<PAGE>   1



                                    AGREEMENT

                  THIS AGREEMENT dated as of September 15, 1998 (this
"Agreement"), is made by and between Graham-Field Health Products, Inc., a
Delaware corporation having its principal offices at 400 Rabro Drive East,
Hauppauge, New York 11788 (the "Company"), and Richard S. Kolodny, Vice
President and General Counsel (the "Executive").

                  WHEREAS, the Company considers it essential to the best
interests of its shareholders to foster the continued employment of key
executive management personnel; and

                  WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.4 below) of the
Company exists from time to time and that such possibility, and the uncertainty,
instability and questions which it may raise for and among key executive
management personnel, may result in the premature departure or significant
distraction of such management personnel to the material detriment of the
Company and its shareholders; and

                  WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce, focus and encourage the continued attention and
dedication of key members of the executive management of the Company and its
subsidiaries, including (without limitation) the Executive, to their assigned
duties without distraction in the face of potentially disturbing or unsettling
circumstances arising from the possibility of a Change in Control of the
Company;

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:

         1.       DEFINITIONS.  For purposes of this Agreement, the
following terms have the meanings set forth below:

                  1.1 "ANNUAL BASE SALARY" shall mean the Executive's rate of
regular basic annual compensation prior to any reduction under a salary
reduction agreement pursuant to section 401(k) or section 125 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), and shall not
include (without limitation) cost of living allowances, fees, retainers,
reimbursements, bonuses, incentive awards, prizes or similar payments.

                  1.2 "BIL" shall mean collectively, Brierley Investments Ltd.,
BIL (Far East Holdings) Limited, BIL Securities (Offshore) Ltd. and any Person
or group of Persons which is directly affiliated with or is wholly or partly
controlled by one or more of such entities.

                  1.3      "CAUSE" for termination by the Company or any
subsidiary of the Executive's employment, after any Change in


<PAGE>   2



Control, shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company, or a subsidiary
of the Company, as such duties may reasonably be defined from time to time by
the Board (or a duly designated and authorized committee thereof), or to abide
by the reasonable written policies of the Company or of the Executive's primary
employer (other than any such failure resulting from the Executive's incapacity
due to physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination by the Executive for Good Reason
pursuant to Section 4.1) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically identifies
the manner in which the Board believes that the Executive has not substantially
performed the Executive's duties or has not abided by any reasonable written
policies, or (ii) the continued and willful engaging by the Executive in conduct
which is demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of
this definition, no act, or failure to act, on the Executive's part shall be
deemed "willful" unless done, or omitted to be done, by the Executive in bad
faith and without reasonable belief that the Executive's act, or failure to act,
was in the best interests of the Company or its subsidiaries.

                  1.4      "CHANGE IN CONTROL" shall mean and be deemed to have
occurred if:

                           (i) any Person is or becomes the Beneficial Owner (as
         that term is defined in Rule 13d-3 under the Securities Exchange Act of
         1934 (the "Exchange Act")), directly or indirectly, of securities of
         the Company (not including in the securities beneficially owned by such
         Person any securities acquired directly from the Company) representing
         twenty-five percent (25%) or more of the combined voting power of the
         Company's then outstanding securities, or there occurs any transaction
         which the Company is required to disclose pursuant to Item 1(a) of Form
         8-K (as filed pursuant to Rule 13a-11 or Rule 15d-11 of the Exchange
         Act), other than BIL which may purchase securities of the Company
         provided that, immediately after giving effect to such purchase, BIL
         does not own in the aggregate outstanding voting securities
         representing more than 49% of the voting power of all outstanding
         voting securities of the Company; or

                           (ii) during any period of twenty-four (24)
         consecutive months (not including any period prior to September 15,
         1998), individuals who at the beginning of such period constitute the
         Board and any new director (other than a director designated by a
         Person who has entered into an agreement with the Company to effect a
         transaction described in clause (i), (iii) or (iv) of this definition
         or any such individual whose initial assumption of office occurs as a
         result of either an
<PAGE>   3

         actual or threatened election contest (as such terms are used in Rule
         14a-11 of Regulation 14A promulgated under the Exchange Act) or other
         actual or threatened solicitation of proxies or consents) whose
         election by the Board or nomination for election by the Company's
         stockholders was approved by a vote of at least a majority of the
         directors then still in office who either were directors at the
         beginning of such period or whose election or nomination for election
         was previously so approved, cease for any reason to constitute a
         majority of the Board; or

                           (iii) the shareholders of the Company approve a
         reorganization, merger or consolidation, other than a reorganization,
         merger or consolidation with respect to which all or substantially all
         of the individuals and entities who were Beneficial Owners, immediately
         prior to such reorganization, merger or consolidation, of the combined
         voting power of the Company's then outstanding securities beneficially
         own, directly or indirectly, immediately after such reorganization,
         merger or consolidation, more than seventy-five percent (75%) of the
         combined voting power of the securities of the corporation resulting
         from such reorganization, merger or consolidation; or

                           (iv) the shareholders of the Company approve (a) the
         sale or disposition by the Company (other than to a subsidiary of the
         Company) of all or substantially all of the assets of the Company, or
         (b) a complete liquidation or dissolution of the Company.

                  1.5 "COMPANY" shall mean Graham-Field Health Products, Inc.
and any successor to its business and/or assets which assumes (either expressly,
by operation of law or otherwise) and/or agrees to perform this Agreement by
operation of law or otherwise (except in determining, under Section 1.3 hereof,
whether or not any Change in Control of the Company has occurred in connection
with such succession).

                  1.6 "DISABILITY" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the Executive's duties
for a period of three (3) consecutive months.

                  1.7 "GOOD REASON" for termination by the Executive of the
Executive's employment in connection with or as a result of any Change in
Control shall mean the occurrence (without the Executive's prior express written
consent) of any one of the following acts, or failures to act, unless, in the
case of any act or failure to act described in clauses (i), (iv), (v) or (vi)
below, such act or failure to act is corrected by the Company or
<PAGE>   4

any subsidiary prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:

                           (i) the assignment to the Executive of any duties or
         responsibilities inconsistent with the Executive's most significant
         position(s) (including without limitation status, offices, titles and
         reporting responsibilities/rights) as an executive officer of the
         Company and/or a subsidiary held during the one hundred eighty (180)
         day period immediately preceding any related Potential Change in
         Control, or a substantial adverse alteration of the Executive's
         position or title(s) with the Company or any subsidiary or in the
         nature of such status, offices, titles and reporting
         responsibilities/rights;

                           (ii) a reduction in the Executive's Annual Base
         Salary as in effect on the date of this Agreement or as the same may be
         increased at any time thereafter and from time to time;

                           (iii) the relocation of the Company's principal
         executive offices to a location more than thirty (30) miles from its
         location on the date of this Agreement (or, if different, more than
         thirty (30) miles from where such offices are located immediately prior
         to any Potential Change of Control) or the Company's requiring the
         Executive to be based anywhere other than the location where the
         Executive is performing his duties immediately prior to any Potential
         Change in Control, except for required travel on the Company's business
         to an extent substantially consistent with the Executive's business
         travel obligations as of the date of the Potential Change in Control;

                           (iv) any failure by the Company to comply with any of
         the provisions of this Agreement, other than an isolated, insubstantial
         and inadvertent failure not occurring in bad faith and which is
         remedied by the Company promptly after receipt of notice thereof given
         by the Executive;

                           (v) the failure by the Company or a subsidiary to
         continue in effect any pension benefit or incentive or deferred
         compensation plan in which the Executive participates immediately prior
         to any Potential Change in Control which is material to the Executive's
         total compensation, unless an equitable arrangement (embodied in an
         ongoing substitute or alternative plan or arrangement) has been made
         with respect to such plan, or the failure by the Company or a
         subsidiary to continue the Executive's participation therein (or in
         such substitute or alternative plan or arrangement) on a basis not
         materially less favorable, both in terms of the
<PAGE>   5

         amount of benefits provided and the level of the Executive's
         participation relative to other participants, as existed at the time of
         the Potential Change in Control;

                           (vi) the failure by the Company or a subsidiary to
         continue to provide the Executive with health and welfare benefits
         substantially similar to those enjoyed by the Executive under any of
         the Company's or a subsidiary's retirement, life insurance, medical,
         health and accident, or disability or similar plans in which the
         Executive was participating at the time of any Potential Change in
         Control, the taking of any action by the Company or a subsidiary which
         would directly or indirectly materially reduce any of such benefits or
         deprive the Executive of any material fringe benefit enjoyed by the
         Executive at the time of the Potential Change in Control, or the
         failure by the Company or a subsidiary to provide the Executive with
         the number of paid vacation days to which the Executive is entitled in
         accordance with the Company or a subsidiary's normal vacation policy in
         effect at the time of the Potential Change in Control;

                           (vii) any purported termination of the Executive's
         employment which is not effected pursuant to a Notice of Termination
         satisfying the requirements of Section 4.1; and/or

                           (viii) a termination by the Executive of his
         employment for any reason during the thirty (30) day period immediately
         following the first (1st) anniversary after the date of any Change in
         Control.

                  1.8 "PERSON" shall have the meaning ascribed thereto in
Section 3(a)(9) of the Exchange Act, as modified, applied and used in Sections
13(d) and 14(d) thereof; provided, however, a Person shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation or
other entity owned, directly or indirectly, by the stockholders of the Company
in substantially the same character and proportions as their ownership of stock
of the Company.

                  1.9 "POTENTIAL CHANGE IN CONTROL" shall mean and be deemed to
have occurred if:

                           (i) the Company enters into an agreement the
         consummation of which would result in the occurrence of a Change in
         Control; and/or

                           (ii) any Person becomes, after September 15,
<PAGE>   6

         1998, the Beneficial Owner, directly or indirectly, of securities of
         the Company representing ten percent (10%) or more of the combined
         voting power of the Company's then outstanding securities, or any
         Person increases such Person's beneficial ownership of such securities
         by five (5) percentage points or more over the percentage so owned by
         such Person on September 15, 1998.

                  1.10 "WINDOW PERIOD" shall mean the thirteen (13) month period
following a Change in Control.

         2. TERM OF THIS AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect as long as the Executive is employed by the
Company, provided, however, that if (i) a Change in Control shall have occurred
during the Executive's employment with the Company, this Agreement shall
continue in effect until the termination of the applicable Window Period, or
(ii) if a Potential Change in Control shall have occurred during the Executive's
employment with the Company, this Agreement shall continue in effect until one
(1) year after the Executive's termination of employment with the Company (the
"Term").

         3. SEVERANCE PAYMENTS.

                  3.1 SEVERANCE. The Company shall pay the Executive the
payments described in Section 3.1.1 and 3.1.2 (the "Severance Payments") upon
the termination of the Executive's employment with the Company during the Window
Period (including, but not limited to, the Executive's termination of employment
for Good Reason, death or Disability), unless such termination is (i) by the
Company for Cause, or (ii) by the Executive without Good Reason. In addition,
the Executive's employment shall be deemed to have been terminated immediately
following a Change in Control by the Company without Cause or by the Executive
for Good Reason if (a) the Executive reasonably demonstrates that the
Executive's employment was terminated prior to a Change in Control without Cause
(1) at the request of a Person who has entered into an agreement with the
Company the consummation of which will constitute a Change in Control (or who
has taken other steps reasonably calculated to effect a Change in Control) or
(2) otherwise in connection with, as a result of or in anticipation of a Change
in Control, (b) the Executive terminates his employment for Good Reason prior to
a Change in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1) at
the request of such Person or (2) otherwise in connection with, as a result of
or in anticipation of a Change in Control, or (c) the Executive dies or is
terminated due to Disability, in each case, after the occurrence of a Potential
Change in Control and related Change in Control actually occurs within one (1)
year after the Date of Termination or the date of death, as the case may be. The
Executive's right to terminate the Executive's employment for Good Reason shall
not be affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to,
<PAGE>   7

or a waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder.

                           3.1.1 In lieu of any further salary and bonus
         payments to the Executive for periods subsequent to the Date of
         Termination, the Company shall pay to the Executive (i) a lump sum
         severance payment in cash (or at the Executive's sole and exclusive
         option receive such amounts as salary continuation during the
         applicable periods set forth below), equal to (x) three (3) times the
         highest Annual Base Salary paid or payable to the Executive during the
         thirty-six (36) month period immediately preceding the month in which
         the Change in Control occurs, and (y) the aggregate of the maximum
         bonuses (as defined in the Annual Incentive Plan (a copy of which is
         attached hereto as Exhibit A)) which could have been earned, vested or
         otherwise paid for the year in which the Change in Control occurs (for
         purposes herein, the maximum bonuses shall automatically vest and be
         deemed earned in their entirety as if the Executive was employed for
         the entire applicable year period in which the Change in Control occurs
         and shall be deemed payable to the Executive in full as of the Date of
         Termination), and (ii) all unpaid accrued vacation through the Date of
         Termination in accordance with the Company's plans and practices in
         effect immediately prior to the Change in Control, provided that such
         unpaid vacation has been accrued on the books and records of the
         Company prior to the Date of Termination.

                           3.1.2 After the Date of Termination, the Company
         shall continue to provide the Executive and/or the Executive's
         dependents, as the case may be, with (i) life, disability, accident and
         health insurance benefits ("Benefits Coverage") substantially similar
         to those which the Executive and/or the Executive's dependents is
         receiving immediately prior to any related Potential Change in Control
         or the receipt of the Notice of Termination (without giving effect to
         any reduction in such benefits subsequent to a Change in Control which
         reduction constitutes Good Reason), whichever is greater, until the
         earlier to occur of such time as the Executive is provided with
         substantially comparable Benefits Coverage with a new employer or
         thirty six (36) months; (ii) the automobile allowance, gas and other
         automobile benefits the Executive was receiving immediately prior to
         any related Potential Change in Control or the receipt of the Notice of
         Termination (without giving effect to any reduction in such benefits
         subsequent to a Change in Control which reduction constitutes Good
         Reason), whichever is greater, for a period of twelve (12) months; and
         (iii) outplacement services, the scope and provider of which shall be
         selected by the Executive with the cost of such services and related
         expenses borne by the
<PAGE>   8

         Company, subject to the submission of reasonable documentation in
         accordance with the Company's standard practice to substantiate
         expenses.

                  3.2 SPECIAL REIMBURSEMENT. In the event that the Executive
becomes entitled to the Severance Payments, if any payment or benefit paid or
payable, or received or to be received, by or on behalf of the Executive in
connection with a Change in Control or the termination of the Executive's
employment, whether any such payments or benefits are pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company, any
of its subsidiaries, any Person, or otherwise (the "Total Payments"), will or
would be subject to the excise tax imposed under section 4999 of the Code (the
"Excise Tax"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and any Excise Tax imposed upon or attributable to
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Total Payments.

                           3.2.1 For purposes of determining whether any of the
         Total Payments will be subject of the Excise Tax and the amount of such
         Excise Tax, (i) the Total Payments shall be treated as "parachute
         payments" within the meaning of section 280G(b)(2) of the Code, and all
         "excess parachute payments" within the meaning of section 280G(b)(1) of
         the Code shall be treated as subject to the Excise Tax, unless in the
         opinion of tax counsel (delivered to the Executive) selected by the
         Company and reasonably acceptable to the Executive such Total Payments
         (in whole or in part) (a) do not constitute parachute payments,
         including (without limitation) by reason of section 280G(b)(4)(A) of
         the Code, (b) such excess parachute payments (in whole or in part)
         represent reasonable compensation for services actually rendered,
         within the meaning of section 280G(b)(4)(B) of the Code, or (c) are
         otherwise not subject to the Excise Tax, and (ii) the value of any
         non-cash benefits or any deferred payment or benefit shall be
         determined by the Company's independent auditors in accordance with the
         principles of sections 280G(d)(3) and (4) of the code.

                           3.2.2 In the event that the Excise Tax is
         subsequently determined to be less than the amount taken into account
         hereunder at the time of termination of the Executive's employment, the
         Executive shall repay to the Company, at the time that the amount of
         such reduction in Excise Tax is finally determined, the portion of the
         Gross-Up Payment attributable to such reduction plus interest on the
         amount of such repayment at the rate provided in section 1274(b)(2)(B)
         of the Code. In the
<PAGE>   9

         event that the Excise Tax is determined to exceed the amount taken into
         account hereunder at the time of the termination of the Executive's
         employment (including by reason of any payment the existence or amount
         of which cannot be determined at the time of the Gross-Up Payment), the
         Company shall make an additional Gross-Up Payment in respect of such
         excess (plus any interest, penalties or additions payable by the
         Executive with respect to such excess) at the time that the amount of
         such excess is finally determined. The Executive and the Company shall
         each reasonably cooperate with the other in connection with any
         administrative or judicial proceedings concerning the existence or
         amount of any such subsequent liability for Excise Tax with respect to
         the Severance Payments.

                  3.3 DATE OF PAYMENT. The payment provided for in Section 3.1.1
and Section 3.2 hereof shall be made not later than the fifteenth (15th) day
following the Date of Termination; provided, however, that if the amounts of
such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments to which the Executive is
likely to be entitled to and shall pay the remainder of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code) as soon
as the amount thereof can be determined but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth (5th) business day after demand by the Company (together with interest
at the rate provided in section 1274(b)(2)(B) of the Code). At the time that
payments are made under this Section 3.3, the Company shall provide the
Executive with a detailed written statement setting forth the manner in which
such payments were calculated and the basis for such calculations including,
without limitation, any opinions or other advice the Company has received from
outside counsel, auditors or consultants (and any such opinions or advice which
are in writing shall be attached to the statement).

                  3.4 LEGAL COSTS. The Company shall also reimburse the
Executive for all legal fees and expenses incurred in good faith by the
Executive as a result of any dispute with any party (including, but not limited
to, the Company and/or any affiliate of the Company) regarding the payment of
any benefit provided for in this Agreement (including, but not limited to, all
such fees and expenses incurred in disputing any termination or in seeking in
good faith to obtain or enforce any benefit or right provided by this Agreement
or in connection with any tax audit or proceeding to the extent attributable to
the application of Section 4999 of the Code), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in section
7872(f)(2)(A) of the Code. Such payments shall be made within five (5) business
<PAGE>   10

days after delivery of the Executive's written requests for payment accompanied
by such evidence of fees and expenses incurred as the Company reasonably may
require.

                  3.5 EMPLOYMENT AGREEMENT. The payment to the Executive of the
Severance Payments provided for in Section 3.1 shall be in lieu of any severance
payable to the Executive under the terms of any other employment agreement in
effect on the Date of Termination. Except as provided in the preceding sentence,
this Agreement is not intended to and shall not modify or supersede any such
employment agreement or other contract or arrangement between the Executive and
the Company in effect from time to time.

         4.       TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.

                  4.1 NOTICE OF TERMINATION. Any purported termination of the
Executive's employment with the Company (other than by reason of death) during
the Window Period shall be communicated by written Notice of Termination from
one party hereto to the other party hereto in accordance with Section 7 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment with
the Company under the provision so indicated. Further, a Notice of Termination
for Cause is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board in the form and in the manner specified in Section 1.3 of this
Agreement. For purposes of this Agreement, any purported termination not
effected in accordance with the Section 4.1 shall not be considered effective.

                  4.2 DATE OF TERMINATION. "Date of Termination," with respect
to any purported termination of the Executive's employment during the Window
Period, shall mean (i) if the Executive's employment is terminated for
Disability, fifteen (15) days after Notice of Termination is given, and (ii) if
the Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination by
the Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive, shall
not be less than fifteen (15) days nor more than thirty (30) days, respectively,
after the date on which such Notice of Termination is given).

                  4.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 4.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of a court of
<PAGE>   11

competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice of
dispute only if the basis for such notice is reasonable, such notice is given in
good faith and the party giving such notice pursues the resolution of such
dispute with reasonable diligence.

                  4.4 COMPENSATION DURING DISPUTE. If a purported termination
occurs during the Window Period, and such termination is disputed in accordance
with Section 4.3 above, the Company shall continue to pay the Executive the full
compensation (including without limitation Annual Base Salary and Target Bonus)
in effect at the time of any related Potential Change in Control or when the
notice giving rise to the dispute was given (whichever is greater) and continue
the Executive as a participant in all compensation, incentive, pension and
welfare benefit and insurance plans in which the Executive was participating at
the time of any Potential Change in Control or when the notice giving rise to
the dispute was given, whichever is greater, until the dispute is finally
resolved in accordance with Section 4.3 hereof. Amounts paid under this Section
4.4 are in addition to all other amounts due under this Agreement and shall not
be offset against or reduce any other amounts due under this Agreement or any
other plan, agreement or arrangement.

                  5. NO MITIGATION. The Company agrees that, if the Executive's
employment is terminated during the Window Period, the Executive is not required
to seek other employment or to attempt in any way to reduce any amounts payable
to the Executive by the Company pursuant to Section 3 or Section 4.4. Further,
the amount of any payment or benefit provided for in Section 3 or Section 4.4
shall not be reduced by any compensation earned by the Executive as a result of
employment by another employer, by retirement benefits, or offset against any
amount claimed to be owed by the Executive to the Company or any of its
subsidiaries, or otherwise.

                  6. SUCCESSORS; BINDING AGREEMENT.

                           6.1 SUCCESSORS. In addition to any obligations
imposed by law upon any successor to the Company, the Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to compensation
from the Company in the same amount and on the same terms as the Executive would
be entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason during the Window Period, except that, for purposes
of implementing the foregoing, the date on which any
<PAGE>   12

such succession becomes effective shall be deemed the Date of Termination.

                           6.2 BINDING AGREEMENT.  This Agreement shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive shall die while any amount would still
be payable to the Executive hereunder (other than amounts which, by their terms,
terminate upon the death of the Executive) if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the term of this Agreement to the executors, personal
representatives or administrators of the Executive's estate.

                  7. NOTICES. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States certified mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:

                           To the Company:

                           Graham-Field Health Products, Inc.
                           400 Rabro Drive East
                           Hauppauge, New York   11788
                           Attention:  Chairman of the Board and
                                       Chief Executive Officer


                           With a copy to:

                           Robert S. Reder, Esq.
                           Milbank, Tweed, Hadley & McCloy
                           1 Chase Manhattan Plaza
                           New York, New York   10005


                           To the Executive:

                           Richard S. Kolodny
                           44 Spring Court
                           Muttontown, New York  11791

                  8. MISCELLANEOUS. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or

<PAGE>   13

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. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware without regard to the principles of
conflict of laws thereof. All references to sections of the Exchange Act or the
Code shall be deemed also to refer to and include any successor provisions to
such sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed. The rights and
obligations of the Company and the Executive under this Agreement shall survive
the expiration of the Term.

         9.  VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.

         10. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

         11. NO LIMITATION. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.

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


                                            GRAHAM-FIELD HEALTH PRODUCTS, INC.



   
                                            By: /s/ Rodney F. Price
                                               --------------------------------
                                            Name: Rodney F. Price
                                                  -----------------------------
    

<PAGE>   14

   
                                            Title: Chairman of the Board and
                                                   Chief Executive Officer
                                                  -----------------------------
    

   
                                            /s/ Richard S. Kolodny
                                            -----------------------------------
                                            RICHARD S. KOLODNY