     

    (b) To
      the
      extent that the assignment by the Seller to the Purchaser of any Material
      Agreement or other contract, agreement, instrument, lease, license,
      understanding, or arrangement to be assigned to the Purchaser hereunder shall
      require the consent of a party other than the Seller, including those set forth
      on Schedule
      4.3,
      which
      has not been obtained prior to the Closing and if Langer and the Purchaser
      shall
      nevertheless elect to consummate the transactions contemplated by this
      Agreement, this Agreement shall not constitute an agreement to assign the same
      if an attempted assignment without such consent would constitute a breach
      thereof unless the Purchaser before, at, or after the Closing elects in a
      writing delivered to the Seller, specifically identifying such absent consent,
      to waive such consent. Nothing in this Section 2.8(b) regarding such
      non-assignment or such election shall limit any rights Langer or the Purchaser
      may have against the Seller as
      a
      result of the failure to obtain such consent.

     

    (c) All
      costs
      and expenses incurred in connection with the assignment and transfer of the
      Purchased Assets (including, but not limited to, amounts required to be paid
      in
      order to obtain necessary consents for such assignments and transfers) shall
      be
      borne solely by the Seller.

     

    
      
        
        

      

      
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    (d) Seller
      hereby constitutes and appoints Purchaser, and its successors and assigns,
      the
      true and lawful attorneys-in-fact of Seller with full power of substitution,
      in
      the name of Purchaser or the name of Seller, on behalf of and for the benefit
      of
      Purchaser, to collect all accounts receivable included within the Purchased
      Assets and other items being transferred, conveyed and assigned to Purchaser
      as
      provided herein, to endorse, without recourse, checks, notes and other
      instruments included with the Purchased Assets in the name of Seller for the
      purpose of collection, to institute and prosecute, in the name of Seller or
      otherwise, all proceedings which Purchaser may deem proper in order to collect,
      assert or enforce any claim, right or title of any kind in or to the Purchased
      Assets being transferred, conveyed and assigned as provided herein and to defend
      and compromise any and all actions, suits or proceedings in respect of any
      of
      such Purchased Assets and Assumed Liabilities and to do all such acts and things
      in relation thereto as Purchaser may deem advisable in its sole discretion.
      Seller acknowledges and agrees that the foregoing powers are coupled with an
      interest and shall be irrevocable. Seller further agrees that Purchaser shall
      retain for its own account any amounts collected pursuant to the foregoing
      powers, and Seller, the Principal Shareholders, and their Affiliates shall
      pay
      to Purchaser, if and when received, any amounts which shall be received by
      Seller, the Principal Shareholders, or their Affiliates after the Closing in
      respect of the Purchased Assets to be transferred, conveyed and assigned to
      Purchaser as provided herein; and Langer, the Purchaser, and the Affiliates
      shall pay to Seller, if and when received, any amounts which shall be received
      by Langer, the Purchaser, or their Affiliates after the Closing in respect
      of
      the Excluded Assets.

     

    2.9
       Closing;
      Effective Date. Subject
      to the terms and conditions set forth herein, the closing of the transactions
      contemplated by this Agreement (the “Closing”) shall take place at the offices
      of Kane Kessler, P.C., 1350 Avenue of the Americas, New York, New York 10019,
      on
      January 8, 2007, or
      at
      such other place as shall be mutually agreed by the parties as soon as
      practicable after the conditions to Closing set forth in Article 6 of this
      Agreement have been satisfied. The
      Closing shall be deemed to be effective as of 12:01 a.m., New York City time,
      on
      such date, and such date is referred to herein as the “Closing Date”. All
      proceedings to be taken and all documents to be executed at the Closing shall be
      deemed to have been taken, delivered and executed simultaneously, and no
      proceeding shall be deemed taken nor documents deemed executed or delivered
      until all have been taken, delivered and executed.

     

    2.10
       Fractional
      Shares. Notwithstanding
      any other provision of this Agreement, if the Seller would otherwise have been
      entitled to receive a fraction of a share of Langer Common Stock, the number
      of
      shares issuable shall be rounded up or down to the nearest whole
      number.

     

    2.11
       Legending
      of Securities. Each
      certificate for Langer Common Stock to be issued to the Seller as part of the
      Consideration Shares shall bear substantially the following legend:

     

    “THE
      SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT
      BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT SUCH
      REGISTRATION UNDER THE SECURITIES ACT OR AN EXEMPTION THEREFROM.


     

    IN
      ADDITION, THE TRANSFER OF THE SHARES OF COMMON STOCK EVIDENCED HEREBY IS
      RESTRICTED BY THE TERMS OF AN AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF
      AND
      THE ISSUER HEREOF. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES
      OF THE ISSUER.”

     

    
      
        
        

      

      
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    ARTICLE
      III. 

     

    REPRESENTATIONS
      AND WARRANTIES OF LANGER AND PURCHASER

     

    In
      order
      to induce the Seller and the Principal Shareholders to enter into this Agreement
      and the Seller Ancillary Agreements and to consummate the transactions
      contemplated hereby and thereby, Langer and the Purchaser, jointly and
      severally, make the representations and warranties set forth below to the Seller
      and the Principal Shareholders.

     

    3.1
       Organization;
      Standing and Power.
      Langer
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of the State of Delaware. Purchaser is a corporation duly organized,
      validly existing and in good standing under the laws of the State of Delaware.
      Langer and the Purchaser have all requisite right, power and authority to
      execute, deliver and perform this Agreement, the Langer Ancillary Agreements,
      and the Purchaser Ancillary Agreements, as the case may be, and to consummate
      the transactions contemplated hereby.

     

    3.2
       Authorization;
      Enforceability.
      The
      execution, delivery and performance of this Agreement, the Langer Ancillary
      Agreements, and the Purchaser Ancillary Agreements, as the case may be, by
      Langer and Purchaser and the consummation by Langer and Purchaser of the
      transactions contemplated hereby have been duly authorized by all requisite
      corporate action on the part of Langer and Purchaser. This Agreement, the Langer
      Ancillary Agreements, and the Purchaser Agreements have been duly executed
      and
      delivered by Langer and Purchaser, as the case may be, and constitute the legal,
      valid and binding obligations of Langer and Purchaser, as the case may be,
      enforceable in accordance with their terms, except to the extent that their
      enforcement is limited by bankruptcy, insolvency, reorganization or other laws
      relating to or affecting the enforcement of creditors’ rights generally and by
      general principles of equity.

     

    3.3
       No
      Violation or Conflict.
      The
      execution, delivery and performance of this Agreement, the Langer Ancillary
      Agreements, and the Purchaser Ancillary Agreements by Langer and Purchaser,
      as
      the case may be, and the consummation by Langer and Purchaser of the
      transactions contemplated hereby and thereby do not violate or conflict with
      any
      provision of any Applicable Law, the violation of which would interfere in
      any
      material respect with Langer or Purchaser’s
      ability to consummate the transactions contemplated hereby, or any provision
      of
      Langer or Purchaser’s respective certificate of incorporation or
      bylaws.

     

    3.4
       Consent
      of Governmental Authorities.
      No
      consent, approval or authorization of, or registration, qualification or filing
      with any Governmental Authority is required to be made by Langer and Purchaser
      in connection with the execution, delivery or performance by Langer and
      Purchaser of this Agreement, the Langer Ancillary Agreements, or the Purchaser
      Ancillary Agreements or the consummation by Langer and Purchaser of the
      transactions contemplated hereby, other than as required by the Securities
      Act
      with respect to the issuance of the Consideration Shares.

     

    3.5
       Brokers.
      Except
      as set forth on Schedule
      3.5,
      Langer
      and Purchaser have not employed any financial advisor, broker or
      finder.
      in
      connection with the transactions contemplated by this Agreement which would
      be
      entitled to a broker’s, finder’s or similar fee or commission in connection
      therewith or upon the consummation thereof.

     

    
      
        
        

      

      
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    3.6
       SEC
      Filings.  The
      unaudited consolidated balance sheet and related consolidated statements of
      income, cash flows, and changes in stockholders’ equity (together with related
      notes) as of and for the nine months ended September 30, 2006, as set forth
      in
      the Purchaser’s Quarterly Report on Form 10-Q, as
      filed
      with the SEC, (x) fairly present in all material respects the financial position
      of the Purchaser as of September 30, 2006 and the results of its operations,
      cash flows, and stockholders’ equity for the nine months ended September 30,
      2006 and (y) were prepared in accordance with GAAP applied on a consistent
      basis
      throughout such period, except as otherwise indicated in the notes
      thereto.

     

    ARTICLE
      IV. 

     

    REPRESENTATIONS
      AND WARRANTIES OF THE SELLER

     

    In
      order
      to induce Purchaser and Langer to enter into this Agreement, the Langer
      Ancillary Agreements, and the Purchaser Ancillary Agreements and to consummate
      the transactions contemplated hereby and thereby, the Seller and each of the
      Principal Shareholders, jointly and severally, make the representations and
      warranties set forth below to Purchaser and to Langer.

     

    4.1
       Organization. (a)
      The
      Seller is a limited liability company duly formed, validly existing and in
      good
      standing under the laws of North Carolina. The Seller is duly qualified to
      transact business as a foreign company in all jurisdictions where the ownership
      or leasing of its properties or the conduct of its business requires such
      qualification, except where the failure to be so qualified would not have a
      Material Adverse Effect. Each jurisdiction in which the Seller is so qualified
      is listed on Schedule
      4.1(a)
      hereto.
      The Seller has the requisite right, power and authority (i) to own or lease
      and
      operate its properties and (ii) to conduct its business as presently
      conducted.

     

    (b) The
      Seller does not, directly or indirectly, (a) own, of record or beneficially,
      any
      outstanding voting securities
      or other equity interests in any corporation, partnership, limited liability
      company, joint venture or other entity, (b) control any corporation,
      partnership, joint venture or other entity,
      or (c)
      have any Investments.

     

    4.2
       Authorization;
      Enforceability. The
      Seller has all requisite right, corporate power and corporate authority to
      execute, deliver and perform this Agreement and the Seller Ancillary Agreements
      and to consummate the transactions contemplated hereby and thereby. Each
      Principal Shareholder has the capacity
      to execute, deliver, and perform this Agreement and the agreements or other
      documents contemplated hereby to which it is a party. This Agreement, the Seller
      Ancillary Agreements, the Shero Employment Agreement and all other agreements
      or
      documents executed and delivered by the Seller or the Principal Shareholders
      pursuant to this Agreement have been duly authorized by the Seller and the
      Principal Shareholders, do not require any further authorization or consent
      of
      the Seller or the Principal Shareholders, and have been and will be duly
      executed and delivered and constitute the legal, valid and binding obligations
      of Seller and the Principal Shareholders enforceable in accordance with their
      respective terms, except
      to
      the extent that their enforcement is limited by bankruptcy, insolvency,
      reorganization or other laws relating to or affecting the enforcement of
      creditors’ rights generally and by general principles of equity.

     

    
      
        
        

      

      
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    4.3
       No
      Violation or Conflict; Consent. (a)
      Except as set forth on Schedule
      4.3(a)
      hereto,
      the execution, delivery and performance of this Agreement, the Seller Ancillary
      Agreements and the Shero Employment Agreement and the transactions contemplated
      by this Agreement by the Seller and the Principal Shareholders and the
      consummation by the Seller and the Principal Shareholders of the transactions
      contemplated hereby: (i) do not violate or conflict with any Applicable Law,
      (ii) do not violate or conflict with any provision of either Seller’s
      certificate of incorporation or bylaws; and (iii) do not, with or without the
      passage of time or the giving of notice, (x) result in the breach of, constitute
      a default, or give rise to a right of termination, cancellation, or acceleration
      of performance or loss of a benefit or other adverse reaction under, or in
      any
      way affect the continuation, validity, or effectiveness of any Material
      Agreement or any other agreement, understanding, or instrument which is a
      Purchased Asset to which the Seller or any Principal Shareholder is a party
      or
      by which the Seller or the Principal Shareholders or their respective properties
      may be bound or affected or (y) result in the creation of any Encumbrance upon
      any property or assets of the Seller or the Principal Shareholders pursuant
      to
      any Material Agreement or any other agreement, understanding, or instrument
      which is a Purchased Asset to which the Seller or any Shareholder is a party
      or
      by which the Seller or the Principal Shareholders or their respective properties
      may be bound or affected.

     

    (b) Except
      as
      set forth on Schedule
      4.3(b),
      the
      consummation of the transactions contemplated by this Agreement, the Seller
      Ancillary Agreements, the Shero Employment Agreement and the other agreements
      executed and delivered by the Seller or the Principal Shareholders at the
      Closing will not require the notification of or consent, approval, or
      authorization of any third party. Each of the consents, approvals, and
      authorizations listed on Schedule
      4.3
      has been
      obtained and are valid, unconditional, and in full force and effect as of the
      date hereof, except as set forth on Schedule
      4.3(c).

     

    4.4
       Consents
      of Governmental Authorities. Except
      as
      set forth on Schedule
      4.4,
      no
      consent, approval or authorization of, or registration, qualification or filing
      with any Governmental Authority is required to be made in connection with the
      execution, delivery or performance of this Agreement, the Seller Ancillary
      Agreements, or the Shero Employment Agreement, by the Seller or the Principal
      Shareholders or the consummation by the Seller of the transactions contemplated
      hereby.

     

    4.5
       Conduct
      of Business. Except
      as
      disclosed on Schedule
      4.5
      hereto,
      since December 31, 2005, the Seller has conducted its business in the ordinary
      and usual course consistent with past practices and there has not occurred
      any
      Material Adverse Change. Without limiting the generality
      of the foregoing, except as disclosed on Schedule
      4.5,
      since
      December 31, 2005, Seller has not: (a)
      sustained any operating loss or reduction in net assets; (b) suffered any
      damage, destruction or loss, whether or not covered by insurance, which has
      had
      or could have a Material Adverse Effect; (c) sold, leased, or disposed of any
      material assets or property; (d) granted or made any mortgage or pledge or
      subjected itself or any of its properties or assets to any Encumbrance of any
      kind, except liens for Taxes not currently due; (d) become subject to any
      Guaranty; (e) changed any accounting method used by the Seller or been affected
      by any material change in any accounting method used by the Seller; (f) entered
      into any agreement which would be a Material Agreement, or amended or terminated
      any existing Material Agreement or received notice of any such amendment or
      termination; (g) experienced any strike, work stoppage or slowdown; (h) received
      notice of any adverse change in its relationship with any financial institution,
      customer or supplier with which it currently does business, nor is the Seller
      aware of any circumstance that could reasonably lead to such a change; or (i)
      entered into any agreement to do any the foregoing.

     

    
      
        
        

      

      
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    4.6
       Litigation;
      Disputes. Except
      as
      set forth on Schedule
      4.6,
      there
      are no actions, suits, investigations, arbitrations, claims or proceedings
      (“Litigation”) pending or, to the Knowledge of the Seller or the Principal
      Shareholders, threatened by or before any Governmental Authority or arbitrator,
      (a) affecting the Seller (as plaintiff or defendant) or the Purchased Assets
      or
      (b) against the Seller or the Principal Shareholders relating to the Purchased
      Assets or the transactions contemplated by this Agreement, and there exist
      no
      facts or circumstances creating any reasonable basis for the institution of
      any
      such action, suit, investigation, claim or proceeding described above.
Schedule
      4.6
      sets
      forth a complete and accurate list and description of any Litigation commenced
      against the Seller in the last five (5) years. No dispute or claim exists
      between the Seller and any of its customers, suppliers, or distributors that
      could reasonably be expected to have a Material Adverse Effect.

     

    4.7
       Brokers. Except
      as
      set forth on Schedule
      4.7
      hereto,
      neither the Seller nor the Principal Shareholders has employed any financial
      advisor, broker or finder, and neither of them has incurred or will incur any
      other broker’s, finder’s, investment banking or similar fees, commissions or
      expenses in connection with the transactions contemplated by this Agreement.
      The
      Seller shall be solely responsible for all fees, commissions, and expenses
      of
      any Person set forth
      on
Schedule
      4.7
      hereto
      incurred in connection with the transactions contemplated by this
      Agreement.

     

    4.8
       Compliance. The
      Seller is in compliance with all Applicable Law including, but not limited
      to,
      those relating to (a) the development, manufacture, distribution, marketing
      and sale of products and services, (b) employment, (c) building, zoning and
      land
      use, (d) Environmental and Safety Requirements, (e) the bidding for contracts
      by
      and the conduct of business by federal and state contractors, (f) the Medicare
      and Medicaid Anti-Fraud and Abuse Amendments to the Social Security Act (42
      U.S.C. §1320a-7a-b and 42 U.S.C. §1396h(a)), (g) the Federal False Claims Act,
      and (h) the Stark Law (42 U.S.C. §1395nn). The Seller is not subject to any
      judicial, governmental or administrative
      order, judgment or decree. Attached hereto as Schedule
      4.8
      are true
      and correct copies of all reports of inspections of the Purchased Assets, the
      Business and properties of the Seller which occurred during the past five (5)
      years through the date hereof, under all Applicable Laws. Neither the Seller
      nor
      the Principal Shareholders has received notice of any violation (or any
      investigation, inspection, audit, or other proceeding by any Governmental
      Authority involving an allegation of any violation) of any Applicable Law,
      and
      to the Knowledge of the Seller or the Principal Shareholders, no investigation,
      inspection, audit, or other proceeding by any Governmental Authority involving
      an allegation of violation of any Applicable Law by the Seller is threatened
      or
      contemplated.

     

    4.9
       Charter,
      Bylaws and Corporate Records. A
      true,
      correct and complete copy of (a) the certificate of incorporation of each
      Seller, as amended and in effect on the date hereof and (b) the bylaws of each
      the Seller, as amended and in effect on the date hereof, has previously been
      made available to the Purchaser. The minute books of each Seller has previously
      been made available to the Purchaser. Such minute books contain complete and
      accurate records, in all material respects, of all meetings and other corporate
      actions of the board of directors, committees of the board of directors,
      incorporators and shareholders of each Seller from the date of its incorporation
      to the date hereof. All such meetings were duly called and held in accordance
      with the corporate laws of the State of North Carolina.

     

    
      
        
        

      

      
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    4.10
       Financial
      Statements. Attached
      hereto as Schedule
      4.10(a)
      are true
      and complete copies of the Financial Statements and the Seller’s balance sheet
      and profit and loss statements for the eleven months ended November 30, 2006
      (the “Quarter Statements”). Except as set forth on Schedule
      4.10(b),
      the
      Financial Statements and the Quarter Statements: (a) are correct and complete
      in
      all material respects and have been prepared in accordance with the books of
      account and records of the Seller; (b) fairly present, and are true, correct
      and
      complete statements in all material respects of the Seller’s financial condition
      and the results of its operations and cash flows at the dates and for the
      periods specified in those statements; and (c) have been prepared in accordance
      with GAAP, consistently applied with prior periods.

     

    4.11
       Absence
      of Undisclosed Liabilities. Except
      for Liabilities (as defined below) incurred in the ordinary course of business
      consistent with past practice since January 1, 2004, the Seller does not have
      any direct or indirect indebtedness, liability, claim, loss, damage, deficiency,
      obligation or responsibility, known or unknown, fixed or unfixed, choate or
      inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute,
      contingent or otherwise, including, without limitation, liabilities on account
      of Taxes, other governmental charges or lawsuits brought, whether or not of
      a
      kind required by GAAP to be set forth on a financial statement, (“Liabilities”),
      which were not fully and adequately reflected on (i) the Financial Statements
      or
      (ii) Schedule
      4.11.
      There
      are no circumstances, conditions, events or arrangements which may hereafter
      give rise to any Liabilities of Seller except in the ordinary course of business
      or as otherwise set forth on Schedule
      4.11.

     

    4.12
       Title
      to Securities. The
      shareholders of the Seller are the record and beneficial owner of the shares
      of
      common stock or other securities of the Seller listed opposite their names
      on
Schedule
      4.12,
      and,
      such securities are owned free and clear of any Encumbrances and claims
      whatsoever, including, without limitation, claims or rights under any voting
      trust agreements, shareholder agreements or other agreements. The shares of
      common stock listed on Schedule
      4.12
      constitute all of the issued and outstanding capital stock of the
      Seller.

     

    4.13
       Title
      to and Condition of Personal Property. Schedule
      4.13(a)
      sets
      forth all interests owned or claimed by the Seller (including, without
      limitation, options) in or to the plant, machinery, equipment, furniture,
      leasehold improvements, fixtures, vehicles, structures, any related capitalized
      items and other tangible property used in the Business (“Tangible
      Property”). The
      Seller has good and marketable title to, or in the case of leased property,
      has
      a valid leasehold interest in, each item of Tangible Property, free and clear
      of
      any options or Encumbrances whatsoever, except as set forth on Schedule
      4.13(b)
      hereto.
      Except as set forth on Schedule
      4.13(c),
      all
      Tangible Property owned by the Seller or used by the Seller on the date hereof
      (with a replacement value in excess of $3,000) in the operation of the Business
      is in good operating condition and in a good state of maintenance and repair
      (subject to normal wear and tear), is adequate for the Business as presently
      conducted and as proposed, to the Knowledge of the Seller or the Principal
      Shareholders, to be conducted by the Purchaser, and is inspected, maintained,
      and operated in conformity with all Applicable Law in all material respects.
      Except as set forth on Schedule
      4.13(d),
      there
      are no assets owned by the shareholders of the Seller or any third party which
      are used in or necessary for the operation of the Business, as presently
      conducted. Schedule
      4.13(e)
      sets
      forth a complete and accurate list of all Tangible Property that are in the
      possession of any third party.  

     

    
      
        
        

      

      
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    4.14
       Real
      Property. The
      Seller does not own any fee simple interest in real property. All lease and
      sublease agreements and all other instruments granting leasehold interests,
      rights, options, or other interests, as amended to date (the “Lease”)
      to
      which Seller is a party are set forth on Schedule
      4.14.
      Complete copies of each of the Leases have been previously provided to
      Purchaser. Except as set forth on Schedule
      4.14,
      the
      Leases are valid, binding and in full force and effect, all rent and other
      sums
      and charges payable thereunder are current, no notice of default or termination
      under any of the Leases is outstanding, no termination event or condition or
      uncured default on the part of the Seller or on the part of the landlord or
      sublandlord, as the case may be, thereunder, exists under the Leases, and no
      event has occurred and no condition exists which, with the giving of notice
      or
      the lapse of time or both, would constitute such a default or termination event
      or condition. All of the properties subject to the Leases (the “Leased
      Property”) are used solely in the conduct of the Business. There are no
      liabilities (other than rent and other sums and charges regularly payable)
      associated with any of the Leases including, without limitation, any liability
      under any Environmental and Safety Requirements which is or which may become
      payable by Purchaser.
      There is
      no obligation to reinstate any of the Leased Property by removing or dismantling
      any alteration made to it. There is no actual or contingent liability on Seller
      arising out of any leasehold estate or interest held by Seller as original
      lessee. All
      improvements located on the Leased Property are in a state of good maintenance
      and repair (subject to normal wear and tear) and in a condition adequate and
      suitable for the effective conduct therein of the Business. The heating,
      ventilation, air conditioning, plumbing and electrical systems at the Leased
      Property will be in good working order and repair on the Closing Date. The
      Seller has not experienced any material interruption in such services provided
      to any of the premises located on the Leased Property within the last year.
      To
      the knowledge of the Seller or the Principal Shareholders, no landlord under
      the
      Leases has any plans to make any material alterations to any of the Leased
      Property, the construction of which would interfere with the use of any portion
      of the Leased Property. To the knowledge of the Seller or the Principal
      Shareholders, no landlord under the Leases has any plans to make any material
      alterations to any of the buildings in which Leased Property is located, the
      costs of which alterations would be borne in any part by a tenant under the
      applicable Lease.

     

    4.15
       Insurance. Schedule
      4.15
      sets
      forth a true and complete list of all insurance policies providing insurance
      coverage of any nature to the Seller. The Seller has previously provided the
      Purchaser with true and complete copies of all of such insurance policies,
      as amended
      to the date hereof. Such policies provide adequate and customary coverage for
      the Business and are sufficient for compliance by the Seller with all
      requirements of Applicable Law and all Material Agreements to which the Seller
      is a party or by which any of the Purchased Assets of the Seller are bound.
      All
      of such policies are in full force and effect and are valid and enforceable
      in
      accordance with their terms, and the Seller has complied with all terms and
      conditions of such policies, including premium payments. None of the insurance
      carriers has indicated to the Seller or the Principal Shareholders an intention
      to cancel, or alter the coverage under, any such policy. The Seller does not
      have any claim pending against any of the insurance carriers under any of such
      policies and, to the Knowledge of Seller or the Principal Shareholders, there
      has been no actual or alleged occurrence of any kind which may give rise to
      any
      such claim and has not made any claims under any policy at any time since
      January 1, 2003, except as set forth on Schedule
      4.15.
      All
      applications for such policies are accurate in all respects.

     

    
      
        
        

      

      
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    4.16
       Governmental
      Authorizations. Schedule
      4.16
      lists
      all authorizations, consents, approvals, franchises, licenses and permits
      required under Applicable Law or regulation for the operation of the business
      of
      the Seller as presently operated (the “Governmental Authorizations”). All the
      Governmental Authorizations have been duly issued or obtained and are in full
      force and effect, and the Seller is in compliance with the terms and conditions
      of all the Governmental Authorizations. No fact, condition, or violation exists
      which could cause the Governmental Authorizations not to be renewed by the
      appropriate Governmental Authorities in the ordinary course or which could
      cause
      the revocation, termination, suspension, or impairment of any Governmental
      Authorization. Except as set forth on Schedule
      4.16,
      the
      consummation of the transactions contemplated hereby and the transfer to the
      Purchaser of the Governmental Authorizations will not adversely affect the
      status of any of the Governmental Authorizations.

     

    4.17
       Intellectual
      Property Rights.

     

    (a) Schedule
      4.17(a)
      sets
      forth a complete and accurate list and description of all of the Intellectual
      Property currently used or contemplated or necessary to be used in connection
      with the Business.

     

    (b) Except
      as
      set forth on Schedule
      4.17(b),
      the
      Sellers has ownership of or a valid right to use all of the Intellectual
      Property currently used or contemplated or necessary to be used in connection
      with the Business. To the Knowledge of the Seller and each of the Principal
      Shareholders, none of the Intellectual Property infringes the right of any
      other
      person. To the Knowledge of the Seller and each of the Principal Shareholders,
      no other person is infringing the rights of the Seller in any such Intellectual
      Property.

    


    4.18
       Customers
      and Suppliers; Supplies. Schedule
      4.20(a)
      sets
      forth a list of the twenty (20) largest customers (measured by dollar volume)
      of
      the Seller within the United States, ten (10) largest customers (measured by
      dollar volume) of the Seller within Canada, and all suppliers of significant
      goods or services to the Seller for the year ended December 31, 2005.
Schedule
      4.18(b)
      identifies those suppliers of significant goods or services with respect to
      which alternative sources of supply are not readily available on comparable
      terms and conditions. Except as indicated on Schedule
      4.18(c),
      all
      supplies and services necessary for the conduct of the business of the Seller,
      as presently conducted, may be obtained from alternate sources on terms and
      conditions comparable to those presently available to the Seller, and no facts,
      circumstances or conditions exist which create a reasonable basis for believing
      that any of the Seller will be unable to continue to procure the supplies and
      services necessary to conduct its business on substantially the same terms
      and
      conditions as such supplies and services are currently procured. There has
      not
      been and will not be any material adverse change in the relations of the Seller
      with their respective customers, suppliers, contractors, licensors and lessors,
      as a result of the announcement or consummation of the transactions contemplated
      by this Agreement and neither the Seller nor the Principal Shareholders has
      any
      Knowledge that the Seller’s customers or suppliers has or is contemplating
      terminating its relationship with the Seller. To Seller’s and the Principal
      Shareholders’ Knowledge, no customer or supplier has experienced any type of
      work stoppage or other material adverse circumstances or conditions that may
      jeopardize or adversely affect the Seller’s future relationship with any
      customer or supplier. There are no pending disputes or controversies between
      any
      customer or supplier of any of the Seller, nor are there any facts which in
      the
      future would impair the relationship of the Seller with its customers or
      suppliers.

     

    
      
        
        

      

      
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    4.19
       Related
      Parties. Except
      as
      set forth on Schedule
      4.19,
      neither
      the Seller, nor any current or former (within the past five (5) years) director,
      officer, or Principal Shareholder of the Seller, or any of their family members
      (individually a “Related Party” and collectively the “Related Parties”), or any
      Affiliate of the Seller or any Related Party: (a) owns, directly or indirectly,
      any interest in any person which is a competitor of the Seller, or of a supplier
      or customer of the Seller; (b) owns, directly or indirectly, in whole or in
      part, any property, asset or right, real, personal or mixed, tangible or
      intangible (including, but not limited to, any of the intangible property)
      which
      is utilized in the operation of the Business; (c) has an interest in or is,
      directly or indirectly, a party to any contract, agreement, lease or arrangement
      pertaining or relating to the Seller, except for employment, consulting or
      other
      personal service agreements that may be in effect and which are listed on
Schedule
      4.19
      hereto;
      or (d) to the Knowledge of Seller
      or
      the Principal Shareholders, has any cause of action or other claim whatsoever
      against, or owes any amount to, the Seller.

     

    4.20
       List
      of Accounts and Proxies. Set
      forth
      on Schedule
      4.20
      is: (a)
      the name and address of each bank or other institution in which the Seller
      maintains an account (cash, securities or other) or safe deposit box; (b) the
      name and phone number of the Seller’s contact person
      at
      such bank or institution; (c) the account number of the relevant account and
      a
      description of the type of account; (d) the name of each person authorized
      by
      the Seller to effect transactions therewith or to have access to any safe
      deposit box or vault; and (e) all proxies, powers of attorney or other like
      instruments to act on behalf of the Seller in matters concerning its business
      or
      affairs.

     

    4.21
       Employees,
      Employment Agreements and Employee Benefit Plans. 

     

    (a) Schedule
      4.21(a)
      contains
      the names, job descriptions and annual salary rates and other compensation
      of
      all officers, directors, consultants and employees (who are paid in excess
      of
      Fifty Thousand Dollars ($50,000.00) per annum by the Seller) of the Seller
      (including compensation paid or payable by the Seller under the Seller Plans
      (as
      hereinafter defined)). A complete copy of all employee policies, employee
      manuals or other written statements of rules or policies as to working
      conditions, vacation and sick leave has been made available to
      Purchaser.

    


    (b) Employment
      Agreements.
      Except
      as set forth on Schedule
      4.21(b),
      there
      are no employment, consulting, severance or indemnification arrangements,
      agreements or understandings between the Seller and any officer, director,
      consultant or employee ("Employment Agreements"). The Seller has previously
      delivered to Purchaser true and complete copies of all of the Employment
      Agreements. 

    


    (c) Employee
      Benefit Plans.
      Except
      as set forth on Schedule
      4.21(c),
      the
      Seller has no pension, retirement, stock purchase, stock bonus, stock ownership,
      stock option, profit sharing, savings, medical, disability, hospitalization,
      insurance, deferred compensation, bonus, incentive, welfare or any other
      employee benefit plan, policy, agreement, commitment, arrangement or practice
      currently or previously maintained or contributed to by the Seller for any
      of
      its directors, officers, consultants, employees or former employees (the "Seller
      Plans"). The Seller has previously made available to Purchaser (i) a true and
      complete copy of all of the Seller Plans (or, if oral, an accurate written
      summary thereof); and (ii) a current summary plan description (plus summaries
      of
      any subsequent modifications thereto) for each Seller Plan. Except as set forth
      on Schedule
      4.21(c),
      none of
      the Seller Plans are subject to ERISA and except as set forth on Schedule
      4.21(c),
      the
      Seller has not established, maintained, made or been required to make any
      contributions to, or terminated, and has no liability with respect to, any
      "employee benefit plan" within the meaning of ERISA. 

    


    
      
        
        

      

      
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    4.22
       Tax
      Matters. (a)
      The
      Seller has previously delivered to Purchaser true, correct and complete copies
      of each of the federal, state, local, and other income Tax Returns filed by
      the
      Seller for the past five fiscal years which were due, without regard to any
      extensions granted, on or before the date hereof. At all times since the date
      of
      incorporation, the Seller has been a validly electing S corporation within
      the
      meaning of Code Sections 1361 and 1362. All Tax Returns and tax reports required
      to be filed with respect to the income, operations, business or assets of the
      Seller or each affiliated, combined or unitary group (“Tax Group”) of which the
      Seller has been a member have been timely filed (or appropriate extensions
      have
      been obtained which extensions are listed on Schedule
      4.22)
      with
      the appropriate governmental agencies in all jurisdictions in which such returns
      and reports are required to be filed. All of the foregoing as filed are true,
      correct and complete and, in all respects, reflect accurately all liability
      for
      Taxes of the Seller for the periods to which such returns relate, and all
      amounts shown as owing thereon have been paid. All income, profits, franchise,
      sales, use, value added, occupancy, property, excise, payroll, withholding,
      FICA, FUTA and other Taxes (including interest and penalties), if any,
      collectible or payable by the Seller or relating to or chargeable against any
      of
      its assets, revenues or income or relating to any employee, independent
      contractor, creditor, stockholder or other third party through December 31,
      2006, were fully collected and paid by such date or provided for by adequate
      reserves in the Financial Statements or, for periods thereafter, on the books
      of
      the Seller, as the case may be, and all similar items due through the Closing
      Date will have been fully paid by that date or provided for by adequate
      reserves, whether or not any such Taxes were reported or reflected in any Tax
      Returns or filings.

     

    (b) No
      Tax
      Authority has sought to audit, and the Seller has not received notice of an
      audit of, the records of the Seller for the purpose of verifying or disputing
      any Tax Returns, reports or related information and disclosures provided to
      such
      Tax Authority, or for the Seller’s alleged failure to provide any such Tax
      Returns, reports or related information and disclosure. Except as provided
      on
Schedule
      4.22,
      no
      claims, deficiencies, or assessments have been asserted against or inquiries
      raised with the Seller with respect to any Taxes or other governmental charges
      or levies which have not been paid or otherwise satisfied, including claims
      that, or inquiries whether, the Seller has not filed a Tax Return that it was
      required to file, and there exists no reasonable basis for the making of any
      such claims or inquiries. The Seller has not waived any restrictions on
      assessment or collection of Taxes or consented to the extension of any statute
      of limitations relating to taxation.

     

    (c) No
      claim
      has been made, nor do the Seller or the Principal Shareholders know of any
      claim
      that is pending, by an authority in any jurisdiction where the Seller files
      Tax
      Returns alleging that the Seller is or may be subject to taxation in that
      jurisdiction.

     

    (d) Except
      for (i) Taxes for the payment of which an adequate reserve has been established
      on the Financial Statements and (ii) property taxes that are not delinquent,
      there is no Tax lien imposed by any taxing authority outstanding against any
      of
      the assets or properties of the Seller.

     

    
      
        
        

      

      
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    (e) The
      Seller has not executed any “closing agreement” or similar agreement with any
      taxing authority, domestic or international.

     

    (f) The
      Seller and any member of a Tax Group have reported on its income Tax Returns
      any
      positions taken therein that could give rise to a substantial understatement
      of
      federal or other income tax within the meaning of Section 6662 of the Code
      or
      similar statute.

     

    (g) None
      of
      the Purchased Assets is property which is required to be treated as being owned
      by any other Person pursuant to the so-called “safe harbor lease” provisions of
      former section 168(f)(8) of the Code.

     

    (h) None
      of
      the Purchased Assets directly or indirectly secures any debt or other liability,
      the interest on which is tax exempt under section 103(a) of the
      Code.

     

    (i) None
      of
      the Purchased Assets is “tax exempt use property” within the meaning of section
      168(h) of the Code.

     

    (j) Schedule
      4.22
      sets
      forth a list of all states where the Seller has collected sales tax during
      the
      past two (2) years.

     

    4.23
       Material
      Agreements.

     

    (a) Schedule
      4.23(a)
      sets
      forth a list and a brief description of all material written and oral contracts
      or agreements relating to the Business, including without limitation any:
      (i) contract or series of contracts resulting in a commitment or potential
      commitment for expenditure or other obligation or potential obligation, or
      which
      provides for the receipt or potential receipt, involving in excess of Fifteen
      Thousand Dollars ($15,000) in any instance, or series of related contracts
      that
      in the aggregate give rise to rights or obligations exceeding such amount,
      entered into by the Seller in the ordinary course of business,
      (ii) indenture, mortgage, promissory note, loan agreement, guarantee or
      other agreement or commitment for the borrowing or lending of money or
      encumbrance of assets involving more than Fifteen Thousand Dollars ($15,000)
      in
      each instance; (iii) warranties made with respect to products manufactured,
      packaged, distributed or sold or services provided by the Seller; (iv) any
      agreement which terminates, or gives another party the right to terminate such
      agreement, upon the completion of the transaction contemplated by this
      Agreement; or (v) any other contract, agreement, instrument, arrangement or
      commitment that is material to the condition (financial or otherwise), results
      of operation, assets, properties, liabilities or business of the Seller
      (collectively the "Material Contracts"). The Seller has previously furnished
      to
      Purchaser true, complete and correct copies of all written agreements, required
      to be listed on Schedule 4.23(a).

     

    (b) The
      Material Contracts are each in full force and effect and are the valid and
      legally binding obligations of the Seller and, to the knowledge of the Seller
      and the Principal Shareholders, the other parties thereto, enforceable in
      accordance with their respective terms, subject only to bankruptcy, insolvency
      or similar laws affecting the rights of creditors generally and to general
      equitable principles. Neither the Seller nor the Principal Shareholders has
      received notice of its default under any of the Material Contracts and to the
      Knowledge of Seller and the Principal Shareholders no event has occurred which,
      with the passage of time or the giving of notice or both, would constitute
      a
      default by the Seller thereunder. To the Knowledge of Seller and the Principal
      Shareholders, none of the other parties to any of the Material Contracts is
      in
      default thereunder, nor has an event occurred which, with the passage of time
      or
      the giving of notice or both would constitute a default by such other party
      thereunder. Neither the Seller nor the Principal Shareholders has received
      notice of the pending or threatened cancellation, revocation or termination
      of
      any of the Material Contracts.

     

    
      
        
        

      

      
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    4.24
       Products.

     

    (a) Except
      as
      set forth on Schedule
      4.24,
      there
      exists no set of facts (i) which could furnish a basis for the recall,
      withdrawal or suspension of any Governmental Authorization, approval or consent
      of any Governmental Authority with respect to any category of product
      manufactured, distributed or sold by the Seller (a “Product”), (ii) which could
      furnish a basis for the recall, withdrawal or suspension by order of any
      Governmental Authority of any Product, or (iii) which could have a Material
      Adverse Effect or which could otherwise cause the Seller to recall, withdraw
      or
      suspend any such Product from the market or to change the marketing
      classification of any such Product. There are no material defects in the
      designs, specifications, or process with respect to any Product sold or
      otherwise distributed that will give rise to any Losses or that will cause
      such
      Products to not be useable as intended or marketed.

     

    (b) Schedule
      4.24
      sets
      forth a list and brief description of all correspondence received or sent by
      or
      on behalf of the Seller during the past five (5) years from or to any
      Governmental Authority with respect to a potential or actual recall, withdrawal,
      or suspension from the market of any Product. Copies of all such correspondence
      have been previously delivered to Purchaser.

     

    4.25
       Environmental
      and Safety Matters. 

     

    (a) No
      hazardous materials have been generated, transported, used, disposed, stored,
      treated, released, discharged, disposed, or otherwise caused to enter the soil
      or water in, under or upon any real property leased or operated by the Seller,
      except in material compliance with applicable Environmental and Safety
      Requirements. The Seller is in compliance with all applicable Environmental
      and
      Safety Requirements.

     

    (b) Neither
      this Agreement nor the consummation of the transactions contemplated by this
      Agreement shall impose any obligations on the Seller or otherwise for site
      investigation or cleanup, or notification to or consent of any Governmental
      Authority or Regulatory Entities or third parties under any Environmental and
      Safety Requirements (including, without limitation, any so called
“transaction-triggered” or “responsible property transfer” laws and
      regulations).

     

    (c) The
      Seller has not either expressly or by operation of law, assumed or undertaken
      any liability or corrective, investigatory or remedial obligation of any other
      Person relating to any Environmental and Safety Requirements.

     

    (d) No
      Environmental Lien has attached to any property leased or operated by the
      Seller.

     

    
      
        
        

      

      
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    4.26
       Accounts
      Receivable, Notes Receivable, and Costs in Excess of Billing. All
      accounts and notes receivable of the Seller have arisen in the ordinary course
      of business, represent valid obligations to the Seller for sales made, services
      performed or other charges, are not subject to claims or set-off, or other
      defenses or counter-claims, and, subject only to consistently recorded reserves
      for bad debts (which has been recorded on the Financial Statements and books
      and
      records of the Seller in accordance with GAAP on a consistent basis in a manner
      consistent with past practice), have been collected or are collectible in the
      aggregate recorded amounts thereof in accordance with their terms. All items
      which are required by GAAP to be reflected as accounts and notes receivable
      on
      the Financial Statements and on the books and records of the Seller are so
      reflected and have been recorded in accordance with GAAP on a consistent basis
      in a manner consistent with past practice. The Seller has properly perfected
      in
      accordance with Applicable Law, to the extent applicable, enforceable interests
      (or title) in such accounts and notes receivable or other security interests
      related to such receivables.

     

    4.27
       Accounts
      and Notes Payable. Schedule
      4.27(a)
      sets
      forth a true and correct aged list of all accounts and notes payable of the
      Seller with respect to the Purchased Assets and as of the end of the month
      prior
      to the date hereof in excess of $1,000 to any one payee. No account or note
      payable of the Seller with respect to the Purchased Assets which has arisen
      subsequent to the end of the month prior to the date hereof has exceeded $1,000
      nor has the aggregate of such accounts payable exceeded $15,000. All such
      accounts and notes payable have arisen in the ordinary course of business and
      represent valid indebtedness of the Seller. Except as set forth on Schedule
      4.27(b),
      all
      items which are required by GAAP to be reflected as accounts and notes
      receivable on the Financial Statements and on the books and records of the
      Seller are so reflected and have been recorded in accordance with GAAP on a
      consistent basis in a manner consistent with past practice.

     

    4.28
       Inventory
      Valuation. The
      raw
      materials, work in process, spare parts, and other inventory of the Seller
      as
      set forth on the Financial Statements was, and the raw materials, work in
      process, spare parts, and other inventory of the Seller currently is, in usable
      or salable condition in the ordinary course of business at the amounts carried
      on the Financial Statements and currently on the books and records of the
      Seller, respectively. The raw materials, work in process, spare parts, and
      other
      inventory are not obsolete or excessive and are of at least the standard quality
      for such items; are suitable for the manufacture and distribution of Seller’s
      Products of standard quality for such products; and are not in excess of the
      normal purchasing patterns of the Seller. Neither the Seller nor the Principal
      Shareholders knows of any condition adversely affecting the supply of materials
      available to the Seller. The amounts of the inventories
      reflected on the Financial Statements and on the books and records of the Seller
      have been determined in accordance with GAAP consistently applied.

     

    4.29
       Absence
      of Certain Business Practices. None
      of
      the Seller, its related parties or any affiliates or any other Person acting
      on
      behalf of or associated with the Seller or any individual related to any of
      the
      foregoing Persons, acting alone or together, has with respect to the Business
      or
      activities of the Seller: (a) received, directly or indirectly, any rebates,
      payments, commissions, promotional allowances or any other economic benefits,
      regardless of their nature or
      type,
      from any customer, supplier, trading company, shipping company, governmental
      employee or other Person with whom the Seller has done business directly or
      indirectly; or (b) directly or indirectly, given or agreed to give any gift
      or
      similar benefit to any customer, supplier, trading company, shipping company,
      governmental employee or other Person who is or may be in a position to help
      or
      hinder the business of the Seller (or assist the Seller in
      connection with
      any
      actual or proposed transaction) which (i) may subject the Seller to any damage
      or any penalty in any civil, criminal or governmental litigation or proceeding,
      (ii) if not given in the past, may have had a Material Adverse Effect or (iii)
      if not continued in the future, may materially adversely affect the assets,
      business or operations of the Seller or subject the Seller to suit or penalty
      in
      any private or governmental litigation or proceeding. The Seller has conducted
      its business in a manner that complies with the U.S. Foreign Corrupt Practices
      Act.

     

    
      
        
        

      

      
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    4.30
       Solvency. The
      Seller is able to pay its debts as they mature and the transfer of the Purchased
      Assets by the Seller to the Purchaser in accordance with the terms of this
      Agreement shall not constitute a voidable preference or transfer in fraud of
      any
      creditor under applicable federal or state insolvency law.

     

    4.31
       Review
      of Forms. The
      Seller has (1) received and carefully reviewed the Langer 10-K and Langer’s
      Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed by Langer
      with the Commission since January 1, 2004 and (2) had the opportunity to ask
      questions and receive answers from Langer concerning such forms and the
      documents incorporated by reference therein and to obtain any documents relating
      to Langer which are on file with the SEC and available for inspection by the
      public. The Seller is aware of the risks inherent in an investment in Langer
      and
      specifically the risks of an investment in the Langer Common Stock. In addition,
      Seller is aware and acknowledges that there can be no assurance of the future
      viability or profitability of Langer, nor can there be any assurance relating
      to
      the current or future price of the Langer Common Stock, as quoted on the NASDAQ
      Global Market, or market conditions generally. 

     

    4.32
       Investment
      Representations. The
      Seller is acquiring the Consideration Shares for its own account and will not
      sell, transfer, or otherwise dispose of (including pursuant to a liquidating
      dividend or otherwise) any of the Consideration Shares or any interest therein,
      without registration under the Securities Act and applicable state “blue sky”
laws, except in a transaction which in the opinion of counsel reasonably
      acceptable to Langer is exempt therefrom. The Seller is an “accredited investor”
as that term is defined in Regulation D promulgated under the Securities Act.
      The Seller has such Knowledge and experience in financial and business matters
      as to be capable of evaluating the merits and risk of an investment in the
      Langer Common Stock and has obtained, in its judgment, sufficient information
      from Langer to evaluate the merits and risks of an investment in the Langer
      Common Stock. The Seller has been provided the opportunity to obtain information
      and documents concerning Langer and the Langer Common Stock, and has been given
      the opportunity to ask questions of, and receive answers from, the directors
      and
      officers of Langer concerning Langer and the Langer Common Stock and other
      matters pertaining to this investment. The Seller is acquiring the Consideration
      Shares for its own account, for investment purposes only, and not with a view
      to
      or for the resale, distribution
      or fractionalization thereof. The Seller acknowledges that the offer of the
      Langer Common Stock will not be reviewed by any governmental agency and is
      being
      sold to the Seller in reliance upon exemption from the Securities Act. The
      Seller acknowledges that certificates representing the Consideration Shares
      will
      bear the legend set forth in Section 2.12.

     

    4.33  Ownership
      of Shares of Langer. The
      Seller and the shareholders of the Seller do not own, as determined in
      accordance with Section 197(f)(9) of the Code, directly or indirectly, in the
      aggregate, immediately prior to and as of the Closing, more than twenty percent
      (20%) of the outstanding shares of capital stock of Langer.

     

    
      
        
        

      

      
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    4.34  Returns
      and Exchanges. Schedule
      4.35
      sets
      forth a complete and accurate description of the Seller’s policy regarding
      product returns and exchanges and a statement of the percentage of the Seller’s
      products returned or exchanged within the three (3) years prior to the date
      of
      this Agreement.

     

    4.35  Disclosure. No
      representation or warranty of the Seller contained in this Agreement or the
      Seller Ancillary Agreements, and no statement, report, or certificate furnished
      by or on behalf of the Seller or the Principal Shareholders to Langer and/or
      the
      Purchaser or its agents pursuant hereto or in connection with the transactions
      contemplated hereby, contains or will contain any untrue statement of a material
      fact or omits to state a material fact necessary in order to make the statements
      contained herein or therein not misleading or omits or will omit to state a
      material fact necessary in order to provide a prospective purchaser of the
      Purchased Assets with full and proper information as to the business, financial
      condition, assets, results of operation or prospects of the Seller and the
      value
      of its properties or the ownership or operation of the Seller. There is no
      fact
      known to Seller or the Principal Shareholders, or which reasonably should be
      known to Seller or the Principal Shareholders, which Seller and the Principal
      Shareholders have not disclosed to Langer and Purchaser in writing with respect
      to the transactions contemplated hereby.

     

    ARTICLE
      V. 

     

    INDEMNIFICATION

     

    5.1
       Survival
      of the Representations and Warranties. The
      representations and warranties of Langer, the Purchaser, the Seller and the
      Principal Shareholders set forth in this Agreement, the Seller Ancillary
      Agreements, the Purchaser Ancillary Agreements, the Langer Ancillary Agreements,
      and the Shero Employment Agreement shall survive the Closing Date for a period
      of two (2) years; provided that the representations and warranties set forth
      in
      Sections 4.1, 4.2, 4.6, 4.12, 4.13, 4.21, 4.22, 4.25, 4.29, and 4.35 shall
      survive the Closing and remain in effect until the expiration of the applicable
      statute of limitations.

     

    5.2
       Investigation. The
      representations, warranties, covenants and agreements set forth in this
      Agreement shall not be affected or diminished in any way by any investigation
      (or failure to investigate) at any time by or on behalf of the party for whose
      benefit such representations, warranties, covenants and agreements were made.
      All statements contained herein or in any schedule, certificate, exhibit, list
      or other document delivered pursuant hereto, shall be deemed to be
      representations and warranties for purposes of this Agreement. 

     

    
      
        
        

      

      
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    5.3
       Indemnification
      Generally.

     

    (a) By
      the Seller and the Principal Shareholders.
      The
      Seller and the Principal Shareholders agree, jointly and severally, to be
      responsible for, pay, indemnify and hold harmless Purchaser and Langer and
      their
      respective directors, officers, employees and agents (the “Purchaser Indemnified
      Parties”) from, against and in respect of, the full amount of any and all
      liabilities, damages, claims, deficiencies, fines, assessments, losses, Taxes,
      penalties, interest, costs and expenses, including, without limitation,
      reasonable fees and disbursements of counsel (collectively, “Losses”) arising
      from, in connection with, or incident to: (i) any breach, or inaccuracy of
      any
      of the representations or warranties of the Seller or the Principal Shareholders
      contained in this Agreement or any of the Seller Ancillary Agreements, the
      Shero
      Employment Agreement, or any other agreement referred to herein or delivered
      at
      or prior to the Closing; (ii) any breach of Seller or the Principal Shareholders
      of any covenants or agreements contained in this Agreement or any of the Seller
      Ancillary Agreements, the Shero Employment Agreement, or any other agreement
      referred to herein and delivered at to the Closing; (iii) any failure by the
      Seller or the Principal Shareholders to perform any obligations contained in
      this Agreement or any of the Seller Ancillary Agreements, the Shero Employment
      Agreement, or any other agreement referred to herein and delivered at to the
      Closing; (iv) any liability resulting from any litigation involving the Seller,
      if no accrual for such liability was taken into account in the preparation
      of
      the Closing Date Balance Sheet or if an accrual for such liability was taken
      into account in the preparation of the Closing Date Balance Sheet, to the extent
      such liability exceeds the accrual for such liability set forth on the Closing
      Date Balance Sheet, regardless of whether or not such litigation was disclosed
      by the Seller on Schedule
      4.6;
      (v) any
      and all Taxes and related penalties, interest or other charges for any unaccrued
      or unreported Tax liabilities with respect to the Seller or the Purchased Assets
      for all periods prior to or including the Closing Date; (vi) any and all claims
      or liabilities, other than Assumed Liabilities, arising out of, relating to,
      resulting from or caused (whether in whole or in part) by any transaction,
      event, condition, occurrence, situation, omission, or failure to comply with
      Applicable Law in any way relating to the Purchased Assets, the Seller or the
      conduct of the Business arising or occurring on or prior to the Closing Date
      without regard to whether such claim exists on the Closing Date or arises at
      any
      time thereafter; (vii) any failure of the Seller or the Principal Shareholders
      to perform or satisfy any liability or obligation of the Seller of any nature,
      fixed, absolute, accrued, contingent, or otherwise, not assumed hereunder by
      the
      Purchaser, including any Excluded Liability, (viii) any and all claims or
      liabilities resulting from or arising out of the Seller Leases prior to the
      Closing Date, (ix) any claim or liability arising out of or related to the
      Seller’s failure to obtain any consent set forth on Schedule
      4.3
      hereto;
      and (x) any and all actions, suits, proceedings, demands, assessments or
      judgments, costs and expenses incidental to any of the foregoing.

     

    (b) By
      Langer and the Purchaser.
      Langer
      and the Purchaser agree, jointly and severally, to be responsible for, pay
      and
      indemnify and hold harmless the Seller, the Principal Shareholders, and their
      respective directors, officers, employees and agents (“Seller Indemnified
      Parties”) from, against and in respect of, the full amount of any and all Losses
      arising from, in connection with, or incident to (i) any breach or inaccuracy
      of
      any of the representations or warranties of Langer or the Purchaser contained
      in
      this Agreement, any of the Langer Ancillary Agreements or the Purchaser
      Ancillary Agreements, or any other agreement referred to herein and delivered
      at
      the Closing; (ii) any breach of Langer or the Purchaser of any covenants or
      agreements contained in this Agreement, any of the Langer Ancillary Agreements
      or the Purchaser Ancillary Agreements, or any other agreement referred to herein
      and delivered at the Closing; (iii) any failure by Langer or the Purchaser
      to
      perform any obligations contained in this Agreement, any of the Langer Ancillary
      Agreements or the Purchaser Ancillary Agreements, or any other agreement
      referred to herein and delivered at the Closing; (iv) any failure of the
      Purchaser to perform or satisfy any Assumed Liability, and (v) any and all
      claims actions, suits, proceedings, demands, assessments or judgments, costs
      and
      expenses incidental to any of the foregoing.

     

    
      
        
        

      

      
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    (c) Indemnity
      Procedure.
      A party
      or parties hereto agreeing to be responsible for or to indemnify against any
      matter pursuant to this Agreement is referred to herein as the “Indemnifying
      Party” and the other party or parties claiming indemnity is referred to as the
“Indemnified Party”.

     

    
      	 	
              (i)

            	
              An
                Indemnified Party under this Agreement shall, with respect to claims
                for
                Losses asserted against such party by any third party, give written
                notice
                to the Indemnifying Party of any liability which might give rise
                to a
                claim for indemnity under this Agreement, to the extent reasonably
                possible, but not later than ten (10) days prior to, with respect
                to
                claims for losses arising after the date hereof, the date any answer
                or
                responsive pleading is due, and with respect to other matters for
                which
                the Indemnified Party may seek indemnification, give prompt written
                notice
                to the Indemnifying Party of any liability which might give rise
                to a
                claim for indemnity; provided,
                however,
                that any failure to give such notice will not waive any rights of
                the
                Indemnified Party, except to the extent the rights of the Indemnifying
                Party are materially prejudiced.

            


    

     

    
      	 	
              (ii)

            	
              Subject
                to Section 5.3(c)(iii), the Indemnified Party shall have the right to
                conduct and control, through counsel of its choosing, the defense,
                compromise or settlement of any third Person claim, action or suit
                against
                such Indemnified Party as to which indemnification will be sought
                by any
                Indemnified Party from any Indemnifying Party hereunder,
                and in any such case the Indemnifying Party shall cooperate in connection
                therewith and shall furnish such records, information and testimony
                and
                attend such conferences, discovery proceedings, hearings, trials
                and
                appeals as may be reasonably requested by the Indemnified Party in
                connection therewith; provided, that the Indemnifying Party may
                participate, through counsel chosen by it and at its own expense,
                in the
                defense of any such claim, action or suit as to which the Indemnified
                Party has so elected to conduct and control the defense thereof;
                and
                provided, further,
                that the Indemnified Party shall not, without the written consent
                of the
                Indemnifying Party (which written consent shall not be unreasonably
                withheld), pay, compromise or settle any such claim,
                action or suit, except that no such consent shall be required if,
                following a written request from the Indemnified Party, the Indemnifying
                Party shall fail, within
                14 days after the making of such request, to acknowledge and agree in
                writing that, if such claim, action or suit shall be adversely determined,
                such Indemnifying Party has an obligation to provide indemnification
                hereunder to such Indemnified Party. Notwithstanding the foregoing,
                the
                Indemnified Party shall have the right to pay, settle or compromise
                any
                such claim, action or suit without such consent, provided that in
                such
                event the Indemnified Party shall waive any right to indemnity therefor
                hereunder unless such consent is unreasonably
                withheld.

            


    

     

    
      
        
        

      

      
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              (iii)

            	
              If
                any third Person claim, action or suit against any Indemnified Party
                (A)
                does not seek an injunction or other equitable relief against the
                Indemnified Party; (B) such claim does not involve criminal proceedings
                against the Indemnified Party; (C) such claim would not reasonably
                be
                expected to have a Material Adverse Effect; (D) the applicable claim
                is
                against, or if the defendants in any litigation relating to the applicable
                claim include, both the Indemnified Party and the Indemnifying Party
                and
                the Indemnified Party does not reasonably conclude in good faith
                that
                there are defenses available to it that are different or additional
                to
                those available to the Indemnifying Party; or (E) no conflict of
                interest
                exists between the Indemnifying Party and the Indemnified Party as
                to such
                claim; then with respect to each such claim, action or suit the
                Indemnifying Party shall have the right to conduct and control, through
                counsel of its choosing, the defense, compromise or settlement of
                any such
                claim, action or suit against such Indemnified Party as to which
                indemnification will be sought by any Indemnified Party from any
                Indemnifying Party hereunder, provided that the Indemnifying Party
                has
                acknowledged and agreed in writing that, if the same is adversely
                determined, the Indemnifying Party has an obligation to provide
                indemnification to the Indemnified Party in respect thereof. In any
                such
                case the Indemnified Party shall reasonably cooperate in connection
                therewith and shall furnish such records, information and testimony
                and
                attend such conferences, discovery proceedings, hearings, trials
                and
                appeals as may be reasonably requested by the Indemnifying Party
                in
                connection therewith, and the Indemnified Party may participate,
                through
                counsel chosen by it and at its own expense, in the defense of any
                such
                claim, action or suit as to which the Indemnifying Party has so elected
                to
                conduct and control the defense thereof. So long as the Indemnifying
                Party
                is diligently contesting any such claim in good faith, the Indemnified
                Party may pay, settle, or compromise such claim only at its own expense
                and the Indemnifying Party will not be responsible for the fees of
                separate legal counsel to the Indemnified Party, unless the named
                parties
                to any proceeding include both parties and representation of both
                parties
                by the same counsel would be a conflict of interest for such counsel.
                If a
                conflict of interest exists between the Indemnifying Party or Indemnified
                Party, or if the Indemnifying Party does not make an election to
                defend
                the claims or, if having made such election to defend the claim does
                not,
                in the good faith reasonable opinion of the Indemnified Party, proceed
                diligently to defend such claim with respect to a Loss and as a result
                the
                Indemnifying Party’s ability to defend a claim for such Loss may
                reasonably be materially prejudiced, after written notice to the
                Indemnifying Party articulating with reasonable specificity any lack
                of
                diligence by the Indemnifying Party in defending such claim and a
                10
                business day opportunity to cure, then the Indemnified Party may
                at the
                expense of the Indemnifying Party, elect to take over the defense
                of and
                proceed to handle such claim but shall not, without the written consent
                of
                the Indemnifying Party (which written consent shall not be unreasonably
                withheld or delayed), pay, compromise or settle any such claim, action
                or
                suit. In connection therewith, the Indemnifying Party shall reasonably
                cooperate with the Indemnified Party should the Indemnified Party
                elect to
                take over the defense of any such claim. Notwithstanding the foregoing,
                the Indemnified Party shall have the right to pay, settle or compromise
                any such claim, action or suit, provided that in such event the
                Indemnified Party shall waive any right to indemnity therefor hereunder
                unless the Indemnified Party shall have sought the consent of the
                Indemnifying Party to such payment, settlement or compromise and
                such
                consent was unreasonably withheld or delayed, in which event no claim
                for
                indemnity therefor hereunder shall be
                waived.

            


    

     

    
      
        
        

      

      
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              (iv)

            	
              With
                regard to any and all claims for which indemnification is payable
                hereunder, such indemnification shall be paid by the Indemnifying
                Party
                upon the earlier to occur of (the “Final Determination”): (i) the entry of
                a judgment against the Indemnified Party and the expiration of any
                applicable appeal period, or if earlier, five (5) days prior to the
                date
                that the judgment creditor has the right to execute the judgment;
                (ii) the
                entry of an unappealable judgment or final appellate decision against
                the
                Indemnified Party; or (iii) a settlement of the claim. Notwithstanding
                the
                foregoing, provided that there is no good faith dispute as to the
                applicability of indemnification, the reasonable legal fees and expenses
                of counsel to the Indemnified Party shall be reimbursed on a current
                basis
                by the Indemnifying Party if such legal fees and expenses are a liability
                of the Indemnifying Party. With regard to other claims for which
                indemnification is payable hereunder, such indemnification shall
                be paid
                promptly by the Indemnifying Party upon demand by the Indemnified
                Party.
                

            


    

     

    (d) Limitations
      on Indemnification.
      (i)
      Anything in this Agreement to the contrary notwithstanding, no indemnification
      payment shall be made to the Purchaser Indemnified Parties until the amounts
      which the Purchaser Indemnified Parties would otherwise be entitled to receive
      as indemnification under this Agreement aggregate at least $100,000, at which
      time the Purchaser Indemnified Parties shall be indemnified dollar for dollar
      to
      the extent such liability exceeds $100,000. The indemnification provisions
      set
      forth in Section 5.3(a)(i) (with respect to a breach of Sections 4.1, 4.2,
      4.6,
      4.12, 4.13, 4.21, 4.22, 4.25, 4.29, and 4.35), 5.3(a)(ii), 5.3(a)(iii),
      5.3(a)(iv), 5.3(a)(v), 5.3(a)(viii), 7.2, 8.1, and 8.2 or a claim based upon
      “fraud” (as hereinafter defined) shall not be subject to the limitations set
      forth in this Section 5.3(d)(i) and shall be indemnified to the Purchaser
      Indemnified Parties dollar for dollar to the extent any liability with respect
      to such matters exists. Anything in this Agreement to the contrary
      notwithstanding, no indemnification payment shall be made to the Seller
      Indemnified Parties until the amounts which the Seller Indemnified Parties
      would
      otherwise be entitled to receive as indemnification under this Agreement
      aggregate at least $100,000, at which time the Seller Indemnified Parties shall
      be indemnified dollar for dollar to the extent such liability exceeds
      $100,000.

     

    
      
        
        

      

      
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              (ii)

            	
              The
                maximum aggregate liability of the Seller and the Principal Shareholders
                for any claim arising from or relating to this Agreement or the
                transactions contemplated hereby, whether asserted as breach of contract,
                tort, violation of statute or otherwise, irrespective of the theory
                or
                basis of such claim, shall not exceed the Indemnification Limit (as
                defined below), provided,
                that the limitation set forth in this sentence shall not apply to
                (1) any
                breach by Seller or the Principal Shareholders of the representations,
                warranties or covenants contained in Sections 4.1, 4.2, 4.6, 4.12,
                4.13,
                4.21, 4.22, 4.25, 4.29, 4.35, 7.2, 8.1, and 8.2 of this Agreement,
                (2) the
                indemnification provisions set forth in Sections 5.3(a)(ii), 5.3(a)(iii),
                5.3(a)(iv), 5.3(a)(v), and 5.3(a)(viii) or (3) the commission of
“fraud”
                by the Seller or the Principal Shareholders with respect to any matters
                pertaining to this Agreement and the consummation of the transactions
                contemplated hereby. For purposes of this Section 5.3(d), the term
“fraud”
                shall include any willful or intentional misrepresentation or the
                making,
                by the Seller or any Shareholder, of any untrue statement of a material
                fact or the omission to state a material fact necessary in order
                to make
                the statement made, in light of the circumstances under which they
                were
                made, not misleading if the person making such untrue statement of
                a
                material fact or omitting to state such material fact had actual
                Knowledge
                that such statement or omission was untrue when made or omitted.
                The
                maximum aggregate liability of Langer and the Purchaser for any claim
                arising from or relating to this Agreement or the transactions
                contemplated hereby, whether asserted as breach of contract, tort,
                violation of statute or otherwise, irrespective of the theory or
                basis of
                such claim, shall not exceed the Indemnification Limit. As used herein,
                “Indemnification Limit” shall mean the sum of the Purchase Price, as it
                may be increased or decreased pursuant to Section 2.6
                hereof.

            


    

     

    
      	 	
              (iii)

            	
              The
                extent to which any Indemnified Party shall be entitled to indemnification
                hereunder shall be reduced by the amount of any insurance proceeds
                received by the Indemnified Party on account of the claim that the
                Indemnified Party is seeking to be indemnified for, irrespective
                of the
                identity of the party that paid for such
                insurance.

            


    

     

    


    
      
        
        

      

      
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    ARTICLE
      VI. 

     

    CLOSING
      DELIVERIES
      AND CONDITIONS

     

    6.1
       Closing
      Date Deliveries by the Seller. At
      the
      Closing, the Seller shall deliver each of the following to the Purchaser and
      Langer:

     

    (a) a
      copy of
      Seller’s Certificate of Formation certified as of a recent date by the Secretary
      of State of the State of North Carolina;

     

    (b) a
      certificate of good standing of Seller issued as of a recent date by the
      Secretary of State of the State of North Carolina;

     

    (c) certificates
      of the secretary of Seller, dated the Closing Date, in form and substance
      reasonably satisfactory to the Purchaser, as to (i) no amendments to its
      Certificate of Formation since the date certified by the Secretary of State
      of
      the State of North Carolina; (ii) its by-laws; (iii) the resolutions
      of the Board of Directors of Seller, and of holders of all of the capital stock
      of the Seller, authorizing the execution and performance of this Agreement,
      the
      Seller Ancillary Agreements and the transactions contemplated hereby and
      thereby; and (iv) incumbency and signatures of the officers of Seller
      executing this Agreement and any other agreement, document, or certificate
      delivered in connection herewith;

     

    (d) Bill
      of
      Sale, Assignment, and Assumption Agreement, substantially in the form of
Exhibit
      1
      hereto,
      duly executed by the Seller (the “Bill of Sale”);

     

    (e) a
      Lock-Up
      Agreement, substantially in the form of Exhibit
      2
      hereto,
      duly executed by John Shero (the “Lock-Up Agreement”);

     

    (f) a
      Registration Rights Agreement, substantially in the form of Exhibit
      3
      hereto,
      duly executed by the Principal Shareholders (the “Registration Rights
      Agreement”);

     

    (g) an
      employment agreement, substantially in the form of Exhibit
      4,
      between
      Langer and John Shero, duly executed by Mr. Shero (the “Shero Employment
      Agreement”);

     

    (h) all
      consents, waivers or approvals required of any Person or Governmental Authority
      with respect to transfer of the Purchased Assets or the consummation of the
      transactions contemplated by this Agreement, including, but not limited to,
      parties to the Material Agreements;

     

    (i) the
      legal
      opinion of Mark H. Selz, counsel to the Seller and the Principal Shareholders,
      dated the Closing Date, addressed to Langer and Purchaser, substantially in
      the
      form of Exhibit
      5
      hereto;

     

    (j) certificate
      of title or origin (or like documents) with respect to any equipment included
      in
      the Purchased Assets for which a certificate of title or origin is required
      in
      order to transfer title;

     

    
      
        
        

      

      
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    (k) such
      other bills of sale, assignments, warranty deeds, and such other good and
      sufficient instruments of assignment, transfer or conveyance as the Purchaser
      may reasonably request or as may be otherwise necessary to vest in Purchaser
      the
      Purchased Assets and evidence and effect the sale, assignment, transfer,
      conveyance and delivery of the Purchased Assets to the Purchaser;

     

    (l) 
      the
      Assignment of Lease with consent by Landlord and Assumption by Assignee relating
      to the Office Lease (the “Assignment and Assumption of the Office Lease”),
      substantially in the form of Exhibit
      6
      hereto,
      duly executed by Seller; and 

     

    (m) evidence
      reasonably acceptable to the Purchaser that, prior to or at Closing, all of
      the
      Funded Indebtedness and Affiliate Payables have been extinguished and the Seller
      and the Purchased Assets have been released of any Encumbrance related to the
      Funded Indebtedness and Affiliate Payables; and 

     

    (n) such
      other documents and instruments as the Purchaser may reasonably
      request.

     

    In
      addition to the foregoing deliveries, Seller shall take all steps and actions
      as
      Purchaser may reasonably request or as otherwise may be necessary to put
      Purchaser in actual possession or control of the Purchased Assets and that
      the
      Purchased Assets are free and clear of any Encumbrance.

     

    6.2
       Closing
      Date Deliveries by Langer and/or the Purchaser. At
      Closing, Langer and/or the Purchaser shall deliver each of the following to
      the
      Seller:

     

    (a) certificates
      representing the Consideration Shares;

     

    (b) Bill
      of
      Sale, duly executed by the Purchaser;

     

    (c) the
      Registration Rights Agreement, duly executed by Langer;

     

    (d) the
      Shero
      Employment Agreement, duly executed by Langer;

     

    (e) the
      Assignment and Assumption of the Office Lease, duly executed by
      Langer;

     

    (f) a
      certificate of good standing of Purchaser issued as of a recent date by the
      Secretary of State of the State of Delaware;

     

    (g) a
      certificate of good standing of Langer issued as of a recent date by the
      Secretary of State of the State of Delaware; and

     

    (h) such
      other documents and instruments as the Seller may reasonably
      request.

     

    6.3
       Conditions
      to Obligations of the Seller and Principal Shareholders.
      The
      obligations of the Seller and Principal Shareholders to consummate the
      transactions contemplated by this
      Agreement are
      subject to the fulfillment, at or before the Closing Date, of the following
      conditions, any one or more of which may be waived by the Seller in its sole
      discretion:

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    (a) Representations
      and Warranties of the Purchaser and Langer.
      All
      representations and warranties made by the Purchaser and Langer in this
      Agreement shall be true and correct in all material respects (except
      as to representations and warranties which are qualified as to materiality,
      which representations and warranties shall be true and correct in all respects)
      on
      and as
      of the Closing Date as if again made by the Purchaser and Langer on and as
      of
      such date, and the Seller and the Principal Shareholders shall have received
      a
      certificate dated the Closing Date and signed by the
      secretary of each
      of
      the Purchaser and Langer to that effect.

     

    (b) Performance
      of the Obligations of the Purchaser and Langer.
      The
      Purchaser and Langer shall have performed in all material respects all of their
      respective obligations required under this Agreement to be performed by them
      on
      or before the Closing Date, and the Seller shall have received a certificate
      dated the Closing Date and
      signed by the secretary of each of the Purchaser and Langer to that
      effect.

     

    (c) No
      Violation of Orders.
      No
      preliminary or permanent injunction or other order issued by any court or other
      governmental
      or regulatory authority, domestic or foreign, nor any statute, rule, regulation,
      decree or executive order promulgated or enacted by any government or
governmental
      or regulatory authority, domestic or foreign, that declares the Agreement
invalid
      or unenforceable in any respect or which prevents the consummation of the
      transactions contemplated hereby shall be in effect.

     

    (d) No
      Injunctions or Restraints.
      No
      temporary restraining order, preliminary or permanent injunction or other order
      issued by any court of competent jurisdiction or other legal restraint or
      prohibition preventing the consummation of this Agreement and the transactions
      contemplated by it shall be in effect.

     

    (e) Consents
      and Approvals.
      All
      consents, waivers, authorizations and approvals of any governmental or
      regulatory authority, domestic or foreign, required in connection with the
      execution, delivery and performance of the Agreements shall have been duly
      obtained and shall be in full force and effect on the Closing Date.

     

    (f)
      Purchaser
      and Langer Closing Documents.
      Each of
      the Purchaser and Langer shall have delivered to the Seller and the Principal
      Shareholders all of the documents referred to in Section 6.2.

    


    6.4
       Conditions
      to Obligations of the Purchaser and Langer.
      The
      obligations of the Purchaser and Langer to consummate the transactions
      contemplated by this Agreement are subject to the fulfillment, at or before
      the
      Closing Date, of the following conditions, any one or more of which may be
      waived by Langer in its sole discretion:

     

    (a) Representations
      and Warranties of the Seller and the Principal Shareholders.
      All
      representations and warranties made by the Seller and the Principal Shareholders
      in this Agreement shall be true and correct in all material respects (except
      as
      to representations and warranties which are qualified as to materiality, which
      representations and warranties shall be true and correct in all respects) on
      and
      as of the Closing Date as if again made by the Seller and the Principal
      Shareholders on and as of such date, and the Purchaser and Langer shall have
      received a certificate dated the Closing Date and signed by the secretary of
      the
      Seller to that effect.

     

    
      
        
        

      

      
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    (b) Performance
      of the Obligations of the Seller and the Principal Shareholders.
      The
      Seller and the Principal Shareholders shall have performed in all material
      respects all of their respective obligations required under this Agreement
      to be
      performed by them on or before the Closing Date, and the Purchaser and Langer
      shall have received a certificate dated the Closing Date and signed by the
      secretary of the Seller to that effect.

     

    (c) No
      Violation of Orders.
      No
      preliminary or permanent injunction or other order issued by any court or other
      governmental or regulatory authority, domestic or foreign, nor any statute,
      rule, regulation, decree or executive order promulgated or enacted by any
      government or governmental or regulatory authority, domestic or foreign, that
      declares the Agreement invalid or unenforceable in any respect or which prevents
      the consummation of the transactions contemplated hereby shall be in
      effect.

     

    (d) No
      Injunctions or Restraints.
      No
      temporary restraining order, preliminary or permanent injunction or other order
      issued by any court of competent jurisdiction or other legal restraint or
      prohibition preventing the consummation of this Agreement and the transactions
      contemplated by it shall be in effect.

     

    (e) No
      Material Adverse Effect.
      During
      the period from the date hereof to the Closing Date, there shall not have
      occurred any condition or fact in connection with the Purchased Assets or the
      Business which has, or which would reasonably be expected to have, a Material
      Adverse Effect.

     

    (f)
      Satisfactory
      Completion of Due Diligence.
      The
      Purchaser and Langer shall have completed their due diligence concerning the
      Seller, the Purchased Assets and the transactions
      contemplated hereby to their satisfaction.

    


    (g)
      Seller
      and the Principal Shareholders Closing Documents.
      Each of
      the Seller and Principal Shareholders shall have delivered to the Purchaser
      and
      Langer all of the documents referred to in Section 6.1.

     

    ARTICLE
      VII. 

     

    COVENANTS
      OF THE SELLER AND PRINCIPAL SHAREHOLDERS

     

    7.1
       Conduct
      of Business Before the Closing Date. 

     

    (a) Without
      the
      prior written consent of the Purchaser, between the date hereof and the Closing
      Date, the Company shall not and the Principal Shareholders shall cause the
      Company to not:

     

    (i) make
      any
      material change in the conduct of the Business or enter into any transaction
      in
      an
      amount greater than $25,000 or having a term or duration of more than one year
      or other
      than in
      the
      ordinary course of business consistent with past practices;

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    (ii) make
      any
      sale, assignment, transfer, abandonment or other conveyance of the Purchased
      Assets or any part thereof, except transactions pursuant to existing contracts
      set forth in the Schedules
      4.23
      and
      dispositions of inventory in
      the
      ordinary course of business consistent with past practice;

     

    (iii) subject
      any of the Purchased Assets, or any part thereof, to any Encumbrance or suffer
      such to exist other than such Encumbrance as may arise in
      the
      ordinary course of business consistent with past practice by
      operation of law and that will not, individually or in the aggregate, interfere
      materially with the use, operation, enjoyment or marketability of any of the
      Purchased Assets;

     

    (iv) fail
      to
      keep in full force and effect insurance comparable in amount and scope of
      coverage maintained in respect of the Business;

     

    (v) take
      any
      other action that would cause any of the representations and warranties made
      by
      them in this Agreement not
      to
      remain true and correct
      in all
      respects;

     

    (vi) without
      notifying the Buyer in writing at least five (5) Business Days prior thereto,
      (A) make
      any
      change in any tax election or in
      any
      accounting principle, method, estimate or practice (except
      for any such change required by reason of a concurrent change in
      GAAP)
      or
      (B)
      except in
      the
      ordinary course of business consistent with past practice,
      write
      down the value of any inventory or write off as uncollectible any accounts
      receivable;

     

    (vii) make,
      enter into, modify, amend in any material respect, renew, extend or terminate
      any Material
      Agreement included in the Purchased Assets in
      an
      amount greater than $25,000 or having a term or duration of more than one year
      or other than in the ordinary course of business consistent with past
      practice;
      

     

    (viii) settle,
      release or forgive any claim or litigation or waive any right,
      with
      respect to the Purchased Assets in an amount greater than $25,000 or having
      a
      term or duration of more than one year or other than in the ordinary course
      of
      business and consistent with past practice;
      or

     

    (ix) agree
      or
      commit to do any of the foregoing.

     

    (b) From
      and
      after the date hereof and until the Closing Date, the Company shall and the
      Principal Shareholders shall cause the Company to:

     

    (i) continue
      to maintain, in all material respects, the Purchased Assets in accordance with
      present practice in a condition suitable for its current use;

     

    (ii) file,
      when due or required, subject
      to applicable extensions, federal,
      state, foreign and other Tax Returns and other reports required to be filed
      and
      pay when due all Taxes, assessments, fees and other charges lawfully levied
      or
      assessed against them, unless the validity thereof is contested in good faith
      and by appropriate proceedings diligently conducted;

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    (iii) continue
      to conduct the Business in
      the
      ordinary course of business consistent with past practice;

     

    (iv) keep
      the
      books of account, records and files in the ordinary course of business and
      in
      accordance with existing practice; 

     

    (v) use
      commercially reasonable efforts
      to
      maintain existing business relationships with landlords, lenders, suppliers
      and
      customers with respect to the Business
      in
      accordance with past practice;
      

     

    (vi) cause
      all
      of the Funded Indebtedness and Affiliate Payables to have been extinguished
      and
      the Seller and the Purchased Assets to have been released of any Encumbrance
      related to the Funded Indebtedness and Affiliate Payables; 

     

    (vii) provide
      Purchaser, Langer and their proposed lenders and investors, and their respective
      counsel, accountants and other representatives reasonable access, at times
      reasonably agreed to by Seller, to the facilities, properties, books, records,
      contracts and documents of the Purchased Assets and the Business for the purpose
      of such inspection, investigation, copying and testing as such parties
      reasonably deem appropriate in connection with the transactions contemplated
      by
      this Agreement and furnish to Purchaser, Langer and their representatives all
      information (including financial and operating data and reports) with respect
      to
      the business and affairs of the Purchased Assets and the Business as Purchaser
      and Langer may reasonably request from time to time; and

     

    (viii) use
      all
      cash generated by the Business solely for working capital purposes in accordance
      with past practice.

     

    7.2
       Acquisition
      Proposals; No Solicitation.
      From
      and after the date hereof
      until the Closing Date or termination of the Agreement pursuant to Article
      9
      hereof,
      neither
      the Sellers, the Principal Shareholders or any of their respective Affiliates,
      nor any of their respective officers or directors nor anyone acting on behalf
      of
      the Seller or Principal Shareholders or such persons shall, directly or
      indirectly, encourage, solicit, engage in discussions
      or negotiations
      with, or provide any information to, any Person, firm, or other entity or group
      (other than the Purchaser or Langer or their respective representatives)
      concerning any merger, sale of substantial assets, purchase or sale of shares
      of
      capital stock or similar transaction involving either of the Seller, the
      Principal Shareholders, the Business or any other transaction inconsistent
      with
      the transactions contemplated hereby. The Seller and Principal Shareholders
      shall promptly communicate to the Purchaser and Langer any inquiries or
      communications concerning any such transaction which they may receive or of
      which they may become aware.

     

    


    
      
        
        

      

      
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    ARTICLE
      VIII. 

     

    ADDITIONAL
      AGREEMENTS

     

    8.1
       Non-competition. For
      purposes of this Section 8.1, all references to Langer or the Purchaser shall
      be
      deemed to include all of the Affiliates, Subsidiaries, successors and assigns
      of
      Langer or the Purchaser, as the case may be, and all references to the Seller
      shall be deemed to include the Seller and its successors and assigns. The Seller
      and the Principal Shareholders acknowledge that in order to assure Langer and
      the Purchaser that Langer and the Purchaser will retain the value of the
      Purchased Assets as a “going concern,” the Seller and the Principal Shareholders
      agree, on the terms set forth in this Section 8.1, not to utilize their special
      Knowledge of the business of the Seller and their relationships with customers,
      suppliers and others to compete with Langer or the Purchaser, subject to the
      terms hereafter set forth. For the Restricted Period (as defined below) the
      Seller, the Principal Shareholders, and their Affiliates shall not engage or
      have an interest in any Competitive Business, anywhere in (i) the United States
      of America or its territories and possessions, including, but not limited to,
      Puerto Rico, (ii) Canada, (iii) Europe, or (iv) any other geographic area where
      Langer or the Purchaser does business or in which any of Langer’s or the
      Seller’s products are marketed, as principal, officer, agent, employee,
      director, partner or stockholder (except as an owner of five percent (5%) or
      less of the stock of any company listed on a national securities exchange or
      traded in the over-the-counter market), or through the investment of capital,
      lending of money or property, rendering of services or capital, or otherwise,
      in
      any Competitive Business. In addition, during the Restricted Period, the Seller,
      the Principal Shareholders, and their Affiliates shall not, and shall not permit
      any of their employees, agents or others then under their control to, directly
      or indirectly, on behalf of the Seller, the Principal Shareholders, or their
      Affiliates, or any other Person, (i) accept Competitive Business from, or
      solicit the Competitive Business of any Person who is, or who had been at
      any time
      during the three (3) years prior to such solicitation, a customer or supplier
      of
      any of Langer, the Purchaser, the Seller, or their respective Subsidiaries
      or
      any successor to the business of Langer, the Purchaser, the Seller, or their
      Subsidiaries, (ii) accept Competitive Business from, or solicit the Competitive
      Business of any Person who, at any time during the one (1) year prior to such
      solicitation, had discussions with Langer, the Purchaser, the Seller, or any
      of
      their respective Subsidiaries regarding becoming a customer of any of such
      companies, or (iii) recruit or otherwise solicit or induce any person who is
      an
      employee or consultant of, or otherwise engaged by, Langer, the Purchaser or
      their Subsidiaries, or any successor to the business of Langer, the Purchaser
      or
      their Subsidiaries to terminate his or her employment or other relationship
      with
      Langer, the Purchaser or their Subsidiaries, or such successor, or hire any
      person who has left the employ of Langer, the Purchaser, or their Subsidiaries,
      or any such successor during the one (1) year preceding such solicitation.
      The
      Seller, the Principal Shareholders, and their Affiliates shall not at
any
      time,
      directly or indirectly, use or purport to authorize any Person to use any
      name, mark,
      copyright, logo, trade dress or other identifying words or images which are
      the
      same as or similar to those used currently or in the past by Langer, the
      Purchaser, the Seller, or their Subsidiaries in connection with any product
      or
      service, whether or not such use would be in a Competitive Business. The Seller
      and the Principal Shareholders acknowledge that compliance with the restrictions
      set forth in this Section 8.1 will not prevent any of them from earning a
      livelihood. As used herein, the “Restricted Period” shall mean (a) with respect
      to each Principal Shareholder and their Affiliates, a period equal to five
      (5)
      years commencing on the Closing Date and (b) with respect to the Seller, a
      period equal to the lesser of (x) five (5) years commencing on the Closing
      Date.
      As used herein, the phrase “Competitive Business” means any business competitive
      with business engaged in by Langer, the Purchaser, or the Seller as of the
      date
      hereof and/or during the Restricted Period excluding (i) the wholesale
      manufacture and distribution of pre-fabricated orthotic devices;
      and
      (ii) any business competitive with business engaged in by the Seller as of
      the
      date hereof solely to the extent such business doesn’t have aggregate net sales
      in excess of $50,000 in any calendar month.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    8.2
       General
      Confidentiality. For
      purposes of this Section 8.2, all references to Langer or the Purchaser shall
      be
      deemed to include all of the Affiliates, Subsidiaries, successors and assigns
      of
      Langer or the Purchaser, as the case may be, and all references to the Seller
      shall be deemed to include the Seller and its successors and assigns. The Seller
      and the Principal Shareholders acknowledge that the intangible property and
      all
      other confidential or proprietary information with respect to the business
      and
      operations of the Seller and the Purchased Assets are, after the Closing Date,
      valuable, special and unique assets of the Purchaser. The Seller and the
      Principal Shareholders shall not, at any time after the Closing Date, disclose,
      directly or indirectly, to any Person, or use or purport to authorize any Person
      to use any confidential or proprietary information with respect to the Seller
      or
      the Purchased Assets, whether or not for their own benefit, without the prior
      written consent of Langer, including without limitation, (i) trade secrets,
      designs, formulae, drawings, intangible property, diagrams, techniques, research
      and development, specifications, data, know-how, formats, marketing plans,
      business plans, budgets, strategies, forecasts and client data; (ii) information
      relating to the products developed by Langer, (iii) the names of the Seller’s
      customers and contacts, the Seller’s marketing strategies, the names of their
      vendors and suppliers,
      the cost of materials and labor, the prices obtained for services sold
      (including the methods used in price determination, manufacturing and sales
      costs), lists or other written records used in the Business, compensation paid
      to employees and consultants and other terms of employment, production operation
      techniques or any other confidential information of, about or pertaining to
      the
      Business, and any other information and material relating to any customer,
      vendor, licensor, licensee, or other party transacting business with the Seller,
      (iv) all tangible material that embodies any confidential and proprietary
      information as well as all records, files, memoranda, reports, price lists,
      drawings, plans, sketches and other written and graphic records, documents,
      equipment, and the like, relating to the business of the Seller, and (v) any
      other confidential information or trade secrets relating to the business or
      affairs of Langer or the Purchaser which the Seller or the Principal
      Shareholders may acquire or develop in connection with or as a result of his
      or
      its performance of the terms and conditions of this Agreement. Notwithstanding
      anything to the contrary set forth in this Section 8.2, confidential and
      proprietary information shall not include (i) information that is known to
      the
      public or which may become known to the public without any fault of the Seller
      or any of the Principal Shareholders or in violation of any confidentiality
      restrictions imposed upon Seller or the Principal Shareholders, (ii) information
      that is required to be disclosed pursuant to subpoena or court order to the
      extent that such information is disclosed in compliance therewith, (iii)
      information that is required to be disclosed by Applicable Law or to any
      Governmental Authority to the extent that such information is disclosed in
      compliance therewith or (iv) information that is disclosed by the Principal
      Shareholders to their respective attorneys and accountants in connection with
      the enforcement of this Agreement to the extent that such attorneys and
      accountants are bound by the restrictions of the type set forth in this Section
      8.2. The Seller and the Principal Shareholders acknowledge that Langer and
      the
Purchaser
      would not enter into this Agreement without the assurance that all such
      confidential and proprietary information will be used for the exclusive benefit
      of Langer and the Purchaser.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    8.3
       Continuing
      Obligations; Equitable Remedies. The
      restrictions set forth in Sections 8.1 and 8.2 are considered by the parties
      to
      be reasonable for the purposes of protecting the value of the business and
      goodwill of the Purchaser and the Purchased Assets. Purchaser, the Seller and
      the Principal Shareholders acknowledge that Purchaser and Langer would be
      irreparably harmed and that monetary damages would not provide an adequate
      remedy to Purchaser or Langer in the event the covenants contained in Sections
      8.1 and 8.2 were not complied with in accordance with their terms. Accordingly,
      the Seller and the Principal Shareholders agree that any breach or threatened
      breach by any of them of any provision of Sections 8.1 or 8.2 shall entitle
      Purchaser and Langer to injunctive and other equitable relief to secure the
      enforcement of these provisions, in addition to any other remedies (including
      damages) which may be available to Purchaser. If the Seller or any of the
      Principal Shareholders breaches the covenant set forth in Section 8.1, the
      running of the non-compete period described therein shall be tolled for so
      long
      as such breach continues. It is the desire and intent of the parties that the
      provisions of Sections 8.1 and 8.2 be enforced to the fullest extent permissible
      under the laws and public policies of each jurisdiction in which enforcement
      is
      sought. If any provisions of Section 8.1 relating to the time period, scope
      of
      activities or geographic area of restrictions is declared by a court of
      competent jurisdiction to exceed the maximum permissible time period, scope
      of
      activities or geographic area, as the case may be, the time period, scope of
      activities or geographic area shall be reduced to the maximum which such court
      deems enforceable. If any provisions of Section 8.1 or 8.2 other than those
      described in the preceding sentence
      are adjudicated to be invalid or unenforceable, the invalid or unenforceable
      provisions shall be deemed amended (with respect only to the jurisdiction in
      which such adjudication is made) in such manner as to render them enforceable
      and to effectuate as nearly as possible the original intentions and agreement
      of
      the parties. In addition, if any party brings an action to enforce Sections
      8.1
      or 8.2 hereof or to obtain damages for a breach thereof, the prevailing party
      in
      such action shall be entitled to recover from the non-prevailing party all
      attorney’s fees and expenses incurred by the prevailing party in such
      action.

     

    8.4
       Change
      of Name; Post-Closing Use of Name and Tradenames. Within
      1
      day following the Closing Date, the Seller shall change its name to remove
      the
      words “Regal” by amendment of its certificate of incorporation. The Seller shall
      provide to Purchaser a copy of
      such
      amendment of its certificate of incorporation and evidence satisfactory to
      Purchaser that whatever filings are necessary to effect such name change in
      any
      jurisdiction in which such Seller is licensed or qualified to do business have
      been made. From and after the Closing, none of the Seller, the Principal
      Shareholders, or any of their Affiliates shall use the name “Regal” or any
      tradenames or trademarks listed on Schedule
      4.19,
      nor any
      derivations thereof or any confusingly similar tradenames or trademarks, in
      connection with the conduct of any business.

     

    8.5
       Taxes. The
      Seller agrees to pay when due and discharge all sales and other state and local
      taxes owing by the Seller in respect of the operation of the Seller up to and
      including the Closing Date. The Seller shall file with all appropriate
      authorities its final sales Tax Returns when and as such returns are due under
      Applicable Law. Any sales Tax, use Tax, real property transfer or gains Tax,
      documentary stamp Tax or similar Tax attributable to the sale or transfer of
      the
      Business, the Purchased Assets or the Assumed Liabilities shall be paid by
      Seller. Purchaser agrees to sign and deliver such certificates or forms as
      may
      be necessary or appropriate to establish an exemption from (or otherwise
      reduce), or file Tax Returns with respect to, such Taxes.

     

    
      
        
        

      

      
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    8.6
       Collection
      of Receivables.
      (a) From
      and after the Closing Date, the Purchaser shall have the right and authority,
      and shall use commercially reasonable efforts to collect the accounts and notes
      receivable included in the Purchased Assets (the “Receivables”) and to endorse
      all checks received on account of the Receivables, in the Seller’s name
      generally in accordance with the billing and collection practices presently
      applied by the Purchaser in the collection of its accounts and notes receivable,
      except that with respect to any particular Receivable, the Purchaser shall
      be
      under no obligation to commence or not to commence litigation to effect
      collection and may make any adjustment, concession or settlement which in the
      good faith judgment of the Purchaser is commercially reasonable. In connection
      with the collections by the Purchaser, if a payment is received from an account
      debtor who has not designated the invoice being paid thereby, such payment
      shall
      be applied to the earliest invoice outstanding with respect to indebtedness
      of
      such account debtor, except for those invoices which are subject to a dispute
      to
      the extent of such dispute.

     

    (b)
      The
      Purchaser shall, on or before the fifteenth business day of each calendar month
      commencing with the second complete calendar month following the Closing Date,
      deliver to Seller a written report (“Collection Report”) of the following
      information with respect to the Receivables:

     

    (i)
      the
      aggregate amount of the Receivables (and the number of accounts comprising
      such
      Receivables); and

     

    (ii)
      the
      aggregate amount of cash collections of the Receivables during the period from
      the Closing Date through the date of the Collection Report.

     

    (c)
      If
      the Purchaser has not collected, within nine (9) months after the Closing Date,
      or in the event of an extended payment arrangement with respect to a customer
      disclosed on Schedule
      8.6(c),
      such
      later date as provided in accordance with the terms of such payment arrangement,
      an amount equal to the excess of the Receivables over the allowance for doubtful
      accounts shown on the Closing Date Balance Sheet (such excess being referred
      to
      herein as the “Net Amount of Receivables”), then the Purchaser shall have the
      right to require the Seller to pay the Purchaser an amount (the “Receivables
      Reimbursement Payment”) equal to (i) the Net Amount of Receivables minus
      (ii) the
      amount collected in cash by the Purchaser during such nine (9) month period
      in
      respect of the Receivables; provided
      that the
      Purchaser shall have no right to receive a Receivables Reimbursement Payment
      with respect to any amount thereof for which the Purchaser or Langer received
      indemnification pursuant to Section 5.3(a). After the expiration of such nine
      (9) month period, any then outstanding Receivables shall be referred to the
      collection agency employed by Langer or the Purchaser at such time for
      collection of such outstanding Receivable; provided,
      however,
      that if
      at the end of such nine (9) month period, the Purchaser shall elect not to
      refer
      any Receivable to such collection agency, the Seller shall not be required
      to
      pay the portion of the Receivable Reimbursement Payment related to such
      Receivable unless and until the Purchaser refers such Receivable to such
      collection agency.

     

    (d) If,
      after
      the Closing Date, the Seller, or any other Person on behalf of the Seller,
      shall
      receive any remittance from any account debtors with respect to the Receivables
      (excluding any Receivable assigned to the Seller), the Seller or such other
      Person shall endorse such remittance to the order of the Purchaser and forward
      it to the Purchaser immediately upon receipt thereof, and any such amounts
      shall
      be deemed to have been collected by the Purchaser for purposes of this
      Section 8.6.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    (e) If
      a
      Langer Affiliate shall receive any remittance from or on behalf of any account
      debtor with respect to any Receivable after such Receivable has been referred
      to
      a collection agency, including a remittance from the collection agency, the
      Purchaser shall endorse such remittance to the order of the Seller and forward
      it to the Seller immediately upon receipt thereof.

     

    8.7
       Access
      to Records after Closing. For
      a
      period of six (6) years after the Closing Date, Langer, Purchaser and their
      representatives shall have reasonable access to all of the books and records
      relating to the Business which Seller, the Principal Shareholders or any of
      their Affiliates may retain after the Closing Date. Such access shall be
      afforded by Seller, the Principal Shareholders and their Affiliates upon receipt
      of reasonable advance notice and during normal business hours. The Purchaser
      shall be solely responsible for any costs and expenses incurred by it pursuant
      to this Section 8.7. If the Seller, the Principal Shareholders, or any of
      their Affiliates shall desire to dispose of any of such books and records prior
      to the expiration of such representations and warranties, the Seller, the
      Principal Shareholders, and their Affiliates shall, prior to such disposition,
      give the Purchaser a reasonable opportunity, at the Purchaser’s expense, to
      segregate and remove such books and records as the Purchaser may
      select.

     

    8.8
       Treatment
      of Certain Excluded Liabilities. Seller
      agrees that its obligations with respect to the Excluded Liabilities referred
      to
      in Sections 2.4(e) and 2.4(g) include the obligation to undertake the defense
      of
      or otherwise settle or resolve each such matter. Seller shall have
      the right
      to
      defend, settle or otherwise resolve each such matter in any manner it deems
      appropriate, provided that (i) no such matter may be settled or resolved in
      a
      manner that would materially increase the cost of the conduct of the Business
      after the Closing and (ii) no such matter may be settled or resolved in a manner
      that provides for injunctive or other nonmonetary relief affecting Langer,
      the
      Purchaser, or the Purchased Assets. Seller shall provide periodic status reports
      to Purchaser regarding any matter referred to in this Section 8.8 that could
      affect Langer, the Purchaser, the Business, or the Purchased Assets after the
      Closing Date. Langer, Purchaser, and their counsel and
      representatives shall have the right to consult with Seller and its counsel
      from
      time to time regarding such matters and to review any documents prepared in
      connection therewith.

     

    8.9
       Payments
      of Accounts Payable. The
      accounts payable of the Seller set forth on Schedule
      8.10
      shall be
      paid in full, with interest thereby, by the Purchaser within forty-five (45)
      days after the Closing Date. 

     

    ARTICLE
      IX.

     

    TERMINATION

    


    9.1
       Termination
      by the Purchaser. This
      Agreement may be terminated by the Purchaser as follows:

    


    (a) upon
      a
      material breach of any representation, warranty, covenant or agreement on the
      part of the Seller or the Principal Shareholders set forth in this Agreement,
      or
      if any representation or warranty of the Seller or the Principal Shareholders
      shall have become untrue in any material respect, in either case such that
      the
      conditions set forth in Section 6.4 of this Agreement would be incapable of
      being satisfied by the Seller on or prior to the Closing; provided, that in
      any
      case, a willful breach shall be deemed to cause such conditions to be incapable
      of being satisfied for purposes of this Section 9.1(a), and further provided
      that such breach or untrue representation or warranty, other than a breach
      of
      Section 7.2, is not cured within ten (10) days after notice thereof;


    


    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

    (b) any
      legal
      proceeding is commenced or threatened by any Governmental Entity or other Person
      directed against the consummation of the Closing or any other transaction
      contemplated hereby, and Purchaser reasonably and in good faith deems it
      impractical or inadvisable to proceed in view of such legal proceeding or threat
      thereof; or

    


    (c) at
      any
      time after 5:00 p.m., New York time, on March 1, 2007 if the transactions
      contemplated by this Agreement have not closed by such time; or

    


    9.2
       Termination
      by the Seller and Principal Shareholders.
      This
      Agreement may be terminated by the Seller and the Principal Shareholders as
      follows:

    


    (a) upon
      a
      breach of any material representation, warranty, covenant or agreement on the
      part of Purchaser set forth in this Agreement, or if any material representation
      or warranty of Purchaser shall have become untrue, in either case such that
      the
      conditions set forth in Section 6.3 of this Agreement would be incapable of
      being satisfied by Purchaser on or prior to the Closing; provided, that in
      any
      case, a willful breach shall be deemed to cause such conditions to be incapable
      of being satisfied for purposes of this Section 9.2(a), and further provided
      that such breach or untrue misrepresentation or warranty is not cured within
      ten
      (10) days after notice thereof; or

    


    (b) at
      any
      time after 5:00 p.m., New York time, on March 1, 2007 if the transactions
      contemplated by this Agreement have not closed by such time.

    


    9.3 Effect
      of Termination.
      In the
      event of termination of this Agreement as provided in Sections 9.1 and 9.2,
      this Agreement (except for the provisions of Section 10.15, 10.16, 10.9 and
      this
      Section 9.3, which shall continue indefinitely, Section 7.2 which shall continue
      for one year from the Closing Date), shall forthwith become void and neither
      party shall have any further liability to the other under this Agreement;
      provided that nothing herein shall relieve any party from liability for fraud
      or
      willful breach of this Agreement or the transactions contemplated hereby. For
      the avoidance of doubt, Section 7.2 shall survive termination of this Agreement
      for purposes of the Purchaser bringing any claims relating to breaches of
      Section 7.2 that occurred prior to or within one year after the termination
      of
      this Agreement.

    


    9.4 Notice
      of Termination. A
      party
      shall provide each of the other parties with at least ten (10) days’ notice
      prior to termination under Sections 9.1(a) and (b) or 9.2(a) hereof and the
      opportunity to cure any such deficiency or, if not capable of being cured in
      such ten (10) day period, then to commence cure and proceed to complete same
      diligently and in any event within thirty (30) days of such notice.

    


    9.5 Waiver. At
      any
      time prior to the Closing, each of the parties hereto may (a) extend
      the time for the performance of any of the obligations or other acts of the
      other party hereto, (b) waive any inaccuracies in the representations and
      warranties contained herein or in any document delivered pursuant hereto or
      (c) waive compliance with any of the agreements or conditions contained
      herein. Any such extension or waiver shall be valid if set forth in an
      instrument in writing signed by the party to be bound thereby.

     

    
      
        
        

      

      
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    ARTICLE
      X. 

     

    MISCELLANEOUS

     

    10.1
       Notices. Any
      notice, demand, claim or other communication under this Agreement shall be
      in
      writing and shall be sent by certified mail, return receipt requested, postage
      prepaid; telegraph; cable; or overnight courier to the following addresses
      (or
      to such other address as a party to receive such notice shall specify to the
      other parties hereto in accordance with the provisions of this
      section):

     

    
      	
              If
                to Langer or Purchaser:

               

              450
                Commack Rd.

              Deer
                Park, NY 11729

              Attn.:
                Chief Executive Officer

               

              with
                a copy to:

              Kane
                Kessler, P.C.

              1350
                Avenue of the Americas

              26th
                Floor

              New
                York, NY 10019

              Attn.:
                Robert L. Lawrence, Esq.

            	
              If
                to the Seller or the Principal Shareholders:

               

              Regal
                Medical Supply, LLC

              401
                Temple Highway

              Suite
                5

              Granbury,
                TX 76049

              Attn:
                John Shero

            


    

    


    All
      such
      notices and communications shall be deemed effective as follows: if mailed,
      on
      the third business day following deposit in the mail; if sent by telegraph,
      or
      cable, when delivered to the telegraph or cable company, as the case may be,
      or
      if by overnight courier, on the day following delivery to the courier; provided
      that if such day is not a business day, such notice or communication shall
      be
      deemed effective on the next succeeding business day.

     

    10.2
       Entire
      Agreement. This
      Agreement contains every obligation and understanding between the parties
      relating to the subject matter hereof and merges all prior discussions,
      negotiations and agreements between them, and
      none
      of the parties shall be bound by any conditions, definitions, understandings,
      warranties or representations other than as expressly provided or referred
      to
      herein. 

     

    10.3
       Binding
      Effect. This
      Agreement shall be binding upon and inure to the benefit of the parties hereto
      and their respective successors, heirs, personal representatives, legal
      representatives, and permitted assigns.

     

    10.4
       Knowledge
      of the Parties. Where
      any
      representation or warranty contained in this Agreement is expressly qualified
      by
      reference to the Knowledge of any of the parties hereto, such party acknowledges
      and confirms that it has made due and diligent inquiry as to the matters that
      are the subject of such representations and warranties.

     

    
      
        
        

      

      
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    10.5
       Assignment. This
      Agreement may not be assigned by any party without the written consent of the
      other party; provided that Langer and the Purchaser may assign this Agreement
      to
      a corporation, partnership, limited liability company, or other entity of which
      either Langer or the Purchaser maintains majority control;
      and
      provided further that Langer shall agree to guaranty the obligations hereunder
      of such assignee.

     

    10.6
       Waiver
      and Amendment. Any
      representation, warranty, covenant, term or condition of this Agreement which
      may legally be waived, may be waived, or the time of performance thereof
      extended, at any time by the party hereto entitled to the benefit thereof,
      and
      any term, condition or covenant hereof (including, without limitation, the
      period during which any condition is to be satisfied or any obligation
      performed) may be amended by the parties thereto at any time. Any such waiver,
      extension or amendment shall be evidenced by an instrument in writing executed
      on behalf of the appropriate party by its President or any Vice President or
      other person, who has been authorized by its Board of Directors to execute
      waivers, extensions or amendments on its behalf. No waiver by any party hereto,
      whether express or implied, of its rights under any provision of this Agreement
      shall constitute a waiver of such party’s rights under such provisions at any
      other time or a waiver of such party’s rights under any other provision of this
      Agreement. No failure by any party thereof to take any action against any breach
      of this Agreement or default by another party shall constitute a waiver of
      the
      former party’s right to enforce any provision of this Agreement or to take
      action against such breach or default or any subsequent breach or default by
      such other party.

     

    10.7
       No
      Third Party Beneficiary. Nothing
      expressed or implied in this Agreement is intended, or shall be construed,
      to
      confer upon or give any Person other than the parties hereto and their
      respective heirs, personal representatives, legal representatives, successors
      and permitted assigns, any rights or remedies under or by reason of this
      Agreement. 

     

    10.8
       Severability. In
      the
      event that any one or more of the provisions contained in this Agreement shall
      be declared invalid, void or unenforceable, the remainder of the provisions
      of
      this Agreement shall remain in full force and effect, and such invalid, void
      or
      unenforceable provision shall be interpreted as closely as possible to the
      manner in which it was written. It is the desire and intent of the parties
      that
      the provisions of this Agreement be enforced to the fullest extent permissible
      under the laws and public policies of each jurisdiction in which enforcement
      is
      sought. If any provision of this Agreement relating to a time period or scope
      of
      activities is declared by a court of competent jurisdiction to exceed the
      maximum permissible time period or scope of activities, as the case may be,
      the
      time period or scope of activities shall be reduced to the maximum which such
      court deems enforceable.

     

    10.9
       Expenses. Except
      as
      set forth in Section 2.6(d) with respect to $10,000 of expenses incurred by
      the
      Seller, each party agrees to pay, without right of reimbursement from the other
      party, the costs incurred by it incident to the performance of its obligations
      under this Agreement and the consummation of the transactions contemplated
      hereby, including, without limitation,
      costs incident to the preparation of this Agreement, and the fees and
      disbursements of counsel, accountants and consultants employed by such party
      in
      connection herewith.

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

    10.10
       Headings. The
      section and other headings contained in this Agreement are for reference
      purposes only and shall not affect the meaning or interpretation of any
      provisions of this Agreement.

     

    10.11
       Counterparts. This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed an original but all of which together shall constitute one and the same
      instrument.

     

    10.12
       Time
      of the Essence. Wherever
      time is specified for the doing or performance of any act or the payment of
      any
      funds, time shall be considered of the essence.

     

    10.13
       Injunctive
      Relief. It
      is
      possible that remedies at law may be inadequate and, therefore, the parties
      hereto shall be entitled to equitable relief including, without limitation,
      injunctive relief, specific performance or other equitable remedies in addition
      to all other remedies provided hereunder or available to the parties hereto
      at
      law or in equity. 

     

    10.14
       Remedies
      Cumulative. No
      remedy
      made available by any of the provisions of this Agreement is intended to be
      exclusive of any other remedy, and each and every remedy shall be cumulative
      and
      shall be in addition to every other remedy given hereunder or now or hereafter
      existing at law or in equity. 

     

    10.15
       Governing
      Law. This
      Agreement has been entered into and shall be construed and enforced in
      accordance with the laws of the State of New York without reference to the
      choice of law principles thereof. 

     

    10.16
       Jurisdiction
      and Venue.
      This
      Agreement shall be subject to the exclusive jurisdiction of the Federal and
      New
      York state courts located in the County of New York, State of New York, United
      States of America, with the exceptions of the matters in Section 2.6, which
      are
      required to be resolved by the parties in the manner prescribed by Section
      2.6.
      The parties to this Agreement agree that any breach of any term or condition
      of
      this Agreement or other dispute arising under this Agreement shall be deemed
      to
      have occurred in the State of New York by virtue of a failure to perform an
      act
      required to be performed in the State of New York or otherwise and irrevocably
      and expressly agree to submit to the jurisdiction of the Federal and New York
      State courts located in the County of New York, State of New York, United States
      of America for the purpose of resolving any disputes among the parties relating
      to this Agreement or the transactions contemplated hereby. By the execution
      and
      delivery of this Agreement, the parties irrevocably waive, to the fullest extent
      permitted by law, any objection which they may now or hereafter have to the
      laying of venue or to the jurisdiction of any such suit, action or proceeding
      arising out of or relating to this Agreement, or any judgment entered by any
      court in respect hereof brought in the Federal or New York state courts located
      in the County of New York, State of New York, United States of America, and
      irrevocably submit generally and unconditionally to the jurisdiction of any
      such
      court in any such suit, action or proceeding, and further irrevocably waive
      any
      claim that any such suit, action or proceeding brought in the Federal or New
      York state courts located in the County of New York, State of New York, United
      States of America has been brought in an inconvenient forum or lacks personal
      jurisdiction. Each party agrees that service of process may be made by personal
      service of a copy of the summons and complaint or other legal process in any
      such suit, action or proceeding, or by registered or certified mail (postage
      prepaid) to the proper address for notice set forth herein or by any other
      method of service provided for under the applicable laws in effect in the state
      of New York. 

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    10.17
       Participation
      of Parties. The
      parties hereto acknowledge that this Agreement and all matters contemplated
      herein, have been negotiated among all parties hereto and their respective legal
      counsel and that all such parties have participated in the drafting and
      preparation of this Agreement from the commencement of negotiations at all
      times
      through the execution hereof. 

     

    10.18
       Further
      Assurances. The
      parties hereto shall deliver any and all other instruments or documents required
      to be delivered pursuant to, or necessary or proper in order to give effect
      to,
      all of the terms and provisions of this Agreement including, without limitation,
      all necessary stock powers and such other instruments of transfer as may be
      necessary or desirable to transfer ownership of the Purchased
      Assets.

     

    10.19
       Publicity. No
      public
      announcement or other publicity regarding this Agreement or the transactions
      contemplated hereby shall be made prior to or after the date hereof without
      the
      prior written consent of Langer, and the Purchaser, as to form, content, timing
      and manner of distribution. Notwithstanding the foregoing, nothing in this
      Agreement shall preclude any party or its affiliates from making any public
      announcement or filing pursuant to any federal or state securities laws or
      stock
      exchange rules.

     

     

     

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    In
      Witness Whereof,
      the
      parties hereto have each executed and delivered this Agreement as of the day
      and
      year first above written.

     

    PRINCIPAL
      SHAREHOLDERS:               

     

    
      	 	/S/  John Eric
              Shero
	 	
              
John Eric
              Shero
	 	 
	 	/S/  William Joseph Warning
	 	
              
William
              Joseph Warning
	 	 
	 	/S/  John P Kenney 
	 	
              
John
              P Kenney
	 	 
	 	/S/  Richard Alan Nace 
	 	
              
Richard
              Alan Nace
	 	 
	 	/S/  Linda Ann Lee
	 	
              
Linda
              Ann Lee
	 	 
	 	/S/  Carl David Ray 
	 	
              
Carl
              David Ray
	 	 
	 	/S/  Roy Kelley 
	 	
              
Roy
              Kelley 


    

     

    
      	 	 	 
	SELLER:	REGAL MEDICAL SUPPLY, LLC
	 
 	 
 	 
 
	 	By:  	/S/ 
W.
              Gray
              Hudkins
	 	
              
Name:
              W. Gray Hudkins
	 	Title:
              President


    

     

    
      	 	 	 
	PURCHASER:	REGAL ACQUISITION CO.
	 
 	 
 	 
 
	 	By:  	/S/ 
              John Eric Shero
	 	
              
Name:
              John Eric Shero
	 	Title:
              President



     

    
      	 	 	 
	 	LANGER, INC.
	 
 	 
 	 
 
	 	By:  	/S/ 
W.
              Gray
              Hudkins
	 	
              
Name:
              W. Gray Hudkins
	 	Title:
              President and CEO