112296/4


                     THE GREAT AMERICAN BACKRUB STORE, INC.
                               425 MADISON AVENUE
                            NEW YORK, NEW YORK 10017


                                AGENCY AGREEMENT


                                                       November 22, 1996



Investors Associates, Inc.
411 Hackensack Avenue
Hackensack, NJ  07601

Attn:  Mr. Herman Epstein

Ladies and Gentlemen:

          THE GREAT AMERICAN  BACKRUB STORE,  INC., a New York  corporation (the
"Company"  or "GAB"),  proposes  to offer for sale in a private  placement  (the
"Offering"),  four (4) units (the  "Units")  at a purchase  price of $50,000 per
Unit, each Unit consisting of a $49,250  principal  amount  promissory note (the
"Note(s)"),  and warrants (the  "Warrants")  to purchase an aggregate of 750,000
shares of preferred stock (the "Preferred Stock"), convertible into common stock
(the  "Common  Stock") of the Company,  $0.001 par value per share.  The minimum
purchase is one Unit, but you may accept  subscriptions  for fractional Units in
your  discretion  and with the Company's  consent.  Payment of the Notes will be
secured by a pledge of all the Common  Stock  legally or  beneficially  owned by
William Zanker and Terrance C. Murray which shall be evidenced by a Stock Pledge
Agreement  (the  "Security  Agreement")  to be  entered  into  with  you or your
affiliates as agent for the benefit of each purchaser of the Units. The Warrants
will be issued in the form of  Exhibit A hereto.  The Units  will be  offered to
"accredited investors" on a "best efforts" basis in accordance with Section 4(2)
and/or 3(b) of the  Securities Act of 1933, as amended (the  "Securities  Act"),
and Regulation D promulgated thereunder, and to non-United States investors.

          The Units,  Notes and Warrants  will contain the terms and  conditions
set  forth in the  Company's  Confidential  Private  Offering  Memorandum  to be
prepared by our counsel and  delivered  to each  prospective  purchaser of Units
(the  "Memorandum").   The  Memorandum,  together  with  all  exhibits  thereto,
including the  Subscription  Agreement to be executed by each  purchaser and the
Company,  will be  referred  to herein as the  "Offering  Documents".  Investors
Associates, Inc. is sometimes referred to herein as the "Placement Agent".
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          1.        APPOINTMENT OF PLACEMENT AGENT; THE OFFERING.

          1.1.      APPOINTMENT  OF PLACEMENT  AGENT.  You are hereby  appointed
exclusive  placement  agent (the  "Placement  Agent") of the Company  during the
offering  period herein  specified  (the  "Offering  Period") for the purpose of
assisting the Company in finding qualified  investors (the  "Subscribers").  The
Offering Period shall commence on the day the Offering  Documents are first made
available to you by the Company and shall  continue until the 30th day following
the date first written above,  PROVIDED, the Offering Period may be extended for
an  additional  period  not to exceed  10 days by the  mutual  agreement  of the
Company and the Placement Agent, or may be terminated earlier if all $200,000 of
the Units  offered  hereby  have been  sold.  The day that the  Offering  Period
terminates  is  hereinafter  referred to as the  "Termination  Date." You hereby
accept  such  agency  and agree to  assist  the  Company  in  finding  qualified
subscribers.  Your agency hereunder is not terminable by the Company except upon
termination  of the  Offering.  You shall have the right to enter  into  selling
agreements with members of your selling group,  who shall be members of the NASD
(as hereunder defined).

          1.2       OFFERING  DOCUMENTS.  The Company will provide the Placement
Agent with a sufficient number of copies of the Offering  Documents for delivery
to potential  Subscribers and such other information,  documents and instruments
which the Placement Agent deems  reasonably  necessary to comply with the rules,
regulations   and  judicial  and   administrative   interpretations   respecting
compliance with state and Federal statutes applicable to the Offering.

          2.        REPRESENTATIONS  AND WARRANTIES OF THE COMPANY.  The Company
represents and warrants as set forth below.  For purposes of this Article 2, the
term "Company" shall include the Subsidiaries (as defined below):

          2.1.      DUE  INCORPORATION AND  QUALIFICATION.  The Company has been
duly incorporated, is validly existing and is in good standing under the laws of
its  state of  incorporation  and is duly  qualified  as a  foreign  corporation
(except where the failure to so qualify would not have a material adverse effect
on the business of the Company) for the  transaction  of business and is in good
standing  in  each  jurisdiction  in  which  the  ownership  or  leasing  of its
properties or the conduct of its business requires such  qualification.  GAB has
no subsidiaries,  other than those  corporations (the  "Subsidiaries")  named on
Schedule A annexed hereto, each of which was formed solely to acquire a lease of
retail  premises  indicated  opposite  its name.  The Company has all  requisite
corporate  power  and  authority  necessary  to own or hold its  properties  and
conduct its business as described in the Offering Documents.

          2.2       AUTHORIZED  CAPITAL.  Immediately  prior to the closing (the
"Closing") of this Offering, the Company will have an

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authorized and outstanding  capitalization  as set forth on Schedule 2.2 hereto,
and all of the then  issued  and  outstanding  shares  of  capital  stock of the
Company (the  "Capital  Stock") will have been duly and validly  authorized  and
issued and will be fully paid and  non-assessable.  None of the  holders of such
outstanding  shares of Capital Stock is subject to personal  liability solely by
reason of being such a holder.  Except as described on Schedule 2.2 hereto,  the
offers  and  sales of such  outstanding  shares  of  Capital  Stock  were at all
relevant  times either  registered  under the  Securities Act and the applicable
state securities or blue sky laws, or exempt from such  registration.  Except as
described on Schedule 2.2 hereto,  no holder of any of the Company's  securities
has any rights,  "demand",  "piggyback"  or otherwise,  to have such  securities
registered  or to demand the  filing of a  registration  statement.  Immediately
prior to the Closing of the  Offering,  GAB will have  reserved  for  issuance a
sufficient number of shares of Common Stock to be issued to the Subscribers upon
the exercise of the Warrants.

          2.3       NO  PREEMPTIVE  RIGHTS;  OPTIONS.  Except  as set  forth  on
Schedule 2.3 hereto, there are no preemptive or other rights to subscribe for or
purchase,  or any  restriction  upon the  voting or  transfer  of, any shares of
Capital  Stock or  other  securities  of the  Company,  under  the  articles  or
certificates of  incorporation  or by-laws of the Company or under any agreement
or other  outstanding  instrument to which the Company is a party or by which it
is bound.  Except as set forth in the Memorandum or on Schedule 2.3 hereto,  the
Company does not have outstanding any option, warrant,  convertible security, or
other right  permitting  or requiring  it to issue,  or otherwise to purchase or
convert any obligation  into shares of Capital Stock or other  securities of the
Company  and the  Company  has not agreed to issue or sell any shares of Capital
Stock or other securities of the Company.

          2.4       FINANCIAL  STATEMENTS.  The  financial  statements  of  GAB,
including the notes thereto,  included in the Offering  Documents fairly present
the financial position and results of operations of GAB at the dates thereof and
for the periods in conformity  with generally  accepted  accounting  principles,
consistently applied throughout the periods involved.

          2.5.      NO MATERIAL ADVERSE  CHANGES.  Except as otherwise stated in
the Offering  Documents  and/or Schedule 2.5 hereto,  since the date of our last
report  filed with the SEC (as below  defined) (i) there has not been any change
in the condition,  financial or otherwise, of the Company which could materially
adversely  affect its  ability to conduct its  operations  as  described  in the
Offering  Documents,  and  (ii)  the  Company  has  not  incurred  any  material
liabilities or obligations,  direct or contingent, not in the ordinary course of
business and except as may be contemplated by the Offering Documents.

          2.6.      TAXES. Except as set forth on Schedule 2.6 hereto, 

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the Company has filed all  Federal tax returns and all state and  municipal  and
local tax  returns  (whether  relating  to  income,  sales,  franchise,  real or
personal  property or other types of taxes)  required to be filed under the laws
of the United States and applicable states, and has paid in full all taxes which
have  become  due  pursuant  to such  returns or claimed to be due by any taxing
authority or  otherwise  due and owing,  PROVIDED,  the Company has not paid any
tax, assessment,  charge, levy or license fee that it contests in good faith and
by  proper  proceedings  and  adequate  reserves  for the  accrual  of same  are
maintained if required by generally accepted accounting principles.  Each of the
tax returns  heretofore filed by the Company  correctly and accurately  reflects
the amount of its tax liability thereunder. The Company has withheld,  collected
and paid all other  levies,  assessments,  license  fees and taxes to the extent
required and with  respect to payments,  to the extent that the same have become
due and payable.

          2.7       FINDER'S  FEES;  OTHER  UNDERWRITERS.  The  Company  is  not
obligated to pay a finder's fee to anyone in connection with the introduction of
the  Company  to the  Placement  Agent  or  the  consummation  of  the  offering
contemplated  hereunder or the PO (as below  defined) other than payments to the
Placement  Agent.  The Company has not paid or issued any monies,  securities or
other  compensation  to any member of the  National  Association  of  Securities
Dealers,  Inc.  (the  "NASD") or to any  affiliate  of such a member  during the
previous 12 months,  except payments made (i) to the Placement Agent  hereunder;
(ii) to the Placement  Agent under the Letter (as below  defined);  (iii) to the
Placement  Agent under the Financial  Advisory and  Consulting  Agreement  dated
February  8,  1996,  or  (iv)  to  Horatio  Management  Services  Corp.  under a
consultative  agreement  dated  February  1, 1996.  The  Letter  and  agreements
aforesaid are in full force and effect and Investors Associates, Inc. is in full
compliance with all of its obligations thereunder.

          2.8       NO  PENDING  ACTIONS.  Except as set forth on  Schedule  2.8
hereto, or in the Memorandum,  there are no actions, suits, proceedings,  claims
or  hearings  of any kind or  nature  or,  to the best of the  knowledge  of the
Company, any investigations or inquiries,  before or by any court,  governmental
authority,  tribunal  or  instrumentality,  pending or  threatened  against  the
Company,  or involving  the  properties of the Company which could result in any
material  adverse  change in the  business,  properties,  financial  position or
results of operations of the Company, or which could materially adversely affect
the transactions or other acts contemplated by this Agreement or the validity or
enforceability of this Agreement.

          2.9       PRIVATE OFFERING  EXEMPTION;  OFFERING  DOCUMENTS.  Assuming
that each United States  purchaser of Units in this  Offering is an  "accredited
investor" as defined in Rule 502 of  Regulation  D, or a foreign  investor,  the
Offering Documents conform

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in all material  respects with the  requirements  of Section 4(2) and/or 3(b) of
the  Securities  Act and Rules 501-506 of  Regulation D  promulgated  thereunder
("Reg D") and with the requirements of all other published rules and regulations
of the  Securities  and  Exchange  Commission  (the  "SEC" or the  "Commission")
currently in effect  relating to "private  offerings".  To the best knowledge of
the Company,  the  Memorandum,  as  supplemented  by the  information  disclosed
pursuant hereto in the annexed  schedules,  does not contain an untrue statement
of a material fact or omit to state a material  fact  necessary in order to make
the statements  therein, in the light of the circumstances under which they were
made, not misleading.  The Notes,  Preferred  Stock and Warrants  conform to the
descriptions thereof contained in the Subscription Agreement and the Memorandum.

          2.10      DUE  AUTHORIZATION.  GAB has full right, power and authority
to enter into this Agreement and the Security  Agreement and issue the Units and
the securities  contained therein and the securities  underlying the same and to
perform all of its  obligations  hereunder and  thereunder  and as  contemplated
hereby and thereby and pursuant to the terms of the  securities  comprising  the
Units.  The execution and delivery of this Agreement and the Security  Agreement
have been duly  authorized  by all  necessary  corporate  action  and no further
corporate  action or approval  is  required  for such  execution,  delivery  and
performance.  This  Agreement  constitutes,  and the Security  Agreement and the
Warrants will, upon execution and delivery and payment therefor,  as applicable,
constitute  a valid  and  binding  obligation  of the  Company,  enforceable  in
accordance with its respective terms (except (i) as the  enforceability  thereof
may be limited by bankruptcy,  insolvency,  reorganization,  moratorium or other
similar laws affecting  creditors' rights generally or by general  principles of
equity, and (ii) that the enforceability of the indemnification and contribution
provisions of this Agreement may be limited by the Federal  securities  laws and
public policy),  and no consent,  approval,  authorization,  order of, or filing
with, any court or  governmental  authority or any other third party is required
to consummate the transactions  contemplated by this Agreement,  except that the
offer and sale of the  Units in  certain  jurisdictions  may be  subject  to the
provisions of the securities or Blue Sky Laws of such jurisdictions. No licenses
issued by the  department  of health or other  authorities  will be  required in
order to become a Subscriber.

          2.11      NON-DEFAULT;   NON-CONTRAVENTION.  The  Company  is  not  in
violation of its articles or certificate of  incorporation or by-laws or, except
as described in the financial statements and on Schedule 2.11 hereto, in default
in the performance or observance of any material obligation, agreement, covenant
or condition  contained in any material  contract,  lease or other instrument to
which it is a party,  and GAB's  execution and delivery of this  Agreement,  the
Security Agreement and/or the securities comprising

                                       -5-
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the Units,  and the incurrence of the obligations  herein and therein set forth.
The  consummation of the transactions  contemplated  herein will not immediately
prior to the Closing of the Offering (i) conflict  with,  or constitute a breach
of, or a default under the articles or certificate of  incorporation  or by-laws
of the Company,  or any material contract,  lease or other material agreement or
instrument  to  which  the  Company  is a party or in which  the  Company  has a
beneficial  interest or by which the Company is bound; (ii) violate any existing
applicable law, rule, regulation,  judgment, order or decree of any governmental
agency or court,  domestic or foreign,  having  jurisdiction over the Company or
any of its properties or business,  or (iii) have any material adverse effect on
any permit, certification, registration, approval, consent, license or franchise
necessary for the Company to own or lease and operate any of its  properties and
to conduct its business or the ability of the Company to make use thereof.

          2.12      VALID ISSUANCES.  The shares of Preferred Stock to be issued
upon  exercise of the  Warrants and  underlying  Common Stock have been duly and
validly  authorized  and,  when issued and  delivered and paid for in accordance
with the terms of the Offering  Documents,  this Agreement and the Warrants,  as
applicable, will be duly and validly issued, fully paid and non-assessable.  The
Notes  and the  Warrants  included  in the  Units  have  been  duly and  validly
authorized  and, when issued and  delivered in accordance  with the terms of the
Subscription Agreement and this Agreement, will be duly and validly issued.

          2.13      NO  ANTI-DILUTION  ADJUSTMENT.  The issuance of the Units in
the  Offering  will not  give any  holder  of any of the  Company's  outstanding
options,  warrants or other convertible  securities or rights to purchase shares
of the Company's  capital stock, the right to purchase any additional  shares of
capital stock and/or the right to purchase shares at a reduced price.

          2.14      NO  REGULATORY  ISSUES.  The  Company  (i) has  not  filed a
registration  statement  which  is the  subject  of any  pending  proceeding  or
examination  under  Section 8 of the  Securities  Act,  or is the subject of any
refusal  order or stop order  thereunder;  (ii) is not  subject  to any  pending
proceeding  under Rule 261 of the  Securities  Act or any similar  rule  adopted
under Section 3(b) of the  Securities  Act, or to an order  entered  thereunder;
(iii) has not been convicted of any felony or misdemeanor in connection with the
purchase or sale of any security  involving  the making of any false filing with
the  Commission;  (iv) is not subject to any order,  judgment,  or decree of any
court of competent  jurisdiction  temporarily  or  preliminarily  restraining or
enjoining the Company from engaging in or continuing  any conduct or practice in
connection  with the purchase or sale of any security or involving the making of
any false  filing with the  Commission;  (v) is not  subject to a United  States
Postal  Service false  representation  order entered under Section 3005 of Title
39, United States Code,

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or a temporary restraining order or preliminary injunction entered under Section
3007 of Title 39, with respect to conduct alleged to have violated  Section 3005
of Title  39,  United  States  Code,  or (vi) has not  been the  subject  of any
investigation or proceeding involving the suspension or cessation of the trading
or quotation of its securities on any exchange or quotation system.  None of the
Company's  directors  or  officers  (i) has  been  convicted  of any  felony  or
misdemeanor  in connection  with the purchase or sale of any security  involving
the making of a false filing with the Commission,  or arising out of the conduct
of the business of an underwriter,  broker, dealer, municipal securities dealer,
or investment advisor; (ii) is subject to any order,  judgment, or decree of any
court of  competent  jurisdiction  temporarily  or  preliminarily  enjoining  or
restraining,  or is subject to any  order,  judgment,  or decree of any court of
competent  jurisdiction  permanently  enjoining or restraining  such person from
engaging  in or  continuing  any  conduct or  practice  in  connection  with the
purchase or sale of any security, or involving the making of a false filing with
the Commission, or arising out of the conduct of the business of an underwriter,
broker,  dealer,  municipal  securities dealer, or investment advisor;  (iii) is
subject to an order of the Commission entered pursuant to Section 15(b),  15B(a)
or 15B(c) of the Securities Exchange Act of 1934, as amended ("1934 Act"), or is
subject to an order of the Commission  entered pursuant to Section 203(e) or (f)
of the  Investment  Advisors Act of 1940;  (iv) is  suspended  or expelled  from
membership  in, or  suspended  or barred  from  association  with a member of an
exchange registered as a national security exchange pursuant to Section 6 of the
1934 Act, an association  registered as a national securities  association under
Section 15A of the 1934 Act, or a Canadian  securities  exchange or  association
for any act or omission to act constituting  conduct  inconsistent with just and
equitable  principles  of trade,  or (v) is  subject to a United  States  Postal
Service  false  representation  order  entered  under  Section 3005 of Title 39,
United  States  Code,  or is  subject  to a  restraining  order  or  preliminary
injunction  entered under  Section 3007 of Title 39,  United  States Code,  with
respect to conduct  alleged to have  violated  Section 3005 of Title 39,  United
States Code.

          2.15      NO VIOLATIONS.  Except as described in the  Memorandum,  the
Company  is not  in  violation  of  any  material  franchise,  license,  permit,
applicable law, rule, regulation,  judgment or decree of any governmental agency
or court,  domestic or foreign,  having  jurisdiction over the Company or any of
its properties or business other than any violation which individually or in the
aggregate  would not have a material  adverse effect on the Company's  business,
properties or operations.

          2.16      CONDUCT  OF   BUSINESS.   The  Company  has  all   necessary
authorizations,   approvals,   orders,   licenses,   certificates   and  permits
(collectively,   the  "Approvals")  of  and  from  all  governmental  regulatory
officials and bodies, to own or lease its

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properties  and conduct its business as it is being  presently  conducted in the
Company's  existing form as described in the Memorandum,  and the Company is and
has been doing business in compliance with all such material Approvals,  and all
Federal,  state  and local  laws,  rules and  regulations,  other  than any such
Approvals,  laws, rules and regulations,  the failure to comply with which would
not have material  adverse  effect on the Company,  its business,  properties or
operations.  All licenses and findings of suitability required to be obtained by
any  affiliate  of the  Company  have been  obtained  and are in full  force and
effect.

          2.17.     TITLE TO PROPERTY; INSURANCE. The Company has good title to,
or valid and enforceable  leasehold estates in, all items of real property owned
or leased by it, including,  without limitation, the backrub centers referred to
in the  Memorandum and has good title to, or valid and  enforceable  leases with
respect to, all items of personal property  (tangible and intangible),  free and
clear of all liens, encumbrances,  claims, security interests, defects of title,
and restrictions of any material nature  whatsoever,  other than those contained
in the Memorandum  and liens for real estate taxes not yet due and payable.  The
Company has adequately  insured its tangible and/or real properties against loss
or damage by fire or other  casualty  (other  than  earthquake  and  flood)  and
maintains  such insurance in adequate  amounts,  on terms  generally  offered by
reputable insurance carriers in the area.

          2.18      INTANGIBLES.  The Company  owns or possesses  the  requisite
licenses or rights to use all trademarks,  service marks,  service names,  trade
names, and other rights (collectively,  the "Intangibles") described as owned or
used by it in the  Memorandum.  There is no  proceeding  or action by any person
pertaining  to, or proceeding or claim pending or, to the best  knowledge of the
Company, threatened and the Company has not received any notice of conflict with
the  asserted  rights of others  which  challenges  the  exclusive  right of the
Company with  respect to any  Intangibles  used in the conduct of the  Company's
business  except as described in the  Memorandum.  To the best  knowledge of the
Company,  the  Intangibles  and the Company's  operations do not infringe on any
intangibles held by any third party.

          2.19      SECURITY  INTEREST.  Assuming  the  Subscribers  have  taken
possession  of the Pledged  Shares (as defined  below) in good faith and without
notice of any adverse claim and maintain physical possession of the certificates
representing the Pledged Shares in the State of New York, the Security Agreement
will create a valid first priority security interest in favor of the Subscribers
in and to the  Pledged  Shares,  enforceable  against  the Company and all third
parties  securing payment of the Obligations (as below defined)  (PROVIDED,  the
enforceability  of  the  Security  Agreement  may  be  limited  or  affected  by
bankruptcy,  insolvency,  reorganization,   moratorium  or  other  similar  laws
affecting creditors' rights and by general principles of equity). No filings

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or recordings  are required in order to perfect  fully the security  interest in
the Pledged Shares under the Security Agreement.

          3.        REPRESENTATIONS,  WARRANTIES  AND COVENANTS OF THE PLACEMENT
AGENT. The Placement Agent represents, warrants and covenants as follows:

          (a)       The  Placement  Agent  is  duly   incorporated  and  validly
existing and in good standing under the laws of the state of its incorporation.

          (b)       The Placement  Agent is a  broker-dealer  registered as such
under the  Securities  Exchange Act of 1934 and is a member in good  standing of
the NASD.

          (c)       Sales of  Units by the  Placement  Agent or  members  of its
selling  group will only be made in such  jurisdictions  in which the  Placement
Agent is a registered  broker-dealer or where an applicable  exemption from such
registration exists.

          (d)       Offers  and  sales of Units  by the  Placement  Agent or any
members of its selling  group will be made  solely to  accredited  investors  in
compliance  with the  provisions of Rule 502(c) of Regulation D, and to non-U.S.
investors,  and the Placement  Agent will furnish to each investor a copy of the
Offering Documents prior to accepting any payments for Units.

          (e)       The Placement  Agent has the  necessary  power to enter into
this Agreement and to consummate the transactions contemplated hereby.

          (f)       The execution  and delivery by the  Placement  Agent of this
Agreement and the consummation of the transactions  herein contemplated will not
result in any  violation  of, or be in conflict  with,  or  constitute a default
under, any agreement or instrument to which the Placement Agent is a party or by
which the Placement Agent or its properties are bound, or any judgment,  decree,
order or, to the Placement Agent's  knowledge,  any statute,  rule or regulation
applicable to the Placement Agent.  This Agreement,  when executed and delivered
by the Placement Agent, will constitute the legal,  valid and binding obligation
of the Placement Agent,  enforceable in accordance with its terms, except to the
extent  that  (i)  the  enforceability  hereof  may be  limited  by  bankruptcy,
insolvency,  reorganization,  moratorium  or  similar  laws from time to time in
effect and affecting the rights of creditors generally;  (ii) the enforceability
hereof is subject to general principles of equity, or (iii) the  indemnification
provisions hereof may be held to be violative of public policy.

          (g)       The Placement Agent will deliver to each purchaser, prior to
any  submission by such person of a written offer to purchase any Units,  a copy
of the Memorandum,  as it may have been most recently amended or supplemented by
the Company.


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          (h)       Upon receipt of an executed  Subscription  Agreement and the
payments representing subscriptions for Units, the Placement Agent will promptly
forward  copies of the  subscription  documents to the Company and shall forward
all  consideration  received for such Units to the escrow agent specified in the
Memorandum to be held in escrow.

          4.        CLOSING.

          4.1       TIME AND PLACE.  At any time prior to the  Termination  Date
and after the receipt of subscription agreements and related documentation,  and
the receipt  and  clearance  of funds  representing  the sale of four  Units,  a
Closing (the "Closing")  shall take place at the office of the Placement  Agent,
at its address above given or at the offices of its counsel, 545 Madison Avenue,
16th Floor, New York City. At the Closing, payment for the Units issued and sold
by  the  Company  shall  be  recognized   against  delivery  of  the  Notes  and
certificates representing the Warrants comprising the Units.

          4.2       DELIVERIES AT CLOSING.

          (a)       At the  Closing,  and as a  condition  to the  Closing,  the
Company shall deliver or cause to be delivered to the Placement  Agent on behalf
of the Placement Agent and the Subscribers:

          (i)       the opinion of Olshan  Grundman Frome & Rosenzweig LLP as at
the date of the Closing, substantially to the effect that:

          (A)       The Company has been duly organized and is validly  existing
and in good standing under the laws of the  jurisdiction  of its  incorporation,
has all requisite  corporate  power and  authority  necessary to own or hold its
properties  and conduct its business as described in the Offering  Documents and
is duly qualified as a foreign  corporation  for the  transaction of business in
any state  requiring  such  qualification  where the failure to so qualify would
reasonably  be expected to have a material  adverse  effect on the  Company.  In
giving such opinion  counsel may rely solely on a  certificate  of an officer of
the Company as to the jurisdictions in which the Company conducts business.

          (B)       The Company has all requisite  corporate power and authority
to enter into this  Agreement and to perform all of its  obligations  hereunder;
the Company has all requisite corporate power and authority to issue and deliver
the Units,  this  Agreement,  the  Notes,  the  Warrants,  the  Preferred  Stock
underlying the Warrants and the Common Stock underlying the Preferred Stock; and
this Agreement,  the Notes and the Warrants have been duly authorized,  executed
and  delivered by the Company and are the valid and binding  obligations  of the
Company,  each enforceable against the Company in accordance with its respective
terms except (I) as

                                      -10-
<PAGE>
the   enforceability   thereof  may  be  limited  by   bankruptcy,   insolvency,
reorganization,  moratorium  or other  similar  laws now or  hereafter in effect
relating to or affecting  creditors' rights generally,  or by general principles
of  equity,  and  (II)  that  the  enforceability  of  the  indemnification  and
contribution  provisions  of  this  Agreement  may be  limited  by  the  Federal
securities laws and public policy.

          (C)       The  Preferred  Stock  to be  issued  upon  exercise  of the
Warrants, when issued and paid for in accordance with the terms of the Warrants,
and the Common Stock underlying the Preferred Stock, when issued upon conversion
of the  Preferred  Stock in  accordance  with the terms thereof and upon payment
therefor, will be duly and validly issued and fully paid and non-assessable. The
Preferred  Stock,  the Common  Stock,  the Warrants and the Notes conform to the
description thereof contained in the Offering  Documents.  To the best knowledge
of  such  counsel,  except  as  described  on  Schedule  2.2  hereto  or in  the
Memorandum,  no  holder  of any of the  Company's  securities  has  any  rights,
"demand",  "piggyback" or otherwise,  to have such  securities  registered or to
demand the filing of a registration  statement.  Except as set forth on Schedule
2.3 hereto or in the Memorandum, to the best knowledge of such counsel following
due  inquiry,  there  are no  preemptive  or other  rights to  subscribe  for or
purchase,  or any  restriction  upon the  voting or  transfer  of, any shares of
Common Stock of the Company,  under the articles or certificate of incorporation
or by-laws of the Company or under the business  corporation law of the state of
the Company's incorporation or, to the best knowledge of such counsel, under any
agreement or other outstanding  instrument to which the Company is a party or by
which it is bound.

          (D)       Neither the  execution and delivery of this  Agreement,  the
certificates  representing  the Warrants or the Notes,  nor compliance  with the
terms  hereof or  thereof  will (i)  conflict  with,  result in a breach  of, or
constitute  a default  under the articles or  certificate  of  incorporation  or
by-laws  of the  Company  or,  to the  best of  such  counsel's  knowledge,  any
contract, instrument,  agreement or document to which the Company is a party, or
by which the properties of the Company are bound;  (ii) to the best knowledge of
counsel  following  due inquiry,  violate any  existing  applicable  law,  rule,
regulation,  judgment,  order or  decree  of any  governmental  agency or court,
domestic  or  foreign,  having  jurisdiction  over  the  Company  or  any of its
properties or business,  or (iii) to the best knowledge of counsel following due
inquiry,  have  any  material  adverse  effect  on  any  permit,  certification,
registration,  approval, consent, license or franchise necessary for the Company
to own or lease and operate any of its properties.

          (E)       No  approval,  consent or  finding  of any  court,  board or
governmental agency, instrumentality or authority of the United States or of any
state having jurisdiction or authority over the

                                      -11-
<PAGE>
Company or of any other third party,  not duly obtained (other than any approval
or consent required under any state securities or Blue Sky Laws) is required for
the  valid  authorization,  issuance,  sale and  delivery  of the  Units and the
consummation of the transactions contemplated by this Agreement.

          (F)       To the best of counsel's  knowledge  following  due inquiry,
except as disclosed on Schedule 2.8 hereto, there are no claims, actions, suits,
hearings, investigations, inquiries or proceedings of any kind or nature, before
or by any court, governmental authority,  tribunal or instrumentality pending or
threatened   against  or  affecting  the  Company  which  could   reasonably  be
anticipated  to  materially  and adversely  affect the  business,  properties or
financial   position  of  the  Company,   or  the  transactions  or  other  acts
contemplated  by  this  Agreement  or the  validity  or  enforceability  of this
Agreement.

          (G)       To the best of counsel's  knowledge  following  due inquiry,
there are no material licenses, permits, certificates,  registrations, approvals
or consents of any governmental agency,  commission,  board,  instrumentality or
department  that are  required to be obtained by the Company in order to conduct
its business as conducted at the date hereof which have not been so obtained and
as to which the failure to so obtain would  reasonably be  anticipated to have a
material adverse effect on the Company's business.

          (H)       To the best of counsel's  knowledge  following  due inquiry,
the issuance of the Units in the Offering will not give any holder of any of the
Company's  outstanding  options,  warrants or other  convertible  securities  or
rights to purchase shares of the Company's  capital stock, the right to purchase
any  additional  shares of capital  stock or the right to  purchase  shares at a
reduced price.

          (I)       Assuming the Subscribers have taken possession of the shares
of Common Stock subject to the Security Agreement (the "Pledged Shares") in good
faith and without notice of any adverse claim and maintain  physical  possession
of the  certificates  representing  the Pledged Shares in the State of New York,
the Security  Agreement  creates a valid and perfected  first priority  security
interest in favor of the Subscribers in the Pledged Shares that is subject to no
other  security  interest  in favor of any other  person,  as  security  for the
Obligations (as defined in the Security Agreement). No filings or recordings are
required in order to perfect the security interest in the Pledged Shares created
under the Security Agreement.

          Counsel's  opinion  shall be  limited  to the laws of the state of New
York and  applicable  federal law. Where opinions of counsel are stated to be to
Counsel's  "knowledge" or "best knowledge"  after due inquiry,  or words to that
effect, such

                                      -12-
<PAGE>
references  shall mean that, after an examination of documents made available to
counsel by the  Company  and after  inquiries  of the  Company,  but without any
further independent factual  investigation,  counsels finds no reason to believe
that its opinions are factually incorrect, and the expression "to our knowledge"
or similar  language  with  reference  to matters of fact  refers to the current
actual knowledge of attorneys at counsel's firm involved in the matter;

          (ii)      a  certificate  of the  Company,  signed  by  two  executive
officers thereof stating that the  representations  and warranties  contained in
Section 2 hereof are true and accurate in all material  respects at the Closing,
with the same effect as though expressly made at the Closing;

          (iii)     the certificates  representing the Warrants and the Notes to
be included in the Units;

          (iv)      the  Security   Agreement,   the  form  of  which  shall  be
reasonably  satisfactory to Placement  Agent's counsel,  and the Pledged Shares,
and

          (v)       such  other   closing   documents  as  shall  be  reasonably
requested by the Placement Agent or its counsel.

          (b)       The Law Offices of Mark Schwarz,  will as a condition to the
Closing,  deliver  its  opinion  that  assuming  (i) a proper Form D is filed in
accordance  with  Rule 503 of Reg D; (ii) the offer and the sale of the Units by
the Placement  Agent was made in compliance with Rule 502(c) of Reg D; (iii) the
Placement Agent's  representations  and warranties set forth in Section 3 hereof
are true and correct,  and (iv) the  representations  of the  Subscribers in the
Subscription Agreement signed by them are true and correct (which facts will not
be independently verified by such counsel), the sale of Units in the Offering is
exempt from registration  under the Securities Act and is in compliance with Reg
D.

          4.3       BLUE SKY  SURVEY.  Counsel  for the  Placement  Agent  shall
survey  the blue sky laws of the states  designated  by the  Placement  Agent in
order to determine the extent to which and the conditions  upon which offers and
sales of the Units may be made in such states. It is understood that such survey
(the  "Blue Sky  Survey"),  which  shall be  delivered  to the  Company  and the
Placement  Agent,  may be based on or may rely upon (i) the  representations  of
each  Subscriber set forth in his or her  Subscription  Agreement,  and (ii) the
representations,  warranties  and  agreements  of the Company and the  Placement
Agent set forth in this Agreement.

          4.4       PLACEMENT  AGENT'S FEES AND  EXPENSES.  At the Closing,  the
Company shall pay to the Placement Agent a commission equal to 10 percent of the
aggregate purchase price of the Units

                                      -13-
<PAGE>
sold at the Closing.  In order to reimburse the Placement Agent for its expenses
incurred in connection with the Offering, at the Closing, the Company also shall
pay to the Placement Agent a  non-accountable  expense  allowance equal to three
percent (3%) of the aggregate  purchase price of the Units sold at such Closing.
On or before the Closing,  the Company shall pay the fees and  disbursements  of
counsel to the Placement  Agent referred to in paragraph 5.3 below in connection
with the qualification of the Units under the securities or blue sky laws of the
states which the Placement Agent shall designate.  All the foregoing amounts are
payable  directly  to the  parties  who are  owed  same by  deduction  from  the
aggregate purchase price of the Units sold otherwise payable to the Company.  If
the  Offering  is not  consummated  because the  Placement  Agent  prevents  its
completion  (except if such  prevention is based upon a breach by the Company of
any  covenant,  representation  or warranty  contained  herein or upon a written
misstatement  to the Placement Agent by the Company of a fact or omission by the
Company to state a fact relating to the business and financial  condition of the
Company),  then the Company  shall not be liable to the  Placement  Agent or its
counsel for any of the foregoing  expenses.  If the Offering is not  consummated
because  the  Company  prevents  its  completion  or  because of a breach by the
Company of any such covenants,  representations  or warranties or because of any
such misstatements or omissions by the Company, then the Company's liability for
the Placement  Agent's  expenses shall be equal to the Placement  Agent's actual
accountable expenses.

          5.        COVENANTS. The Company covenants and agrees that:

          5.1       AMENDMENTS  TO OFFERING  DOCUMENTS.  Until the  Offering has
been  completed  or  terminated,  if there shall occur any event  relating to or
affecting,  among other things,  the Company or any  affiliate,  or the proposed
operations of the Company as described in the  Memorandum,  as a result of which
it is necessary,  in the opinion of counsel for the  Placement  Agent or counsel
for the Company, to amend or supplement the Offering Documents in order that the
Offering  Documents  will not contain an untrue  statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the  circumstances  under which they were made, not  misleading,
the Company  shall  immediately  prepare and  furnish to the  Placement  Agent a
reasonable  number of copies of any  appropriate  amendment or supplement to the
Offering  Documents,  in form and  substance  satisfactory  to  counsel  for the
Placement Agent.

          5.2       USE OF PROCEEDS.  The net  proceeds of the Offering  will be
used by the Company only for the purposes stated in the Offering Documents.

          5.3       EXPENSES OF OFFERING.  The Company shall be responsible for,
and shall pay, all expenses directly and necessarily incurred in connection with
the proposed financing,  including,  but not limited to, the costs of preparing,
printing and filing, where necessary,  the Offering Documents and all amendments
and supplements thereto, fees of Placement Agent's counsel for blue

                                      -14-
<PAGE>
sky and other  matters in the amount of $15,000 as provided  in par.  "E" of the
Letter,  filing  fees and  disbursements  of the  Placement  Agent's  counsel in
connection with blue sky matters.

          5.4.      LETTER OF INTENT.  The Company  will use its best efforts to
expeditiously  proceed to the  consummation  of the public  offering  (the "PO")
contemplated by the letter dated June 18, 1996, as extended,  between you and us
(the  "Letter"),  including but not limited to, the  preparation,  execution and
filing with all necessary governmental authorities of the Registration Statement
on Form SB-2  (including  the related  prospectus and necessary  exhibits),  the
satisfaction  of the  obligations  of the Company in connection  therewith,  the
cooperation with you in requesting  effectiveness of the Registration  Statement
at such time as the Commission is prepared to declare the Registration Statement
effective,  complying with all applicable statutes,  laws, rules and regulations
concerning  the  PO,  and  paying  the  necessary  expenses  to be  incurred  in
connection therewith to the extent provided in the Letter.

          6.        REGISTRATION   RIGHTS.   As  more  fully  described  in  the
Subscription  Agreement to be executed by the Company and each  Subscriber,  the
Company agrees to register for public sale,  Warrants and shares of Common Stock
underlying  the Warrants  included in each  Subscriber's  Units  pursuant to the
Company's  Registration  Statement  to be filed in  connection  with the PO. The
Company shall use its best efforts with due  diligence to keep the  Registration
Statement current throughout the term of the Warrants.

          7.        INDEMNIFICATION AND CONTRIBUTION.

          7.1       INDEMNIFICATION  BY  THE  COMPANY.  The  Company  agrees  to
indemnify  and hold harmless the  Placement  Agent and each person,  if any, who
controls the Placement Agent within the meaning of the Securities Act and/or the
1934 Act against any losses, claims,  damages or liabilities,  joint or several,
to which the  Placement  Agent or such  controlling  person may become  subject,
under the Securities Act or otherwise,  insofar as such losses,  claims, damages
or liabilities  (or actions in respect  thereof) arise out or are based upon (i)
any untrue  statement or alleged  untrue  statement of a material fact contained
(A) in the  Offering  Documents,  or (B) in any  blue sky  application  or other
document executed by the Company specifically for blue sky purposes or any other
written  information  furnished  by the Company or on its behalf to any state or
other  jurisdiction  in order  to  qualify  any or all of the  Units  under  the
securities  laws thereof (any such  application,  document or information  being
hereinafter  called a "Blue Sky  Application"),  or (ii) the omission or alleged
omission by the Company to state in the  Offering  Documents  or in any Blue Sky
Applications  a material fact required to be stated therein or necessary to make
the  statements  therein,  in light of the  circumstances  under which they were
made, not misleading; and will reimburse the Placement Agent

                                      -15-
<PAGE>
and each such  controlling  person  for any legal or other  expenses  reasonably
incurred by the Placement  Agent or such  controlling  person in connection with
investigating or defending any such loss,  claim,  damage,  liability or action,
PROVIDED, the Company will not be liable in any such case to the extent that any
such  loss,  claim,  damage or  liability  arises out of or is based upon (x) an
untrue  statement or alleged  untrue  statement or omission or alleged  omission
made in reliance upon and in conformity  with written  information  furnished to
the Company by the Placement Agent in the preparation of the Offering  Documents
or any such Blue Sky  Application;  (y) any failure by the Placement Agent to be
registered  or be in good standing as a  broker-dealer  in any  jurisdiction  in
which Units are sold or to comply with the terms of the Blue Sky Survey,  or (z)
any misrepresentation  made to a Subscriber by the Placement Agent or its agents
not  included in the  Offering  Documents  and made by means other than the mere
delivery of the Offering Documents to a Subscriber (collectively,  (x), (y), and
(z) above are referred to as the "Non-Indemnity Events").

          7.2       INDEMNIFICATION  BY THE PLACEMENT AGENT. The Placement Agent
agrees to indemnify and hold  harmless the Company and each person,  if any, who
controls the Company  within the meaning of the  Securities  Act and/or the 1934
Act against any losses,  claims,  damages or liabilities,  joint or several,  to
which the  Company or such  controlling  person may  become  subject,  under the
Securities  Act  or  otherwise  insofar  as  such  losses,  claims,  damages  or
liabilities(or  actions in respect  thereof)  arise out of or are based upon (i)
any untrue  statement or alleged  untrue  statement of a material fact contained
(A) in the Offering Documents,  or (B) in any Blue Sky Application,  or (ii) the
omission or alleged  omission to state in the Offering  Documents or in any Blue
Sky  Application a material  fact required to be stated  therein or necessary to
make the statements  therein, in the light of the circumstances under which they
were made, not misleading; but in each case, only if and to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity  with written  information  furnished to
the Company by the Placement  Agent  specifically  for use with reference to the
Placement  Agent in the  preparation of the Offering  Documents or any such Blue
Sky Application,  or (iii) any other Non-Indemnity Event; and will reimburse the
Company  and each  such  controlling  person  for any  legal  or other  expenses
reasonably incurred by the Company or such controlling person in connection with
investigating  or defending any such loss,  claim,  damage or liability which is
found ultimately to arise out of or be based upon the circumstances described in
clauses (i), (ii) or (iii) of this Section 7.2.

          7.3       PROCEDURE.  Promptly after receipt by an  indemnified  party
under  this  Section  7 of  notice  of  the  commencement  of any  action,  such
indemnified  party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 7,

                                      -16-
<PAGE>
notify in writing the indemnifying party of the commencement thereof,  PROVIDED,
that the  omission  to so notify the  indemnifying  party will not  relieve  the
indemnifying  party from any  liability  under this  Section 7. In case any such
action is brought against any indemnified party, and it notifies an indemnifying
party of the commencement  thereof,  the indemnifying  party will be entitled to
participate therein, and to the extent that it may elect, jointly with any other
indemnifying  party,  similarly  notified,  to assume the defense thereof,  with
counsel who shall be to the reasonable  satisfaction of such indemnified  party,
and after notice from the indemnifying  party to such  indemnified  party of its
election so to assume the defense thereof,  the  indemnifying  party will not be
liable to such  indemnified  party  under this  Section 7 for any legal or other
expenses  subsequently incurred by such indemnified party in connection with the
defense  thereof  other  than  reasonable  costs  of  investigation.   Any  such
indemnifying  party shall not be liable to any such indemnified party on account
of any  settlement of any claim or action  effected  without the consent of such
indemnifying party.

          7.4       CONTRIBUTION.  If the  indemnification  provided for in this
Section 7 is  unavailable  to any  indemnified  party in respect to any  losses,
claims,   damages,   liabilities  or  expenses  referred  to  herein,  then  the
indemnifying  party,  in lieu  of  indemnifying  such  indemnified  party,  will
contribute to the amount paid or payable by such indemnified  party, as a result
of such losses, claims, damages,  liabilities or expenses (i) in such proportion
as is  appropriate to reflect the relative  benefits  received by the Company on
the one hand, and the Placement Agent on the other hand,  from the Offering,  or
(ii) if the  allocation  provided  by  clause  (i)  above  is not  permitted  by
applicable  law, in such  proportion as is  appropriate  to reflect not only the
relative benefit but also the relative fault of the Company on the one hand, and
of the Placement  Agent on the other hand, in connection  with the statements or
omissions  which  resulted  in such  losses,  claims,  damages,  liabilities  or
expenses as well as any other relevant  equitable  considerations.  The relative
benefits  received by the Company on the one hand and the Placement Agent on the
other hand,  shall be deemed to be in the same  proportion as the total proceeds
from the Offering  (net of sales  commissions,  but before  deducting  expenses)
received by the  Company,  bear to the  commissions  received  by the  Placement
Agent.  The  relative  fault of the Company on the one hand,  and the  Placement
Agent on the other hand,  will be  determined  with  reference  to,  among other
things,  whether the untrue or alleged  untrue  statements of a material fact or
the  omission to state a material  fact relates to  information  supplied by the
Company,  and  its  relative  intent,  knowledge,   access  to  information  and
opportunity to correct or prevent such statement or omission.

          7.5       EQUITABLE  CONSIDERATIONS.  The  Company  and the  Placement
Agent agree that it would not be just and equitable if

                                      -17-
<PAGE>
contribution  pursuant to this Section 7 were  determined by pro rata allocation
or by any other  method of  allocation  which  does not take  into  account  the
equitable considerations referred to in the immediately preceding subsection.

          7.6       ATTORNEYS'  FEES.  The amount  payable by a party under this
Section 7 as a result of the losses,  claims,  damages,  liabilities or expenses
referred  to above will be deemed to include any legal or other fees or expenses
reasonably  incurred by such party in connection with investigating or defending
any action or claim.

          8.        TERMINATION  BY PLACEMENT  AGENT.  The Placement  Agent will
have the right to terminate this Agreement by giving notice as herein specified,
at any time,  at or prior to the  Closing  Date if (i) the  Company  shall  have
failed, refused or been unable to perform any of its obligations  hereunder,  or
breached any of its  representations or warranties  hereunder,  or (ii) if there
has  occurred  an event  materially  and  adversely  affecting  the value of the
Warrants or Notes.

          9.        NOTICES. Any notice, election, demand or other communication
hereunder  shall be in a signed  writing and shall be deemed  given or made when
actually  received by personal  delivery or by  facsimile  transmission,  or two
business days following the date when mailed by certified mail, postage prepaid,
return receipt requested,  to the appropriate party or parties, at the following
addresses:  if to the  Placement  Agent,  to  Investors  Associates,  Inc.,  411
Hackensack Avenue, Lobby Level, Hackensack, NJ 07601, Attention: Herman Epstein,
Chairman  (Fax  No.  (201)  646-0093)  with a copy  to the Law  Offices  of Mark
Schwarz,  545 Madison Avenue,  16th Floor, New York, NY 10022,  Attention:  Mark
Schwarz,  Esq. (Fax No. (212) 826-1046),  and if to the Company,  at its address
above given, Attention: William Zanker, President with a copy to Olshan Grundman
Frome & Rosenzweig LLP, Attention:  Stephen Irwin, Esq., (Fax No. (212)755-1467)
or, in each case, to such other address as the parties may hereinafter designate
by like notice.

          10.       PARTIES.  This Agreement will inure to the benefit of and be
binding upon the Placement Agent,  the Company and their  respective  successors
and assigns. This Agreement is intended to be, and is for the sole and exclusive
benefit of the parties hereto and the persons  described in subsections  7.1 and
7.2) hereof,  and their respective  successors and assigns,  and no other person
will have any legal or equitable  right,  remedy or claim under or in respect of
this Agreement.

          11.       AMENDMENT AND/OR MODIFICATION.  Neither this Agreement,  nor
any term or  provision  hereof,  may be changed,  waived,  discharged,  amended,
modified or  terminated  orally or in any manner other than by an  instrument in
writing signed by each of the parties hereto.

                                      -18-
<PAGE>
          12.       FURTHER  ASSURANCES.  Each  party  to  this  Agreement  will
perform any and all acts and execute any and all  documents  as may be necessary
and proper  under the  circumstances  in order to  accomplish  the  intents  and
purposes of this Agreement and to carry out its provisions.

          13.       VALIDITY.  In case any term or provision  of this  Agreement
will be held  invalid,  illegal  or  unenforceable,  in whole  or in  part,  the
validity  of the other terms of this  Agreement  will not in any way be affected
thereby.

          14.       WAIVER OF BREACH.  The failure of any party hereto to insist
upon strict performance of any of the covenants and agreements herein contained,
or to  exercise  any  option  or  right  herein  conferred  in any  one or  more
instances,  will not be construed to be a waiver or  relinquishment  of any such
option or right, or of any other  covenants or agreements,  and the same will be
and remain in full force and effect.

          15.       ENTIRE  AGREEMENT.   This  Agreement   contains  the  entire
agreement and  understanding  of the parties with respect to the subject  matter
hereof, and there are no representations,  inducements,  promises or agreements,
oral  or  otherwise,   not  embodied  in  this  Agreement.  Any  and  all  prior
discussions, negotiations, commitments and understanding relating to the subject
matter of this Agreement are superseded by and merged into it.

          16.       COUNTERPARTS.  This Agreement may be executed in counterpart
and each such counterpart will for all purposes be deemed to be an original, and
such counterparts will together constitute one and the same instrument.

          17.       LAW.  This  Agreement  will be  deemed to have been made and
delivered  in the  state  of New  York  and  will be  governed  as to  validity,
interpretation,  construction,  effect and in all other respects by the internal
laws of the state of New York. The parties  hereto  consent to the  jurisdiction
and venue of any state or  Federal  court  located in New York for  purposes  of
resolving any disputes hereunder.

          18.       REPRESENTATIONS,   WARRANTIES   AND   COVENANTS  TO  SURVIVE
DELIVERY. The respective representations, indemnities, agreements, covenants and
warranties  of the Company and the Placement  Agent shall  survive  execution of
this  Agreement  and  delivery  of the  Units  and/or  the  termination  of this
Agreement prior thereto.

          19.       NO  ASSIGNMENT.  Neither  this  Agreement  nor any rights or
obligations  hereunder may be assigned by either party without the prior consent
of the other party, and any attempted  assignment  without such consent shall be
void and of no effect.

                                      -19-
<PAGE>
          20.       SCHEDULES.  Any disclosure made on any schedule hereto shall
be deemed as also having been made on any other schedule hereto as to which such
disclosure is also responsive.

          If you find the  foregoing is in  accordance  with our  understanding,
kindly sign and return to us a counterpart  hereof,  whereupon  this  instrument
along with all counterparts will become a binding agreement between us.

                              Very truly yours,

                              THE GREAT AMERICAN BACKRUB STORE INC.


                              By: /s/ Terrance C. Murray,
                                  -----------------------
                                  Terrance C. Murray,
                                  Chief Executive Officer





ACCEPTED AND AGREED TO:

INVESTORS ASSOCIATES, INC.


By: /s/ Herman Epstein
    ----------------------
     Herman Epstein, Chairman

                                      -20-

<PAGE>
                                                               December 20, 1996

The Great American BackRub Store, Inc.
425 Madison Avenue, Fifth Floor
New York, NY  10017

Attn:  Mr. William Zanker

                  Re:  Agency Agreement (the "Agreement")
                       Between us dated November 11, 1996
                       ----------------------------------

Ladies and Gentlemen:

          We refer to the Agency  Agreement  and your  request to  increase  the
Offering by 1-1/3 (one and one-third)  Units to 5-1/3 (five and one-third) Units
(or a total of  $266,666.67).  This  letter  will  serve to  confirm  our mutual
understanding  to amend the  Agreement  in  accordance  with the  foregoing  and
regarding related matters. Capitalized terms used herein shall have the meanings
ascribed to them in the Agreement unless otherwise defined herein:

          1. The  references  to  "four  (4)" on page 1 and in  Section  4.1 are
hereby  changed to read "5-1/3 (five and  one-third)".  Further,  an  additional
sentence  shall be inserted  after the second  sentence on page 1 to read in its
entirety as follows:  "One and  one-third  (1-1/3)  Units shall be reserved  for
purchase by William Zanker, Keith Dee and Terrance C. Murray or their affiliates
in such proportion as shall be determined by them on notice to us".

          2. The  reference  to $200,000 in Section 1.1 shall be changed to read
"$266,666.67".

          3. The second line on page 6 is hereby amended to read in its entirety
"set forth, and the consummation of the transactions contemplated".

          4.  After  the word "to" in the  second  line of  subparagraph  "3(d)"
insert the language:  "persons or entities who the Placement Agent has reason to
believe constitute".

  In furtherance of the foregoing,  the terms and conditions
of the letter of intent between us dated June 18, 1996 under the caption "Bridge
Financing"  commencing on page 21 are hereby amended  accordingly.  Further, the
reference to page 23 to "24-month" shall be changed to "36-month".
<PAGE>
The Great American BackRub Store, Inc.
December 20, 1996
Page -2-

          Additionally,  it  is  understood  that  the  investors  who  executed
documents to subscribe to the previous bridge financing shall have the option to
receive  an  immediate  refund  of their  subscription  funds or  remain  in the
enlarged bridge financing by so indicating on a simplified  ratification form to
be circulated in substantially the form annexed hereto.

          Kindly acknowledge  receipt and acceptance of the foregoing by signing
where  indicated at the foot of the duplicate  hereof enclosed and returning the
same to this office.

          Thank you for your courtesy and cooperation.


                                         Very truly yours,

                                         INVESTORS ASSOCIATES, INC.



                                         By: /s/ Herman Epstein
                                            ----------------------------- 
                                                  Vice President


Receipt and Acceptance Acknowledged:

THE GREAT AMERICAN BACKRUB STORE, INC.



By: /s/ William Zanker 
   ----------------------------- 
             William Zanker
             President