Exhibit 2.1
                            ASSET PURCHASE AGREEMENT


         THIS ASSET  PURCHASE  AGREEMENT  is executed on March 25, 1997  between
Sunrise Technologies  International,  Inc., a Delaware  corporation  ("seller"),
having  its  principal  place of  business  at  47257  Fremont  Blvd.,  Fremont,
California 94538, and Lares Research, a California corporation ("buyer"), having
its principal place of business at 295 Lockheed Avenue, Chico, California 95973.

                                    RECITALS

         A.  Seller is engaged in the  business  of  developing,  manufacturing,
distributing and selling  high-technology dental lasers,  abrasive tooth cutting
systems,  and composite curing systems (the "Dental  Business").  Seller is also
engaged in an  ophthalmic  business,  and  intends to  continue  to conduct  its
ophthalmic business.

         B. Seller and buyer have entered into a Letter of Intent dated November
14, 1996,  which was agreed to by seller on November  18,  1996,  and amended by
letter dated February 24, 1997,  stating the intent of seller to sell the Dental
Business and the intent of buyer to purchase the Dental Business, subject to the
negotiation and execution of a definitive agreement between the parties.

         C. Seller and buyer  desire to enter into this  agreement  to set forth
the definitive agreement of seller and buyer for the sale of the Dental Business
to buyer.

                                    AGREEMENT

         NOW, THEREFORE,  in consideration of the mutual covenants,  agreements,
representations and warranties contained in this Agreement, the parties agree as
follows:

                                    ARTICLE 1

                           PURCHASE AND SALE OF ASSETS

         1.1      Agreement for Purchase and Sale.

         Subject to the terms and  conditions of this  Agreement,  seller hereby
agrees to sell,  assign,  transfer  and  deliver to buyer,  and buyer  agrees to
purchase  from  seller free and clear of all liens or  encumbrances,  all of the
assets, properties, and business of seller, whether tangible,  intangible, real,
personal or mixed, and wherever located,  that are held for use in the operation
of and are a part  of  seller's  Dental  Business,  excluding  only  the  assets
described in section 1.2, below (the "assets"), which assets include but are not
necessarily limited to the following:

         A.  All of the  seller's  supplies,  materials,  equipment,  machinery,
tools,  instruments,  furniture,  fixtures, and other tangible personal property
(the  "tangible  property")  held for use by seller in the  Dental  Business.  A
listing of the items of tangible  property  having an original cost greater than
$1,000.00  shall be prepared,  approved by buyer and signed by the parties,  and
attached to this agreement as Exhibit 1.1A prior to the closing.

         B. All of seller's  inventories  (the  "inventory")  of parts,  work in
process,  and  finished  goods used and  produced in the  business of the Dental
Business. Seller and buyer agree that a physical inventory


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will be taken jointly  immediately prior to the closing and the actual inventory
purchased by the buyer shall be based thereon.  A listing of the inventory being
purchased  shall be prepared,  approved by buyer and signed by the parties,  and
attached to this agreement as Exhibit 1.1B prior to the closing.

         C.  All  outstanding  inventory  purchase  and  product  sales  orders,
together with any deposits or prepayments received by seller on account thereof.
A listing of the  inventory  purchase  and product  sales  orders,  deposits and
prepayments  shall be  prepared  by seller,  approved by buyer and signed by the
parties, and attached to this agreement as Exhibit 1.1C prior to the closing.

         D. All of seller's  claims and rights under  leases,  contracts,  trade
secrets, patents, patent applications,  trademarks,  service marks, trade names,
copyrights,  inventions,  formulas, knowhow,  confidential proprietary technical
information,  licenses,  royalty rights, deposits,  rights and claims to refunds
and  adjustments  of any kind,  computer  programs,  software or firmware,  data
processing  information,  and any other intellectual property, that are held for
use by seller in the Dental  Business.  Included in the  foregoing  shall be all
information,  documents,  design files,  files, notes, and records of every kind
and  nature   prepared  or  maintained  in  connection  with  the  research  and
development activities of seller's Dental Business, including but not limited to
those concerning the original development of existing products,  enhancements or
changes made to products of the Dental Business (whenever made), enhancements or
changes proposed to be made or being considered to be made to existing products,
or the development of new products. A partial listing of these claims and rights
shall be prepared by seller,  approved by buyer and signed by the  parties,  and
attached to this  agreement as Exhibit  1.1D signed by the parties  prior to the
closing.

         E. Contact  information,  including address and telephone numbers,  for
vendors,  customers,  and others used by seller in the Dental Business,  and any
yellow pages and trade journal  advertising,  web site files and web site links,
and all other advertising relating to the Dental Business.

         F. All of seller's  goodwill in the Dental  Business,  including all of
the seller's files (in any format,  including paper and electronic),  documents,
lists and  records  relating  to the  customers  of and  vendors  to the  Dental
Business (the "customer lists").

         G.  A  Covenant  Not to  Compete  pursuant  to  paragraph  4.1 of  this
agreement.

         1.2      Excluded Assets.

         There shall be excluded from the assets sold hereunder:

         A. Except for the deposits and prepayments  described in paragraph 1.1C
of this agreement, all cash, cash items, accounts receivable, investments, stock
and other securities of seller;

         B. All of seller's general financial records, provided that buyer shall
have the right to obtain  copies of the  financial  records  which  buyer  shall
reasonably require with respect to the continuing conduct of the business of the
Dental  Business  and with  respect  to  filings  with  governmental  and taxing
authorities concerning the assets;

         C. All of seller's property,  files and records used in connection with
seller's  ophthalmic  business  or not  relating to the Dental  Business.  Buyer
acknowledges  that  certain of seller's  trade  secrets,  inventions,  formulas,
knowhow and confidential  proprietary technical information have applications to
and are used by seller in seller's ophthalmic business (collectively referred to
as "proprietary  ophthalmic

                                      -2-

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information"),  and seller retains such proprietary  ophthalmic  information for
all  uses,  other  than in  Dental  Business  applications,  including,  without
limitation,  such rights and proprietary information as it may have with respect
to the neodymium yag and other lasers;

         D. The real  property  used in the  business  of the  Dental  Business,
subject to the provisions of paragraphs 4.7 and 9.9, hereof; and

         E. The assets and rights described on Exhibit 1.2 to this agreement.

                                    ARTICLE 2

                            CONSIDERATION FOR ASSETS

         As full  consideration  for the transfer of the assets to buyer,  buyer
agrees to pay and deliver to seller at the closing the following:

         2.1 Cash Portion.  The sum of Four Million Dollars ($4,000,000) in cash
(the "cash portion"). Upon execution of this agreement,  buyer agrees to deposit
the sum of Two Hundred Fifty Thousand  Dollars  ($250,000)  (the "deposit") with
Mid Valley Title & Escrow Company, 601 Main Street, Chico, California 95928 (the
"escrow company") which sum,  together with the remaining cash portion,  will be
paid to Seller at the  closing.  The  deposit  shall be refunded to buyer in the
event the  purchase and sale of the assets does not close as a result of failure
of any of the  conditions  precedent to the  obligations  of buyer  contained in
Sections 9.1 through 9.6,  Section  9.7B,  and Section 9.8,  hereof.  Seller and
buyer  agree to execute  such  instructions  as shall be  required by the escrow
company as a condition to receipt and holding of the deposit.

         2.2 Promissory Note.  Buyer's  promissory note, dated as of the closing
date,  in the  principal  amount of One Million  Five Hundred  Thousand  Dollars
($1,500,000) in the form of Exhibit 2.2A attached hereto and incorporated herein
by this reference.  The promissory note shall be secured by a Security Agreement
in  substantially  the form of Exhibit  2.2B  attached  hereto and  incorporated
herein by this reference and a Deed of Trust in standard form.  Seller agrees to
execute a subordination agreement in favor of Bank of America NT&SA (the "bank")
subordinating  seller's rights under the Security Agreement and Deed of Trust to
rights conferred upon the bank under its financing  documents with buyer.  Prior
to the  closing,  Buyer  agrees  to enter  into  such  revisions  to the form of
promissory  note,  security  agreement  and deed of  trust as may be  reasonably
requested by seller as a result of restrictions  which may be placed upon seller
under  the terms of the  subordination  agreement  requested  by the bank to the
extent that the restrictions are substantially different from those contained in
the bank's standard "Business Loan Subordination Agreement", or upon buyer under
the bank's financing agreements with buyer.

         2.3 Allocation of Purchase Price. The purchase price shall be allocated
as follows:

         A. $2,750,000 to the laser products portion of the Dental Business.

         B.  $2,200,000  to the air  abrasive  products  portion  of the  Dental
Business.

         C. $550,000 to the CureStar composite curing lamp portion of the Dental
Business.

                                      -3-

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                                    ARTICLE 3

                                   LIABILITIES

         3.1      No Assumption of Liabilities.

         Except as stated in paragraphs 3.3 and 5.3, it is expressly  agreed and
understood  that buyer shall not assume and in no event shall buyer be deemed to
have  assumed or agreed to pay or perform,  and seller shall at all times remain
solely  responsible  for,  any debts,  contracts,  commitments,  obligations  or
liabilities  of  seller  of any kind or  nature  whatsoever,  including  but not
limited to those of the Dental  Business or  connected  in any way to the assets
arising or accruing  prior to the  closing , and  specifically  including  those
arising out of or  connected  in any way to claims  based on products  liability
theories of recovery.

         3.2      Payment of Seller's Liabilities.

         Prior  to or at  the  close  of  escrow,  all of  Seller's  liabilities
incurred  in  Seller's  operation  of the Dental  Business  shall be  adequately
provided for to buyer's reasonable satisfaction.

         3.3      Assumption of Contracts.

         Buyer agrees to assume all of seller's  obligations on those contracts,
licenses,  or other  agreements  listed  on  Exhibit  3.3  attached  hereto  and
incorporated  herein  by this  reference,  including,  without  limitation,  all
outstanding inventory purchase and product sales orders, as described in Exhibit
1.1C,  but only to the extent of  obligations  that are  executory  or arise and
accrue thereunder from and after the closing date, and all unsatisfied  warranty
obligations of seller related to Dental Business products.

                                    ARTICLE 4

                                OTHER AGREEMENTS

         4.1      Covenant Not to Compete and Non-Disclosure Agreement.

         A. During the period  commencing  on the closing date and ending on the
date  which is five (5)  years  after the  closing  date,  except  as  otherwise
approved in advance and in writing by buyer,  seller agrees not to,  directly or
indirectly,  for  seller's  own  account,  or  through,  on  behalf  of,  or  in
conjunction with any person, firm, corporation,  business or other legal entity,
(i) own, maintain,  operate,  control,  have any interest in, perform consulting
services for or otherwise  engage in any business or  enterprise  which sells or
leases  products or provides  services in competition  with or similar to or the
same as the  products  sold or leased by or  services  provided by the seller as
part of the Dental  Business as of the  closing  date  within any  territory  or
geographic area throughout the world in which seller through its Dental Business
may be doing business, or (ii) induce or attempt to persuade any employee, agent
or customer of the Dental Business to terminate his or her employment, agency or
business relationship with buyer in order to enter into any such relationship on
behalf of any competing business.  Nothing herein shall be construed to restrict
Seller's use of its  proprietary  ophthalmic  information  and laser products in
ophthalmic or any other applications other than in the Dental Business.

         B.  Seller  further  agrees  not to  divulge,  communicate,  use to the
detriment  of the buyer or for the benefit of any other  person or  persons,  or
misuse in any way, any  confidential  information or trade secrets of the seller
that  is  part  of  the  assets  being  purchased  hereby,  including  personnel
information,

                                      -4-

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secret processes,  know-how,  customer lists,  formulas or other technical data,
except as may be  required  by law,  provided  however,  that this  prohibition,
subject to the agreement of seller  contained in paragraph 4.1A, shall not apply
to any  information  which,  through no improper  action of seller,  is publicly
available or generally known in the industry.

         C. To the extent necessary to satisfy the laws of any state,  including
the state of California, seller agrees that any geographical,  temporal or other
restriction  set forth in this  paragraph 4.1 can and should,  if necessary,  be
judicially  modified to the extent necessary to make it enforceable and enforced
as modified.

         D. It is agreed  between  the parties  that buyer would be  irreparably
damaged by reason of any violation of the  provisions of this paragraph 4.1, and
that any remedy at law for a breach of such provision would be inadequate. Buyer
shall  therefore be entitled to seek and obtain  injunctive  or other  equitable
relief  (including,  but not  limited  to,  a  temporary  restraining  order,  a
temporary injunction or a permanent injunction) against seller, seller's agents,
assigns or successors of a breach or threatened  breach of such  provisions  and
without  the  necessity  of  proving  actual  monetary  loss.  It  is  expressly
understood  among the parties that this  injunctive  or other  equitable  relief
shall not be the buyer's  exclusive  remedy for any breach of this paragraph 4.1
and subject to the provisions of Section 11, the buyer shall be entitled to seek
any other  relief  or  remedy  which it may have by  contract,  statute,  law or
otherwise  for any  breach  hereof,  and it is agreed  the buyer  shall  also be
entitled to recover its attorneys'  fees and costs in any  successful  action or
suit against seller relating to any such breach.

         E.  Seller  warrants  and  represents  that it:  (i) is  familiar  with
covenants not to compete;  (ii) has discussed the provisions of the covenant not
to compete  contained  herein  with its  attorney  and has  concluded  that such
provisions (including, without limitation, the right to equitable relief and the
length of time and size of area provided for herein) are fair,  reasonable,  and
just  under  the  circumstances;  and (iii) is fully  aware of the  obligations,
limitations and liabilities included in the covenant not to compete contained in
this agreement.

         4.2      Employees.

         A. Prior to the  closing,  buyer agrees to  coordinate  in advance with
seller's chief executive  officer as to all  communications  or contacts for any
purpose with seller's  employees.  Buyer wishes to have the  opportunity to have
certain employees of buyer observe seller's manufacturing processes prior to the
closing.  Seller  will  allow  buyer's  employee's  to have  such  access  if so
requested  by buyer at such  times  and with  such  frequency,  subject  to such
conditions  and with regard to such  operations  and processes as seller and its
employees may  determine;  provided,  that the presence of buyer's  employees do
not, in the sole judgment and  discretion of seller's chief  executive  officer,
interfere with seller's employees or seller's normal business operations.

         B. Immediately preceding the closing, seller shall, at its sole expense
and responsibility,  terminate,  effective as of the closing,  employment of any
employees of seller  providing  services in connection  with the Dental Business
upon  receipt  of  written  notice  from  buyer  that buyer has made an offer of
employment to such employees,  which offer has been accepted.  Seller shall have
no obligation to terminate  the  employment of any other of Seller's  employees.
Buyer shall have no responsibility for any wages, benefits and other payments or
obligations due or becoming due (including any benefits which have accrued,  but
which have not been paid) employees of seller or former employees arising out of
their  employment prior to the closing or the termination of their employment by
seller  including,  without  limitation,  any liability for any injuries of such
employees relating to any period prior to closing.

                                      -5-

<PAGE>

         Employment  of the same  persons by buyer shall not cause nor be deemed
to cause  buyer to  assume  or be  responsible  for any of such  obligations  or
liabilities  of seller.  It is the intent of this paragraph to define the duties
and  obligations  only as  between  the  parties  hereto.  Accordingly,  nothing
contained herein shall be deemed to create any third party beneficiary rights to
others.

         C. With respect to any person who accepts regular employment with buyer
prior to the  closing,  during the five (5) year  period  following  the closing
Seller agrees not to directly or indirectly solicit the personal services of any
such person,  and during the one (1) year period  following  the closing  Seller
agrees not to hire, or otherwise directly or indirectly make use of the personal
services of, any such person.

         D.  Seller  agrees  to make  available  to buyer at  seller's  business
premises those  employees who worked in the Dental Business prior to the closing
but remain as employees of seller,  upon written  request from buyer, on up to a
full time basis for a six (6) month  transition  period  after the  closing.  In
addition,  after the transition period,  seller shall make available to buyer at
either seller's  premises or such other locations may be requested by buyer such
employees  of seller  for one (1) year after the  Closing  Date,  if  reasonably
requested by buyer from time to time in connection  with buyer's  conduct of the
Dental  Business;  provided that such  services to buyer shall not  unreasonably
interfere with seller's normal business operations.  In the event of a conflict,
the requirements of seller shall have priority over those of buyer.

         E.  For  any  services  rendered  by  seller's   employees  during  the
transition  period or in the one year period after the closing,  seller shall be
reimbursed for all travel,  lodging and other out-of-pocket expenses incurred by
seller or its employees,  and shall be paid for each of its employees  providing
services  to buyer the  product  of the  following:  (number  of hours  spent by
employee on services to buyer) x  (employee's  hourly rate of pay from seller) x
(1.25)  within thirty (30) days after the services  have been  provided.  If any
affected  employees are  compensated on a basis other than hourly,  seller shall
calculate an equivalent  hourly rate of pay,  assuming a 40-hour work week and a
52-week work year. Buyer  acknowledges  that seller is providing the services of
its employees as an accommodation and agrees that seller and its employees shall
have no  liability  with  respect to any services  rendered,  and buyer  further
agrees to indemnify and hold harmless seller and its employees from any damages,
costs, losses, liability or expense arising as a result of such accommodation.

         4.3      Risk of Loss.

         The risk of loss to any of the assets being purchased shall remain with
seller  until the  closing.  Buyer  shall have the option to either  cancel this
Agreement without further obligation or to negotiate a pro rata reduction in the
purchase price of the assets in the event of any material loss, destruction,  or
damage to the assets by reason of fire, other casualty,  or other cause prior to
such time.

         4.4      Time.

         Time is of the  essence  in  connection  with  the  performance  of the
covenants, agreements and obligations arising under this agreement.

         4.5      Use of Sunrise Name.

          Seller  hereby  grants  buyer  the  right  to use  the  name  "Sunrise
Technologies" and "Sunrise" (the "Sunrise names") as follows:

                                      -6-

<PAGE>

         A. Buyer may  distribute  any and all supplies of  brochures  and other
marketing and promotional  materials  concerning the Dental  Business,  sell any
item or items of inventory,  containing the Sunrise names, and use any packaging
materials  containing  the  Sunrise  names that  exist as of the  closing in the
ordinary course of business, provided that buyer agrees to place a notice on the
materials  to the effect that buyer is now the owner of the Dental  Business and
will be selling,  distributing,  and warranting the products. The form of notice
shall  be  approved  in  advance  by  Sunrise,   which  approval  shall  not  be
unreasonably  withheld,  and seller  agrees to  promptly  review and  respond to
buyer's notice proposal.

         B. Buyer may use the "Sunrise"  name for a period of one (1) year after
the Closing Date in new marketing materials and advertising to indicate that the
Dental  Business  products  being  sold by  buyer  were  formerly  manufactured,
marketed  and sold by  seller.  The form of use of the  "Sunrise"  name shall be
approved  in  advance  by  Sunrise,  which  approval  shall not be  unreasonably
withheld,  and seller agrees to promptly review and respond to buyer's proposals
for use.

         C. Buyer  agrees to  indemnify  and hold  harmless  seller and seller's
successors  and assigns  from and against any and all loss and expense (as those
terms are defined in paragraph  11.1,  below) in connection with or arising from
any claim relating to the use of the Sunrise names.

         4.6      Access to Records.

         Subject to Section 1.2B,  Buyer  acknowledges  that buyer will receive,
and seller  agrees to  deliver to buyer at the  closing  all  documents,  books,
papers,  files and other records or data relating to the operation of the Dental
Business,  and Seller  shall not be  obligated  to retain any of such  materials
except  as  required  by  law  or as is  reasonably  prudent  for  tax  and  SEC
requirements.  For a period of six (6) years  following  the closing date seller
shall make available to buyer or buyer's representatives and official designees,
during normal business hours for any proper purpose,  such books,  papers, files
or other  records or data of or relating to the operation of the business of the
Dental  Business of seller  prior to the closing  date as seller may have in its
possession  or under its  control,  if any,  and permit buyer to make copies and
extracts  therefrom at buyer's expense.  For a period of six (6) years after the
closing  date,  seller  agrees not to dispose of all or part of such  records or
data in its  possession  without  giving buyer less than  forty-five  (45) days'
advance written notice of seller's intention to make such disposal.

         4.7      Lease of Premises.

         Seller holds a lease for the premises  from which seller  operates (the
"premises")  through January 31, 1998 for approximately  25,000 sq. ft. From the
Closing  Date,  through  such  period  of time as buyer  may have  equipment  or
materials  located at the premises,  or any employees working for buyer from the
premises,  the base rent and the  additional  rent payable to the landlord under
the lease shall be allocated as follows:  seller shall be  responsible  for base
rent and additional  rent for 8,000 sq. ft., buyer shall be responsible for base
rent and  additional  rent for 12,000 sq. ft.,  and seller and buyer shall share
equally base rent and additional rent for the remaining portion of the premises.
As of the first day of the month  following  buyer's  vacation of the  premises,
seller shall be responsible for base rent and additional rent for 8,000 sq. ft.,
and seller and buyer shall share equally base rent and  additional  rent for the
remaining  portion of the premises until such time as the lease is terminated or
assigned, provided that buyer shall not be responsible for any share of the cost
of utilities  paid directly by the tenant  provided to the premises  after buyer
has  vacated the  premises.  Seller and buyer  shall use their  respective  best
efforts (without the expenditure of money) to find a new tenant for the premises
for any time  period  after  buyer has given  seller  notice  that it intends to
vacate the premises.  Any amount received from any subtenant(s) shall be applied

                                      -7-

<PAGE>

on a  pro-rata  basis to  reduce  the  obligations  of the  parties  under  this
paragraph. Seller has obtained the consent of the landlord to buyer's use of the
premises as described in this Section.

         4.8 Insurance Coverage After Closing.  Seller agrees to maintain, for a
period of five (5) years after the  closing,  the products  liability  insurance
coverage  in  existence  at  the  time  of  execution  of  this  agreement,   or
substantially similar coverage, and to name buyer as an additional insured under
said insurance  coverage.  Seller agrees to give buyer at least 60 days' advance
notice of a decision to terminate  said insurance  coverage,  and shall instruct
the insurance  carrier to provide  buyer at least 30 days'  advance  notice of a
cancellation  or lapse of said coverage.  Said insurance  coverage shall provide
for the  option  to  purchase  at least 5 years  of  extended  reporting  ("tail
coverage").  As  additional  insured,  buyer shall be entitled to purchase,  and
seller  hereby  expressly  authorizes  buyer to so  acquire  if seller  does not
purchase, the tail coverage at any time said tail coverage may be purchased.  If
buyer  exercises  the  option to  purchase  the tail  coverage,  buyer  shall be
responsible  for the premium cost of the tail coverage for any period beyond the
above-referenced 5 year period, and seller agrees to pay the premium cost of the
tail  coverage for the portion of the tail  coverage that applies to said 5 year
period.

                                    ARTICLE 5

                                   THE CLOSING

         5.1      Closing Date.

         The  closing of the  purchase  and sale of the assets  (the  "closing")
shall be consummated at 10:00 A.M., local time, at the seller's  principal place
of business,  on or before the later of (i) thirty (30) days after the effective
date of this agreement or (ii) three (3) business days after receipt of approval
of the sale by seller's  shareholders as required by paragraph 10.4,  hereof, or
at such  other  time and place or on such  other  date as may be agreed  upon by
seller and buyer in writing (the "closing date"), but in no event later than May
15, 1997.  Possession  of the assets shall be  transferred  to buyer as of 12:01
a.m. on the date of closing.

         5.2      Closing Date Deliveries.

         A.  Subject  to  satisfaction  or  waiver of the  conditions  set forth
herein,  on the closing  date seller  shall  deliver to buyer (i) duly  executed
instruments  of  transfer  and  assignment  in  form  and  substance  reasonably
satisfactory to buyer sufficient to vest in buyer good and valid title to all of
seller's  right,  title and  interest  in and to the  assets,  (ii)  such  other
documents as reasonably may be necessary to enable buyer to deal with,  utilize,
sell and/or collect on the assets which are the subject of this Agreement, (iii)
originals  or copies,  as  appropriate,  of the  materials  reviewed by buyer in
buyer's due diligence  inspections,  and (iv) each of the other  instruments and
documents required to be delivered by seller hereunder.

         B.  Subject  to  satisfaction  or  waiver of the  conditions  set forth
herein,  on the  closing  date buyer  shall  deliver to seller (i) the  $250,000
deposit held in escrow by  certified  check or by wire  transfer of  immediately
available  funds from the escrow  company  and  $3,750,000  by wire  transfer of
immediately  available  funds,  together  constituting  the cash  portion,  (ii)
buyer's duly  executed  promissory  note as described  in paragraph  2.2,  (iii)
buyer's  duly  executed  Security  Agreement  and Deed of Trust as  described in
paragraph 2.2, and (iv) each of the other instruments and documents  required to
be delivered by buyer hereunder.

         5.3 Prorations.  All state and local real and personal  property taxes,
rent, utilities and

                                      -8-

<PAGE>

telephone services, and any other ongoing services utilized by the seller in the
Dental Business and  specifically  assumed in writing by buyer, if any, shall be
prorated  between seller and buyer as of the date of closing.  Buyer will not be
responsible for any business,  occupation,  withholding,  or similar tax, or for
any taxes of any kind related to any period before the closing date. Any and all
sales taxes arising  because of the sale of tangible  property  pursuant to this
Agreement shall be paid by the seller. Seller shall pay all fees associated with
the transfer of the ADL licenses to use patents.

                                    ARTICLE 6

                    REPRESENTATIONS AND WARRANTIES OF SELLER

         As an  inducement  to  buyer  to  enter  into  this  agreement  and  to
consummate the transactions  contemplated  hereby,  seller hereby represents and
warrants to buyer and agrees as follows:

         6.1      Organization of Seller.

         Seller is a corporation duly organized,  validly existing,  and in good
standing under the laws of the state of Delaware, is qualified to do business in
and in good standing under the laws of the state of California,  and neither the
nature of its properties nor the conduct of its business  requires  seller to be
qualified to transact  business as a foreign  corporation  in any other state or
jurisdiction  in which the failure to be so qualified and in good standing would
be materially adverse to the seller.

         6.2      Corporate Power.

         The seller has full power and authority to own or lease and operate its
properties and to conduct its business as now being conducted.

         6.3      Authority of the Seller.

         A. The seller has full power and  authority to execute and deliver this
agreement and each of the agreements and instruments  contemplated  hereby to be
executed and  delivered by seller and to perform all acts which are necessary or
desirable  to  be  performed  by it to  carry  out  the  terms,  conditions  and
provisions thereof.

         B. Subject to obtaining  the consent  described in Section  10.4C,  the
execution, delivery and performance of this agreement and each of the agreements
and instruments  contemplated hereby to be executed and delivered by seller have
been duly  authorized  and  approved by all  necessary  corporate  action of the
seller and no further corporate action on the part of the seller is necessary to
authorize such  execution,  delivery and  performance.  Subject to obtaining the
consent  described in Section  10.4C,  this agreement has been duly executed and
delivered by seller and constitutes,  and each of the agreements and instruments
contemplated  hereby to be executed  and  delivered by the seller will when duly
executed and delivered  constitute,  the legal,  valid and binding obligation of
the seller, enforceable against the seller in accordance with its terms, subject
only (i) to applicable bankruptcy,  insolvency, moratorium or other similar laws
affecting the rights of creditors  generally  and (ii) to general  principles of
equity.

         C. Upon acquiring the consents identified herein, neither the execution
and  delivery by seller of this  agreement  nor the  execution  and  delivery by
seller of any of the other agreements or instruments  contemplated  hereby to be
executed  and  delivered  by  the  seller  nor  the  consummation  of any of the
transactions  contemplated  hereby or thereby nor  compliance  by seller with or
fulfillment of the terms,

                                      -9-

<PAGE>

conditions and provisions  hereof or thereof will (i) conflict with, result in a
breach of the terms, conditions or provisions of, or constitute a default under,
the  charter  or  bylaws  of  seller,  any note,  agreement,  conditional  sales
contract, indenture, mortgage, deed of trust, guarantee, lease, license, permit,
judgment, order, or other material agreement, commitment or arrangement to which
seller is a party or to which  seller or  seller's  assets or any real  property
owned or leased by seller are bound or  affected  and which is  material  to the
business and properties of the Dental  Business,  or any law,  statute,  rule or
regulation to which seller is subject,  or (ii) require the  approval,  consent,
authorization  of  exemption  by, or filing  with any person not a party to this
Agreement or any court,  governmental authority or regulatory or self-regulatory
body.

         6.4      Financial Statements.

         Schedule  6.4  hereto  contains  the  audited  statement  of  financial
condition  of the seller as of December  31, 1996 (such  statement  of financial
condition  being herein called the  "Seller's  Audited  Balance  Sheet") and the
related  statements  of  retained  earnings,  operations  and cash flows for the
twelve  month  period  then  ended,  together  with  appropriate  notes  to such
financial statements,  certified by Ernst & Young, Certified Public Accountants.
Such statements of financial  condition,  retained earnings,  operation and cash
flows (and the Closing Unaudited  Financial Statement described in paragraph 8.5
and its related statements of retained earnings, operations and cash flows) have
been  prepared in  conformity  with  generally  accepted  accounting  principles
consistently applied (including, without limitation,  provision for deferred tax
liability,  and  except  for the  absence  of  notes  to the  Closing  Unaudited
Financial  Statements and subject to normal year-end  adjustments  which are not
material)  and  present  fairly the  financial  position  of the company and the
Dental  Business,  respectively,  and the  results  of  operations  as of  their
respective dates and for the respective periods covered thereby.

         6.5      Absence of Changes.

         Except as disclosed in Schedule 6.5, since December 31, 1996:

         A.  There  has not been any  material  adverse  change  in the  assets,
properties,  liabilities,  business or condition (financial or otherwise) of the
Dental Business and no fact or condition exists or is contemplated or threatened
which might reasonably be expected to cause such a change in the future.

         B. The seller has conducted the business of the Dental Business only in
the usual,  regular  and  ordinary  course and  consistent  with past  practice.
Without  limiting the  generality  of the  foregoing,  since  December 31, 1996,
except as  contemplated  by this agreement the seller has not (i) sold,  leased,
transferred  or  otherwise  disposed  of or  mortgaged,  pledged,  or imposed or
suffered  to be imposed  any lien on any of the  assets of the  Dental  Business
reflected  on the  Seller's  Audited  Balance  Sheet or any assets of the Dental
Business  acquired by the seller after  December 31, 1996,  other than  property
sold or  otherwise  disposed  of for fair  value in the  ordinary  course of the
seller's  business  consistent  with past  practice;  (ii) canceled or agreed to
cancel  any  debts  owed to or claims  held by the  seller  associated  with the
business  of the  Dental  Business  other  than in the  ordinary  course  of the
seller's business consistent with past practice; (iii) entered into any material
contract or other agreement or any amendment or termination thereof with respect
to the Dental Business; (iv) made any change in the accounting policies, methods
or practices followed by the seller with respect to the Dental Business;  or (v)
entered into or become committed to enter into any other transaction  concerning
the business of the Dental Business except in the ordinary course of business.

         6.6      Absence of Undisclosed Liabilities.

         The seller is not subject to any  liability  with  respect to or in any
manner affecting the Dental

                                      -10-

<PAGE>

Business whether absolute,  contingent, accrued or otherwise, which is not shown
or which is in  excess  of the  amount  shown or  reserved  for in the  Seller's
Audited  Balance Sheet,  other than  liabilities of the same nature and scope as
those which are set forth or reserved for in the Seller's  Audited Balance Sheet
and the notes thereto incurred in the ordinary course of business after the date
of the Seller's Audited Balance.

         6.7      Tax Returns.

         Except as  disclosed  in Schedule  6.7,  seller has filed all  federal,
state and local income,  excise,  withholding,  payroll,  property,  sales, use,
franchise and other tax returns required to be prepared or filed by or on behalf
of the  seller  in  accordance  with  applicable  law,  and has paid all  taxes,
interest, assessments,  deficiencies and penalties due and payable to any taxing
authority.  Except as disclosed  in Schedule  6.7,  there are no current  audits
pending  and no  current  disputes  as to  seller's  liability  for taxes of any
nature.  All federal,  state and local  income,  excise,  withholding,  payroll,
property, sales, use, franchise and other tax returns required to be filed by or
on behalf of the seller on or prior to the  closing  date will be true,  correct
and complete and duly and timely filed in accordance with applicable law.

         6.8      Assets.

         The listing of assets in paragraph  1.1 and in the  exhibits  described
therein is a complete and accurate list of seller's assets being sold hereunder.
The assets  constitute  all the assets  necessary or  appropriate to conduct the
Dental  Business  as  conducted  by seller as of the date of  execution  of this
agreement and are, to the best knowledge of seller, in good condition and repair
(subject  to  normal  wear and  tear)  and are  suitable  for the uses for which
intended.  To the best  knowledge  of  seller,  all such  assets  and their uses
conform in all material  respects to all applicable  laws,  regulations,  rules,
ordinances,  codes,  licenses,   franchises  and  permits  (including,   without
limitation,  building, zoning,  environmental and occupational safety and health
requirements),  and no written  notice of any  violation  of any of such matters
relating to such assets and their use has been received by the seller.

         6.9      Title to Assets; Condition.

         A.  Seller  has,  and  will  have  at  the  closing,  good,  valid  and
indefeasible  title to all the  assets.  All the  assets  are free and  clear of
restrictions  on or conditions to transfer or assignment and are free and clear,
or will be free and clear at the closing, of mortgages, liens, pledges, charges,
encumbrances,  claims and other covenants, conditions or restrictions. Seller is
not a party  to,  and the  assets  are  not  bound  by,  any  agreement  that is
materially  adverse to the assets.  There are no liabilities or obligations with
respect  to  the  assets,  either  accrued,   absolute,  direct,  contingent  or
otherwise,  which would affect the value of the assets.  Except for the licenses
described on Exhibit 1.1D,  none of the assets is leased or subject to any other
agreement or right inconsistent with full ownership of the assets.

         B. Except as described on Schedule  6.9B,  to the  knowledge of seller,
subject to the reserve for obsolescence shown on seller's Audited Balance Sheet,
the  inventories  of the seller consist of merchandise of a quality and quantity
usable and saleable in the ordinary course of the conduct of the Dental Business
and are  valued at the lower of cost (on a FIFO  basis) or market in  accordance
with generally accepted accounting  principles  consistently  applied.  The term
"saleable"  shall include use of inventory to perform  warranty or  non-warranty
service  or repair of  products  sold by seller  in the  conduct  of the  Dental
Business,  whether  or not  seller  receives  additional  consideration  for the
service or repair.

         C. The customer accounts receivable of the seller have arisen from bona
fide transactions in the ordinary course of business of the Dental Business.

                                      -11-

<PAGE>

         D. EXCEPT AS SET FORTH IN THIS AGREEMENT, THERE ARE NO OTHER WARRANTIES
OF SELLER, EXPRESS OR IMPLIED, WITH RESPECT TO THE ASSETS OR INVENTORIES.

         6.10     Litigation.

         A. The seller has  complied  in all  material  respects  with all laws,
regulations,  rules or ordinances  of, and with all judgments,  writs,  decrees,
injunctions  or orders of, any foreign,  federal,  state,  county,  municipal or
other government or governmental department,  commission,  board, bureau, agency
or  instrumentality  which are applicable to the Dental  Business or the assets,
except for such failures to comply as in the aggregate would not have a material
adverse effect on the seller.

         B.  Except for  workers  compensation  claims,  there are no  lawsuits,
actions,  claims,  suits,  proceedings  or  investigations,   legal,  equitable,
administrative,  through  arbitration  or  otherwise,  pending  or,  to the best
knowledge of seller,  threatened  against  seller,  its officers or directors or
affecting the assets or operations of seller's Dental  Business,  and (ii) there
is no action,  suit or proceeding  pending or, to the best  knowledge of seller,
threatened  against  seller  which  questions  the  legality or propriety of the
transactions  contemplated  by this  agreement  or the  agreements  contemplated
hereby.

         6.11     Permits.

         A. The seller  owns,  holds or  possesses  all  material  governmental,
regulatory,  and/or  private  licenses,   registrations,   franchises,  permits,
privileges,  immunities,  approvals and other authorizations which are necessary
to entitle it to own or lease, operate and use its properties and assets related
to the  Dental  Business  and to carry on and  conduct  its Dental  Business  as
currently conducted (herein collectively called "Permits"). Schedule 6.11 hereto
sets forth a list and brief  description of each Permit owned, held or possessed
by the  seller  and used in the  Dental  Business.  Seller  is not  aware of any
non-material licenses, permits, or other authorizations that are needed to carry
on and conduct the Dental Business.

         B. Seller has  delivered,  or will deliver  prior to closing,  to buyer
complete  and correct  copies of all Permits  owned,  held or  possessed  by the
seller and used in the Dental  Business.  The seller has fulfilled and performed
its  obligations  under each of the Permits  which,  if failed to be  performed,
could  have a  material  adverse  effect on the  seller.  No  written  notice of
cancellation,  of default or of any dispute concerning, any such Permit has been
received by the seller,  or is known to seller.  Except as set forth on Schedule
6.11,  each of the Permits owned,  held or possessed by the seller will continue
in full force and effect after the consummation of the transactions contemplated
by this  agreement  and will  accrue to the  benefit  of and be  owned,  held or
possessed  by  buyer  without  (i) the  occurrence  of any  breach,  default  or
forfeiture of rights thereunder,  (ii) the consent,  approval, or act of, or the
making of any filing with, any governmental body, regulatory commission or other
party, or (iii) the payment of any transfer or consent fee.

         6.12     Environmental Matters.

         A. The seller does not own any real property. Schedule 6.12A sets forth
a list and brief  description  of each  lease or other  agreement  (including  a
description of premises and its rental term and location) under which the seller
is lessee of, or holds or operates or has an interest in, any real  property not
owned by the seller that is used in the  operation of the Dental  Business.  The
seller has the right to quiet  enjoyment of all such real property  described in
such Schedule for the full term of each such lease or 

                                      -12-

<PAGE>

similar agreement (and any related renewal option relating thereto). To the best
knowledge of seller,  neither the whole nor any part of any real property owned,
leased,  used or occupied by the seller is subject to any suit for  condemnation
or other  taking by any  public  authority,  and no such  condemnation  or other
taking is threatened or, to the best knowledge of seller, contemplated.

         B.  The  seller  is   operating   in  material   compliance   with  all
environmental   Permits  and  seller  has  not  received  any  notice  from  any
governmental or regulatory  authority of violation of any environmental,  health
or safety laws or environmental Permits.

         C.  To  the  best  knowledge  of  seller,  neither  the  real  property
identified  on  Schedule  6.12A nor any other real  property  now or  previously
owned, leased, used or occupied by seller is the subject of any investigation by
any governmental or regulatory  authority evaluating whether any remedial action
is needed to respond to a release of any hazardous or toxic  substance or waste,
including  but not  limited  to  medical  or  biological  wastes,  petroleum  or
petroleum-based substance or waste, onto, at or beneath the real property.

         D. Schedule 6.12D lists any materials  known to seller that are located
at the seller's  premises  that might be  considered,  under  applicable  law, a
hazardous or toxic  substance or waste.  Except as disclosed on Schedule  6.12D,
there is not now,  nor was there at any time during the  seller's  tenure on any
real property owned or leased by the seller:

                  1.  Any  treatment,  storage,  recycling  or  disposal  of any
hazardous waste requiring a permit under 40 C.F.R. Part 264 or 256, or any state
equivalent;

                  2.  Any  underground  storage  tanks  used  for  the  seller's
operations or liability for which is assumed under the applicable lease executed
by the seller;

                  3. Any  asbestos-containing  building or insulating materials;
or

                  4. Any  seller-owned  or operated  electrical  transformers or
other equipment containing polychlorinated biphenyls.

         6.13     Employees and Related Agreements; ERISA.

         A. Except as set forth in Schedule  6.13A,  with  respect to the Dental
Business, the seller is not a party to or subject to or bound by any written or,
to the best  knowledge  of seller,  oral:  (i)  employee  collective  bargaining
agreement,  employment  agreement,  consulting,  advisory,  agency,  or  service
agreement,   deferred  compensation  agreement,   confidentiality  agreement  or
covenant not to compete; (ii) employees, pension, profit-sharing,  stock option,
bonus, incentive, stock purchase,  welfare, life insurance,  hospital or medical
benefit  plan or any other  employee  benefit  agreement  or plan;  or (iii) any
contract  or  agreement  with any  officer,  director  or employee of the seller
(other than employment agreements).

         B. Seller has heretofore delivered to buyer a list of all employees and
commissioned  salespersons  of the seller  providing  any services in connection
with the business of the Dental Business,  which is current as of March 1, 1997,
setting forth the total annual compensation  (salary and other benefits) payable
as of such date to each of such employees or commissioned salespersons.

         6.14     Contracts.

         A. Except as set forth in Schedule 6.14, the seller, in connection with
the  operation  of the

                                      -13-

<PAGE>

Dental  Business,  is not a party to or bound by, and the assets are not subject
to: (i) any sales, agency, royalty,  commission or franchise agreement; (ii) any
letter of credit or  guarantee  of the  obligations  of  others;  (iii) any loan
agreement  or other  instrument  relating to  indebtedness  of the seller or any
instrument or arrangement creating liens on any property of the seller; (iv) any
contract,  agreement,  commitment,  arrangement or  understanding  not elsewhere
specifically  disclosed  pursuant  to this  agreement  involving  the payment or
receipt by the  seller of more than  $10,000  per year or $25,000  over the term
thereof; other than purchase orders or agreements for the purchase of inventory,
supplies or equipment entered into in the ordinary course of business  described
on Exhibit 1.1C or (v) any other contract, agreement or commitment,  written or,
to the best  knowledge of seller,  oral,  which is material to the seller or the
business of the Dental  Business that is not  terminable on no more than 30 days
notice and involves at least $2,000,  whether or not made in the ordinary course
of business.

         B.  Except  as set  forth  in  Schedule  6.14,  each of the  contracts,
agreements and commitments  listed in any schedule hereto to which the seller is
a party and which  buyer has agreed to assume as set forth on Exhibit 3.3 hereto
(collectively the "Contracts") constitutes a valid and binding obligation of the
seller and, to the best knowledge of seller, the other parties thereto and is in
full  force  and  effect  and will  continue  in full  force  and  effect to the
exclusive  benefit  of buyer  following  the  consummation  of the  transactions
contemplated by this agreement and the agreements  contemplated  hereby,  and in
each case without (i) breaching the terms thereof or resulting in the forfeiture
or impairment of any material rights thereunder,  or (ii) the approval,  consent
or act of any  other  party,  or any  foreign,  federal,  state or local  court,
governmental  authority  or  regulatory  body.  The seller has  performed in all
material  respects its obligations  under each of the Contracts which, if failed
to be performed, could have a material adverse effect on the seller, and, to the
best knowledge of seller,  no other party to any of the Contracts has materially
breached or defaulted  thereunder.  Complete  and correct  copies of each of the
Contracts have heretofore been delivered to buyer by seller.

         C. Seller has  disclosed to buyer all material  contracts,  agreements,
arrangements  or  understandings  known  to  seller  that are  necessary  to the
operation of the Dental Business in the manner in which it has been conducted by
seller.

         6.15     Insurance and Claims.

         A. Schedule  6.15A sets forth a list and brief  description  (including
nature  of  coverage,  deductibles,  premiums)  of  all  policies  of  insurance
maintained,  owned or held by the seller on the date hereof with  respect to its
properties,  operations, assets, business, employees or otherwise related to the
Dental  Business.  Seller shall keep such  insurance or comparable  insurance in
full force and effect  through the closing  date.  The seller has complied  with
each of such insurance  policies in all material  respects and has not failed to
give any notice or present any claim thereunder in a due and timely manner which
failure could have a material adverse effect on the Dental Business.

         B. There have been no claims for products liability damages or injuries
made with respect to products sold by the Dental Business since October 12, 1994
and, to the best  knowledge of seller,  from its inception  through  October 12,
1994. For purposes of this paragraph, the term "claim" shall include claims that
have been made to seller or  seller's  agents or  insurance  carriers  either in
writing  or, to the best  knowledge  of seller,  orally,  as well as claims that
seller is aware might or could be made.

         6.16     Trademarks, Patents, Etc.

         Seller  does  not  hold  any  patents  nor  has  it  filed  any  patent
applications  in connection  with the

                                      -14-

<PAGE>

operation  of the Dental  Business  except as  described  in Exhibit  1.1D.  All
trademarks,   trade  names,  service  marks,  copyrights,   inventions,   patent
applications,  software, firmware,  formulas, knowhow,  confidential proprietary
technical  information and trade secrets (the "intellectual  property") owned by
the seller and used in the Dental Business, all registered names under which the
seller is doing business in the Dental Business, and all licenses, agreements or
arrangements,  undertakings or commitments, written or, to the best knowledge of
seller,  oral, under which the seller has the right to use any of the foregoing,
and any patents or patent rights used,  in connection  with the operation of the
Dental  Business are briefly  described in Exhibit 1.1D, and are valid,  binding
and  enforceable  in  accordance  with  their  terms.  Except  for  the  settled
litigation  with ADL,  no claims  have  been made or, to the best  knowledge  of
seller,  threatened,  and no proceedings have been instituted or are pending or,
to the best knowledge of seller,  threatened  against seller which challenge the
validity of the  ownership  or use by the seller as part of the  business of the
Dental Business of any such intellectual property or rights. Except as described
in Exhibit 1.1D,  Seller has not licensed  anyone to use any of the foregoing or
any other of its proprietary  rights or  intellectual  property that are used in
the business of the Dental  Business,  seller has no knowledge of the infringing
use of any of such trademarks,  trade names, service marks, copyrights,  patents
or patent rights,  or other proprietary  rights by any other person,  and seller
has  no  knowledge  that  seller's  use  of  seller's   proprietary  rights  and
intellectual  property or sale of Dental  Division  products either violates any
patent,  trademark or other  rights of any other  person or  infringes  upon the
intellectual rights of any other person.

         6.17     Disclosure.

         None  of the  representations  or  warranties  made by  seller  in this
Agreement, none of the information relating to seller contained in the schedules
hereto,  and none of the other  information  provided by seller's  president  or
documents,  certificates,  schedules or memoranda  furnished by seller or any of
its  representatives  to buyer or any of its  representatives in connection with
this  Agreement  or  with  the  transaction  herein  contemplated  is  false  or
misleading in any material  respect,  contains any untrue  statement of material
fact or omits any  material  facts  required to be stated to make the  statement
therein,  taken as a whole,  not  misleading.  To the best  knowledge of seller,
there is no material fact which adversely  affects the  properties,  business or
prospects of the Dental Business of seller in any material respect which has not
been  set  forth or  referred  to in this  agreement  or the  schedules  to this
agreement.

         6.18     Finder.

         Seller has not paid or become obligated to pay any fee or commission to
any  broker,  finder  or  intermediary  for or on  account  of the  transactions
contemplated by this agreement.

         6.19     Knowledge.

         When used in this Article 6,  "knowledge" or "known" means  information
actually known by any of the following:  David W. Light, Cathy Caserza, Clara R.
Munley, Joseph W. Shaffer and C. Russell Trenary.

                                    ARTICLE 7

                     REPRESENTATIONS AND WARRANTIES OF BUYER

         As an  inducement  to  seller  to  enter  into  this  agreement  and to
consummate the transactions  contemplated  hereby,  buyer hereby  represents and
warrants to seller and agrees as follows:

                                      -15-

<PAGE>

         7.1      Organization of Buyer.

         Buyer is a corporation duly organized,  validly  existing,  and in good
standing under the laws of the state of California and neither the nature of its
properties  nor the conduct of its  business  requires  buyer to be qualified to
transact business as a foreign corporation in any other state or jurisdiction in
which the failure to be so qualified  and in good  standing  would be materially
adverse to the buyer.

         7.2      Corporate Power.

         The buyer has full power and  authority to own or lease and operate its
properties and to conduct its business as now being conducted.

         7.3      Authority of the Buyer.

         A. The buyer has full power and  authority  to execute and deliver this
agreement and each of the agreements and instruments  contemplated  hereby to be
executed and  delivered by buyer and to perform all acts which are  necessary or
desirable  to  be  performed  by it to  carry  out  the  terms,  conditions  and
provisions thereof.

         B. The execution,  delivery and  performance of this agreement and each
of the  agreements  and  instruments  contemplated  hereby  to be  executed  and
delivered  by buyer have been duly  authorized  and  approved  by all  necessary
corporate action of the buyer and no further corporate action on the part of the
buyer is necessary to authorize such execution,  delivery and performance.  This
agreement  has been duly executed and  delivered by buyer and  constitutes,  and
each of the agreements and  instruments  contemplated  hereby to be executed and
delivered by the buyer will when duly  executed and  delivered  constitute,  the
legal, valid and binding obligation of the buyer,  enforceable against the buyer
in  accordance  with  its  terms,  subject  only (i) to  applicable  bankruptcy,
insolvency,  moratorium or other similar laws  affecting the rights of creditors
generally and (ii) to general principles of equity.

         C. Upon acquiring the consents identified herein, neither the execution
and delivery of this agreement nor the execution and delivery by buyer of any of
the other  agreements  or  instruments  contemplated  hereby to be executed  and
delivered  by the  buyer  nor  the  consummation  of  any  of  the  transactions
contemplated  hereby or thereby nor  compliance by buyer with or  fulfillment of
the terms,  conditions and provisions hereof or thereof will, (i) conflict with,
result in a breach of the terms,  conditions or  provisions  of, or constitute a
default under, the charter or bylaws of buyer, any note, agreement,  conditional
sales contract,  indenture,  mortgage, deed of trust, guarantee, lease, license,
permit, judgment, order, or other material agreement,  commitment or arrangement
to  which  buyer is a party or to which  buyer  or  buyer's  assets  or any real
property owned or leased by buyer are bound or affected and which is material to
the  business  and  properties  of the  buyer,  or any  law,  statute,  rule  or
regulation  to which buyer is subject,  or (ii) require the  approval,  consent,
authorization  of  exemption  by, or filing  with any person not a party to this
Agreement or any court,  governmental authority or regulatory or self-regulatory
body.

         7.4      Financial Statements.

         Schedule  7.4 hereto  contains  the  unaudited  statement  of financial
condition  of the buyer as of October  31,  1996 (such  statement  of  financial
condition  being herein called the "Buyer's 1996 Balance Sheet") and the related
statements of retained earnings,  operations and cash flows for the twelve month
period then ended, together with appropriate notes to such financial statements,
reviewed by Matson & Isom Accountancy Corporation, Certified Public Accountants.
Schedule  7.4 also  contains the  internally

                                      -16-

<PAGE>

generated unaudited statement of financial condition of buyer as of December 31,
1996 (such  statement of financial  condition  being herein  called the "Buyer's
Unaudited  Balance  Sheet") and the  related  statements  of retained  earnings,
operations and cash flows for the two month period then ended.  Such  statements
of financial  condition,  retained earnings,  operation and cash flows have been
prepared  in  conformity   with   generally   accepted   accounting   principles
consistently  applied  (except for the  absence of notes  thereto and subject to
normal  year-end  adjustments  which are not  material)  and present  fairly the
financial  position  of the buyer,  and the  results of  operations  as of their
respective dates and for the respective periods covered thereby.

         7.5      Absence of Changes.

         Since the date of the Buyer's Unaudited Balance Sheet:

         A.  There  has not been any  material  adverse  change  in the  assets,
properties, liabilities, business or condition (financial or otherwise) of buyer
and no fact or condition  exists or is  contemplated  or threatened  which might
reasonably be expected to cause such a change in the future.

         B. The buyer has conducted buyer's business only in the usual,  regular
and ordinary  course and  consistent  with past practice.  Without  limiting the
generality of the  foregoing,  since the date of the Buyer's  Unaudited  Balance
Sheet,  except as  contemplated  by this  agreement  the buyer has not (i) sold,
leased,  transferred or otherwise disposed of or mortgaged,  pledged, or imposed
or suffered to be imposed any lien on any of the assets reflected on the Buyer's
Unaudited  Balance Sheet or any of buyer's  assets after the date of the Buyer's
Unaudited Balance Sheet,  other than property sold or otherwise  disposed of for
fair value in the ordinary course of the buyer's  business  consistent with past
practice;  (ii) canceled or agreed to cancel any debts owed to or claims held by
the buyer  associated with buyer's business other than in the ordinary course of
the buyer's  business  consistent  with past  practice;  (iii)  entered into any
material  contract or other  agreement or any amendment or termination  thereof;
(iv) made any change in the accounting  policies,  methods or practices followed
by the buyer;  or (v) entered  into or become  committed to enter into any other
transaction  concerning  buyer's  business  except  in the  ordinary  course  of
business.

         7.6      Absence of Undisclosed Liabilities.

         The  buyer  is  not  subject  to  any  liability,   whether   absolute,
contingent,  accrued or  otherwise,  which is not shown or which is in excess of
the amount  shown or  reserved  for in the  Buyer's  1996  Balance  Sheet or the
Buyer's Unaudited  Balance Sheet,  other than liabilities of the same nature and
scope as those which are set forth or reserved  for in the Buyer's  1996 Balance
Sheet and the notes thereto or the Buyer's  Unaudited  Balance Sheet incurred in
the  ordinary  course of business  after the dates of the Buyer's  1996  Balance
Sheet and the Buyer's Unaudited Balance Sheet, respectively.

         7.7      Litigation.

         A. The buyer  has  compiled  in all  material  respects  with all laws,
regulations,  rules or ordinances  of, and with all judgments,  writs,  decrees,
injunctions  or orders of, any foreign,  federal,  state,  county,  municipal or
other government or governmental department,  commission,  board, bureau, agency
or instrumentality  which are applicable to it or its properties,  operations or
business except for such failures to comply as in the aggregate would not have a
material adverse effect on the buyer.

         B.  Except as set forth on  Schedule  7.7,  (i) there are no  lawsuits,
actions,  claims,  suits,  proceedings  or  investigations,   legal,  equitable,
administrative,  through  arbitration  or  otherwise,  pending  or,

                                      -17-

<PAGE>

to the best  knowledge  of buyer,  threatened  against  buyer,  its  officers or
directors or affecting the properties,  operations or business of the buyer, and
(ii) there is no action, suit or proceeding pending or, to the best knowledge of
buyer, threatened against buyer which questions the legality or propriety of the
transactions  contemplated  by this  agreement  or the  agreements  contemplated
hereby.

         7.8      Finder.

         Except for a letter agreement with Robert Oliver, buyer has not paid or
become  obligated  to  pay  any  fee or  commission  to any  broker,  finder  or
intermediary  for  or on  account  of  the  transactions  contemplated  by  this
agreement.

         7.9      Disclosure.

         None  of the  representations  or  warranties  made  by  buyer  in this
Agreement,  none of the information relating to buyer contained in the schedules
hereto,  and none of the other  information  provided  by buyer's  president  or
documents, certificates, schedules or memoranda furnished by buyer or any if its
representatives to seller or any if its  representatives in connection with this
Agreement or with the transaction herein  contemplated is false or misleading in
any material  respect,  contains any untrue  statement of material fact or omits
any material facts required to be stated to make the statement therein, taken as
a whole,  not misleading.  To the best knowledge of buyer,  there is no material
fact which  adversely  affects  the  properties,  business or  prospects  of the
business  of buyer  in any  material  respect  which  has not been set  forth or
referred to in this agreement or the schedules to this agreement.

         7.10     Knowledge.

         When used in this Article 7,  "knowledge" or "known" means  information
actually known by Craig Lares.

                                    ARTICLE 8

                        ACTIONS PRIOR TO THE CLOSING DATE

         The parties  hereto  hereby  covenant  and agree to take the  following
actions between the date hereof and the closing date:

         8.1      Access to the Seller and Buyer.

         Seller agrees to cooperate with the buyer and buyer agrees to cooperate
with seller in the performance of a legal,  business and financial due diligence
audit.   The  parties  agree  to  grant  to  each  other  and  their  authorized
representatives   (including   without   limitation   its   independent   public
accountants,  attorneys and bank representatives)  access during normal business
hours to and the right to inspect  and copy the books and records of the parties
and to consult with the directors, officers, employees,  attorneys, auditors and
accountants  of the parties  concerning  customary due diligence  matters.  Such
inspections  may include,  for example,  review of books and records of account,
tax  records,  records  of  corporation  proceedings,   contracts,   trademarks,
governmental consents, and other business activities and matters relating to the
transactions  contemplated by this agreement.  The parties agree to provide such
information  and  copies of  documents  as may be  reasonably  requested  by the
parties in connection with the audit. All confidential  information  acquired by
the other party  pursuant to this  paragraph  shall be held in the  strictest of
confidence  by the other  party and shall not be revealed  or  disclosed  to any
third party or parties except

                                      -18-

<PAGE>

as may be required by law. Any such  investigation  shall be conducted in such a
manner as not to interfere  unduly with the business or  operations of the other
party.

         8.2      Preserve Accuracy of Representations and Warranties.

         Each of the seller and the buyer shall  refrain  from taking any action
which would render any representation or warranty contained in Article 6 or 7 of
this  agreement  inaccurate  as of the closing  date.  Seller and buyer agree to
promptly notify the other of such representation or warranty becoming untrue.

         8.3      Operations Prior to the Closing Date.

         Except as  contemplated  by this  agreement,  seller  and  buyer  shall
operate  and carry on their  respective  businesses  in the usual,  regular  and
ordinary  manner,  substantially  as  presently  operated and with a view to the
maintenance  and  preservation of the assets and going concern value existing as
of the date hereof.  Consistent  with the foregoing,  except as  contemplated by
this agreement or with the prior written consent of the other party,  each party
(as to seller,  with respect to the Dental  Business) agrees not to: (i) change,
alter or make any  employment  contracts  or  arrangements  with any  management
personnel;  (ii)  create,  assume,  or  acquire  property  subject  to any lien,
mortgage or other encumbrance  except in the ordinary course of business;  (iii)
compromise  any debt or claim  except  for  adjustments  made  with  respect  to
contracts for the purchase of supplies and materials or for the sale of products
in the ordinary  course of business,  which in the  aggregate  are not material;
(iv) other than in the ordinary course of business,  enter into any transaction,
incur any  indebtedness  or other  obligation,  or,  without  the prior  written
consent of the other party, sell any assets;  (v) alter, amend or enter into any
licensing  or  other  contractual   arrangement  with  respect  to  intellectual
property;  (vi) make any  material  changes in its existing  business  practices
affecting  the amount of inventory  in the Dental  Business,  including  but not
limited to changes,  whether or not material,  to  historical  terms of sales of
inventory;  or (vii) make any other material change in the business or operation
of the Dental Business or enter into any material agreement. Buyer agrees not to
unreasonably  withhold  approval of  non-cancelable  agreements with a term less
than one year, and normal purchase orders for materials,  supplies,  etc., shall
not require buyer's approval. Seller shall be entitled to continue to distribute
and sell inventory in the ordinary course of business, subject to the provisions
of paragraph 9.5, below,  concerning the book value of seller's inventory on the
closing  date.  Seller agrees to replace,  consistent  with past  practice,  any
products  consigned to its sales personnel that are sold by said sales personnel
in the ordinary course of business.  Seller agrees that segregation of inventory
to seller's ophthalmic business has been completed,  and no additional inventory
will be transferred to the seller's ophthalmic business.

         8.4      Satisfaction of Conditions.

         Seller shall use its best efforts to cause the  conditions set forth in
paragraphs 9.3, 9.4, 9.5, 9.6, 9.8, and 9.10 to be satisfied as soon as possible
and buyer  agrees to use its best efforts to cause the  conditions  set forth in
paragraphs 10.3, 10.4, 10.5, 10.6, and 10.7 to be satisfied as soon as possible.

         8.5      Subsequent Financial Statements.

         Prior to the closing,  seller (with respect to the Dental Business) and
buyer shall deliver to each other,  not later than  twenty-five  (25) days after
the end of each  monthly  period and in the form  customarily  prepared  by each
party, each party's internally  generated statement of financial condition as of
the last  day of the  previous  month  and the  related  statement  of  retained
earnings,  operations  and cash flows for the monthly  period then ended and for
the period  from the  beginning  of the fiscal  year to the end of such

                                      -19-

<PAGE>

monthly period (the "additional unaudited financial statements").  Seller agrees
to  deliver to buyer  prior to the  closing an  additional  unaudited  financial
statement (the "Closing  Unaudited  Financial  Statement") as of a date not more
than thirty (30) days prior to the closing date,  which  statement shall also be
certified as to its accuracy and completeness by the chief executive officer and
the chief financial officer of seller.

         8.6      Maintenance of Insurance.

         Seller  agrees to  continue  to carry  all  existing  insurance  on the
business and  operations of the Dental  Business,  and the assets and properties
covered by this  Agreement  to the date of  closing,  subject to  variations  in
amounts resulting from the ordinary operations of the Dental Business.

         8.7      Consents to Assignments of Agreements.

         Seller  agrees to use  seller's  best  efforts  (without the payment of
money  unless  required by the terms of the  Contract)  to obtain  promptly  the
consent to the  transfer  of the assets to buyer  under any  Contract  listed in
Exhibit 3.3 requiring the consent of any party to effectuate such transfer.

         8.8      Regulatory Consents.

         Seller  shall use  seller's  best  efforts  (without the payment of any
transfer or consent  fee) to obtain  promptly the consent to the transfer of the
assets to buyer under each material permit held by seller  requiring the consent
of the issuer of the permit to effectuate such transfer.

         8.9      Acquisition Financing.

         Buyer shall use its best efforts to finalize financing in the amount of
not more than  $4,000,000  from Bank of America NT&SA (the "bank") and Joseph P.
Lares on terms and conditions  acceptable to buyer, which financing is necessary
for buyer to close the purchase, as soon as possible after the execution of this
agreement, and agrees to use its best efforts to finalize the financing from the
bank and Joseph P.  Lares on or before  April 4,  1997,  in order to  facilitate
seller's plan to hold its  shareholders  meeting on April 30, 1997,  but without
any  adverse   consequences   whatsoever   should  said  April  4  date  not  be
accomplished.

                                    ARTICLE 9

                   CONDITIONS PRECEDENT TO OBLIGATION OF BUYER

         The  obligations  of buyer to be performed  under this agreement on the
closing date shall, at the sole option of buyer, be subject to the satisfaction,
on or prior to the closing  date,  of the  following  conditions in all material
respects:

         9.1 No  Misrepresentation  or Breach of Covenants,  Representations and
Warranties.

         There shall have been no breach by seller in the  performance of any of
seller's  covenants and agreements  contained in this agreement and seller shall
have  performed  all  obligations  required to be performed by seller under this
agreement  prior to or on the  closing  date;  each of the  representations  and
warranties of seller contained in this agreement, other than the representations
contained in paragraphs 6.1, 6.5A, 6.8, 6.9, 6.10A,  6.11, 6.12, 6.14, 6.15, and
6.17, shall be true and correct in all material  respects on the closing date as
though made on the closing date, and each of the  representations and warranties
of seller

                                      -20-

<PAGE>

contained in paragraphs 6.1, 6.5A, 6.8, 6.9, 6.10A,  6.11, 6.12, 6.14, 6.15, and
6.17 shall be true and correct in all  respects  on the  closing  date as though
made on the  closing  date;  and  there  shall  have been  delivered  to buyer a
certificate  to such  effect,  dated  the  closing  date,  signed  by the  chief
executive officer of seller.

         9.2      Opinion of Counsel for Seller.

         Buyer shall have received from Thelen,  Marrin,  Johnson & Bridges LLP,
as counsel for seller, an opinion, dated the closing date, in form and substance
reasonably satisfactory to buyer and its counsel.

         9.3      Corporate Action.

         Seller shall have taken all corporate  action  necessary to execute and
deliver  all  papers  and  documents  and to do and  perform  all acts which are
necessary or desirable to carry out the terms, conditions and provisions of this
agreement  and the  agreements  contemplated  hereby,  including  the  requisite
approval of the Board of Directors of seller,  and the approval of a majority of
the shareholders of seller, and seller shall furnish buyer with certified copies
of  resolutions  adopted  by the  Board  of  Directors  of  seller,  in form and
substance reasonably  satisfactory to counsel for buyer, in connection with such
action.

         9.4      Approvals.

         A. All governmental, regulatory and self-regulatory approvals, actions,
consents,  authorizations,  declarations,  filings,  registrations  and  waiting
periods which are necessary to consummate the transactions  contemplated by this
agreement, including those which are specified in any schedule hereto, and those
which are  referred  to in  paragraph  8.8,  shall have been made,  obtained  or
satisfied  and be in full force and  effect,  and any such  approvals,  actions,
consents and authorizations, declarations, filings and registrations shall be in
form and substance reasonably satisfactory to buyer and its counsel.

         B. All  consents,  authorizations  and  approvals  to the  transactions
contemplated by this agreement that are required by the terms of those Contracts
referred to in Exhibit  3.3,  shall have been  obtained and be in full force and
effect,  and such consents,  authorizations  and approvals  shall be in form and
substance reasonably satisfactory to buyer and its counsel.

         C.  Buyer  shall,  using  its  best  efforts,  have  negotiated  a  new
representation  agreement  with  Helmuth  Mayer which  supersedes  the  existing
Consulting  Agreement with seller on terms and conditions  satisfactory to buyer
and seller.

         9.5      No Change in Business.

         Between the date hereof and the closing date, there shall have been (i)
no material  adverse change in the  properties,  the business or the operations,
liabilities,  profits,  prospects or condition  (financial  or otherwise) of the
Dental Business of seller ; (ii) no material adverse  foreign,  federal or state
legislative or regulatory  change  affecting the business of the Dental Business
or its products;  (iii) no material damage to the assets regardless of insurance
coverage for such damage;  or (iv) no lawsuits,  claims or proceedings filed or,
to the best knowledge of seller,  threatened  against or affecting the seller or
any of its properties or business which, if adversely  determined,  might have a
material adverse effect on the assets,  the business of the Dental Business,  or
the  operations,  liabilities,  profits,  prospects or condition  (financial  or
otherwise)  of the Dental  Business  of the  seller;  and there  shall have been
delivered to buyer a  certificate  or  certificates  to such  effect,  dated the
closing date and signed by the chief executive officer of seller. On the date of

                                      -21-

<PAGE>

closing, the book value of seller's inventory (as defined in paragraph 1.1B, net
of  seller's  reserve  for  obsolete  inventory)  shall not be less than  eighty
percent (80%) of the book value of seller's  inventory,  net of seller's reserve
for obsolete inventory, as of December 31, 1996.

         9.6      No Restraint or Litigation.

         No order, decree or ruling of any court shall have been entered, and no
action or proceeding before any court or governmental or regulatory authority or
agency  shall be  pending,  to  restrain,  prohibit,  challenge,  invalidate  or
otherwise  adversely  affect  any  of  the  transactions  contemplated  by  this
agreement or the agreements contemplated hereby.

         9.7      Buyer's Financing.

         A. Buyer shall have obtained the financing  described in paragraph 8.9,
above, and bank shall have approved this agreement.

         B. Seller shall have executed a subordination agreement in such form as
shall be required by Bank of America NT & SA.

         9.8      Products Liability Coverage.

         Buyer shall have been named as an  additional  insured on the  products
liability  insurance policies of seller covering claims arising from the sale of
products by seller prior to the date of closing.

         9.9      Lease of Business Premises.

         If buyer desires to make use of the business premises currently used by
seller for the Dental Business,  buyer shall have entered into a sublease of the
premises based on the terms of the existing lease agreement for a portion of the
business  premises  currently  used by seller  for the Dental  Business.  In any
event,  buyer shall be  responsible  for the payments  described in Section 4.7,
hereof.  Seller agrees to cooperate with buyer in facilitating  buyer's lease of
the premises and obtaining the consent of the landlord to buyer's sublease.

         9.10     Approval of Counsel.

         All matters,  proceedings,  instruments and documents required to carry
out this agreement or the agreements  contemplated  hereby or incidental thereto
and all other relevant legal matters shall be reasonably satisfactory to counsel
for buyer.

                                   ARTICLE 10

                  CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER

         The  obligations of seller to be performed  under this agreement on the
closing  date  shall,  at  the  sole  option  of  seller,   be  subject  to  the
satisfaction,  on or prior to the closing date,  of the following  conditions in
all material respects:

         10.1 No Misrepresentation  or Breach of Covenants,  Representations and
Warranties.

                                      -22-

<PAGE>

         There shall have been no breach by buyer in the  performance  of any of
buyer's  covenants and  agreements  contained in this  agreement and buyer shall
have  performed  all  obligations  required to be  performed by buyer under this
agreement  prior to or on the  closing  date;  each of the  representations  and
warranties of buyer contained in this agreement,  other than the representations
contained in paragraphs  7.1,  7.5A,  7.7A, and 7.9 shall be true and correct in
all material  respects on the closing  date as though made on the closing  date,
and each of the  representations and warranties of buyer contained in paragraphs
7.1,  7.5A,  7.7A,  and 7.9 shall be true and  correct  in all  respects  on the
closing  date as though  made on the  closing  date;  and there  shall have been
delivered to seller a certificate to such effect, dated the closing date, signed
by the chief executive officer of buyer.

         10.2     Opinion of Counsel for Buyer.

         Seller shall have received from Richard S. Matson,  attorney at law, as
counsel for buyer,  an opinion,  dated the closing  date,  in form and substance
reasonably satisfactory to seller and its counsel.

         10.3     Corporate Action.

         Buyer shall have taken all  corporate  action  necessary to execute and
deliver  all  papers  and  documents  and to do and  perform  all acts which are
necessary or desirable to carry out the terms, conditions and provisions of this
agreement  and the  agreements  contemplated  hereby,  including  the  requisite
approval of the Board of Directors of buyer, and buyer shall furnish seller with
certified  copies of resolutions  adopted by the Board of Directors of buyer, in
form and substance  reasonably  satisfactory to counsel for buyer, in connection
with such action.

         10.4     Approvals.

         A. All governmental, regulatory and self-regulatory approvals, actions,
consents,  authorizations,  declarations,  filings,  registrations  and  waiting
periods which are necessary to consummate the transactions  contemplated by this
agreement,  including  those which are specified in any schedule  hereto,  shall
have been made,  obtained or satisfied and be in full force and effect,  and any
such approvals, actions, consents and authorizations,  declarations, filings and
registrations shall be in form and substance  reasonably  satisfactory to seller
and its counsel.

         B. All  consents,  authorizations  and  approvals  to the  transactions
contemplated  by this  agreement that are required by the terms of any contracts
or  otherwise  from  third  shall  have been  obtained  and be in full force and
effect,  and such consents,  authorizations  and approvals  shall be in form and
substance reasonably satisfactory to seller and its counsel.

         C. At least a majority  of the  holders  of the issued and  outstanding
shares of seller  shall  have  voted to  approve  the sale of the  assets of the
Dental  Business  on terms no less  favorable  to  seller  than  those set forth
herein.

         D.  Buyer  shall,  using  its  best  efforts,  have  negotiated  a  new
representation  agreement  with  Helmuth  Mayer which  supersedes  the  existing
Consulting  Agreement with seller on terms and conditions  satisfactory to buyer
and seller.

         10.5     No Restraint or Litigation.

         No order, decree or ruling of any court shall have been entered, and no
action or proceeding before

                                      -23-

<PAGE>

any court or governmental or regulatory authority or agency shall be pending, to
restrain, prohibit,  challenge,  invalidate or otherwise adversely affect any of
the transactions  contemplated by this agreement or the agreements  contemplated
hereby.

         10.6     Approval of Counsel.

         All matters,  proceedings,  instruments and documents required to carry
out this agreement or the agreements  contemplated  hereby or incidental thereto
and all other relevant legal matters shall be reasonably satisfactory to counsel
for seller.

         10.7     No Change in Business.

         Between the date hereof and the closing date, there shall have been (i)
no material  adverse change in the  properties,  the business or the operations,
liabilities,  profits,  prospects or condition  (financial  or otherwise) of the
buyer's business; (ii) no material adverse foreign, federal or state legislative
or regulatory change affecting the business of the buyer or its products;  (iii)
no material  damage to the assets  regardless  of  insurance  coverage  for such
damage;  or (iv) no  lawsuits,  claims  or  proceedings  filed  or,  to the best
knowledge  of buyer,  threatened  against or  affecting  the buyer or any of its
properties or business  which,  if adversely  determined,  might have a material
adverse  effect  on  the  assets,  the  buyer's  business,  or  the  operations,
liabilities,  profits,  prospects or condition  (financial  or otherwise) of the
buyer's business;  and there shall have been delivered to buyer a certificate or
certificates  to such  effect,  dated the  closing  date and signed by the chief
executive officer of buyer.

                                   ARTICLE 11

                                 INDEMNIFICATION

         11.1     Indemnification of Buyer.

         A.  Seller  agrees to  indemnify  and hold  harmless  buyer and buyer's
successors  and assigns  from and against any and all (i)  liabilities,  losses,
claims,  taxes,  fines,  penalties,  damages  and  expenses,  direct or indirect
("losses") and (ii) reasonable  attorneys' and  accountants'  fees and expenses,
court  costs  and  all  other  reasonable  out-of-pocket  expenses  ("expenses")
incurred by buyer in connection with or arising from:

                  1. any damage or deficiency resulting from the non-performance
of any  agreement to be  performed  by seller  under this  Agreement or from any
material  misrepresentation  in  or  omission  from  any  certificate  or  other
instrument furnished to buyer under this Agreement;

                  2.  any  breach  of any of  the  representations,  warranties,
covenants or  agreements  made by seller in this  Agreement or in any  ancillary
document;

                  3. any attempt  (whether or not  successful)  by any person to
cause or require  buyer to pay or discharge any debt,  obligation,  liability or
commitment  of seller the  existence  of which would  constitute a breach of any
representation, warranty, covenant or agreement made by seller in this Agreement
or in any ancillary documents;

                  4.  any  action,  suit,  proceeding,  compromise,  settlement,
assessment or judgment (including  reasonable attorneys' fees) arising out of or
incident to any of the matters indemnified against in 

                                      -24-

<PAGE>

this paragraph 11.1; or

                  5. the operation of the Dental  Business  and/or the ownership
or use of the assets  prior to the  closing,  including  but not  limited to the
liabilities described in paragraph 3.1, above.

         B. If buyer believes that any person  indemnified under paragraph 11.1A
has  suffered  or incurred  any loss or  incurred  any expense as to which it is
entitled to indemnification  under paragraph 11.1A, buyer shall so notify seller
promptly in writing,  describing such loss or expense,  the amount  thereof,  if
known,  and the  method  of  computation  of  such  loss or  expense,  all  with
reasonable  particularity  and  containing a reference to the provisions of this
agreement,   or  any  agreement  or  instrument   contemplated  hereby,  or  any
certificate  delivered pursuant hereto or thereto, in respect of which such loss
or expense  shall have  occurred;  and if any action at law or suit in equity is
instituted  by or  against  a  third  party  with  respect  to  which  any  such
indemnified  person intends to claim any loss or expense under paragraph  11.1A,
such  indemnified  person shall promptly notify the  indemnifying  party of such
action or suit;  provided that failure to give such notice shall not abrogate or
diminish  any of seller's  obligations  under  paragraph  11.1A if seller has or
receives timely actual knowledge of the existence of any such claim by any other
means or except to the extent such failure prejudices seller's ability to defend
such claim.

         C. If, by reason of the claims of any third  party  relating  to any of
the  matters  subject to  indemnification  under this  paragraph  11.1,  a lien,
attachment,  garnishment or execution is placed on any of the property or assets
of buyer,  seller will take  whatever  action is  necessary to obtain the prompt
release of such lien, attachment, garnishment or execution.

         D. The  foregoing  indemnities  shall be in addition  to any  equitable
relief  which the buyer  might  otherwise  be  entitled  to obtain  against  the
indemnifying party.

         E.   Notwithstanding  any  other  provision  of  this  agreement,   the
indemnification  obligations of seller under this agreement, and with respect to
the  transactions  contemplated by this agreement,  shall not apply to the first
Fifty Thousand Dollars  ($50,000.00) of losses or expenses incurred by buyer, in
the aggregate,  but this  limitation  shall not apply to the seller's  indemnity
obligations  for  losses or  expenses  described  in  subparagraph  A(3) of this
paragraph,  and  the  indemnity  obligations  under  subparagraph  A(4)  of this
paragraph to the extent related to losses or expenses  described in subparagraph
A(3) of this paragraph.

         F. Seller may, by written  notice  given to buyer  within  fifteen (15)
days of the final  determination  of the amount of any  indemnity  obligation to
buyer under this paragraph, satisfy all or a portion of its indemnity obligation
to Buyer by an offset against the accrued but unpaid interest,  if any, and then
against the unpaid principal balance, if any, then due under the promissory note
described in paragraph 2.2,  above.  Any amount of the indemnity  obligation not
satisfied by this offset shall be promptly paid in cash.

         11.2     Indemnification of Seller.

         A. Buyer  agrees to  indemnify  and hold  harmless  seller and seller's
successors  and assigns  from and against any and all (i)  liabilities,  losses,
claims, taxes,  liabilities,  fines, penalties,  damages and expenses, direct or
indirect  ("losses") and (ii) reasonable  attorneys' and  accountants'  fees and
expenses,   court  costs  and  all  other  reasonable   out-of-pocket   expenses
("expenses") incurred by seller in connection with or arising from:

                                      -25-

<PAGE>

                  1. any damage or deficiency resulting from the non-performance
of any  agreement  to be  performed  by buyer under this  Agreement  or from any
material  misrepresentation  in  or  omission  from  any  certificate  or  other
instrument furnished to seller under this Agreement;

                  2.  any  breach  of any of  the  representations,  warranties,
covenants or  agreements  made by buyer in this  Agreement  or in any  ancillary
document;

                  3. any attempt  (whether or not  successful)  by any person to
cause or require seller to pay or discharge any debt,  obligation,  liability or
commitment  of buyer the  existence  of which would  constitute  a breach of any
representation,  warranty, covenant or agreement made by buyer in this Agreement
or in any ancillary documents;

                  4.  any  action,  suit,  proceeding,  compromise,  settlement,
assessment or judgment (including  reasonable attorneys' fees) arising out of or
incident to any of the matters indemnified against in this paragraph 11.2; or

                  5. the operation of the Dental  Business  and/or the ownership
or use of the  assets  after  the  closing,  including  but not  limited  to the
obligations assumed by buyer pursuant to paragraph 3.3.

         B. If seller believes that any person indemnified under paragraph 11.2A
has  suffered  or incurred  any loss or  incurred  any expense as to which it is
entitled to indemnification  under paragraph 11.2A, seller shall so notify buyer
promptly in writing,  describing such loss or expense,  the amount  thereof,  if
known,  and the  method  of  computation  of  such  loss or  expense,  all  with
reasonable  particularity  and  containing a reference to the provisions of this
agreement,   or  any  agreement  or  instrument   contemplated  hereby,  or  any
certificate  delivered pursuant hereto or thereto, in respect of which such loss
or expense  shall have  occurred;  and if any action at law or suit in equity is
instituted  by or  against  a  third  party  with  respect  to  which  any  such
indemnified  person intends to claim any loss or expense under paragraph  11.2A,
such  indemnified  person shall promptly notify the  indemnifying  party of such
action or suit;  provided that failure to give such notice shall not abrogate or
diminish  any of  buyer's  obligations  under  paragraph  11.2A if buyer  has or
receives timely actual knowledge of the existence of any such claim by any other
means or except to the extent such failure  prejudices buyer's ability to defend
such claim.

         C. If, by reason of the claims of any third  party  relating  to any of
the  matters  subject to  indemnification  under this  paragraph  11.2,  a lien,
attachment,  garnishment or execution is placed on any of the property or assets
of seller,  buyer will take  whatever  action is  necessary to obtain the prompt
release of such lien, attachment, garnishment or execution.

         D. The  foregoing  indemnities  shall be in addition  to any  equitable
relief  which the seller  might  otherwise  be  entitled  to obtain  against the
indemnifying party.

         E.   Notwithstanding  any  other  provision  of  this  agreement,   the
indemnification  obligations of buyer under this agreement,  and with respect to
the  transactions  contemplated by this agreement,  shall not apply to the first
Fifty Thousand Dollars ($50,000.00) of losses or expenses incurred by seller, in
the  aggregate,  but this  limitation  shall not apply to the buyer's  indemnity
obligations  for  losses or  expenses  described  in  subparagraph  A(3) of this
paragraph,  and  the  indemnity  obligations  under  subparagraph  A(4)  of this
paragraph to the extent related to losses or expenses  described in subparagraph
A(3) of this paragraph.

                                      -26-

<PAGE>

         11.3     Third Party Claims

         The  indemnifying  party under this  Article 11 shall have the right to
conduct and control,  through  counsel of its  choosing,  any third party claim,
action  or  suit  and  may  compromise  or  settle  the  same.  So  long  as the
indemnifying  party is  contesting  any such action or suit in good  faith,  the
indemnified   persons  shall  not  pay  or  settle  any  such  action  or  suit.
Notwithstanding  the foregoing,  the indemnified persons shall have the right to
pay or settle  any such  action  or suit,  provided  that (i) in such  event the
indemnified persons shall waive any right to indemnity therefor and no amount in
respect  thereof  shall be claimed as loss or expense  under this Article 11 and
(b) the  terms  of any such  settlement  do not  involve  any  agreement  by the
indemnified persons that affects the indemnifying party.

                                   ARTICLE 12

                                   TERMINATION

         12.1     Termination.

         Anything  contained in this agreement to the contrary  notwithstanding,
this  agreement  may be  terminated  and the  transactions  contemplated  herein
abandoned  at any time prior to the  closing:  (a) by the mutual  consent of the
buyer and the seller; (b) by buyer in the event of any material breach by seller
of any of seller's agreements,  representations, or warranties contained herein;
(c) by  seller in the event of any  material  breach by buyer of any of  buyer's
agreements,  representations,  or warranties  contained herein; (d) by seller or
buyer  if the  transactions  contemplated  herein  have not  closed  by the date
specified in paragraph 5.1 except if the closing has not occurred as a result of
the fault of the party desiring to terminate this agreement.

         12.2     Effect of Termination.

         In the event  that  this  agreement  shall be  terminated  pursuant  to
paragraph  12.1,  all further  obligations  of the parties under this  agreement
shall be terminated  without  further  liability of any party to any other party
except for  paragraphs  8.1,  13.3,  and 13.13 hereof which shall continue after
such  termination,  provided  that nothing  herein shall  relieve any party from
liability for its willful breach of this agreement.

                                   ARTICLE 13

                               GENERAL PROVISIONS

         13.1     Survival of Representations, etc.

         All representations, warranties, and other agreements contained in this
agreement  shall survive the  consummation of the  transactions  contemplated by
this  agreement;  provided,  however,  that the  representations  and warranties
contained in Articles 6 and 7 shall  terminate on the last day of the  thirtieth
(30th) month after the closing  date.  Except as otherwise  provided  herein and
except for  claims  for  indemnification  for the  breach or  inaccuracy  of any
representation or warranty asserted in accordance with Article 11, hereof, prior
to such last day of the thirtieth  (30th) month but not concluded prior thereto,
no claim shall be made for the breach or the inaccuracy of any representation or
warranty  contained in Articles 6 and 7 or under any certificate  delivered with
respect thereto under this agreement after the date on which such representation
and warranty terminates as set forth in this paragraph.

                                      -27-

<PAGE>

         13.2     Waivers.

         No delay or omission by any party hereto in exercising any right, power
or privilege  hereunder shall impair such right,  power or privilege,  nor shall
any single or partial  exercise of any such right,  power or privilege  preclude
any  further  exercise  thereof or the  exercise  of any other  right,  power or
privilege.  No waiver by any party hereto at any time of any breach by any other
party  hereto  of, or  compliance  with,  any  condition  or  provision  of this
agreement  to be  performed  by such  other  party  shall be  deemed a waiver of
similar or  dissimilar  provisions  or conditions at the same or at any prior or
subsequent time.

         13.3     Expenses

         All costs and expenses incurred by the respective parties in connection
with the  negotiation,  execution  and  delivery of this  agreement  and related
agreement and the consummation of the transactions  contemplated hereby shall be
paid by the party incurring such costs and expenses.

         13.4     Notices.

         All notices,  requests,  claims, demands and other communications which
are required to be or may be given under this Agreement  shall be in writing and
shall be deemed to have been duly given  when  delivered  in  person,  by cable,
telegram,  telex,  facsimile or by  registered  or certified  first-class  mail,
return receipt requested,  postage prepaid, to the party to which the same is so
given or made.

         A.       If to seller, to:

                  David W. Light, Chief Executive Officer
                  Sunrise Technologies, Inc.
                  47257 Fremont Boulevard
                  Fremont, California 94538

                  with a copy to:

                  Nancy L. Murray, Esq.
                  Thelen, Marrin, Johnson & Bridges LLP
                  2 Embarcadero Center, Suite 2100
                  San Francisco, California 94111-3995

         B.       If to buyer:

                  Craig J. Lares, President
                  Lares Research
                  295 Lockheed Avenue
                  Chico, California 95973

                                      -28-

<PAGE>

                  with a copy to:

                  Richard S. Matson, Esq.
                  Richard S. Matson Law Office
                  P. O. Box 4141
                  Chico, CA 95927-4141

Any party may by notice  given in  accordance  with this  paragraph to the other
parties designate another address or person for receipt of notices hereunder.

         13.5     Entire Agreement.

         This   Agreement   (including   the  Exhibits  and  Schedules   hereto)
constitutes the entire agreement among the parties and supersedes all prior oral
and written agreements and understandings  among the parties hereto with respect
to  the  subject  matter  hereof,  including  specifically,  but  not  by way of
limitation,  a "Letter of Intent"  dated  November 14, 1996,  and a letter dated
February 24, 1997. The parties hereto acknowledge and agree that no agreement or
representations,  oral or  otherwise,  express or implied,  with  respect to the
subject  matter  hereof  have been made by either  party which are not set forth
expressly in this agreement.

         13.6     Headings and Gender.

         The paragraph and other  headings  contained in this  Agreement are for
reference  purposes only and shall not affect the meaning or  interpretations of
this  Agreement.  Reference  to any one gender  shall be deemed to  include  the
other.

         13.7     Counterparts.

         This Agreement may be executed in any number of  counterparts,  each of
which shall,  when executed,  be deemed to be an original and all of which shall
be deemed to be one and the same instrument.

         13.8     Severability.

         Any  provision  in  this  agreement  or  any  agreement  or  instrument
delivered   pursuant  hereto  which  is  prohibited  or   unenforceable  in  any
jurisdiction  shall,  as to such  jurisdiction,  be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions hereof and thereof,  and any such prohibition or  unenforceability in
any jurisdiction shall not invalidate or render  unenforceable such provision in
any other jurisdiction. The parties shall endeavor in good faith negotiations to
replace any  prohibited or  unenforceable  provision  with a valid  provision or
provisions,  the effect of which shall  reflect the  bargain  manifested  in the
prohibited or unenforceable provision.

         13.9     Governing Law.

         This Agreement  shall be construed as to both validity and  performance
and  enforced  in  accordance  with and  governed  by the  laws of the  State of
California applicable to agreements made and to be performed in California.

                                      -29-

<PAGE>

         13.10    Assignment; Parties in Interest.

         This  Agreement  may not be  assigned by any party  hereto  without the
prior written  consent of all the other parties,  provided that buyer may assign
its rights and duties under this  agreement to an entity  formed or to be formed
for the purpose of operating the Dental Business. Subject to the foregoing, this
agreement shall inure to the benefit of and be binding upon permitted successors
and assigns of seller and buyer.

         13.11    Modification.

         The provisions of this Agreement may be amended,  modified,  changed or
waived only by a writing signed by all the parties hereto.

         13.12    Further Assurances.

         Each party hereto  agrees to do such  further  acts and things,  and to
execute and deliver such additional agreements and instruments, as any party may
reasonably  request  in  connection  with  the  performance,  administration  or
enforcement of this agreement or the agreements related hereto.

         13.13    Publicity.

         Except for  disclosure  (if any)  required by law to which any party is
subject, the timing and content of any announcements,  press releases and public
statement  concerning  the  acquisition  contemplated  hereby shall be by mutual
agreement of the parties.

                                      -30-

<PAGE>


                                    EXECUTION

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


SELLER:                                            BUYER:

Sunrise Technologies International, Inc.,          Lares Research,
         a Delaware corporation                         a California corporation


By:                                                By:
   -----------------------------------                --------------------------
David W. Light, Chief Executive Officer            Craig J. Lares, President

                                      -31-