EXECUTION COPY










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                            STOCK PURCHASE AGREEMENT

                                  BY AND AMONG

                                    AKI, INC.

                                       AND

                THE SELLERS LISTED ON THE SIGNATURE PAGES HEREOF




                          Dated as of September 2, 1999


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<TABLE>
<CAPTION>


                                                  TABLE OF CONTENTS


                                                                                                               Page
<S>                                                                                                            <C>
Article I SALE AND PURCHASE OF SHARES.............................................................................1
   Section 1.1    Sale and Purchase of Shares.....................................................................1

Article II PURCHASE PRICE AND PAYMENT.............................................................................1
   Section 2.1    Amount of Purchase Price........................................................................1
   Section 2.2    Payment of Estimated Purchase Price.............................................................2
   Section 2.3    Escrows.........................................................................................2
   Section 2.4    Determination of Purchase Price.................................................................3

Article III CLOSING AND TERMINATION...............................................................................5
   Section 3.1    Closing Date....................................................................................5
   Section 3.2    Termination of Agreement........................................................................5
   Section 3.3    Procedure Upon Termination......................................................................5
   Section 3.4    Effect of Termination...........................................................................5

Article IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS..........................................................6
   Section 4.1    Organization and Good Standing..................................................................6
   Section 4.2    Authorization of Agreement......................................................................6
   Section 4.3    Capitalization..................................................................................7
   Section 4.4    Subsidiaries....................................................................................7
   Section 4.5    Conflicts; Certain Consents of Third Parties....................................................8
   Section 4.6    Ownership and Transfer of Shares; Seller Consents...............................................8
   Section 4.7    Financial Statements............................................................................9
   Section 4.8    No Undisclosed Liabilities.....................................................................10
   Section 4.9    Absence of Certain Developments................................................................10
   Section 4.10   Taxes..........................................................................................11
   Section 4.11   Real Property..................................................................................13
   Section 4.12   Tangible Personal Property.....................................................................14
   Section 4.13   Intellectual Property; Proprietary Information.................................................14
   Section 4.14   Material Contracts.............................................................................16
   Section 4.15   Employee Benefits..............................................................................16
   Section 4.16   Labor..........................................................................................18
   Section 4.17   Litigation.....................................................................................19
   Section 4.18   Compliance with Laws; Permits..................................................................19
   Section 4.19   Environmental Matters..........................................................................19
   Section 4.20   Insurance......................................................................................20
   Section 4.21   Inventories; Receivables; Payables.............................................................20
   Section 4.22   Related Party Transactions.....................................................................21
   Section 4.23   Banks..........................................................................................22
   Section 4.24   Full Disclosure................................................................................22


                                                         i
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   Section 4.25   Financial Advisors.............................................................................22
   Section 4.26   Year 2000 Compliance...........................................................................22
   Section 4.27   Representations and Warranties Exclusive.......................................................23

Article V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER........................................................23
   Section 5.1    Organization and Good Standing.................................................................23
   Section 5.2    Authorization of Agreement.....................................................................23
   Section 5.3    Conflicts; Consents of Third Parties...........................................................23
   Section 5.4    Litigation.....................................................................................24
   Section 5.5    Investment Intention...........................................................................24
   Section 5.6    Financial Advisors.............................................................................24

Article VI COVENANTS.............................................................................................25
   Section 6.1    Access to Information..........................................................................25
   Section 6.2    Conduct of the Business Pending the Closing....................................................26
   Section 6.3    Consents.......................................................................................27
   Section 6.4    Other Actions..................................................................................27
   Section 6.5    No Solicitation................................................................................27
   Section 6.6    Preservation of Records........................................................................28
   Section 6.7    Publicity......................................................................................29
   Section 6.8    Termination of Agreements......................................................................29
   Section 6.9    Intellectual Property..........................................................................29
   Section 6.10   Collection of Accounts Receivable..............................................................29

Article VII OTHER AGREEMENTS.....................................................................................30
   Section 7.1    Payment of Sleepeck Indebtedness...............................................................30
   Section 7.2    Exercise of Options and Releases...............................................................30
   Section 7.3    Employees......................................................................................31
   Section 7.4    Certain Insurance Coverage.....................................................................31

Article VIII CONDITIONS TO CLOSING...............................................................................31
   Section 8.1    Conditions Precedent to Obligations of the Purchaser...........................................31
   Section 8.2    Conditions Precedent to Obligations of the Sellers.............................................34

Article IX CLOSING DELIVERIES....................................................................................35
   Section 9.1    Documents to be Delivered by the Sellers.......................................................35
   Section 9.2    Documents to be Delivered by the Purchaser.....................................................36
   Section 9.3    Simultaneous Transactions......................................................................37

Article X INDEMNIFICATION........................................................................................37
   Section 10.1   Non-Tax Indemnification........................................................................37
   Section 10.2   Limitations on Indemnification for Breaches of Representations
                    and Warranties...............................................................................39
   Section 10.3   Non-Tax Indemnification Procedures.............................................................40
   Section 10.4   Tax Matters....................................................................................41
   Section 10.5   Tax Treatment of Indemnity Payments............................................................46





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Article XI MISCELLANEOUS.........................................................................................46
   Section 11.1   Certain Definitions............................................................................46
   Section 11.2   Survival.......................................................................................51
   Section 11.3   Expenses.......................................................................................51
   Section 11.4   Specific Performance...........................................................................52
   Section 11.5   Further Assurances.............................................................................52
   Section 11.6   Arbitration....................................................................................52
   Section 11.7   Entire Agreement; Amendments and Waivers.......................................................52
   Section 11.8   Governing Law..................................................................................53
   Section 11.9   Table of Contents and Headings.................................................................53
   Section 11.10  Notices........................................................................................53
   Section 11.11  Severability...................................................................................55
   Section 11.12  Binding Effect; Assignment.....................................................................55
   Section 11.13  Sellers'Representatives........................................................................56
   Section 11.14  Disclaimer of Certain Kinds of Damages.........................................................56



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                                                        iii
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                                          SCHEDULES

Schedule 1.1      -      Sellers; Shares; Sharing Ratios
Schedule 2.1      -      1998 Working Capital
Schedule 2.3      -      Accounts Receivable
Schedule 4.1      -      Organizations and Good Standing
Schedule 4.3(a)   -      Owners of Stock
Schedule 4.3(b)   -      Rights Holders/Exceptions
Schedule 4.4      -      Subsidiaries/Qualifications
Schedule 4.5      -      Consents of Third Parties
Schedule 4.6      -      Share Ownership
Schedule 4.8      -      Undisclosed Liabilities
Schedule 4.7      -      Financial Statements
Schedule 4.9      -      Certain Developments
Schedule 4.10     -      Taxes
Schedule 4.11     -      Real Property Leases
Schedule 4.12(a)  -      Personal Property Leases
Schedule 4.13     -      Intellectual Property
Schedule 4.14     -      Material Contracts
Schedule 4.15     -      Employee Benefits
Schedule 4.16     -      Labor
Schedule 4.17     -      Litigation
Schedule 4.19     -      Environmental Matters
Schedule 4.20     -      Insurance
Schedule 4.21     -      Inventories; Receivables; Payables
Schedule 4.22     -      Related Party Transactions
Schedule 4.23     -      Banks
Schedule 5.3(b)   -      Consents Required of Purchaser
Schedule 6.8      -      Termination of Agreements
Schedule 8.1(r)   -      Employee Receivables
Schedule 8.1(u)   -      Terminated Employees
Schedule 10.1     -      Indemnification Exceptions

                                       EXHIBITS

Exhibit A         -      Form of Escrow Agreement
Exhibit B         -      Form of Employment Agreement
Exhibit C         -      Form of Consulting Agreement
Exhibit D         -      Printing Services Agreement
Exhibit E         -      Form of Non-Competition and Non-Solicitation Agreement
Exhibit F         -      Form of Release


                                       iv
<PAGE>



                            STOCK PURCHASE AGREEMENT


                  STOCK PURCHASE  AGREEMENT,  dated as of September 2, 1999 (the
"Agreement"),  by and among AKI, Inc., a Delaware corporation (the "Purchaser"),
and the  shareholders  and rights  holders of RetCom  Holdings  Ltd., a Delaware
corporation (the "Company"), listed on the signature pages hereof (collectively,
the "Sellers").

                              W I T N E S S E T H:
                              - - - - - - - - - -

                  WHEREAS,  the Sellers own as  specified in Schedule 1.1 all of
the issued and  outstanding  shares of the Company's  common stock, no par value
(the "Common  Stock"),  and all of the issued and outstanding  options and other
rights to purchase  capital  stock of and all of the other equity  rights of the
Company (collectively, the "Options"); and

                  WHEREAS,  the  Sellers  desire to sell to  Purchaser,  and the
Purchaser desires to purchase from the Sellers, the Common Stock and Options set
forth on Schedule 1.1  (collectively,  the "Shares") for the purchase  price and
upon the terms and conditions hereinafter set forth; and

                  WHEREAS,  certain terms used in this  Agreement are defined in
Section 11.1;

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
mutual covenants and agreements hereinafter contained,  the parties hereby agree
as follows:


                                   Article I
                           SALE AND PURCHASE OF SHARES

                  Section 1.1 Sale and Purchase of Shares.

                  Upon the terms and subject to the conditions contained herein,
on the Closing Date each Seller  identified on Schedule 1.1 shall sell,  assign,
transfer,  convey and deliver to the Purchaser, and the Purchaser shall purchase
from  each such  Seller,  the  Shares of such  Seller  set forth  opposite  such
Seller's name on Schedule 1.1 hereto.


                                   Article II
                           PURCHASE PRICE AND PAYMENT

                  Section 2.1 Amount of Purchase Price.

                  The aggregate  purchase price (the  "Purchase  Price") for the
Shares  shall be an amount  equal to  $10,180,000  less (A) the  amount by which
Working  Capital as of the earlier of  September  15, 1999 and the Closing  Date
(the  "Determination  Date")  (i) falls  short of 108% of the  amount of Working
Capital for September 15, 1998 (the "1998 Working  Capital") if the 1998 Working
Capital was  greater  than or equal to zero or (ii) is less than 92% of the 1998

<PAGE>


Working  Capital if the 1998  Working  Capital  was less than zero,  and (B) the
excess of  Indebtedness  as of the  Determination  Date over $4.5 million.  Each
Seller  identified on Schedule 1.1 shall  receive the amount set forth  opposite
his or its name on Schedule  1.1,  subject to adjustment as described in (A) and
(B) above,  such  adjustments for each such Seller being  calculated pro rata in
accordance  with the  sharing  ratios set forth on  Schedule  1.1 (the  "Sharing
Ratios").

                  Section 2.2 Payment of Estimated Purchase Price.

                  No later than the close of business on September 7, 1999,  the
Purchaser  and Jay  Gartlan  shall  agree on the  estimate  of the 1998  Working
Capital and shall  agree on a schedule  to this  Agreement  to be  initialed  by
William J. Fox and Jay Gartlan and inserted as Schedule 2.1.  Schedule 2.1 shall
show the  estimate  of the 1998  Working  Capital,  based on the  average of the
Working  Capital as of August 31, 1998 and the Working  Capital as of  September
30, 1998,  as shown on the  unaudited  balance  sheets of the Company as of such
respective dates (the "1998 Interim Balance  Sheets").  The 1998 Working Capital
shall be  compiled  from the  relevant  line items on the 1998  Interim  Balance
Sheets  consistent  with the  definition of Working  Capital  herein,  including
consistency with GAAP, except as noted in Schedule 2.1.

                  At least two  Business  Days prior to the  Closing  Date,  the
Purchaser  and the  Sellers'  Representatives  shall agree on an estimate of the
Purchase  Price  (the  "Estimated  Purchase  Price")  based on the 1998  Working
Capital as shown on Schedule  2.1 and using the internal  accounting  records of
the Company and its  Subsidiaries for purposes of estimating the Working Capital
as of the  Determination  Date. On the Closing Date, the Purchaser shall pay the
Estimated  Purchase Price,  adjusted as set forth in Section 2.3, to the Sellers
identified on Schedule 1.1 in accordance with the Sharing Ratios.  Each Seller's
portion of the  Estimated  Purchase  Price  shall be paid to such Seller by wire
transfer of immediately available funds into an account designated in writing by
such Seller not later than two Business  Days before the Closing Date (or, if no
account is designated,  then by certified check payable in immediately available
funds to the order of such Seller).

                  Section 2.3 Escrows.

                  (a) The Purchaser  shall withhold from each Seller  identified
on Schedule 1.1, pro rata in accordance with the Sharing Ratios, an aggregate of
$200,000 (the "Purchase Price Escrow Amount") from the Estimated  Purchase Price
on the Closing Date pending agreement  pursuant to Section 2.4 as to the amounts
of  1998  Working   Capital  and  Working   Capital  and   Indebtedness  on  the
Determination  Date.  The Purchase  Price Escrow Amount shall be deposited in an
interest  bearing  escrow  account  with Hudson  United  Bank or another  Person
acceptable to the Purchaser  and the Sellers'  Representatives,  as escrow agent
(the "Escrow Agent"),  pursuant to an Escrow Agreement (the "Escrow  Agreement")
substantially  in  the  form  of  Exhibit  A  attached  hereto,   pending  final
determination  of the Purchase  Price  pursuant to Section  2.4.  Upon the final
determination  of the Purchase Price pursuant to Section 2.4, the Purchase Price
Escrow  Amount,  if any,  shall be  disbursed  in  accordance  with  such  final
determination.

                  (b) The Purchaser  shall withhold from each Seller  identified
on Schedule 1.1, pro rata in accordance with the Sharing Ratios, an aggregate of
$500,000  (together  with the  Additional  Indemnification  Amount,  if any, the


                                       2
<PAGE>


"Indemnification  Escrow  Amount")  from  the  Estimated  Purchase  Price on the
Closing  Date,  which will be held in an interest  bearing  escrow  account (the
"Indemnification  Escrow  Account") with the Escrow Agent pursuant to the Escrow
Agreement, as security for the Purchaser with respect to the representations and
warranties  of the  Sellers  set  forth in  Article  IV and the  indemnification
obligations of the Sellers set forth in Article X. Subject to certain exceptions
set  forth in the  Escrow  Agreement,  on  January  2,  2001 or as  promptly  as
practicable  thereafter,  the remaining  balance of the  Indemnification  Escrow
Amount and  interest  earned on all  amounts  deposited  pursuant  to the Escrow
Agreement,  if any,  shall be disbursed to the Sellers in accordance  with their
Sharing Ratios.

                  (c) The Purchaser  shall withhold from each Seller  identified
on Schedule 1.1, pro rata in accordance with the Sharing Ratios, an aggregate of
$500,000 (the "Receivable  Escrow Amount") from the Estimated  Purchase Price on
the Closing Date,  which will be held in an interest bearing escrow account with
the Escrow Agent pursuant to the Escrow Agreement, as security for the Purchaser
with respect to the collectability of accounts receivable of the Company and its
Subsidiaries  existing as of the Closing Date which are older than 90 days,  and
which  are set  forth on  Schedule  2.3,  which  Schedule  shall be  updated  in
accordance  with  Section  6.1(b)  hereof as of the close of business on the day
immediately  preceding  the  Closing  Date  (collectively,  the  "Aged  Accounts
Receivable").  An amount equal to the aggregate Aged Accounts  Receivable (other
than Aged Accounts Receivable which have been previously written-off) which have
not been  collected by the Company or its  Subsidiaries  by the date which is 90
days after the Closing Date (the "Collection Date"), less an amount equal to the
$38,743  general  reserve  against  Aged  Accounts  Receivable  reflected on the
unaudited  compiled  consolidated  balance  sheet  as  of  June  30,  1999  (the
"Uncollected  Receivables  Amount") shall be disbursed to the Purchaser from the
Receivable  Escrow Amount as promptly as  practicable  following the  Collection
Date,  and the remaining  balance of the Receivable  Escrow Amount,  if any (the
"Additional  Indemnification  Amount"),  shall be transferred and deposited into
the  Indemnification  Escrow Account.  Thereafter,  the  Indemnification  Escrow
Amount shall be increased by an amount equal to the  Additional  Indemnification
Amount,  and shall be held as security  for the  Purchaser  with  respect to the
representations  and  warranties  of the Sellers set forth in Article IV and the
indemnification obligations of the Sellers set forth in Article X. The Purchaser
shall cause the Company and/or its  Subsidiaries,  as the case may be, to assign
to the Sellers (or their  respective  designees) all of the Company's and/or its
Subsidiaries' right, title and interest in and to Aged Accounts  Receivable,  as
the Purchaser  shall select in its sole  discretion (as evidenced by one or more
invoices),  in an aggregate  amount equal to the funds  disbursed from escrow to
the  Purchaser  in respect of the  Uncollected  Receivables  Amount.  During the
period following the Closing Date and until the Collection Date (the "Collection
Period"),  all payments  received by the Company and its  Subsidiaries  from any
customer owing both Aged Accounts  Receivable  and other accounts  receivable to
the Company or any Subsidiary  during the Collection  Period shall be applied to
such accounts receivables as directed by such customer.

                  Section 2.4 Determination of Purchase Price.

                  (a) As soon as practicable  following the Closing Date, but in
no event later than 30 days  following  the Closing Date,  the  Purchaser  shall
cause the Company to prepare and deliver to the Sellers a final  calculation  of
1998  Working   Capital  and  Working   Capital  and   Indebtedness  as  of  the

<PAGE>



Determination  Date and a balance sheet for the Company and its  Subsidiaries as
of the  Determination  Date (the "Closing  Date Balance  Sheet") and Jay Gartlan
shall be entitled to consult with the Company in the  preparation  of such final
calculations  and the Closing Date Balance Sheet. The Closing Date Balance Sheet
shall be  prepared  in  accordance  with GAAP and shall  (i)  include  all Taxes
accrued on the June 30, 1999  Balance  Sheet,  (ii)  include all Taxes  accruing
after  June 30,  1999 and  until  the  Closing  Date in the  ordinary  course of
business of the Company and its  Subsidiaries  and which are not due for payment
on or prior to the Closing Date,  (iii) be subject to the exception set forth on
Schedule  10.1 hereto with  respect to sales and use Tax  liabilities,  and (iv)
include all such other reserves required by GAAP. If no objections are raised to
the calculations of 1998 Working Capital, Working Capital and Indebtedness as of
the  Determination  Date or the  Closing  Date  Balance  Sheet  by the  Sellers'
Representatives  within 30 days  after  receipt  thereof  by the  Sellers,  such
calculations  and such Closing Date Balance  Sheet shall be deemed  accepted and
approved  by  the  Sellers  and  a  supplemental   closing  (herein  called  the
"Supplemental  Closing")  shall be held at either  the same place and time as is
provided in Section 3.1 hereof,  by conference  telephone  originated  from such
place at such time or as the Sellers and the Purchaser may otherwise  agree in a
signed  writing on the fifth (5th) Business Day following the expiration of such
30 day period. At such Supplemental Closing any difference between the Estimated
Purchase  Price and the actual  Purchase  Price  shall be paid to the Sellers or
reimbursed to the Purchaser,  as the case may be. Any amount  payable  hereunder
shall be satisfied  first from the Purchase  Price Escrow Amount and  thereafter
shall be satisfied by direct payments by the Sellers  identified on Schedule 1.1
(pro rata in accordance with their Sharing Ratios) or the Purchaser, as the case
may be.

                  (b) During the 30-day period after the Sellers' receipt of the
final  calculations of 1998 Working Capital and Working Capital and Indebtedness
as  of  the  Determination   Date,  the  Purchaser  shall  permit  the  Sellers'
Representatives, at the expense of the Sellers, to have reasonable access during
normal  business  hours  to  appropriate  supporting  work  papers  specifically
requested by the Sellers' Representatives with respect to such calculations.  If
the Sellers'  Representatives  object to the final  calculations of 1998 Working
Capital,  Working Capital or Indebtedness  as of the  Determination  Date or the
Closing  Date  Balance  Sheet  within 30 days after  receipt  thereof,  then the
specific matters disputed by the Sellers'  Representatives shall be submitted to
Deloitte & Touche LLP or another independent,  nationally  recognized accounting
firm  acceptable  to the  Purchaser  and  the  Sellers'  Representatives,  which
accounting firm shall make a final and binding determination as to such matters.
The Supplemental  Closing shall then take place five (5) Business Days following
the  receipt of such  final  determination  by the  Purchaser  and the  Sellers'
Representatives.

                  (c) The  parties  shall  cooperate  with  each  other and each
other's authorized  representatives and with the accounting firm selected by the
Purchaser and the Sellers'  Representatives in order that any and all matters in
dispute under this Section 2.4 shall be resolved as soon as practicable and that
a final determination shall be made.

                  (d) The fees and  expenses  of the  accounting  firm  retained
pursuant to this Section 2.4 shall be paid by the objecting Seller(s) and/or the
Purchaser, as determined by such accounting firm.




                                       4

<PAGE>



                                  Article III
                             CLOSING AND TERMINATION

                  Section 3.1 Closing Date.

                  Subject to the  satisfaction  of the  conditions  set forth in
Sections  8.1 and 8.2 hereof  (except  for the  condition  set forth in Sections
8.1(q) and  8.2(l)) or the waiver  thereof by the party  entitled  to waive that
condition,  the closing of the sale and  purchase of the Shares  provided for in
Section 1.1 hereof (the "Closing") shall take place at 10:00 a.m., New York City
time, at the offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P. located at 590
Madison Avenue,  New York, New York 10022 (or at such other place as the parties
may designate in writing) on the date that the parties hereto  reasonably expect
the  conditions  in Sections  8.1 and 8.2 hereof to be  satisfied  or as soon as
practicable thereafter as the parties may otherwise agree. The date on which the
Closing shall be held is referred to in this Agreement as the "Closing Date."

                  Section 3.2 Termination of Agreement.

                  This  Agreement  may be  terminated  prior to the  Closing  as
follows:

                  (a) At the  election of the  Sellers'  Representatives  or the
Purchaser on or after September 21, 1999, if conditions to the obligation of the
relevant  party to close shall not have been  fulfilled or if the Closing  shall
not have otherwise occurred by the close of business on such date, provided that
the  party  seeking  to  terminate  is not  in  material  default  of any of its
obligations hereunder;

                  (b) by mutual written consent of the Sellers'  Representatives
and the Purchaser;

                  (c) by the Sellers'  Representatives or the Purchaser if there
shall  be in  effect  a final  nonappealable  Order  of a  Governmental  Body of
competent  jurisdiction  restraining,  enjoining  or otherwise  prohibiting  the
consummation of the transactions  contemplated  hereby; it being agreed that the
parties  hereto shall  promptly  appeal any adverse  determination  which is not
nonappealable (and pursue such appeal with reasonable diligence); or

                  (d) by the Purchaser pursuant to Section 6.1.

                  Section 3.3 Procedure Upon Termination.

                  In the event of a termination  of this  Agreement  pursuant to
Section 3.2 hereof, written notice thereof shall forthwith be given to the other
parties,  this  Agreement  shall  terminate,  and  the  purchase  of the  Shares
hereunder  shall be abandoned,  without  further  action by the Purchaser or the
Sellers.  If this  Agreement is terminated  as provided  herein each party shall
redeliver  all  documents,  work  papers and other  material  of any other party
relating to the transactions  contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same.

                  Section 3.4 Effect of Termination.




                                       5
<PAGE>


                  In the event  that this  Agreement  is validly  terminated  as
provided herein,  then each of the parties shall be relieved of their respective
duties  and  obligations  arising  under this  Agreement  after the date of such
termination and such  termination  shall be without  liability to the Purchaser,
the  Company or any  Seller;  provided,  however,  that the  obligations  of the
parties set forth in Sections 6.5,  11.3 and 11.6 and the  provisions of Section
6.1 relating to confidentiality  shall survive any such termination and shall be
enforceable hereunder;  provided, further, however, that nothing in this Article
III shall  relieve the  Purchaser or any Seller of any liability for a breach of
this Agreement.


                                   Article IV
                  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

                  Each of the Sellers  hereby  jointly and severally  represents
and warrants to the Purchaser with respect to all representations and warranties
in this  Article  IV,  other  than those set forth in  Sections  4.2 and 4.6 and
Section 4.24 (to the extent Section 4.24 relates to Sections 4.2 and 4.6).  Each
of the Sellers  severally  represents and warrants to the Purchaser as to itself
only with respect to the  representations and warranties in Sections 4.2 and 4.6
and Section 4.24 (to the extent Section 4.24 relates to Sections 4.2 and 4.6).

                  Section 4.1 Organization and Good Standing.

                  The Company is a corporation duly organized,  validly existing
and in good standing under the laws of Delaware and has all requisite  corporate
power and authority to own, lease and operate its properties and to carry on its
business as now  conducted.  The Company is duly  qualified or  authorized to do
business as a foreign  corporation and is in good standing under the laws of the
jurisdictions  set forth on Schedule 4.1, which lists each jurisdiction in which
it owns or leases real property and each other jurisdiction in which the conduct
of its business or the ownership of its properties  requires such  qualification
or  authorization  except  where a failure to be so  qualified  would not have a
material  adverse  effect on the  condition,  financial or otherwise,  or on the
earnings,  prospects, business or operations of the Company and its Subsidiaries
taken as a whole ("Material Adverse Effect").

                  Section 4.2 Authorization of Agreement.

                  Such  Seller  has all  requisite  power,  authority  and legal
capacity  to execute  and  deliver  this  Agreement  and each  other  agreement,
document instrument or certificate contemplated by this Agreement to be executed
by  such  Seller  in  connection  with  the  consummation  of  the  transactions
contemplated by this Agreement (the "Seller  Documents"),  and to consummate the
transactions  contemplated hereby and thereby. This Agreement has been, and each
of the Seller  Documents  shall be at or prior to the Closing,  duly and validly
authorized (if applicable),  executed and delivered by such Seller and (assuming
the due  authorization,  execution and delivery by the other parties  hereto and
thereto) this Agreement  constitutes,  and each of the Seller  Documents when so
executed and delivered shall constitute, legal, valid and binding obligations of
such Seller, enforceable against such Seller in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, reorganization,  moratorium
and  similar  laws  affecting  creditors'  rights and  remedies  generally,  and

                                       6

<PAGE>
subject,  as to  enforceability,  to general  principles  of  equity,  including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).

                  Section 4.3 Capitalization.

                  (a) The  authorized  capital stock of the Company  consists of
1,500 shares of Common  Stock.  After  giving  effect to the exercise of Options
contemplated  by Section  7.2 hereof and the  exercise of the Option held by Jay
Gartlan  (collectively,  the "Options  Exercise"),  as of the Closing Date there
will be 110 shares of Common Stock issued and  outstanding.  After giving effect
to the  Options  Exercise,  as of  the  Closing  Date  all  of  the  issued  and
outstanding  shares of Common Stock will be duly  authorized and validly issued,
fully  paid and  non-assessable.  Schedule  4.3(a)  sets  forth the names of the
record and  beneficial  owners of all of the issued  and  outstanding  shares of
Common  Stock as of the  Closing  Date and the number of shares of Common  Stock
owned by each such stockholder as of the Closing Date after giving effect to the
Options Exercise.

                  (b)  Except as set forth on  Schedule  4.3(b)  and in the Memo
Agreement  dated  January 15, 1998 (the  "January  Memo"),  there is no existing
option,  warrant, call, right, commitment or other agreement of any character to
which  any  Seller  or the  Company  is a  party  requiring,  and  there  are no
securities of the Company  outstanding  which upon  conversion or exchange would
require,  the  issuance,  sale or transfer of any  additional  shares of capital
stock or other equity  securities of or rights to  participate in the Company or
other securities  convertible into,  exchangeable for or evidencing the right to
subscribe for or purchase shares of capital stock or other equity  securities of
or rights to participate in the Company.  Except for the January Memo and as set
forth on Schedule 4.3(b),  none of the Sellers nor the Company is a party to any
voting  trust or other  voting  agreement  with  respect to any of the shares of
Common  Stock or other  equity  securities  of or rights to  participate  in the
Company or to any agreement relating to the issuance, sale, redemption, transfer
or other disposition of the capital stock of the Company.

                  (c) The Shares to be sold to the  Purchaser  represent  all of
the capital  stock and other equity  securities or rights of any kind to acquire
any such securities of the Company.  Upon the Closing and after the consummation
of the transactions  contemplated  hereby, no party other than the Purchaser (or
other Persons  acquiring such rights  directly or indirectly from the Purchaser)
will have any right or claim to  participate  in the assets or  earnings  of the
Company.

                  Section 4.4 Subsidiaries.

                  Schedule 4.4 sets forth each  Subsidiary of the Company,  and,
with respect to each Subsidiary, the jurisdiction in which it is incorporated or
organized, the jurisdictions, if any, in which it is qualified to do business as
a foreign corporation, the number of shares of its authorized capital stock, the
number and class of shares thereof duly issued and outstanding, the names of all
stockholders  or other equity  owners and the number of shares of stock owned by
each  stockholder  or the  amount of equity  owned by each  equity  owner.  Each
Subsidiary  of  the  Company  is  in  good  standing   under  the  laws  of  the
jurisdictions  set forth on Schedule 4.4, which lists each jurisdiction in which


                                       7

<PAGE>

such  Subsidiary  owns or leases real  property and each other  jurisdiction  in
which the conduct of its business or the ownership of its properties requires it
to possess such qualification or authorization,  except where a failure to be so
qualified would not have a Material  Adverse Effect.  The outstanding  shares of
capital stock or equity  interests of each Subsidiary are validly issued,  fully
paid  and  non-assessable,  and  all  such  shares  or  other  equity  interests
represented  as being owned by the Company are owned by it free and clear of any
and all Liens, except as set forth in Schedule 4.4 hereto.  There is no existing
option,  warrant,  call,  commitment  or agreement to which any  Subsidiary is a
party  requiring,  and there are no  convertible  securities  of any  Subsidiary
outstanding which upon conversion would require,  the issuance of any additional
shares of capital  stock or other equity  interests of any  Subsidiary  or other
securities convertible into shares of capital stock or other equity interests of
any Subsidiary or other equity security of any Subsidiary.  Each Subsidiary is a
duly organized and validly existing corporation or other entity in good standing
under the laws of the  jurisdiction of its organization and is duly qualified to
do business and is in good standing under the laws of (i) each  jurisdiction  in
which it owns or leases real property and (ii) each other  jurisdiction in which
the  conduct  of its  business  or the  ownership  of its assets  requires  such
qualification  except  where a  failure  to be so  qualified  would  not  have a
Material Adverse Effect.

                  Section 4.5 Conflicts; Certain Consents of Third Parties.

                  (a) Except as set forth on Schedule 4.5, none of the execution
and  delivery  by any Seller of this  Agreement  and the Seller  Documents,  the
consummation of the transactions  contemplated  hereby or thereby, or compliance
by any Seller with any of the  provisions  hereof or thereof  will (i)  conflict
with,  or  result  in  the  breach  of,  any  provision  of the  certificate  of
incorporation or by-laws or comparable  organizational  documents of the Company
or any  Subsidiary;  (ii)  conflict  with,  violate,  result  in the  breach  or
termination of,  accelerate the performance  required by, give rise to any right
of termination,  acceleration,  cancellation or amendment under, or constitute a
default under any Contract,  instrument, note, bond, mortgage, indenture, lease,
license, franchise, commitment, covenant, understanding,  arrangement, agreement
or other  instrument or  obligation to which the Company or any  Subsidiary is a
party or by which any of them or any of their respective properties or assets is
bound;  (iii)  violate any  statute,  rule,  regulation,  order or decree of any
Governmental  Body by which the  Company  or any  Subsidiary  is bound;  or (iv)
result in the creation of any Lien upon the  properties or assets of the Company
or any  Subsidiary  except,  in case of clauses (ii),  (iii) and (iv),  for such
violations, breaches or defaults as would not, individually or in the aggregate,
have a Material Adverse Effect.

                  (b) Except as set forth on Schedule  4.5, no consent,  waiver,
approval,  Order,  Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental  Body is required on the part of the
Company or any Subsidiary in connection  with the execution and delivery of this
Agreement or the Seller Documents, or the compliance by the Company, with any of
the provisions  hereof or thereof,  except that no  representation is made as to
anything under the Hart-Scott-Rodino  Antitrust Improvements Act of 1976 and the
rules and regulations promulgated thereunder (the "HSR Act").

                  Section 4.6 Ownership and Transfer of Shares; Seller Consents.

                  (a) After  giving  effect to the Options  Exercise,  as of the
Closing  Date the  Purchaser  shall be the  record and  beneficial  owner of the



                                       8
<PAGE>

Shares  indicated  as being  owned by each Seller on  Schedule  4.6,  and on the
Closing Date, after giving effect to the Options  Exercise,  will have valid and
marketable title to the Shares to be sold by such Seller,  free and clear of any
and all Liens  after  giving  effect to the  transactions  contemplated  by this
Agreement.  Each Seller has the capacity,  power,  corporate or  otherwise,  and
authority to sell, transfer,  assign and deliver such Shares as provided in this
Agreement,  and such delivery will convey to the Purchaser  good and  marketable
title to such Shares,  free and clear of any and all Liens upon the consummation
of the transactions contemplated by this Agreement.

                  (b) Except as set forth on Schedule  4.6, no consent,  waiver,
approval,  Order,  Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental  Body is required on the part of any
Seller in connection  with the  execution and delivery of this  Agreement or the
Seller documents, or the compliance by each Seller with any provisions hereof or
thereof, except that no representation is made as to anything under the HSR Act.

                  Section 4.7 Financial Statements.

                  Attached  hereto as Schedule 4.7 are copies of (i) the audited
consolidated  balance sheets of the Company and its  Subsidiaries as at December
31, 1998 and the related audited  consolidated  statements of income and of cash
flows of the Company and its  Subsidiaries for the year then ended and, (ii) the
unaudited compiled consolidated balance sheets of RCC and its subsidiaries as at
December 31, 1997 and the unaudited compiled  consolidated balance sheets of the
Company and its  Subsidiaries  as at June 30,  1999 (the "June 30, 1999  Balance
Sheet") and the related consolidated statements of income and cash flows (except
that there are no cash flows for the June 30, 1999  Balance  Sheet) for the year
and  six-month  period  then ended,  respectively  (such  audited and  unaudited
statements,  including the related notes (except that there are no notes for the
June 30, 1999 Balance  Sheet) and schedules  thereto,  are referred to herein as
the  "Financial  Statements").  Except as set forth on Schedule 4.7, each of the
Financial Statements is complete and correct in all material respects,  has been
prepared  in  accordance   with  GAAP  and  in  conformity  with  the  practices
consistently  applied  by RCC or  the  Company,  as the  case  may  be,  without
modification of the accounting  principles  used in the preparation  thereof and
presents fairly the financial position,  results of operations and cash flows of
RCC and its  subsidiaries or the Company and its  Subsidiaries,  as the case may
be, as at the dates and for the periods indicated.

                  For the  purposes  hereof,  the audited  consolidated  balance
sheet of the Company and its Subsidiaries as at December 31, 1998 is referred to
as the  "Balance  Sheet" and  December  31, 1998 is referred to as the  "Balance
Sheet Date."

                  Except as set forth on Schedule 2.1, the 1998 Interim  Balance
Sheets, to the extent relevant to the determination of the 1998 Working Capital,
are  complete  and  correct in all  material  respects,  have been  prepared  in
accordance with GAAP and in conformity with the practices  consistently  applied
by RCC  or the  Company,  as  the  case  may  be,  without  modification  of the
accounting  principles  used in the  preparation  thereof and present fairly the
financial  position of the Company and its  Subsidiaries as at the dates and for
the periods  indicated.  The 1998 Working  Capital set forth on Schedule 2.1 has



                                       9

<PAGE>


been  accurately  compiled  from the  relevant  line  items in the 1998  Interim
Balance  Sheets and properly  calculated  in accordance  with the  definition of
Working  Capital  contained  herein  (except  for   inconsistencies   with  GAAP
specifically set forth on Schedule 2.1).

                  Section 4.8 No Undisclosed Liabilities.

                  Except as set forth on Schedule  4.8,  neither the Company nor
any  Subsidiary  has any  indebtedness,  obligations  or liabilities of any kind
(whether  accrued,  absolute,  contingent  or  otherwise,  and whether due or to
become due) that would have been required to be reflected in,  reserved  against
or otherwise  described on the Balance  Sheet or the June 30, 1999 Balance Sheet
or in the notes  thereto in accordance  with GAAP which was not fully  reflected
in,  reserved  against or otherwise  described in the Balance Sheet or the notes
thereto or the June 30, 1999 Balance  Sheet in  accordance  with GAAP or was not
incurred in the ordinary course of business  consistent with past practice since
June 30, 1999.

                  Section 4.9 Absence of Certain Developments.

                  Except as expressly  contemplated  by this Agreement or as set
forth on Schedule 4.9, since the Balance Sheet Date:

                           (i) there has not been any  Material  Adverse  Change
nor has there  occurred  any  event  which is  reasonably  likely to result in a
Material Adverse Change;

                           (ii) there has not been any  damage,  destruction  or
loss,  whether or not covered by  insurance,  with  respect to the  property and
assets of the Company or any Subsidiary  having a replacement  cost of more than
$25,000 for any single loss or $100,000 for all such losses;

                           (iii)  there  has not been any  declaration,  setting
aside or payment of any dividend or other  distribution in respect of any shares
of  capital  stock  of  the  Company  or any  repurchase,  redemption  or  other
acquisition  by any Seller or the Company or any  Subsidiary of any  outstanding
shares of capital stock or other securities of, or other ownership  interest in,
the Company or any Subsidiary;

                           (iv)  neither  the  Company  nor any  Subsidiary  has
awarded or paid any bonuses to employees of the Company or any  Subsidiary  with
respect to the  fiscal  year  ending  December  31,  1999,  or entered  into any
employment,  deferred compensation,  severance or similar agreement (nor amended
any such agreement) or agreed to increase the compensation  payable or to become
payable by it to any of the Company's or any Subsidiary's  directors,  officers,
employees,  agents or  representatives  or agreed to  increase  the  coverage or
benefits  available  under any severance  pay,  termination  pay,  vacation pay,
company  awards,  salary  continuation  for  disability,  sick  leave,  deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee  benefit  plan,  payment  or  arrangement  made  to,  for or with  such
directors,  officers,  employees,  agents or representatives  (other than normal
increases in the ordinary  course of business  consistent  with past practice or
consistent  with the terms of the existing  employment  agreements  set forth in
Schedule  4.15(a)  and that in the  aggregate  have not  resulted  in a material
increase  in the  benefits  or  compensation  expense  of the  Company  and  its
Subsidiaries taken as a whole);



                                       10
<PAGE>


                           (v) there has not been any  change by the  Company or
any Subsidiary in accounting or Tax reporting principles, methods or policies;

                           (vi)  neither  the  Company  nor any  Subsidiary  has
entered  into any  transaction  or  Contract  in excess of $25,000  (other  than
contracts relating to sales to customers and purchases of materials and services
included in the  Company's  accounts  for costs of goods sold,  in each case (A)
which have been fully  performed  by all  parties  thereto or (B) which have not
been fully performed and do not involve payments exceeding $50,000) or conducted
its business other than in the ordinary  course  consistent  with past practice,
except to the extent that during the entire period since the Balance Sheet Date,
the Company and its  Subsidiaries  have been engaged in discussions  relating to
the sale or refinancing of their respective businesses;

                           (vii) neither the Company nor any Subsidiary has made
any loans,  advances or capital  contributions to, or investments in, any Person
or paid any fees or expenses to any Seller or any Affiliate of any Seller (other
than (x)  payments  to  Sleepeck  Printing  or Dixon Webb  Printing  Company for
printing  services in the ordinary  course of business which are included in the
Company's   accounts  for  costs  of  goods  sold,  and  (y)  employee   expense
reimbursements  in the  ordinary  course of  business  consistent  with  current
contracts in an amount not to exceed $50,000 in the aggregate per employee);

                           (viii)  neither the Company  nor any  Subsidiary  has
subjected to any Lien (other than Permitted  Exceptions)  any of its assets,  or
acquired  any  assets  or  sold,  assigned,  transferred,  conveyed,  leased  or
otherwise  disposed of any assets of the Company or any  Subsidiary,  except for
assets acquired or sold, assigned,  transferred,  conveyed,  leased or otherwise
disposed of in the ordinary course of business consistent with past practice and
Liens granted and transfers to Sleepeck Printing in connection with the Sleepeck
Indebtedness;

                           (ix) neither the Company nor any  Subsidiary has made
or  committed  to  make  any  capital   expenditures  or  capital  additions  or
betterments in excess of $25,000 individually or $100,000 in the aggregate; and

                           (x) none of the Sellers nor the Company has agreed to
do anything set forth in and not excepted by this Section 4.9.

                  Section 4.10 Taxes.

                  (a) Except as set forth on Schedule  4.10, (A) all Tax Returns
required to be filed by or on behalf of the Company and each of its Subsidiaries
have been  properly  prepared  and duly and timely  filed  with the  appropriate
taxing  authorities in all  jurisdictions in which such Tax Returns are required
to be filed (after  giving  effect to any valid  extensions  of time in which to
make such filings),  and all such Tax Returns were true, complete and correct in
all material respects;  (B) all Taxes owed and required to be paid by any of the
Company  and its  Subsidiaries  prior to the date hereof or prior to the Closing
Date  (whether  or not  shown on any Tax  Return)  have  been  paid or  properly
reflected as an accrual on the June 30, 1999 Balance Sheet;  and (C) neither the
Company  nor any  Subsidiary  has  executed  or filed  with the IRS or any other
taxing  authority  any  agreement,  waiver  or  other  document  or  arrangement
extending  or having  the effect of  extending  the  period  for  assessment  or
collection of Taxes  (including,  but not limited to, any applicable  statute of


                                       11
<PAGE>

limitation),  and no  power  of  attorney  with  respect  to any Tax  matter  is
currently in force.

                  (b) The Company and each of its  Subsidiaries  has complied in
all material  respects with all applicable laws, rules and regulations  relating
to the payment and  withholding  of Taxes and has duly and timely  withheld from
employee  salaries,  wages  and  other  compensation  and has  paid  over to the
appropriate  taxing  authorities all amounts required to be so withheld and paid
over for all periods under all applicable laws.

                  (c) Purchaser has received complete copies of (A) all federal,
state, local and foreign income or franchise Tax Returns of the Company and each
Subsidiary  relating  to taxable  periods  since  1995 and (B) any audit  report
issued within the last three years relating to Taxes due from or with respect to
the Company and each Subsidiary,  its income,  assets or operations.  All income
and  franchise  Tax  Returns  filed  by or on  behalf  of the  Company  and each
Subsidiary  for the  taxable  years ended on the  respective  dates set forth on
Schedule 4.10 have been examined by the relevant taxing authority or the statute
of limitations with respect to such Tax Returns has expired.

                  (d) Except as set forth on  Schedule  4.10,  no claim has been
made by a taxing  authority  in a  jurisdiction  where the Company or any of its
Subsidiaries  does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction.

                  (e) Except as set forth on  Schedule  4.10,  all  deficiencies
asserted or assessments  made as a result of any  examinations by the IRS or any
other  taxing  authority  of the Tax  Returns of or covering  or  including  the
Company  or any of its  Subsidiaries  have  been  fully  paid,  and  none of the
Sellers,  the Company or any of its  Subsidiaries  have received any notice that
there are any other audits or investigations by any taxing authority that are in
progress, nor have the Sellers,  Company or any of its Subsidiaries received any
notice  from any taxing  authority  that it intends to conduct  such an audit or
investigation.  No issue has been raised by a federal,  state,  local or foreign
taxing  authority in any current or prior  examination  which, by application of
the same or similar  principles,  could  reasonably  be  expected to result in a
proposed deficiency for any subsequent taxable period.

                  (f) Except as set forth on Schedule 4.10,  neither the Company
nor any of its Subsidiaries nor any other Person  (including any of the Sellers)
on  behalf of the  Company  or any of its  Subsidiaries  has (A) filed a consent
pursuant to Section  341(f) of the Code or agreed to have  Section  341(f)(2) of
the Code apply to any  disposition  of a  subsection  (f) asset (as such term is
defined in Section  341(f)(4)  of the Code)  owned by the  Company or any of its
Subsidiaries,  (B) agreed to or is required to make any adjustments  pursuant to
Section 481(a) of the Code or any similar  provision of state,  local or foreign
law by reason of a change in accounting  method  initiated by the Company or any
of its  Subsidiaries  or has any  knowledge  that the IRS has  proposed any such
adjustment or change in accounting  method, or has any application  pending with
any taxing authority requesting permission for any changes in accounting methods
that  relate  to  the  business  or  operations  of  the  Company  or any of its
Subsidiaries or (C) requested any extension of time within which to file any Tax
Return of the Company or any of its Subsidiaries, which Tax Return has since not
been filed.  Each of the  Company  and its  Subsidiaries  has  disclosed  in its
federal  income  Tax  Returns  all  positions  taken  that  could give rise to a

                                       12

<PAGE>


substantial  understatement  of federal income Tax within the meaning of Section
6662 of the Code.

                  (g) No  Seller is a  foreign  person  within  the  meaning  of
Section 1445 of the Code.

                  (h) Neither the Company nor any of its Subsidiaries is a party
to any tax sharing or similar agreement or arrangement  (whether or not written)
pursuant to which it will have any  obligation  to make any  payments  after the
Closing.

                  (i)  There  is no  contract,  agreement,  plan or  arrangement
covering any person that,  individually or collectively,  could give rise to the
payment of any amount by the Company or any of its  Subsidiaries  that would not
be deductible by the Company or any of its Subsidiaries,  the Purchaser,  or any
of their respective Affiliates by reason of Section 280G of the Code.

                  (j) There are no Liens except Permitted Exceptions as a result
of any  unpaid  Taxes  upon  any  of the  assets  of the  Company  or any of its
Subsidiaries.

                  (k) Neither the Company nor any of its  Subsidiaries  has ever
been a member of any consolidated,  combined or affiliated group of corporations
for any Tax purposes except the  consolidated  group of which they are currently
members.

                  (l) For each  taxable  period  beginning in 1986 and ending on
December 31, 1997, RCC had a valid election to be treated as an S corporation as
the term is defined in Code Sections 1361(a) for federal income tax purposes and
a similar  valid  election  under the laws of the State of New York or any other
applicable governmental authority. RCC has not been, and will not be, subject to
Tax under Code  Section  1374 or 1375 (or any  comparable  provision of New York
law) for any period ending on or prior to the Closing Date.

                  Section 4.11 Real Property.

                  Neither the Company nor its Subsidiaries own any real property
or interests in real  property in fee.  Schedule 4.11 sets forth a complete list
of all real property and  interests in real  property  leased by the Company and
its Subsidiaries  ("Real Property Leases") as lessee, all security deposits made
thereunder and any and all guarantees or other  agreements  relating to the Real
Property  Leases.  The Real  Property  Leases  constitute  all interests in real
property  currently  used or  currently  held  for use in  connection  with  the
business of the Company and its  Subsidiaries  and which are  necessary  for the
continued  operation of the business of the Company and its  Subsidiaries as the
business is currently  conducted.  The Company and its Subsidiaries have a valid
and  enforceable  leasehold  interest  under each of the Real  Property  Leases,
subject to applicable  bankruptcy,  insolvency,  reorganization,  moratorium and
similar laws affecting  creditors' rights and remedies generally and subject, as
to  enforceability,  to  general  principles  of equity  (regardless  of whether
enforcement  is sought in a proceeding  at law or in equity),  and except as set
forth on Schedule 4.11, there is no default under any Real Property Lease by the
Company or any of its Subsidiaries or, to the best knowledge of the Sellers,  by
any other party thereto,  and no event has occurred that with notice or lapse of
time,  or both,  would  constitute  a default by the  Company or any  Subsidiary
thereunder.  The Sellers  have  delivered  to the  Purchaser  true,  correct and
complete  copies of the Real  Property  Leases,  together  with all  amendments,
modifications or supplements, if any, thereto.



                                       13

<PAGE>

                  Section 4.12 Tangible Personal Property.

                  (a) Schedule  4.12 sets forth each lease of personal  property
("Personal  Property  Leases")  involving  annual  payments  in excess of $6,000
relating to personal  property used in the business of the Company or any of its
Subsidiaries or to which the Company or any of its Subsidiaries is a party or by
which the  properties  or assets of the  Company or any of its  Subsidiaries  is
bound.  The Sellers have delivered to the Purchaser  true,  correct and complete
copies  of  the  Personal   Property  Leases,   together  with  all  amendments,
modifications or supplements thereto.

                  (b) The  Company  and  each of its  Subsidiaries  have a valid
leasehold  interest under each of the Personal Property Leases under which it is
a  lessee,  subject  to  applicable  bankruptcy,   insolvency,   reorganization,
moratorium and similar laws affecting  creditors' rights and remedies  generally
and subject,  as to enforceability,  to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity), and there
is no material  default under any Personal  Property Lease by the Company or any
of its  Subsidiaries  or, to the  knowledge of the  Sellers,  by any other party
thereto,  and no event has  occurred  that with  notice or lapse of time or both
would constitute a material default thereunder by the Company or any Subsidiary.

                  (c) The Company and its Subsidiaries  have good and marketable
title to all of the items of tangible personal property reflected in the Balance
Sheet  (except as sold or  disposed  of  subsequent  to the date  thereof in the
ordinary course of business  consistent  with past practice),  free and clear of
any and all Liens  other  than the  Permitted  Exceptions  and Liens in favor of
Sleepeck  Printing.   All  such  items  of  tangible  personal  property  which,
individually or in the aggregate,  are material to the operation of the business
of the Company and its Subsidiaries are in good condition and in a state of good
maintenance  and repair  (ordinary  wear and tear excepted) and are suitable for
the purposes used.

                  (d) All of the items of tangible personal property used by the
Company and its  Subsidiaries  under the  Personal  Property  Leases are in good
condition and repair  (ordinary wear and tear excepted) and are suitable for the
purposes used.

                  Section 4.13 Intellectual Property; Proprietary Information.

                  (a) Schedule 4.13 contains a complete and correct list of each
patent,   patent   application,   trademark   (registered  or  not),   trademark
application,   common  law  mark,  trade  name,   service  mark,   service  mark
application,  and copyright  (registered or not),  software,  manufacturing  and
development process, know-how, inventions, trade-secret,  regardless of the form
of  manifestation  of any of the above,  and Internet domain name (including the
domain  name  registration,  the  content  contained  within said domain and any
proprietary  software used in conjunction with said domain) owned,  necessary or
used by the Company  and/or its  Subsidiaries  in the business as now  conducted
(collectively the "Intellectual  Property") as well as all registrations thereof
and pending applications  therefor, and each license or other agreement relating
thereto.  Except for Liens in favor of Sleepeck Printing,  each of the foregoing
is owned by the party shown on such Schedule as owning the same,  free and clear

                                       14

<PAGE>


of all Liens and is in good standing and not the subject of any challenge. There
have been no claims made and neither the Sellers, the Company nor any Subsidiary
has received any notice or otherwise  knows, or has reason to believe,  that any
of the foregoing or the  operations,  business or products of the Company or any
Subsidiary,  is invalid,  unenforceable,  infringes  upon or conflicts  with the
proprietary rights of others, nor does the Company or any Subsidiary know of any
basis for any such claim (whether  pending or threatened).  The Company and each
of its Subsidiaries possess or have rights to use all the Intellectual  Property
necessary for the conduct of its business as now  conducted,  not subject to any
restrictions,  licenses or  third-party  rights  except as set forth on Schedule
4.13, and without any known conflict with the rights of others,  and neither the
Company nor any of its Subsidiaries has forfeited or otherwise  relinquished any
right in or to such  Intellectual  Property  necessary  for the conduct of their
respective  businesses as conducted or  contemplated to be conducted on the date
hereof.  Neither the Company nor any of its Subsidiaries is under any obligation
to pay any royalties or similar  payments in connection  with any license to any
Seller or any Affiliate thereof.

                  (b)  Except  as set  forth on  Schedule  4.13,  the  products,
processes,  proprietary technology and other proprietary know-how owned, used or
contemplated to be used by the Company and/or its  Subsidiaries  were completely
developed  by the full time  employees  of the Company  and/or its  Subsidiaries
only,  using  only  resources  of  the  Company  and/or  its  Subsidiaries.  The
inventions and original works of authorship  owned or used by the Company and/or
its  Subsidiaries  were developed or conceived by employees  within the scope of
their  employment by the Company and/or its  Subsidiaries in connection with the
underlying products,  processes and proprietary technology of the Company and/or
its  Subsidiaries.  Except  as  set  forth  on  Schedule  4.13,  no  independent
contractors  or  consultants  were used or contracted by the Company  and/or its
Subsidiaries  in  the  development  of  the  products,  processes,   proprietary
technology and other  proprietary  know-how owned or used or  contemplated to be
used by the Company  and/or its  Subsidiaries.  To the extent  that  independent
contractors or  consultants  were used or contracted by the Company as specified
in Schedule 4.13 (the "Consultants"), the Sellers represent and warrant that any
and all such  Consultants  have executed and delivered to the Company a document
evidencing either the exclusive  ownership of such Intellectual  Property by the
Company or its Subsidiaries,  or the due conveyance,  assignment and transfer of
any and all rights,  title and interest  such  Consultants  may have in any work
product,  invention,  idea, concept, original work of authorship or Intellectual
Property they may have conceived, worked upon or otherwise participated in their
development  within the context of, or in connection with, their employment with
the Company and/or its Subsidiaries, and the Company has all necessary releases,
documents  and  agreements  to  make  all  necessary   future  filings  for  the
registration and otherwise  perfection of rights and to defend against any claim
raised thereupon,  duly executed by such  Consultants,  complete copies of which
have been delivered to the Purchaser.

                  (c)  Except  as set forth on  Schedule  4.13,  each  employee,
consultant or contractor of the Company and/or its  Subsidiaries  who works with
Intellectual Property (other than clerical workers) has executed and delivered a
non-disclosure,  non-solicitation or invention assignment agreement,  and a true
and complete copy of each such  agreement has been  delivered to the  Purchaser.
The Company is not aware that any of its employees is in violation thereof,  and
the Sellers  shall cause the Company to use its best efforts to prevent any such
violation prior to Closing.


                                       15

<PAGE>


                  Section 4.14 Material Contracts.

                  Schedule  4.14 sets forth all of the  following  Contracts  to
which the Company or any of its  Subsidiaries is a party or by which any of them
are bound, other than Contracts for which the Company or its Subsidiaries has no
liabilities or continuing  obligations whatsoever  (collectively,  the "Material
Contracts"): (i) Contracts with any Seller or any current officer or director of
the Company or any of its  Subsidiaries;  (ii)  Contracts  pursuant to which any
party is required to purchase or sell a stated  portion of its  requirements  or
output from or to another party or relating to the sale or  distribution  of the
Company's  products;  (iii)  Contracts  for the sale of any of the assets of the
Company or any of its Subsidiaries other than in the ordinary course of business
or for the grant to any person of any preferential rights to purchase any of its
assets; (iv) joint venture agreements;  (v) Contracts  containing  nondisclosure
covenants or covenants not to compete in any line of business or with any person
in any  geographical  area;  (vi) Contracts  relating to the  acquisition by the
Company or any of its  Subsidiaries  of any  operating  business  or the capital
stock of any other person;  (vii) Contracts  relating to the borrowing of money;
or (viii)  any  other  Contracts,  other  than Real  Property  Leases,  Personal
Property  Leases or  Contracts  which  pertain to the  purchase or sale of goods
and/or services in the ordinary course of business,  which individually  involve
the  expenditure  of more than $50,000 in the aggregate or $6,000  annually,  or
require  performance by any party more than one year from the date hereof.  True
and complete copies of all of the Material  Contracts have been delivered to the
Purchaser, or its representatives.  Except as set forth on Schedule 4.14, all of
the Material Contracts and other agreements are in full force and effect and are
the legal, valid and binding obligations of the Company and/or its Subsidiaries,
enforceable  against them in accordance with their respective terms,  subject to
applicable bankruptcy, insolvency,  reorganization,  moratorium and similar laws
affecting   creditors'  rights  and  remedies  generally  and  subject,   as  to
enforceability,   to  general   principles  of  equity  (regardless  of  whether
enforcement is sought in a proceeding at law or in equity).  Neither the Company
nor any  Subsidiary  is in default in any  material  respect  under any Material
Contract,  nor,  to the  knowledge  of any  Seller,  is any  other  party to any
Material Contract in default thereunder in any material respect and no event has
occurred  that with notice or lapse of time or both would  constitute a material
default thereunder by the Company or any Subsidiary.

                  Section 4.15 Employee Benefits.

                  (a) All benefit and compensation plans,  contracts,  policies,
agreements  or  other  arrangements   providing  for  compensation,   severance,
termination  pay,  performance  awards,  stock or stock related  awards,  fringe
benefits,  change in control  compensation  or  benefits,  employment,  deferred
compensation or other employee benefits of any kind, whether formal or informal,
funded or  unfunded,  written or oral,  and whether or not legally  binding,  or
arrangements  covering current  employees or former employees of the Company and
its Subsidiaries  ("Employees")  and current or former directors of the Company,
including,  but not limited to,  "employee  benefit plans" within the meaning of
Section 3(3) of the Employee  Retirement Income Security Act of 1974, as amended
("ERISA") (the "Benefit  Plans"),  are listed on Schedule 4.15.  Each "change in
control" or similar provision  contained  therein is specifically  identified on
Schedule 4.15.


                                       16

<PAGE>


                  (b) All  employee  benefit  plans,  other than  "multiemployer
plans" within the meaning of Section  3(37) of ERISA,  covering  Employees  (the
"Plans"),  to the extent subject to ERISA,  are in substantial  compliance  with
ERISA,  the Code, and all other  applicable law. Each Plan which is an "employee
pension  benefit  plan"  within the meaning of Section  3(2) of ERISA  ("Pension
Plan") and which is intended to be qualified  under Section  401(a) of the Code,
has received a favorable  determination letter from the Internal Revenue Service
with  respect to "TRA" (as defined in Section 1 of Rev.  Proc.  93-39),  and the
Company is not aware of any circumstances  likely to result in revocation of any
such favorable  determination letter. There is no material pending or threatened
litigation  relating  to  the  Plans.   Neither  the  Company  nor  any  of  its
Subsidiaries  has  engaged  in a  transaction  with  respect  to any Plan  that,
assuming the taxable period of such  transaction  expired as of the date hereof,
could  subject  the  Company or any  Subsidiary  to a tax or penalty  imposed by
either  Section  4975 of the Code or Section  502(i) of ERISA in an amount which
would be material.

                  (c) No current or former Pension Plan of the Company or any of
its  Subsidiaries,  or any entity  which is  considered  one  employer  with the
Company  under  Section  4001 of ERISA  or  Section  414 of the Code (an  "ERISA
Affiliate"),  is or has ever been subject to Title IV of ERISA or Section 412 of
the Code.

                  (d) All  contributions  required to be made under the terms of
any Benefit Plan have been timely made or have been  reflected on the  financial
statements of the Company.

                  (e) Neither the  Company nor any of its  Subsidiaries  has any
obligations  for retiree  health and life benefits under any Benefit Plan or has
ever  represented,  promised or contracted  (whether in oral or written form) to
any Employee(s) that such  Employee(s)  would be provided with retiree health or
life benefits, other than rights and obligations under COBRA.

                  (f) Except as contemplated by Section 8.1(u), the consummation
of the  transactions  contemplated  by this  Agreement  will not (x) entitle any
Employees  of the  Company or any of the  Subsidiaries  to  severance  pay,  (y)
accelerate  the time of payment or  vesting  or trigger  any  payment or funding
(through a grantor  trust or  otherwise)  of  compensation  or  benefits  under,
increase the amount  payable or trigger any other material  obligation  pursuant
to, any of the Benefit  Plans or (z) result in any breach or violation  of, or a
default  under,  any of the Benefit Plans.  It is understood  that in connection
with the  agreements  referred to in Section 7.3 hereof,  the Company will incur
the obligations set forth therein.

                  (g) Any  amount  that  could  be  received  (whether  in cash,
property, or vesting of property) as a result of the transaction contemplated by
this Agreement by any officer,  director,  employee or independent contractor of
the Company or any of its subsidiaries,  who is a "disqualified  individual" (as
defined in proposed Treasury Regulation Section 1.280G-1),  under any employment
arrangement or Benefit Plan would not be characterized  as an "excess  parachute
payment" (as defined in Section 280G of the Code).

                  (i)  True,  correct  and  complete  copies  of  the  following
documents,  with respect to each of the Benefit Plans have been delivered to the
Purchaser (A) any plans and related trust documents, and all amendments thereto,
(B) the Forms 5500 for the past three years and schedules thereto,  (C) the most

                                       17

<PAGE>


recent financial  statements and actuarial  valuations for the past three years,
(D) the most recent Internal Revenue Service  determination letter, (E) the most
recent summary plan descriptions  (including letters or other documents updating
such  descriptions) and (F) written  descriptions of all non-written  agreements
relating to the Benefit Plans.

                  (j) Except as set forth on Schedule 4.15, the Company and each
of its  Subsidiaries  and any ERISA  Affiliate  which  maintains a "group health
plan" within the meaning of Section  5000(b)(1)  of the Code have  complied with
the notice and continuation  requirements of Section 4980B of the Code or Part 6
of Title I of ERISA and the applicable regulations thereunder.

                  (k) No stock or other security issued by the Company or any of
its  Subsidiaries  forms or has  formed a  material  part of the  assets  of any
Benefit Plan.

                  Section 4.16 Labor.

                  (a) Neither the Company nor any of its  Subsidiaries  is party
to any labor or collective  bargaining agreement and as of the date hereof there
are no labor or collective  bargaining  agreements which pertain to employees of
the Company or any of its Subsidiaries.

                  (b) No employees of the Company or any of its Subsidiaries are
represented  by any  labor  organization.  No  labor  organization  or  group of
employees of the Company or any of its  Subsidiaries  has made a pending  demand
for  recognition,  and  there are no  representation  proceedings  or  petitions
seeking a representation  proceeding presently pending or, to the best knowledge
of the  Sellers,  threatened  to be brought or filed,  with the  National  Labor
Relations  Board or any other labor relations  tribunal.  There is no organizing
activity  involving  the Company or any of its  Subsidiaries  pending or, to the
best knowledge of any Seller,  threatened by any labor  organization or group of
employees of the Company or any of its Subsidiaries.

                  (c)  There  are no (i)  strikes,  work  stoppages,  slowdowns,
lockouts or  arbitrations  or (ii) material  grievances or other labor  disputes
pending or, to the best knowledge of any Seller, threatened against or involving
the  Company  or any of its  Subsidiaries.  There are no unfair  labor  practice
charges,  grievances  or  complaints  pending or, to the best  knowledge  of any
Seller,  threatened by or on behalf of any employee or group of employees of the
Company.

                  (d) Schedule 4.16 sets forth all  consultants  and independent
contractors used by the Company as of the date hereof.  None of such consultants
and independent contractors is an employee of the Company.

                  (e) All employees treated as "exempt" employees by the Company
are "exempt"  employees  under the Fair Labor  Standards Act, 29 U.S.C.  Section
201, et seq., or under another analogous  federal,  state, or municipal wage and
hour law.






                                       18

<PAGE>


                  Section 4.17 Litigation.

                  Except  as set  forth  in  Schedule  4.17,  there  is no Legal
Proceeding  pending or, to the  knowledge  of the  Sellers,  overtly  threatened
against the Company or any of its  Subsidiaries  (or,  to the  knowledge  of the
Sellers,  pending or threatened,  against any of the officers,  directors or key
employees  of the  Company  or any of its  Subsidiaries  with  respect  to their
business activities on behalf of the Company or any of its Subsidiaries),  or to
which the  Sellers or the  Company or any of its  Subsidiaries  is  otherwise  a
party,  before any court, or before any Governmental  Body; nor to the knowledge
of the  Sellers is there any  reasonable  basis for any such  Legal  Proceeding.
Except as set forth in Schedule 4.17,  neither the Company nor any Subsidiary is
subject to any judgment, order or decree of any court or governmental agency and
neither the Company nor any Subsidiary is engaged in any legal action to recover
monies due it or for damages sustained by it. None of the Purchaser, the Company
or any of its  Subsidiaries  shall have any  liabilities  or damages  whatsoever
incurred after the Closing Date (other than legal fees and expenses  relating to
the  dismissal  of such  action)  arising  out of or  otherwise  related  to the
Cellesence proceeding set forth on Schedule 4.17 (the "Cellesence Matter").

                  Section 4.18 Compliance with Laws; Permits.

                  The Company and each of its Subsidiaries is in compliance with
 all Laws  applicable  to it or to the conduct of its business or  operations or
 the use of its properties  (including any leased properties) and assets, except
 for such  non-compliances,  individually  or in the aggregate,  as would not be
 reasonably  expected to result in a Material  Adverse  Effect.  The Company and
 each of its Subsidiaries has all  governmental  Permits from state,  federal or
 local  authorities  which  are  required  for  the  Company  and  each  of  its
 Subsidiaries  to  operate  its  business,  except for the  absence of  Permits,
 individually  or in the  aggregate,  that would not be  reasonably  expected to
 result in a Material Adverse Effect.

                  Section 4.19 Environmental Matters.

                  Except as set forth on Schedule 4.19 hereto:

                  (a) the operations of the Company and each of its Subsidiaries
have been and are in compliance with all applicable  Environmental  Laws and all
permits issued pursuant to Environmental Laws or otherwise;

                  (b) the Company and each of its  Subsidiaries has obtained all
permits  required under all applicable  Environmental  Laws necessary to operate
its business;

                  (c) neither the  Company  nor any of its  Subsidiaries  is the
subject of any  outstanding  written  order or  Contract  with any  governmental
authority or person respecting (i)  Environmental  Laws, (ii) Remedial Action or
(iii) any Release or threatened Release of a Hazardous Material;








                                       19

<PAGE>



                  (d)  neither  the  Company  nor  any of its  Subsidiaries  has
received any written  communication  alleging that the Company and/or any of its
Subsidiaries may be in violation of any Environmental  Law, or any Permit issued
pursuant  to any  Environmental  Law,  or  may  have  any  liability  under  any
Environmental Law;

                  (e) neither the  Company nor any of its  Subsidiaries  has any
current  contingent  liability in  connection  with any Release of any Hazardous
Materials into the indoor or outdoor environment  (whether on-site or off-site),
or the unlawful use, generation, emission, discharge,  transportation,  storage,
handling, treatment or disposal of any Hazardous Material;

                  (f) to the Sellers' knowledge,  there are no investigations of
the business,  operations,  or currently or previously owned, operated or leased
property of the Company or any of its  Subsidiaries  pending or threatened which
could lead to the imposition of any liability pursuant to any Environmental Law;

                  (g) there has been no release  of  Hazardous  Material  at any
property leased or operated by the Company or any of its Subsidiaries.

                  (h) Neither the Company nor any of its  Subsidiaries  is aware
of any existing, pending, threatened or past demand, suit or cause of action for
damages, including,  without limitation,  claims for personal injury or property
damage, by any Person,  including,  without limitation,  those alleged to result
from use, handling or exposure to or injury from any Hazardous Material; and

                  (i) None of the off-site  locations to where Company or any of
its Subsidiaries has transported, disposed or arranged for disposal of Hazardous
Materials has been identified as a facility that is subject to an existing claim
under any Environmental  Law, or, to the Sellers'  knowledge,  is the subject of
any threatened claim by any Governmental Body, and all of the off-site locations
to  where  Company  or any of its  Subsidiaries  has  transported,  disposed  or
arranged for disposal of Hazardous  Materials are properly permitted pursuant to
Environmental Laws.

                  Section 4.20 Insurance.

                  Schedule  4.20 sets forth a complete and accurate  list of all
policies of insurance  of any kind or nature  covering the Company or any of its
Subsidiaries  or  any of  their  respective  employees,  properties  or  assets,
including,  without  limitation,  policies  of life,  disability,  fire,  theft,
workers  compensation,  employee  fidelity  and  other  casualty  and  liability
insurance.  All such policies are in full force and effect, and, to the Sellers'
knowledge,  neither the Company nor any of its Subsidiaries is in default of any
provision thereof, except for such defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. Since December 31, 1997, no policy of
insurance of any kind has lapsed or been  cancelled  which was not replaced by a
policy  or  insurance  with  substantially  the  same or  better  coverage  at a
comparable price.

                  Section 4.21 Inventories; Receivables; Payables.

                  (a) The inventories of the Company and its Subsidiaries are in
good and  marketable  condition,  and are  saleable  in the  ordinary  course of

                                       20

<PAGE>


business.  None  of the  Company  or any of its  Subsidiaries  has  obsolete  or
otherwise  unusable inventory which is not reflected on the Balance Sheet or the
June 30, 1999 Balance Sheet.

                  (b) Set forth on Schedule 4.21 is a true, complete and correct
list of all outstanding  accounts receivable of the Company and its Subsidiaries
as of August 27, 1999 (the "Outstanding Receivables").  All outstanding accounts
receivable  of the  Company  and its  Subsidiaries  have  arisen  from bona fide
transactions in the ordinary  course of business  consistent with past practice.
All accounts  receivable  of the Company and its  Subsidiaries  reflected on the
June 30, 1999 Balance Sheet are good and  collectible at the aggregate  recorded
amounts thereof,  net of any applicable reserve for returns or doubtful accounts
reflected  thereon,  which reserves are adequate and were calculated in a manner
consistent with past practice and in accordance with GAAP consistently  applied.
Except as set forth on Schedule 4.21, all accounts  receivable arising after the
Balance Sheet Date are good and  collectible at the aggregate  recorded  amounts
thereof,  net of any applicable reserve for returns or doubtful accounts,  which
reserves are  adequate  and were  calculated  in a manner  consistent  with past
practice and in accordance with GAAP consistently  applied.  The representations
and  warranties  contained in this Section  4.21(b)  shall not be deemed to be a
guaranty  of  collection  of  Outstanding  Receivables.  Except  as set forth on
Schedule 4.21, none of such accounts  receivable are older than 90 days from the
date the Company  recognized  such revenue except for accounts  receivable  from
Gary Farn  Ltd.  which  are not  older  than 120 days from the date the  Company
recognized  such revenue and are in an aggregate  amount not  exceeding  $85,000
Except  as set  forth on  Schedule  4.21,  there  are no  loans,  draws  against
commissions or other accounts receivable from any officer,  director or employee
of  the  Company  or  any  of  its  Subsidiaries  (collectively,  the  "Employee
Receivables").

                  (c) Except as set forth on Schedule 4.21, all accounts payable
of the Company and its  Subsidiaries  reflected in the Balance  Sheet or arising
after the date thereof are the result of bona fide  transactions in the ordinary
course  of  business  and have  either  since  been  paid or are not yet due and
payable.  Schedule 4.21 sets forth a  description  of all  outstanding  accounts
payable of the Company to Sleepeck Printing Company ("Sleepeck  Printing"),  and
shows the date of each invoice.  Except as set forth on Schedule  4.21,  none of
such accounts payable to Sleepeck Printing are overdue by 30 days or more.

                  Section 4.22 Related Party Transactions.

                  Except as set forth on Schedule  4.22,  none of the Sellers or
any  of  their  respective  Affiliates  has  borrowed  any  moneys  from  or has
outstanding any indebtedness or other similar  obligations to the Company or any
of its  Subsidiaries.  Except  as set forth in  Schedule  4.22,  and other  than
ownership of three percent (3%) or less of the outstanding  voting securities of
a company whose stock is traded on a national  securities exchange or The Nasdaq
Stock Market, none of the Sellers,  the Company,  any Subsidiary of the Company,
any of their  respective  Affiliates  nor any officer or employee of any of them
(i) owns any direct or  indirect  interest  of any kind in, or  controls or is a
director,  officer,  employee or partner of, or  consultant  to, or lender to or
borrower  from or has the right to  participate  in the  profits  of, any Person
which is (A) a competitor,  supplier,  customer,  landlord,  tenant, creditor or
debtor of the  Company  or any of its  Subsidiaries,  (B)  engaged in a business
related to the  business  of the  Company or any of its  Subsidiaries,  or (C) a
participant in any  transaction to which the Company or any of its  Subsidiaries

                                       21

<PAGE>


is a party or (ii) is a party to any  Contract  with the  Company  or any of its
Subsidiaries.

                  Section 4.23 Banks.

                  Schedule  4.23  contains a complete  and  correct  list of the
names and locations of all banks and other  financial  institutions in which the
Company or any  Subsidiary  has  accounts  or safe  deposit  boxes or lockbox or
similar  arrangements  into  which  accounts  receivable  of the  Company or any
Subsidiary are deposited or remitted and the names of all persons  authorized on
behalf of the  Company  or any  Subsidiary  to draw  thereon  or to have  access
thereto.  Except  as set forth on  Schedule  4.23,  no  person  holds a power of
attorney or other authority to act on behalf of the Company or any Subsidiary.

                  Section 4.24 Full Disclosure.

                  The Sellers know of no information or facts that  individually
or in the aggregate, have had or could reasonably be expected to have a Material
Adverse  Effect  which has not been  disclosed  to the  Purchaser  Group in this
Agreement or other  written  materials  furnished  to the  Purchaser  Group.  No
representation  or warranty of any Seller  contained in this Agreement or in any
schedule hereto or in any Seller  Document,  contains any untrue  statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.

                  Section 4.25 Financial Advisors.

                  No Person  has acted,  directly  or  indirectly,  as a broker,
finder or financial  advisor for the Sellers or the Company in  connection  with
the transactions contemplated by this Agreement and no Person is entitled to any
fee or commission or like payment in respect thereof.

                  Section 4.26 Year 2000 Compliance.

                  Each  item  of  hardware,  software,  information  technology,
embedded,  or processor based system and/or any combination thereof, used by the
Company  in  providing  service  to  its  customers,  developed,   manufactured,
distributed or licensed by the Company and its Subsidiaries  (collectively,  the
"System"), shall be able to correctly function, operate, process data or perform
date-related calculations, including, but not limited to, calculating, comparing
and  sequencing,  from,  into and  between  the years  1999 and 2000,  and shall
accurately  process,  provide  and/or  receive  date-data,  including  leap year
calculations,  into and  between  the  years  1999  and  2000,  except  for such
inabilities  which,  individually  or in the aggregate,  would not be reasonably
expected  to  result in a  Material  Adverse  Effect.  Neither  performance  nor
functionality  of the System  shall be affected  by dates  prior to,  during and
after January 1, 2000, except for such  non-performances or  non-functionalities
which,  individually  or in the aggregate,  would not be reasonably  expected to
result in a  Material  Adverse  Effect.  A System  containing  or  calling  on a
calendar function including, without limitation, any function indexed to the CPU
clock, and any function  providing  specific dates or days, or calculating spans
of dates or days shall record, store,  process,  provide and, where appropriate,
insert,  true and accurate dates and calculations  for dates and spans,  before,
during  and  following  January  1, 2000,  except  for such  inabilities  which,
individually or in the aggregate,  would not be reasonably expected to result in
a Material  Adverse  Effect.  The System shall have no lesser  functionality  or



                                       22

<PAGE>


operability with respect to records  containing dates,  before,  during or after
January 1, 2000 than  heretofore with respect to dates prior to January 1, 2000,
except for such lesser  functionalities or operabilities which,  individually or
in the  aggregate,  would not be  reasonably  expected  to result in a  Material
Adverse Effect.

                  Section 4.27 Representations and Warranties Exclusive

                  The representations and warranties made by the Sellers in this
Agreement  and in the other Seller  Documents are the only  representations  and
warranties made by any Seller in connection with the  transactions  contemplated
hereby and by the other  Seller  Documents,  and are  intended by the parties to
exclude  any  other  basis of  recovery  against  the  Sellers  by reason of any
representation  or  warranty  of the  Sellers  which  is not set  forth  in this
Agreement  and in the other Seller  Documents,  including  liability  under Rule
10b-5 promulgated under the Securities Exchange Act of 1934, as amended.


                                   Article V
                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants to the Sellers that:


                  Section 5.1 Organization and Good Standing.

                  The  Purchaser  is  a  corporation  duly  organized,   validly
existing and in good standing under the laws of the State of Delaware.

                  Section 5.2 Authorization of Agreement.

                  The  Purchaser  has full  corporate  power  and  authority  to
execute  and  deliver  this  Agreement  and  each  other  agreement,   document,
instrument or  certificate  contemplated  by this Agreement or to be executed by
the  Purchaser  in  connection  with  the   consummation  of  the   transactions
contemplated hereby and thereby (the "Purchaser  Documents"),  and to consummate
the transactions  contemplated hereby and thereby.  The execution,  delivery and
performance by the Purchaser of this Agreement and each Purchaser  Document have
been  duly  authorized  by all  necessary  corporate  action  on  behalf  of the
Purchaser.  This Agreement has been,  and each Purchaser  Document will be at or
prior to the Closing, duly executed and delivered by the Purchaser and (assuming
the due  authorization,  execution and delivery by the other parties  hereto and
thereto)  this  Agreement  constitutes,  and  each  Purchaser  Document  when so
executed and delivered will constitute,  legal, valid and binding obligations of
the  Purchaser,  enforceable  against the  Purchaser  in  accordance  with their
respective terms, subject to applicable bankruptcy, insolvency,  reorganization,
moratorium and similar laws affecting  creditors' rights and remedies generally,
and subject,  as to enforceability,  to general principles of equity,  including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).

                  Section 5.3 Conflicts; Consents of Third Parties.


                                       23

<PAGE>


                  (a) None of the  execution  and  delivery by the  Purchaser of
this  Agreement  and of the  Purchaser  Documents,  nor  the  compliance  by the
Purchaser with any of the  provisions  hereof or thereof will (i) conflict with,
or result in the breach of, any provision of the certificate of incorporation or
by-laws of the Purchaser,  (ii) conflict with, violate, result in the breach of,
or constitute a default under any Contract,  instrument,  note, bond,  mortgage,
indenture,  lease,  license,  franchise,  commitment,  covenant,  understanding,
arrangement,  agreement or other obligation to which the Purchaser is a party or
by which the  Purchaser or its  properties  or assets are bound or (iii) violate
any  statute,  rule,  regulation,  order or decree of any  governmental  body or
authority by which the Purchaser is bound,  except,  in the case of clauses (ii)
and (iii), for such violations,  breaches or defaults as would not, individually
or in the aggregate, have a material adverse effect on the condition,  financial
or  otherwise,  or  the  earnings,  prospects,  business  or  operations  of the
Purchaser and its subsidiaries, taken as a whole.

                  (b) Except as set forth on Schedule  5.3, no consent,  waiver,
approval,  Order,  Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental  Body is required on the part of the
Purchaser in connection with the execution and delivery of this Agreement or the
Purchaser  Documents  or  the  compliance  by  the  Purchaser  with  any  of the
provisions hereof or thereof.

                  Section 5.4 Litigation.

                  There  are no  Legal  Proceedings  pending  or,  to  the  best
knowledge of the Purchaser, threatened against the Purchaser before any court or
any  Governmental  Body that are  reasonably  likely to prohibit or restrain the
ability  of the  Purchaser  to enter  into  this  Agreement  or any of the other
Purchaser  Documents or to consummate the transactions  contemplated  hereby and
thereby.

                  Section 5.5 Investment Intention.

                  The Purchaser is acquiring the Shares for its own account, for
investment  purposes  only and not with a view to the  distribution  thereof  in
violation of the Securities Act of 1933, as amended (the "Securities  Act"). The
Purchaser  understands  that  the  Shares  have not been  registered  under  the
Securities  Act and  cannot be sold  unless  subsequently  registered  under the
Securities Act or an exemption from such registration is available.

                  Section 5.6 Financial Advisors.

                  Except for Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") and William J. Fox, no Person has acted,  directly or  indirectly,  as a
broker,  finder or financial  advisor for the Purchaser in  connection  with the
transactions contemplated by this Agreement and no person is entitled to any fee
or  commission  or like payment in respect  thereof.  All fees payable to DLJ or
William J. Fox as a result of the  transactions  contemplated  by this Agreement
shall be paid by the Purchaser.








                                       24

<PAGE>


                                   Article VI
                                    COVENANTS

                  Section 6.1 Access to Information.

                  (a) The Sellers  shall use their  reasonable  best  efforts to
afford the  Purchaser  and its  representatives  full  access to all  financial,
legal,   management  and  other  information  concerning  the  Company  and  its
Subsidiaries  and their  respective  businesses,  and  permit the  Purchaser  to
complete its reasonable due diligence investigation. Such investigation shall be
conducted in all respects in  accordance  with the terms of the  Confidentiality
Agreement  entered into between the Company and Arcade,  Inc., dated as of March
31, 1998 (the  "Retcom  Confidentiality  Agreement"),  and, as  applicable,  the
Confidentiality  Agreement  entered  into  between  Arcade  Marketing,  Inc. and
Sleepeck  Printing  dated as of October 6, 1998 (the  "Sleepeck  Confidentiality
Agreement",  and collectively  with the Retcom  Confidentiality  Agreement,  the
"Confidentiality  Agreements") which the Purchaser agrees are both still in full
force and effect and are binding on the Purchaser,  its parent  corporation  and
all of its subsidiaries,  consultants and agents  (collectively,  the "Purchaser
Group").   The  Purchaser   shall  not  involve  anyone  in  the  due  diligence
investigation   on  its   behalf   who  has  not  agreed  to  be  bound  by  the
Confidentiality  Agreements.  Subject  to the  foregoing,  until the  Closing or
earlier termination of this Agreement,  each of the parties shall take, or cause
to be taken, such further actions as are reasonably  necessary to consummate the
transactions  contemplated  hereby.  No  investigation  by the  Purchaser or any
Seller prior to or after the date of this  Agreement  shall  diminish or obviate
any of the representations,  warranties,  covenants or agreements of the Sellers
or  the  Purchaser,  respectively,  contained  in  this  Agreement,  the  Seller
Documents or the Purchaser Documents, as the case may be; provided however, that
if the  Purchaser  discovers  any fact prior to the Closing which would make any
representation  or warranty of the Sellers untrue  (regardless  of  materiality)
then the Purchaser  shall notify the Sellers'  Representatives  of such fact and
the  Purchaser may (i) terminate  this  Agreement  pursuant to Section 3.2, (ii)
request a reduction in the  Purchase  Price,  or (iii)  proceed with closing the
transactions  contemplated  hereby without a reduction to the Purchase Price. If
the  Purchaser  fails to notify the Sellers'  Representatives,  then the Closing
shall   constitute   the   Purchaser's   waiver  of  any  such  untruth  in  any
representation  or warranty and the Sellers  shall have no liability as a result
thereof.  If the Purchaser notifies the Sellers'  Representatives but elects not
to proceed as  provided  in clause (i) above,  or proceeds as provided in clause
(ii)  above and  reaches a  satisfactory  agreement  with the  Sellers in regard
thereto or  proceeds as provided in clause  (iii)  above,  then at the  Sellers'
request the Purchaser shall waive such untruth in the relevant representation or
warranty  in writing and then the Sellers  shall have no  liability  as a result
thereof, except as otherwise provided in Section 11.3 hereof.

                  (b) The  Sellers  may  deliver  to the  Purchaser  information
concerning  events subsequent to the date of this Agreement which relates to the
business of the Company and its Subsidiaries in the ordinary course,  which with
the written  consent of the Purchaser  (which consent shall not be  unreasonably
withheld),  shall supplement the information  contained in the Schedules hereto.
In addition,  the Sellers shall  promptly  deliver to the Purchaser  information
concerning  events subsequent to the date of this Agreement which relates to the
business  of the  Company  and its  Subsidiaries  which are not in the  ordinary

                                       25

<PAGE>


course;  provided that receipt of such information  shall not be deemed a waiver
by the  Purchaser  of any of the  conditions  precedent  to the  Closing and the
Purchaser may at its option either terminate this Agreement  pursuant to Section
3.2,  seek a  reduction  in the  Purchase  Price or  proceed  with  closing  the
transactions  contemplated  hereby without a reduction to the Purchase Price. If
the  Purchaser  terminates  this  Agreement or seeks a reduction in the Purchase
Price by reason of such  information  and reaches a satisfactory  agreement with
the Sellers in regard  thereto or proceeds  without a reduction  to the Purchase
Price, then at the Sellers'  request,  the Purchaser shall waive such untruth in
the  relevant  representation  or warranty,  and then the Sellers  shall have no
liability as a result thereof, except as provided in Section 11.3 hereof.

                  Section 6.2 Conduct of the Business Pending the Closing.

                  (a)  Except  as  otherwise  expressly   contemplated  by  this
Agreement or with the prior written consent of the Purchaser, the Sellers shall,
and shall cause the Company and its  Subsidiaries to, (i) conduct the respective
businesses  of the  Company and its  Subsidiaries  only in the  ordinary  course
consistent  with past  practice  and (ii) use its  reasonable  best  efforts  to
preserve  the  business  assets and  earning  potential  of the  Company and its
Subsidiaries.

                  (b)  Except  as  otherwise  expressly   contemplated  by  this
Agreement or with the prior written consent of the Purchaser,  the Sellers shall
not, and shall cause the Company and its Subsidiaries not to:

                           (i) declare,  set aside,  make or pay any dividend or
other distribution in respect of the capital stock of the Company or repurchase,
redeem or otherwise acquire any outstanding shares of the capital stock or other
securities  of, or other  ownership  interests  in,  the  Company  or any of its
Subsidiaries;

                           (ii) transfer,  issue,  sell or dispose of any shares
of capital stock or other  securities of the Company or any of its  Subsidiaries
or grant  options,  warrants,  calls or other  rights to purchase  or  otherwise
acquire shares of the capital stock or other securities of the Company or any of
its Subsidiaries;

                           (iii) effect any recapitalization,  reclassification,
stock  split or like change in the  capitalization  of the Company or any of its
Subsidiaries;

                           (iv)  amend  the  certificate  of   incorporation  or
by-laws of the Company or any of its Subsidiaries;

                           (v) make any payments to (other than  payments  under
employment  agreements  existing as of the Balance Sheet Date) or enter into any
other transactions with its shareholders;

                           (vi) write-off any of the Outstanding Receivables; or

                           (vii) agree to do anything prohibited by this Section
6.2 or anything  which would make any of the  representations  and warranties of
the Sellers in this Agreement or the Seller  Documents untrue or incorrect as of
any time through and including the Closing Date.



                                       26

<PAGE>


                  Notwithstanding  anything in this  Agreement to the  contrary,
the parties hereto agree that Sleepeck Printing shall be entitled to protect its
interests  as a  vendor  and  a  lender  to  the  Company  and  certain  of  its
Subsidiaries.

                  Section 6.3 Consents.

                  (a) The Sellers shall use their  reasonable best efforts,  and
the  Purchaser  shall  cooperate  with the  Sellers,  to obtain at the  earliest
practicable  date all  consents  and  approvals  required  to be obtained by the
Sellers or the  Company so that the  Sellers  may  consummate  the  transactions
contemplated by this Agreement,  including, without limitation, the consents and
approvals referred to in Sections 4.5(b) and 4.6(b) hereof;  provided,  however,
that  neither  the  Sellers  nor the  Purchaser  shall be  obligated  to pay any
consideration  therefor  to any third  party from whom  consent or  approval  is
requested.

                  (b) The Purchaser shall use its reasonable  best efforts,  and
the  Sellers  shall  cooperate  with the  Purchaser,  to obtain at the  earliest
practicable  date all  consents  and  approvals  required  to be obtained by the
Purchaser so that the Purchaser may consummate the transactions  contemplated by
this  Agreement,  including,  without  limitation,  the  consents  and  approval
referred  to in Section  5.3(b)  hereof;  provided,  however,  that  neither the
Purchaser or the Sellers shall be obligated to pay any consideration therefor to
any third party from whom consent or approval is requested.

                  Section 6.4 Other Actions.

                  Each of the  Sellers  and the  Purchaser  shall  use its  best
efforts to (i) take all actions  necessary  or  appropriate  to  consummate  the
transactions contemplated by this Agreement by September 21, 1999 and (ii) cause
the  fulfillment  at the earliest  practicable  date of all of the conditions to
their respective obligations to consummate the transactions contemplated by this
Agreement.  The Purchaser shall prepare the necessary  filings and shall pay all
filing  fees in  connection  with any filing  under the HSR Act  relating to the
transactions contemplated hereby in the event that the Purchaser determines such
a filing is necessary or required.

                  Section 6.5 No Solicitation.

                  Each of the Sellers agrees, severally, that it will not and it
will cause the Company not to, directly or indirectly, without the prior written
consent of Purchaser,  until the Closing Date or earlier termination hereof: (i)
solicit  or  encourage  any other  offers  for any  shares of  capital  stock or
material  assets of the  Company  or any of its  Subsidiaries,  or  provide  any
information  to, or participate in any  discussions or negotiations or otherwise
cooperate with any person other than Purchaser and its designees with respect to
the possible  sale or other  transfer of any shares of capital stock or material
assets of the Company or any of its Subsidiaries, regardless of when such offers
were received or  negotiations  were initiated or (ii) take any action or permit
any action or inaction to be taken that would, directly or indirectly, frustrate
the purpose of this  Agreement or the ability of Purchaser to consummate  any of
the transactions contemplated hereby. Each of the Sellers further agrees that it
will inform Purchaser immediately of the terms and details of any offer received


                                       27

<PAGE>


by it or the  Company  after the date of this  Agreement  to acquire any capital
stock or material assets of the Company or any of its Subsidiaries.

                  Without  limitation  of any other  rights or  remedies  of the
Purchaser hereunder,  if any of the Sellers or the Company engage in discussions
regarding  the sale or transfer of the Common  Stock or Options or any  material
assets of the Company or any of its Subsidiaries  with a third party (whether or
not in response to a proposal) or take any of the other  actions  prohibited  by
the first  paragraph of this Section 6.5 during the period  referred to therein,
and prior to September 21, 2000, the Sellers sell their Shares or the Sellers or
the Company  otherwise  engage in a transaction  which in either case results in
the  realization  by the Sellers of cash or non-cash  proceeds in an amount that
would exceed the amount that they could  reasonably  be expected to realize from
the  consummation  of the  transactions  set forth herein,  then the Sellers who
realize such proceeds  severally (pro rata in accordance  with the percentage of
such  proceeds  realized  by each of them from the  consummation  of the sale or
other  transaction or their percentage of ownership of the Company,  as the case
may be) and not jointly, shall pay the Purchaser the lesser of (x) $1,000,000 or
(y)  the  amount  realized  by  the  Sellers  in  the  consummation  of  such  a
transaction,  minus (i) the Purchase  Price (as adjusted) and (ii) the Company's
reasonable  attorney's  and  accountant's  fees incurred in connection  with the
transactions  contemplated hereby;  provided,  however, that if the transactions
contemplated hereby are not consummated as a result of a breach by the Purchaser
of its  obligations  under this  Agreement,  or an  injunction  prohibiting  the
consummation  of the  transaction  (which is not the  result of  actions  by the
Sellers),  then the payment  obligations  of this paragraph of Section 6.5 shall
not apply.

                  Notwithstanding  the  foregoing,  nothing  contained  in  this
Section 6.5 shall prohibit the Board of Directors of the Company from furnishing
information  to or negotiating  with any Person that makes a Superior  Proposal,
if, and only to the extent that, the Board of Directors in good faith determines
that such action is required to comply  with its  fiduciary  duties.  Nothing in
this paragraph shall permit the Sellers to terminate or breach this Agreement or
to  enter  into  any  agreement  which  would  frustrate  the  purposes  of this
Agreement.

                  Section 6.6 Preservation of Records.

                  Subject   to  Section   10.4(e)   hereof   (relating   to  the
preservation of Tax records),  the Sellers and the Purchaser shall each preserve
and keep the records  held by it relating to the business of the Company and its
Subsidiaries  and the Purchaser shall cause the Company and its  Subsidiaries to
preserve and keep their respective  records for a period of three years from the
Closing  Date and shall make such records and  personnel  available to the other
party as may be  reasonably  required by such party in  connection  with,  among
other things, any insurance claims by, legal proceedings against or governmental
investigations  of the Sellers or the Purchaser or any of their Affiliates or in
order to enable the Sellers or the  Purchaser  to comply  with their  respective
obligations  under  this  Agreement  and  each  other  agreement,   document  or
instrument  contemplated  hereby  or  thereby.  In the event  the  Sellers,  the
Purchaser,  the Company or any  Subsidiary  wishes to destroy such records after
that  time,  such  party  (or the  Purchaser  on behalf  of the  Company  or any
Subsidiary) shall first give ninety (90) days' prior written notice to the other
parties  and each of such other  parties  shall have the right at its option and
expense,  upon prior written  notice given to such party within that ninety (90)
day period,  to take  possession  of the  records  within one hundred and eighty
(180) days after the date of such notice.



                                       28


<PAGE>


                  Section 6.7 Publicity.

                  None of the  Sellers nor the  Purchaser  shall issue any press
release or public  announcement  concerning  this Agreement or the  transactions
contemplated  hereby  or  otherwise  publicly  disclose  the  existence  of this
Agreement  without  obtaining  the prior  written  approval  of the other  party
hereto, which approval will not be unreasonably withheld or delayed,  unless, in
the  sole  judgment  of the  Purchaser,  disclosure  is  otherwise  required  by
applicable  Law,  provided that, to the extent required by applicable Law or the
rules or regulations of any securities  exchange or The Nasdaq Stock Market, the
party  intending  to make such  release  shall use its  reasonable  best efforts
consistent  with  such  applicable  Law  or  the  rules  or  regulations  of any
securities  exchange or The Nasdaq Stock Market, to consult with the other party
with respect to the text thereof.

                  Section 6.8 Termination of Agreements.

                  Prior  to  or  simultaneously   with  the  Closing,   (a)  the
Employment  Agreement by and between  Michael  Berman and RCC dated December 31,
1997,  (b)  the  Employment   Agreement  by  and  between   Michael  Berman  and
Encapsulation Services, Inc. dated January 1, 1998, (c) the Employment Agreement
by and between Jay Gartlan and  Encapsulation  Services,  Inc.  dated January 1,
1998,  and the  Employment  Agreement  by and  between Jay Gartlan and RCC dated
January 1, 1998, and (d) all other Contracts or transactions  between Affiliates
of the Company,  on the one hand,  and the Company or its  Subsidiaries,  on the
other  hand,  as set  forth on  Schedule  4.22  (other  than (i) any  agreements
relating to photography  services  between Paul Pearl and the Company,  (ii) the
consulting  agreement  between  Albert Pearl and RCC dated January 15, 1998 (the
"Pearl Consulting Agreement"),  and (iii) any completed work not yet invoiced or
accounts payable to Sleepeck  Printing by the Company or any of its Subsidiaries
which are not included in the  Sleepeck  Indebtedness  and any  work-in-progress
being performed by Sleepeck  Printing for the Company or its Subsidiaries in the
ordinary  course of  business)  shall have been  terminated  without  payment or
further liability of any party thereto,  except as otherwise contemplated hereby
or as set forth on Schedule 6.8. The bonuses payable in respect of calendar year
1998,  which are  identified  on Schedule  6.8,  shall be paid at Closing to the
extent such  bonuses are  reflected  on the Balance  Sheet and the June 30, 1999
Balance Sheet.

                  Section 6.9 Intellectual Property.

                  Prior  to or  simultaneously  with  the  Closing,  any and all
right, title and interest in any Intellectual  Property held by any Affiliate of
any of the Sellers and/or Fragrance  Technology Trust that is currently used, or
contemplated  to be used,  in the  business of the  Company or its  Subsidiaries
shall be conveyed to RCC,  without  further  consideration,  or  otherwise  made
available  to the  Company or its  Subsidiaries  on an  irrevocable,  worldwide,
exclusive  and royalty free basis,  provided  however,  that this  obligation to
convey  Intellectual  Property  does not  extend  to  Intellectual  Property  of
Sleepeck  Printing  relating to the  printing of  products or the  rendering  of
printing services.

                  Section 6.10 Collection of Accounts Receivable.






                                       29


<PAGE>



                  The Purchaser shall cause the Company and its  Subsidiaries to
use their diligent efforts to collect all accounts receivable  outstanding as of
the Closing Date prior to the Collection Date. Prior to the Collection Date, and
only to the extent requested by the Company in its sole  discretion,  Paul Pearl
shall (i) assist in accordance  with the Company's  directions in the collection
of such  accounts  receivable  and  (ii) act as an  advisor  to the  Company  in
connection  with  any   settlements   with  customers  of  the  Company  or  its
Subsidiaries with respect to such accounts receivable.


                                  Article VII
                                OTHER AGREEMENTS

                  Section 7.1 Payment of Sleepeck Indebtedness.

                  Simultaneously  with the Closing,  the Purchaser shall pay, or
cause the Company or one of its  Subsidiaries to pay, the Sleepeck  Indebtedness
in  full.   Contemporaneously   with  the  payment  in  full  of  the   Sleepeck
Indebtedness,  Sleepeck  Printing shall release all guarantees and Liens made in
connection with the Sleepeck Indebtedness and shall acknowledge to the Purchaser
that  no  money  is owed  to  Sleepeck  Printing  by the  Company  or any of its
Affiliates  in  relation  to  the  Sleepeck  Indebtedness.  Notwithstanding  the
foregoing, any release or acknowledgement given or made pursuant to this Section
7.1 shall not be  deemed  to  include  any  obligations  of the  Company  or any
Affiliate  with  respect  to (a)  amounts  not yet  paid for  printing  services
performed by Sleepeck  Printing,  which has been billed and such bills have been
outstanding  for  less  than 90 days,  (b)  payments  set  aside,  withdrawn  or
otherwise revoked in respect of printing services performed by Sleepeck Printing
prior  to  the  Closing  Date,  or  (c)  obligations  associated  with  printing
work-in-progress being performed by Sleepeck Printing.

                  Section 7.2 Exercise of Options and Releases.

                  (a)  Simultaneously  with the  Closing,  the  Purchaser  shall
exercise  the  Options  which as of the date  hereof  are owned by (i)  Sleepeck
Printing to acquire Common Stock from Retail TCA Corporation  ("TCA") and Retail
TCB Corporation  ("TCB") and (ii) Stuart  Fleischer to acquire Common Stock from
TCB at the exercise  price of $1,000,000,  $884,000 and $136,000,  respectively.
Immediately  upon  the  exercise  of such  Options,  (i)  TCA  shall  repay  all
outstanding indebtedness owed by TCA to the Company or its Subsidiaries and (ii)
TCB  shall  repay  all  outstanding  indebtedness  owed by TCB to  Albert  Pearl
pursuant  to  the  Note  dated  January  15,  1998  and to  the  Company  or its
Subsidiaries.

                  (b)  Simultaneously  with  the  Closing,  each of the  Sellers
shall,  and the Sellers shall cause Albert Pearl to, issue full releases to each
other and to the Company,  its Subsidiaries and their respective  Affiliates (in
the  form  attached  hereto  as  Exhibit  F and  otherwise  satisfactory  to the
Purchaser).

                  (c) Simultaneously with the Closing,  Sellers shall cause each
of the  parties  referenced  in the January  Memo to execute  and  deliver  such
releases as are set forth therein,  in substantially the form attached hereto as
Exhibit F and otherwise satisfactory to the Purchaser.


                                       30

<PAGE>

                  (d)  Simultaneously  with  the  Closing,   the  Company,   its
Affiliates  and the Sellers  (other than Sleepeck  Printing)  shall issue a full
release to Sleepeck Printing (except with respect to liabilities associated with
completed   work   not  yet   invoiced,   accounts   receivable   and   printing
work-in-progress  as described in Section  6.8(iii)),  in substantially the form
attached hereto as Exhibit F and otherwise satisfactory to the Purchaser.

                  Section 7.3 Employees.

                  Subsequent  to the  Closing  and  for a  period  of  one  year
thereafter,  Purchaser agrees that it will not and it will cause the Company not
to  terminate  without  cause  the  employment  with the  Company  or any of its
Subsidiaries of any of (i) Bob Dona,  Arthur Inglesby or Paul Bousselli prior to
the date that is nine (9) months  from  written  notice  from  Purchaser  to the
Company  regarding  the  employment  status of each such  person,  (ii)  William
Deierlein or Bob Westover  prior to the date that is six (6) months from written
notice from  Purchaser to the Company  regarding the  employment  status of each
such  person,  and (iii)  Robert  Larr or Fayez  Hamma prior to the date that is
three (3) months from written notice from Purchaser to the Company regarding the
employment status of each such person.  Purchaser shall provide Jay Gartlan with
a copy of each such notice.  The Sellers  (other than Sleepeck  Printing)  shall
recommend  and  encourage  in good  faith  each such  employee  to enter  into a
confidentiality  and  non-compete  agreement   satisfactory  to  the  Purchaser.
Notwithstanding  anything to the contrary, none of the Purchaser, the Company or
any of its Subsidiaries shall have any obligation or liability to the Sellers or
any such employee if such employee fails to enter into such  confidentiality and
non-compete agreement.

                  Section 7.4 Certain Insurance Coverage.

                  After  the  Closing  Date  and  until  January  2,  2001,  the
Purchaser  shall cause the Company to maintain the  Company's  insurance  policy
covering  professional  errors and omissions  liability having an annual premium
cost of $3,486 in effect on the date  hereof or  another  substantially  similar
insurance  policy  providing  for coverage on a "claims  made" basis;  provided,
however,  that the Purchaser and the Company shall have no obligations  pursuant
to this  Section  7.4 in the  event  of any  material  increase  in the  cost of
premiums  charged for any such policy over the costs of premiums  charged  under
the  Company's  current  policy.  In the event that the Purchaser or the Company
determines to cancel such insurance policy prior to the sixth anniversary of the
Closing Date,  the Purchaser  shall or shall cause the Company to (a) notify the
Sellers'  Representatives  of such  cancellation at least 30 days prior thereto,
and (b) reasonably cooperate (without any cost to the Purchaser,  the Company or
any of its  Subsidiaries)  with the  Sellers'  Representatives'  undertaking  to
purchase  continuation of such insurance  coverage for the benefit of any of Jay
Gartlan, Michael Berman or Paul Pearl who choose to be so insured.

                                  Article VIII
                              CONDITIONS TO CLOSING

                  Section  8.1  Conditions   Precedent  to  Obligations  of  the
Purchaser.






                                       31


<PAGE>


                  The obligation of the Purchaser to consummate the transactions
contemplated by this Agreement is subject to the fulfillment, on or prior to the
Closing Date, of each of the  following  conditions  (any or all of which may be
waived  by the  Purchaser  in  whole  or in  part  to the  extent  permitted  by
applicable law or which shall be deemed waived if the Closing occurs):

                  (a)  all   representations   and  warranties  of  the  Sellers
contained herein qualified as to materiality shall be true and correct,  and the
representations  and warranties of the Sellers contained herein not qualified as
to  materiality  shall be true and correct in all material  respects,  as of the
date  hereof and at and as of the  Closing  Date with the same  effect as though
those  representations and warranties had been made again at and as of that time
without amendment for subsequent disclosure,  except as specifically provided in
Section 6.1;

                  (b) the  Sellers  shall have  performed  and  complied  in all
material respects with all obligations and covenants  required by this Agreement
to be performed or complied with by them on or prior to the Closing Date;

                  (c) the Purchaser shall have been furnished with  certificates
(dated the Closing Date and in form and substance reasonably satisfactory to the
Purchaser)  executed  by each Seller  certifying  as to the  fulfillment  of the
conditions specified in Sections 8.1(a) and 8.1(b) hereof;

                  (d) Stock  certificates (or other  appropriate  documentation)
representing  100% of the Shares  shall have been,  or shall at the  Closing be,
validly  delivered and  transferred to the Purchaser,  free and clear of any and
all Liens;

                  (e) there shall not have been or occurred any Material Adverse
Change;

                  (f) the Sellers  shall have  obtained all consents and waivers
referred to in Schedules 4.5 and 4.6 hereto,  in a form reasonably  satisfactory
to  the  Purchaser,  with  respect  to the  transactions  contemplated  by  this
Agreement and the Seller Documents and the Sellers shall have obtained releases,
in form and substance  satisfactory  to the Purchaser,  of all Liens (other than
Permitted  Exceptions)  filed against the Company or its  Subsidiaries  or their
respective assets;

                  (g)  no  Legal  Proceedings  shall  have  been  instituted  or
threatened  or claim or demand made against the  Sellers,  the Company or any of
its Subsidiaries, or the Purchaser which challenges the validity or propriety of
the transactions  contemplated hereby or otherwise affects the ability of any of
the parties to gain the material intended benefits contemplated hereby;

                  (h) there  shall not be in effect any Order by a  Governmental
Body of competent jurisdiction  restraining,  enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby;

                  (i) each of the Sellers shall have provided the Purchaser with
an affidavit of  non-foreign  status that complies with Section 1445 of the Code
(a "FIRPTA Affidavit");

                  (j) the Purchaser shall have received the written  resignation
of each director of the Company;




                                       32

<PAGE>


                  (k)  each of the  Sellers  and the  Escrow  Agent  shall  have
entered into the Escrow Agreement;

                  (l)  Jay  Gartlan   shall  have  entered  into  an  employment
agreement with the Purchaser or the Company containing terms that are acceptable
to the Purchaser;

                  (m) Paul Pearl shall have entered into an employment agreement
with the  Company  (the  "Employment  Agreement")  substantially  in the form of
Exhibit B hereto;

                  (n)  Michael  Berman  shall  have  entered  into a  consulting
agreement (the  "Consulting  Agreement")  substantially in the form of Exhibit C
hereto;

                  (o)  Sleepeck  Printing  shall  have  entered  into a printing
services agreement (the "Printing Services Agreement") substantially in the form
of Exhibit D hereto;

                  (p) each of Jay Gartlan,  Michael  Berman and Paul Pearl shall
have entered  into a  non-competition  and  non-solicitation  agreement  (each a
"Non-Competition and Non-Solicitation  Agreement")  substantially in the form of
Exhibit E hereto;

                  (q) the actions  contemplated by Sections 6.9, 7.1 (other than
the  first  sentence  of such  Section)  and 7.2  hereof  (other  than the first
sentence of Section 7.2(a)),  including,  without limitation,  the execution and
delivery of the releases  described in such sections,  substantially in the form
of Exhibit F hereto, shall have been taken simultaneously with the Closing;

                  (r) each Employee Receivable,  other than Employee Receivables
set forth on Schedule 8.1(r),  shall have been paid to the Company and satisfied
in full;

                  (s) the  Sleepeck  Lockbox  shall have been  terminated  as of
11:59 p.m.,  New York City time,  on the day  immediately  preceding the Closing
Date and  provision  shall  have been made to have (i) all  amounts  held in the
Sleepeck  Lockbox  for the  account  of the  Company or its  Subsidiaries  to be
disbursed and paid to the Company,  and (ii) all future amounts  remitted to the
Sleepeck Lockbox for the account of the Company or any of its Subsidiaries to be
remitted to the Company;

                  (t) no  Person  other  than  a  Seller  shall  have  made,  or
threatened to make, any claim to any Common Stock, Option or other rights in the
Company;

                  (u) the employment of the employees  listed on Schedule 8.1(u)
shall have been terminated; and

                  (v) Sleepeck  Printing  shall have executed a  confidentiality
agreement in form
and substance reasonably acceptable to the Purchaser and Sleepeck Printing.

                  It is understood that it is not a condition to the Purchaser's
obligations  to  consummate  the  transactions   contemplated  hereby  that  the
Purchaser  shall  have  obtained   financing  to  consummate  the   transactions
contemplated hereby.




                                       33

<PAGE>


                  Section  8.2  Conditions   Precedent  to  Obligations  of  the
Sellers.

                  The obligations of the Sellers to consummate the  transactions
contemplated  by this Agreement are subject to the  fulfillment,  prior to or on
the Closing Date, of each of the following  conditions  (any or all of which may
be  waived  by the  Sellers  in  whole  or in part to the  extent  permitted  by
applicable law or which shall be deemed waived if the Closing occurs):

                  (a)  all  representations  and  warranties  of  the  Purchaser
contained herein qualified as to materiality shall be true and correct,  and all
representations  and warranties of the Purchaser  contained herein not qualified
as to materiality shall be true and correct in all material respects,  as of the
date  hereof and at and as of the  Closing  Date with the same  effect as though
those representations and warranties had been made again at and as of that date;

                  (b) the  Purchaser  shall have  performed  and complied in all
material respects with all obligations and covenants  required by this Agreement
to be performed or complied with by Purchaser on or prior to the Closing Date;

                  (c) the Sellers shall have been  furnished  with  certificates
(dated the Closing Date and in form and substance reasonably satisfactory to the
Sellers)  executed by the Chief Executive Officer and Chief Financial Officer of
the Purchaser  certifying as to the  fulfillment of the conditions  specified in
Sections 8.2(a) and 8.2(b);

                  (d) the Purchaser shall have obtained all consents and waivers
referred to in Schedule 5.3 hereto with respect to the transactions contemplated
hereby;

                  (e)  no  Legal  Proceedings  shall  have  been  instituted  or
threatened  or claim or demand made against the  Sellers,  the Company or any of
its Subsidiaries, or the Purchaser which challenges the validity or propriety of
the transactions  contemplated hereby or otherwise affects the ability of any of
the parties to gain the material intended benefits contemplated hereby;

                  (f) there  shall not be in effect any Order by a  Governmental
Body of competent jurisdiction  restraining,  enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby;

                  (g) the  Purchaser  shall  have  entered  into,  or caused the
Company to enter into, an employment  agreement  with Jay Gartlan  acceptable to
Jay Gartlan;

                  (h) the  Purchaser  shall  have  entered  into,  or caused the
Company to enter into, the Employment Agreement with Paul Pearl substantially in
the form of Exhibit B hereto;

                  (i) the  Purchaser  shall have  entered  in to the  Consulting
Agreement with Michael Berman substantially in the form of Exhibit C hereto;

                  (j)  the  Purchaser  shall  have  entered  into  the  Printing
Services Agreement with Sleepeck Printing substantially in the form of Exhibit D
hereto;





                                       34

<PAGE>

                  (k) the  Purchaser  shall have entered into a  Non-Competition
and Non-Solicitation Agreement with each of Jay Gartlan, Michael Berman and Paul
Pearl substantially in the form of Exhibit E hereto;

                  (l) the actions  contemplated  by Sections  7.1 and 7.2 (other
than  the  second  sentence  of  Section  7.2(a))  hereof,   including   without
limitation,  the  execution  and  delivery  of the  releases  described  in such
sections  substantially  in the form of Exhibit F hereto,  shall have been taken
simultaneously with the Closing;

                  (m) the Purchaser and the Escrow Agent shall have entered into
the Escrow Agreement;

                  (n) the Sellers  shall have received any waivers to which they
are properly entitled pursuant to Section 6.1; and

                  (o) the Purchaser  shall have proffered the payments  referred
to in Section  2.2 hereof and shall have  proffered  the  deposits  into  escrow
contemplated by Section 2.3 hereof.

                                   Article IX
                               CLOSING DELIVERIES

                  Section 9.1 Documents to be Delivered by the Sellers.

                  At the  Closing,  the Sellers  shall  deliver,  or cause to be
delivered,  to  the  Purchaser  and to  each  other  party  as  appropriate  the
following:

                  (a) stock  certificates (or other  appropriate  documentation)
representing the Shares, duly endorsed in blank or accompanied by stock transfer
powers and with all requisite stock transfer tax stamps attached;

                  (b) the certificates referred to in Section 8.1(c) hereof;

                  (c) copies of all consents, waivers and Lien releases referred
to in Section 8.1(f) hereof;

                  (d) Escrow  Agreement,  substantially in the form of Exhibit A
hereto, duly executed by each Seller and the Escrow Agent;

                  (e)  employment  agreement   acceptable  to  Purchaser,   duly
executed by Jay Gartlan;

                  (f) Employment Agreement  substantially in the form of Exhibit
B hereto, duly executed by Paul Pearl;

                  (g) Consulting Agreement  substantially in the form of Exhibit
C hereto, duly executed by Michael Berman;




                                       35

<PAGE>


                  (h) Printing Services  Agreement  substantially in the form of
Exhibit D hereto, duly executed by Sleepeck Printing;

                  (i)    Non-Competition   and    Non-Solicitation    Agreements
substantially in the form of Exhibit E hereto,  duly executed by each of Michael
Berman, Jay Gartlan and Paul Pearl;

                  (j) the conveyances of Intellectual  Property  contemplated by
Section 6.9 and the  acknowledgment of payment and Seller releases  contemplated
by Sections 7.1 and 7.2, with the releases  being  substantially  in the form of
Exhibit F hereto, duly executed by each appropriate Seller;

                  (k)  written  resignation  of  each  of the  directors  of the
Company;

                  (l) duly executed FIRPTA Affidavits for each Seller;

                  (m)  certificates of good standing with respect to the Company
and its  Subsidiaries  issued by the  Secretary of State for each state in which
the Company and its  Subsidiaries is incorporated and in which each is qualified
to do business as a foreign corporation;

                  (n) evidence  satisfactory to the Purchaser of the payment and
satisfaction of each Employee  Receivable,  other than Employee  Receivables set
forth on Schedule 8.1(r);

                  (o) evidence  satisfactory to the Purchaser of the termination
of the Sleepeck Lockbox;

                  (p) the  corporate  books and  records of the  Company and its
Subsidiaries; and

                  (q) such other  documents as the  Purchaser  shall  reasonably
request three (3) days prior to Closing.

                  Section 9.2 Documents to be Delivered by the Purchaser.

                  At the Closing,  the  Purchaser  shall  deliver to the Sellers
(except as provided below) the following:

                  (a) evidence of payment in full of the payments referred to in
Section  2.2 hereof and the  deposits  into escrow  contemplated  by Section 2.3
hereof ;

                  (b) the certificates referred to in Section 8.2(c) hereof;

                  (c) copies of all consents and waivers  referred to in Section
8.2(d) hereof;

                  (d) Escrow  Agreement,  substantially in the form of Exhibit A
hereto, duly executed by the Purchaser and the Escrow Agent;

                  (e) employment  agreement  with Jay Gartlan  acceptable to the
Purchaser, duly executed by the Purchaser to be delivered to Jay Gartlan;





                                       36

<PAGE>


                  (f) Employment Agreement  substantially in the form of Exhibit
B hereto, duly Executed by the Purchaser;

                  (g) Consulting Agreement  substantially in the form of Exhibit
C hereto, duly executed by the Purchaser;

                  (h) Printing Services  Agreement  substantially in the form of
Exhibit D hereto, duly executed by the Purchaser;

                  (i) Non-Competition and Non-Solicitation  Agreements with each
of Michael  Berman,  Jay  Gartlan  and Paul Pearl  substantially  in the form of
Exhibit E hereto, duly executed by the Purchaser;

                  (j) the payments required by Sections 7.1 and 7.2;

                  (k) the releases of Sleepeck Printing  contemplated by Section
7.2;

                  (l) any waivers executed by the Purchaser  pursuant to Section
6.1; and

                  (m) such  other  documents  as the  Sellers  shall  reasonably
request three (3) days prior to Closing.

                  Section 9.3 Simultaneous  Transactions.  All things which this
Agreement  contemplates are to happen at or in connection with the Closing shall
be deemed to have happened in the order contemplated,  if any, and unless all of
such things shall happen none shall be deemed to have occurred.

                                   Article X
                                 INDEMNIFICATION

                  Section 10.1 Non-Tax Indemnification.

                  (a) Subject to Section 6.1, if  applicable,  and Section 10.2,
the Sellers shall jointly and severally  indemnify and hold the  Purchaser,  the
Company,  and  their  respective  directors,  officers,  employees,  Affiliates,
agents,  successors  and  assigns  (collectively,   the  "Purchaser  Indemnified
Parties") harmless from and against:

                           (i) subject to Sections 10.2(f) and 10.3(d),  any and
all Losses of the Company or any of its  Subsidiaries of every kind,  nature and
description,  absolute or contingent,  existing as against the Company or any of
its  Subsidiaries  prior to and including the Closing Date,  including,  without
limitation, the Cellesence Matter (except as otherwise provided in Schedule 10.1
hereto),  or thereafter coming into being or arising by reason of Claims related
to any matters  occurring on or prior to the Closing Date,  except to the extent
that  the same  (x) are  reflected  on the  Balance  Sheet or the June 30,  1999
Balance Sheet, (y) have been incurred in the ordinary course of business between
the  Balance  Sheet  Date and the  Closing  Date,  or (z) are  disclosed  on the
Schedules hereto (except as otherwise provided in Schedule 10.1 hereto);



                                       37


<PAGE>


                           (ii)  subject  to  Section  11.2,  any and all Losses
attributable to or resulting from the failure of any  representation or warranty
of the Sellers set forth in Article IV hereof or any  representation or warranty
contained  in any Seller  Document to be true and correct in all  respects as of
the date made, as amended at or prior to Closing in accordance with Section 6.1,
other than the  representations and warranties set forth in Sections 4.2, 4.6 or
Section  4.24,  to the extent  Section  4.24  relates to Sections 4.2 and 4.6 or
similar representations and warranties contained in any Seller Document;

                           (iii) any and all Losses attributable to or resulting
from the breach of any  covenant  or other  agreement  on the part of any of the
Sellers under this Agreement or the other Seller Documents; and

                           (iv)   any   and   all   notices,   actions,   suits,
proceedings,  claims,  demands,  assessments,  judgments,  costs,  penalties and
expenses,  including  attorneys' and other professionals' fees and disbursements
(collectively,  "Expenses") incident to any and all Losses with respect to which
indemnification  is provided  hereunder or the  enforcement of the provisions of
this Article X.

                  (b)  Notwithstanding   anything  in  Section  10.1(a)  to  the
contrary  and  subject to  Sections  10.2 and 11.2,  each of the  Sellers  shall
severally  (and not  jointly and  severally)  indemnify  and hold the  Purchaser
Indemnified  Parties  harmless  from and against any Losses and  Expenses  based
upon,  attributable  to or resulting  from the failure of any of the  respective
individual  representations  and  warranties  of each such  Seller  set forth in
Sections  4.2,  4.6 or Section  4.24,  to the  extent  Section  4.24  relates to
Sections 4.2 and 4.6 or any similar  representation or warranty contained in any
Seller Document, to be true and correct in all respects as of the date made.

                  (c) The  Purchaser  shall  indemnify  and hold the Sellers and
their respective Affiliates,  agents, successors and assigns, and in the case of
Sellers which are not natural persons, their respective directors,  officers and
employees  (collectively,  the "Seller Indemnified Parties"),  harmless from and
against:

                           (i)  subject  to  Section  11.2,  any and all  Losses
attributable to or resulting from the failure of any  representation or warranty
of the  Purchaser  set  forth in  Article  V hereof,  or any  representation  or
warranty contained in any Purchaser's Document, to be true and correct as of the
date made;

                           (ii) any and all Losses based upon,  attributable  to
or resulting  from the breach of any covenant or other  agreement on the part of
the Purchaser under this Agreement or the other Purchaser Documents; and

                           (iii) any and all Losses of the Company or any of its
Subsidiaries of every kind,  nature and  description  absolute or contingent (A)
existing  as  against  the  Company  or  any of its  Subsidiaries  prior  to and
including the Closing Date or thereafter  coming into being or arising by reason
of any matters occurring on or prior to the Closing Date, but only to the extent
that  the same  (x) are  reflected  on the  Balance  Sheet or the June 30,  1999



                                       38

<PAGE>


Balance Sheet, (y) have been incurred in the ordinary course of business between
the  Balance  Sheet  Date and the  Closing  Date,  or (z) are  disclosed  on the
Schedules hereto (except as otherwise provided in Schedule 10.1 hereto), and (B)
arising from Claims related to any matters occurring after the Closing Date; and

                           (iv) any and all  Expenses  incident  to Losses  with
respect to which indemnification is provided hereunder or the enforcement of the
provisions of this Article X.

                  (d) Sleepeck  Printing shall  indemnify and hold the Purchaser
Indemnified Parties harmless from and against any and all Losses attributable to
or resulting  from the  employment or  termination  of employment of the persons
listed on Schedule 8.1(u).

                  Section 10.2  Limitations on  Indemnification  for Breaches of
Representations and Warranties.

                  (a) The Sellers  shall not have any liability  under  Sections
10.1(a)(i), 10.1(a)(ii), 10.1(a)(iv), 10.1(b) or 10.4(a)(i)(c) hereof unless the
aggregate  amount of Losses and Expenses of the  Purchaser  Indemnified  Parties
finally  determined to arise  thereunder that are attributable to or result from
the  failure of any  representation  or  warranty  of the Sellers to be true and
correct exceeds  $50,000 (the "Basket") and in such event,  the Sellers shall be
required  to pay the entire  amount of such Losses and  Expenses  from the first
dollar  thereof.  In addition,  the Sellers shall not have any  liability  under
Sections  10.1(a),  10.1(b) and 10.4  (a)(i)(c)  hereof  which in the  aggregate
exceeds the Purchase Price (the  "Ceiling").

                  (b) The  liabilities  of the  Sellers  under  Section  10.1(a)
hereof  shall be joint and several  and the  liabilities  of the  Sellers  under
Section 10.1(b) hereof shall be several only.  Subject to Section  10.2(a),  the
maximum  liability  of each  Seller  under this  Agreement  pursuant to Sections
10.1(a),  10.1(b)  and  10.4(a)(i)(c)  shall not exceed  such  Seller's  Maximum
Obligation.  Each Seller's "Maximum Obligation" shall be as follows and shall be
subject to  proportionate  adjustment  upon an adjustment to the Purchase  Price
pursuant to Sections 2.1 and 2.4 hereof:

                  Michael Berman:           $3,829,500
                  Paul Pearl:               $1,665,000
                  Jay Gartlan:              $1,100,000
                  Sleepeck Printing:        $3,344,100
                  Stuart Fleischer:         $   241,400

                  (c)  Notwithstanding  anything to the  contrary and subject to
Section 10.2(b) hereof, the Sellers who are equity holders in any Seller that is
a corporation  shall be jointly and severally  liable with such corporate Seller
for any and all indemnification obligations of such corporate Seller pursuant to
Section 10.1(a) or 10.1(b).

                  (d)  Notwithstanding  anything  to the  contrary,  the Sellers
shall  not  have  any  liability  for  any  Loss  arising  from  the  breach  or
untruthfulness of any of the representations or warranties  contained in Section
4.21(b) solely to the extent that the Purchaser  shall have recovered in full an
amount equal to such Loss pursuant to Section 2.3(c).






                                       39


<PAGE>


                  (e) The  obligations of the Sellers under this Article X shall
be  satisfied  first from the amount  deposited  in escrow  pursuant to Sections
2.3(a)  and  2.3(b)  provided  that  funds are then held in escrow  pursuant  to
Sections 2.3(a) or 2.3(b).

                  (f) Notwithstanding anything to the contrary, in the event any
Purchaser  Indemnified  Party has a claim  for  indemnification  which,  but for
Section  11.2  or  otherwise,  may be  brought  pursuant  to (x)  both  Sections
10.1(a)(ii) and 10.1(a)(i)  hereof,  such claim may only be brought  pursuant to
Section  10.1(a)(ii)  hereof and  recovery  for such claim  pursuant  to Section
10.1(a)(i)  shall be barred,  or (y) both Sections  10.1(a)(ii) and 10.4 hereof,
such  claim may only be  brought  pursuant  to  Section  10.1(a)(ii)  hereof and
recovery for such claim pursuant to Section 10.4 hereof shall be barred.

                  Section 10.3 Non-Tax Indemnification Procedures.

                  (a) In the  event  that  any  Claim  shall  be  instituted  or
asserted by any Person in respect of which  indemnification  may be sought under
Section 10.1 hereof  (regardless of the Basket or the Ceiling),  the indemnified
party shall reasonably and promptly cause written notice of the assertion of any
Claim  of which  it has  knowledge  which is  covered  by this  indemnity  to be
forwarded  to the  indemnifying  party.  The  indemnifying  party shall have the
right,  at its  sole  option  and  expense,  to have  the  indemnified  party be
represented  by  counsel  of the  indemnifying  party's  choice,  which  must be
reasonably  satisfactory  to  the  indemnified  party,  and to  defend  against,
negotiate,  settle or otherwise  deal with any Claim which relates to any Losses
indemnified  against  hereunder.  If the  indemnifying  party  elects  to defend
against, negotiate, settle or otherwise deal with any Claim which relates to any
Losses indemnified against hereunder,  it shall within ten (10) days (or sooner,
if the  nature of the Claim so  requires)  notify the  indemnified  party of its
intent  to do so.  If the  indemnifying  party  elects  not to  defend  against,
negotiate,  settle or otherwise  deal with any Claim which relates to any Losses
indemnified  against  hereunder,  fails to notify the  indemnified  party of its
election  as herein  provided  or  contests  its  obligation  to  indemnify  the
indemnified  party for such Losses under this Agreement,  the indemnified  party
may defend against,  negotiate, settle or otherwise deal with such Claim. If the
indemnified party defends any Claim, then the indemnifying party shall reimburse
the  indemnified  party for the Expenses of defending such Claim upon submission
of periodic  bills.  If the  indemnifying  party shall assume the defense of any
Claim, the indemnified party may participate,  at his or its own expense, in the
defense of such Claim;  provided,  however, that such indemnified party shall be
entitled to participate in any such defense with separate counsel at the expense
of the  indemnifying  party if, (i) so  requested by the  indemnifying  party to
participate  or (ii) in the  reasonable  opinion of  counsel to the  indemnified
party, an actual or potential  conflict exists between the indemnified party and
the  indemnifying  party that would require such separate  representation  under
applicable rules of procedure or code of ethics; and provided, further, that the
indemnifying  party shall not be required to pay for more than one such  counsel
for all  indemnified  parties in connection  with any Claim.  The parties hereto
agree to  cooperate  fully  with  each  other in  connection  with the  defense,
negotiation or settlement of any such Claim.

                  (b) After any final judgment or award shall have been rendered
by a court, arbitration board or administrative agency of competent jurisdiction
and the  expiration  of the time in which to appeal  therefrom,  or a settlement


                                       40

<PAGE>


shall have been consummated, or the indemnified party and the indemnifying party
shall have  arrived  at a mutually  binding  agreement  with  respect to a Claim
hereunder,  the indemnified party shall forward to the indemnifying party notice
of any sums due and owing by the  indemnifying  party pursuant to this Agreement
with respect to such matter and the indemnifying  party shall be required to pay
all of the sums so due and owing to the  indemnified  party by wire  transfer of
immediately  available  funds  within 10  Business  Days  after the date of such
notice.

                  (c) The failure of the  indemnified  party to give  reasonably
prompt  notice of any Claim shall not  release,  waive or  otherwise  affect the
indemnifying  party's obligations with respect thereto except to the extent that
the indemnifying  party can demonstrate actual loss and prejudice as a result of
such failure.

                  (d) A claim for indemnity under Section 10.1(a)(i) may be made
at any time  prior  to the  close  of  business  on  December  31,  2001 and not
thereafter.

                  Section 10.4 Tax Matters.

                  (a) Tax Indemnification.

                           (i) Except to the extent  Taxes are  reserved  for on
the Closing Date Balance Sheet, each Seller, jointly and severally, agrees to be
responsible  for and to indemnify  and hold the  Purchaser  Indemnified  Parties
harmless  from and  against  any and all Taxes due and payable by the Company or
any of its Subsidiaries:

                               (a) with respect to all taxable periods ending on
         or prior to the Closing Date;

                               (b)  with  respect  to any and all  Taxes  of the
         Company  or any of its  Subsidiaries  for the period  allocated  to the
         Sellers pursuant to Section 10.4(b)(iv);

                               (c)  arising  by  reason  of  any  breach  of the
         Sellers  or  inaccuracy  of  any of the  representations  contained  in
         Section 4.10 hereof; and

                               (d)  with  respect  to any and all  Taxes  of any
         member  of a  consolidated,  combined  or  unitary  group of which  the
         Company (or any  predecessor)  or any of its  Subsidiaries  is or was a
         member on or prior to the Closing Date pursuant to Treasury  Regulation
         Section 1.1502-6(a) or any analogous or similar state, local or foreign
         law  or  regulation,   as  transferee  or  successor,  by  contract  or
         otherwise.

The Sellers  shall also pay and shall  indemnify and hold harmless the Purchaser
Indemnified  Parties  from  and  against  any  losses,   damages,   liabilities,
obligations,  deficiencies,  costs and expenses (including,  without limitation,
reasonable  expenses and fees for attorneys and accountants)  ("Related  Costs")
incurred in connection  with the Taxes for which the Sellers are  responsible to
indemnify the Purchaser Indemnified Parties pursuant to this Section 10.4(a) (or
any asserted deficiency,  claim, demand, action, suit,  proceeding,  judgment or
assessment, including the defense or settlement thereof, relating to such Taxes)
or the enforcement of this Section 10.4(a).



                                       41

<PAGE>


                           (ii) The Purchaser  shall indemnify and hold harmless
the Seller  Indemnified  Parties  from and  against any and all Taxes (A) of the
Company or any of its  Subsidiaries  with  respect to any taxable  period of the
Company or any of its Subsidiaries  beginning after the Closing Date, (B) of the
Company of any of its  Subsidiaries  with respect to any taxable period prior to
the Closing Date to the extent  reserved on the Closing Date Balance  Sheet,  or
(C)  attributable  to the period  allocated  to  Purchaser  pursuant  to Section
10.4(b)(iv) as well as any Related Costs  incurred in connection  with the Taxes
for which the  Purchaser  is  responsible  to indemnify  the Seller  Indemnified
Parties  pursuant to this Section  10.4(a) (or any asserted  deficiency,  claim,
demand, action, suit, proceeding, judgment or assessment,  including the defense
or  settlement  thereof,  relating  to such  Taxes) or the  enforcement  of this
Section 10.4(a).

                           (iii)  If  any  indemnification  payment  under  this
Section 10.4  (including,  without  limitation,  this Section  10.4(a)(iii))  is
determined  to be  taxable  to the party  receiving  such  payment by any taxing
authority,  the paying  party  shall also  indemnify  the party  receiving  such
payment for any Taxes incurred by reason of the receipt of such payment  (taking
into account any actual  reduction in tax liability to the receiving  party) and
any Related  Costs  incurred by the party  receiving  such payment in connection
with such  Taxes (or any  asserted  deficiency,  claim,  demand,  action,  suit,
proceeding, judgment or assessment, including the defense or settlement thereof,
relating to such Taxes).

                  (b) Preparation of Tax Returns; Payment of Taxes.

                           (i) The  Sellers  shall cause the Company and each of
its Subsidiaries to file all the federal,  state,  local and foreign Tax Returns
required to be filed by the Company and each of its Subsidiaries for all periods
ending on or prior to the Closing  Date and shall pay any and all Taxes due with
respect to such  Returns to the extent not  reserved on the Closing Date Balance
Sheet. All Tax Returns described in this Section 10.4(b)(i) shall be prepared in
a manner  consistent with prior practice unless a past practice has been finally
determined  to be incorrect  by the  applicable  taxing  authority or a contrary
treatment  is required by  applicable  tax laws (or  judicial or  administrative
interpretations  thereof).  The Sellers  shall cause the Company and each of its
Subsidiaries  to provide the Purchaser with copies of such completed Tax Returns
at least 10 days prior to the filing date,  and the Purchaser  shall be provided
an opportunity to review and propose  changes to such Tax Returns and supporting
workpapers  and schedules  prior to the filing of such Tax Returns.  The Sellers
and  the  Purchaser  shall  attempt  in  good  faith  mutually  to  resolve  any
disagreements  regarding  such Tax  Returns  prior  to the due  date for  filing
thereof.

                           (ii)  Following the Closing,  the Purchaser  shall be
responsible for preparing or causing to be prepared all federal,  foreign, state
and  local  Tax  Returns  required  to be filed by the  Company  and each of its
Subsidiaries  for all periods which begin before and end after the Closing Date.
To the extent any Taxes  shown due on any such Tax Return are  indemnifiable  by
the Sellers, (A) the Purchaser shall provide the Sellers with copies of such Tax
Return at least 30 days prior to the due date for filing  such  return,  and (B)
the Sellers shall have the right to review and approve (which approval shall not
be  unreasonably  withheld)  such  Tax  Returns  for 15 days  following  receipt
thereof.  The  Sellers and  Purchaser  shall  attempt in good faith  mutually to
resolve any  disagreements  regarding such Tax Returns prior to the due date for
filing  thereof.  The  Purchaser  shall  file or cause to be filed  all such Tax


                                       42

<PAGE>


Returns on or prior to the due date, as it may be extended,  and shall,  subject
to receiving the payments from the Sellers referred to in Section  10.4(b)(iii),
pay the Taxes shown due thereon;  provided,  however,  that nothing contained in
the foregoing shall in any manner terminate, limit or adversely affect any right
of  Purchaser  Indemnified  Parties,  the  Sellers  or the  Company  to  receive
indemnification pursuant to any provision in this Agreement.

                           (iii) Not later  than 5 days  before the due date for
payment  of Taxes  with  respect  to any Tax  Returns  which  Purchaser  has the
responsibility  to file,  each of the Sellers  shall pay to the  Purchaser  such
Seller's  proportionate  share of an amount  equal to that  portion of the Taxes
shown on such return for which the Sellers have an  obligation  to indemnify the
Purchaser Indemnified Parties pursuant to the provisions of Section 10.4(a).

                           (iv) For  federal  income tax  purposes,  the taxable
year of the  Company and each of its  Subsidiaries  shall end as of the close of
the Closing Date and, with respect to all other Taxes of the Company and each of
its  Subsidiaries,  the Sellers and the  Purchaser  will,  unless  prohibited by
applicable  law,  close  the  taxable  period  of the  Company  and  each of its
Subsidiaries  as of the close of the Closing  Date.  Neither the Sellers nor the
Purchaser shall take any position  inconsistent  with the preceding  sentence on
any Tax Return. In any case where applicable law does not permit the Company and
each of its Subsidiaries to close its taxable year on the Closing Date or in any
case in which a Tax is assessed with respect to a taxable  period which includes
the Closing  Date (but does not begin or end on that day),  then Taxes,  if any,
attributable  to the taxable period of the Company and each of its  Subsidiaries
beginning before and ending after the Closing Date shall be allocated (i) to the
Sellers  for the  period  up to and  including  the  Closing  Date,  and (ii) to
Purchaser  for the period  subsequent  to the Closing  Date.  Any  allocation of
income or deductions  required to determine any Taxes attributable to any period
beginning  before  and  ending  after the  Closing  Date  shall be  prepared  by
Purchaser  and shall be made by means of a closing  of the books and  records of
the Company and each of its  Subsidiaries  as of the close of the Closing  Date,
provided that  exemptions,  allowances or deductions  that are  calculated on an
annual  basis  (including,  but not limited to,  depreciation  and  amortization
deductions) shall be allocated between the period ending on the Closing Date and
the period  after the Closing Date in  proportion  to the number of days in each
such period. The Purchaser shall provide the Sellers with a schedule showing the
computation  of each item which is subject to  allocation  under this Section at
least 30 days prior to the due date for filing a Tax Return for a taxable period
which includes the Closing Date. The Sellers shall have the right to review such
schedule,  and the Purchaser and Sellers shall attempt in good faith mutually to
resolve any  disagreements  regarding the  determination of any such allocation.
Any amount owing from Sellers  under this Section  10.4(b)(iv)  shall be paid no
later than five (5) days prior to the filing of the underlying Tax Return.  With
respect to the Tax  Returns of the Company  and its  Subsidiaries  for the first
taxable  period  following the Closing Date and  amendments  made  following the
Closing  Date to Tax  Returns of the Company  and its  Subsidiaries  for taxable
periods prior to the Closing Date,  the Purchaser  shall (i) notify or cause the
Company and its Subsidiaries to notify the Sellers'  Representatives at least 30
days  prior to the due date for  filing  such Tax  Returns  if such Tax  Returns
report any item in a manner  that is  inconsistent  with prior  years,  and (ii)
provide the Sellers'  Representatives  with an  opportunity  to consult with the
Purchaser and the Company in connection therewith.



                                       43

<PAGE>


                  (c) Cooperation with Respect to Tax Returns. Purchaser and the
Sellers  agree to furnish or cause to be  furnished  to each other,  and each at
their own expense, as promptly as practicable,  such information relating to the
Company or any of its Subsidiaries  (including  access to books and records) and
assistance,  including making employees available on a mutually convenient basis
to provide  additional  information and explanations of any material provided as
is reasonably  necessary for the preparation  and filing of any Tax Return,  for
the preparation for any audit,  and for the prosecution or defense of any claim,
suit or  proceeding  relating  to any  adjustment  or proposed  adjustment  with
respect to Taxes of the Company or any Subsidiary. Purchaser, the Company or any
of its  Subsidiaries  shall  retain in its  possession,  and shall  provide  the
Sellers  reasonable  access to  (including  the right to make copies  of),  such
supporting  books and  records  and any other  materials  that the  Sellers  may
specify with respect to Tax matters  relating to any taxable period ending on or
prior to the Closing  Date or  relating  to the  portion of any  taxable  period
occurring  on  or  before  the  Closing  Date  until  the  relevant  statute  of
limitations  has  expired.  After  such  time,  Purchaser  may  dispose  of such
material,  provided  that  prior to such  disposition  Purchaser  shall give the
Sellers a reasonable opportunity to take possession of such materials.

                  (d) Tax Audits.

                           (i) The  Purchaser  shall  have  the  sole  right  to
represent the interests of the Company and each of its  Subsidiaries  in any Tax
audit or administrative  or court proceeding  relating to taxable periods of the
Company  or any of its  Subsidiaries  beginning  after the  Closing  Date and to
employ  counsel of its choice at its  expense;  provided  that Jay  Gartlan  and
Sleepeck  Printing  shall each have the right to consult with such counsel.  The
Sellers agrees that they will cooperate  fully with Purchaser and its counsel in
the defense against or compromise of any claim in any said proceeding.

                           (ii) If any taxing  authority  in  writing  asserts a
claim,  makes an assessment  or otherwise  disputes or affects the Tax reporting
position of the Company or any of its Subsidiaries for taxable periods ending on
or  prior to the  Closing  Date,  Purchaser  shall,  promptly  upon  receipt  by
Purchaser,  the Company or any of its  Subsidiaries  of written notice  thereof,
inform the Sellers thereof.

                           (iii) Sellers'  Representatives  shall have the right
to represent  the interests of the Company and each of its  Subsidiaries  in any
Tax audit or administrative  or court proceeding  relating to taxable periods of
the Company or any of its Subsidiaries ending on or prior to the Closing Date to
the extent  that it involves an asserted  Tax  liability  with  respect to which
indemnity is sought under Section  10.04.  The Purchaser  shall  cooperate,  and
shall cause the Company  and its  Subsidiaries  to  cooperate,  at the  Sellers'
expense,  with the  Sellers and their  counsel in the  defense  against any such
claim in any such  proceeding.  At the request of the Sellers'  Representatives,
the Purchaser shall grant a power of attorney to the Sellers' Representatives to
the extent reasonably necessary or required for the Sellers'  Representatives to
exercise their rights under this Section  10.4(d)  (iii).  The Sellers shall not
enter into on behalf of the Purchaser any  settlement  agreement with respect to
any asserted Tax liability  without the prior written  consent of the Purchaser,
which consent may not be unreasonably withheld.





                                       44

<PAGE>


                           (iv) The  Sellers  and the  Purchaser  jointly  shall
represent  the  interests of the Company or any of its  Subsidiaries  in any Tax
audit or  administrative  or court proceeding  relating to any taxable period of
the Company or any of its Subsidiaries which includes (but does not begin or end
on) the Closing Date. All costs,  fees and expenses paid to third parties in the
course of such proceeding shall be borne by the Sellers and the Purchaser in the
same ratio as the ratio in which,  pursuant to the terms of this Agreement,  the
Sellers  and the  Purchaser  would share the  responsibility  for payment of the
Taxes asserted by the taxing authority in such claim or assessment if such claim
or assessment were sustained in its entirety.

                  (e) Refund  Claims.  Except as  otherwise  provided in Section
10.4(f),  to the extent any determination of Tax liability of the Company or any
of its Subsidiaries,  whether as the result of an audit or examination,  a claim
for refund, the filing of an amended return or otherwise,  results in any refund
of Taxes paid attributable to (i) any period which ends on or before the Closing
Date or (ii) any period  which  includes  the Closing Date but does not begin or
end on that day, any such refund shall belong to the Sellers,  provided  that in
the case of any Tax refund described in clause (ii) of this Section 10.4(e), the
portion of such Tax  refund  which  shall  belong to the  Sellers  shall be that
portion  that is  attributable  to the portion of that period  which ends on the
Closing Date  (determined on the basis of an interim  closing of the books as of
the Closing Date),  and Purchaser  shall  promptly pay any such refund,  and the
interest actually  received thereon,  to the Sellers upon receipt thereof by the
Purchaser  or by the  Company  or any of its  Subsidiaries.  Any and  all  other
refunds  shall belong to the  Purchaser.  Any  payments  made under this Section
10.4(e)  shall  be  net of  any  Taxes  payable  by  the  Company  or any of its
Subsidiaries  with respect to such refund,  credit or interest  thereon  (taking
into  account  any  actual  reduction  in Tax  liability  of the  Company or any
Subsidiary realized upon the payment pursuant to this Section 10.4(e)).

                  (f)  Carrybacks.  The Sellers  shall pay to the  Purchaser the
amount of any Tax benefit  (including  interest thereon) realized by the Sellers
or any Affiliate thereof as a result of the carryback of any Tax loss, deduction
or credit of the  Company or any of its  Subsidiaries  from any  taxable  period
beginning  after the Closing  Date to a taxable  period  ending on or before the
Closing Date. The Sellers shall pay such amount to Purchaser  within 10 Business
Days after such Tax benefit is realized  by the  Sellers or any  Affiliate  as a
refund or  otherwise,  provided that  Purchaser  shall return to the Sellers the
amount,  if any, by which the amount of such Tax benefit is  thereafter  reduced
pursuant to a final determination.

                  (g) Transfer Taxes.  The Sellers shall be liable for and shall
pay (and shall indemnify and hold harmless  Purchaser  against) all sales,  use,
stamp,  documentary,  filing,  recording,  transfer or similar  fees or taxes or
governmental  charges  (including,  without  limitation,  real property transfer
gains taxes,  UCC-3 filing fees,  FAA,  ICC,  DOT, real estate and motor vehicle
registration,  title  recording  or filing  fees and other  amounts  payable  in
respect of transfer  filings) as levied by any taxing  authority or governmental
agency in connection with the transactions contemplated by this Agreement (other
than taxes  measured by or with  respect to income  imposed on the Sellers or on
Purchaser or its  Affiliates).  The Sellers  hereby agree to file all  necessary
documents  (including,  but not limited to, all Tax Returns) with respect to all
such amounts in a timely manner.





                                       45



<PAGE>


                  (h) The  indemnification  provided  for in this  Section  10.4
shall be the sole remedy for any claim in respect of Taxes and the provisions of
Sections 10.1 through 10.3 hereof shall not apply to such claims.

                  (i) Any claim for  indemnity  under this  Section  10.4 may be
made at any time prior to 60 days after the  expiration  of the  applicable  Tax
statute of limitations  with respect to the relevant  taxable period  (including
all periods of extension, whether automatic of permissive).

                  Section 10.5 Tax Treatment of Indemnity Payments.

                  The Sellers  and the  Purchaser  agree to treat any  indemnity
payment made pursuant to this Article X as an  adjustment to the Purchase  Price
for federal, state, local and foreign income tax purposes.


                                   Article XI
                                  MISCELLANEOUS

                  Section 11.1 Certain Definitions.

                  "Affiliate"  means,  with  respect  to any  Person,  any other
Person controlling, controlled by or under common control with such Person.

                  "Business Day" means a day other than a Saturday,  a Sunday or
a day on which  commercial  banks in New York City are authorized or required to
be closed.

                  "Code"  shall  mean the  Internal  Revenue  Code of  1986,  as
amended.

                  "Contract"  means any contract,  indenture,  note, bond, loan,
instrument, lease, commitment or other agreement.

                  "Claim" means any legal proceeding, claim or demand.

                  "Environmental Law" means any foreign, federal, state or local
statute,  regulation,  ordinance or rule of common law as currently in effect in
any way relating to the protection of human health and safety or the environment
including,   without  limitation,  the  Comprehensive   Environmental  Response,
Compensation  and  Liability  Act (42 U.S.C.  ss. 9601 et seq.),  the  Hazardous
Materials  Transportation  Act (49 U.S.C.  App. ss. 1801 et seq.),  the Resource
Conservation  and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Clean Water Act
(33 U.S.C.  ss. 1251 et seq.),  the Clean Air Act (42 U.S.C.  ss. 7401 et seq.),
the Toxic  Substances  Control  Act (15 U.S.C.  ss.  2601 et seq.),  the Federal
Insecticide,  Fungicide, and Rodenticide Act (7 U.S.C. ss. 136 et seq.), and the
Occupational  Safety  and  Health  Act (29  U.S.C.  ss.  651 et  seq.),  and the
regulations promulgated pursuant thereto.

                  "GAAP"  means  generally  accepted  United  States  accounting
principles as of the date hereof.




                                       46


<PAGE>


                  "Governmental  Body" means any government or  governmental  or
regulatory body thereof,  or political  subdivision  thereof,  whether  federal,
state, local or foreign, or any agency, instrumentality or authority thereof, or
any court or arbitrator (public or private).

                  "Hazardous  Material"  means any substance,  material or waste
which is  regulated  by the United  States,  or any state or local  governmental
authority  including,   without  limitation,   petroleum  and  its  by-products,
asbestos, and any material or substance which is defined as a "hazardous waste,"
"hazardous  substance,"  "hazardous  material,"  "restricted  hazardous  waste,"
"industrial waste," "solid waste," "contaminant,"  "pollutant," "toxic waste" or
"toxic substance" under any provision of Environmental Law.

                  "Indebtedness"  means debt of the Company and its Subsidiaries
for borrowed money (including  letters of credit),  notes payable (including the
Sleepeck  Indebtedness),  obligations  to pay the  deferred  purchase  price  of
property or services, capitalized leases and guarantees, but shall exclude trade
accounts  payable  incurred and charges for liabilities  accrued in the ordinary
course of business,  in accordance  with GAAP and consistent with past practice.
For the  avoidance  of doubt,  the  indebtedness  of TCA to the  Company  or its
Subsidiaries  and the  indebtedness of TCB to Al Pearl and to the Company or its
Subsidiaries shall not be included in Indebtedness.

                  "Law"  means  any  federal,   state,   local  or  foreign  law
(including common law),  statute,  code,  ordinance,  rule,  regulation or other
requirement.

                  "Legal Proceeding" means any legal action,  suit,  proceeding,
investigation, claim or order.

                  "Lien"  means  any  lien,  pledge,  mortgage,  deed of  trust,
security  interest,  claim,  lease,  charge,  option,  right of  first  refusal,
easement,  servitude,  transfer  restriction  under any  shareholder  or similar
agreement, encumbrance or any other restriction or limitation whatsoever.

                  "Loss" means all losses,  liabilities,  obligations,  damages,
costs,  expenses and other amounts for which an indemnified party becomes liable
under Article X hereof. For purposes of this Agreement, the amount of a Loss and
the amount of any Expense shall be calculated after giving effect to any reserve
available  for the matter or  transaction  in question  reflected on the Closing
Date  Balance  Sheet,  and after  taking  into  account any  insurance  or other
third-party  payments tendered as compensation for such Loss or Expense accruing
to the  benefit of the  indemnified  party by reason of such Loss or Expense and
any tax effect by reason  thereof or by reason of the receipt of such  insurance
or other third party payments tendered as compensation for such Loss or Expense.

                  "Material Adverse Change" means any material adverse change in
the condition,  financial or otherwise, or in the earnings,  prospects, business
or operations of the Company and its Subsidiaries, taken as a whole.

                  "Order"  means  any  order,  injunction,  judgment,  decree or
ruling.

                  "Permit"  means  any  approvals,   authorizations,   consents,
licenses or permits.



                                       47


<PAGE>


                  "Permitted  Exceptions"  means  (i) all  defects,  exceptions,
restrictions, easements, rights of way and encumbrances disclosed in policies of
title insurance which have been provided to Purchaser;  (ii) statutory liens for
current taxes,  assessments or other governmental  charges not yet delinquent or
the amount or validity of which is being  contested in good faith by appropriate
proceedings,  provided an  appropriate  reserve is established  therefor;  (iii)
mechanics',  carriers',  workers',  repairers'  and  similar  Liens  arising  or
incurred  in the  ordinary  course  of  business  that are not  material  to the
business,  operations  and financial  condition of the property so encumbered or
the  Company;  (iv)  zoning,  entitlement  and other land use and  environmental
regulations by any  Governmental  Body,  provided that such regulations have not
been violated;  and (v) such other imperfections in title,  charges,  easements,
restrictions and encumbrances  which do not materially detract from the value of
or materially  interfere with the present use of any property leased pursuant to
a Real Property Lease subject thereto or affected thereby.

                  "Person" means any individual, corporation, partnership, firm,
joint  venture,   association,   joint-stock  company,   trust,   unincorporated
organization, Governmental Body or other entity.

                  "RCC" means Retail Communications Corp.

                  "Release"  means  any  release,   spill,  emission,   leaking,
pumping, injection,  deposit, disposal,  discharge,  dispersal, or leaching into
the indoor or outdoor environment, or into or out of any property.

                  "Remedial  Action" means all actions to (x) clean up,  remove,
treat or in any other way  address  any  Hazardous  Material;  (y)  prevent  the
Release  of any  Hazardous  Material  so it does not  endanger  or  threaten  to
endanger public health or welfare or the indoor or outdoor  environment;  or (z)
perform pre-remedial studies and investigations or post-remedial  monitoring and
care.

                  "Sleepeck  Indebtedness" means all indebtedness of the Company
or any of its Subsidiaries to Sleepeck Printing,  including  principal,  accrued
and unpaid interest and expenses  payable by the Company or a Subsidiary,  other
than indebtedness on account for goods or services provided by Sleepeck Printing
in the ordinary  course,  unless such  indebtedness  has been outstanding for 90
days or more on the Closing Date, with the exception of indebtedness outstanding
for 90 days or more on the Closing  Date that  relates to payables  for printing
services  performed for the benefit of Gary Farn Ltd. or Zaharoff  provided that
the related  accounts  receivable of the Company or its  Subsidiaries  from such
customers exceeds the related payable by the appropriate  amount of gross profit
and other related ordinary course ancillary charges.

                  "Sleepeck Lockbox" means the Sleepeck Printing lockbox account
(account  number  99475)  at the Bank of  America,  231  South  LaSalle  Street,
Chicago, Illinois.

                  "Subsidiary"  means  any  Person  of which a  majority  of the
outstanding  voting  securities  or other  voting  equity  interests  are owned,
directly or indirectly, by the Company.

                  "Superior Proposal" means an unsolicited bona fide offer by an
unaffiliated third party to purchase a majority of the Company's Common Stock or


                                       48

<PAGE>


substantially  all of the assets of the Company and its  Subsidiaries at a value
significantly higher than that implied by this Agreement.

                  "Taxes" shall mean any income,  gross income,  gross receipts,
profits,  capital  stock,  franchise,   business,  withholding  payroll,  social
security, workers compensation,  unemployment, disability, property, ad valorem,
stamp, excise, occupation, service, sales, use, license, lease, commercial rent,
transfer,  import,  export,  customs  duties,  value added,  goods and services,
alternative  minimum,  estimated  or  other  similar  tax  (including  any  fee,
assessment,  or other  charge in the nature of or in lieu of any tax) imposed by
any  Governmental  Body,  and any  interest,  penalties,  additions  to tax,  or
additional amounts in respect of the foregoing.

                  "Tax  Return"  means  all  returns,   declarations,   reports,
estimates, information returns and statements required to be filed in respect of
any Taxes.

                  "Working Capital" means, without  duplication,  the sum of (i)
accounts  receivable,  net of an  allowance  for  doubtful  accounts,  plus (ii)
inventory,  plus (iii) taxes  receivable,  minus (iv)  accounts  payable  (which
includes accrued expenses and other current liabilities), minus (v) the Sleepeck
Indebtedness,  all as would be reflected on a balance sheet of RCC,  prepared in
accordance with GAAP on a basis  consistent with the financial  statements which
have  previously  been delivered to the  Purchaser.  For the avoidance of doubt,
accounts  receivable  which have been  written-off or accounts  receivable which
relate to  bill-and-hold  arrangements  shall not be included in Working Capital
for purposes of this definition.

                  In addition,  the  following  terms shall have the  respective
meanings set forth in the Section noted below:

                  Additional Indemnification Amount..................2.3(c)
                  Aged Accounts Receivable...........................2.3(c)
                  Agreement..........................................Recitals
                  Agreement Duties...................................11.14
                  Arcade Group.......................................6.1
                  Balance Sheet......................................4.7
                  Balance Sheet Date.................................4.7
                  Basket.............................................10.2(a)
                  Benefit Plans......................................4.15(a)
                  Ceiling............................................10.2(a)
                  Cellesence Matter..................................4.17
                  Claim..............................................10.3(a)
                  Closing............................................3.1
                  Collection Date....................................2.3(c)
                  Closing Date.......................................3.1
                  Closing Date Balance Sheet.........................2..4
                  Collection Date....................................2.3(c)
                  Collection Period..................................2.3(c)
                  Common Stock.......................................Recitals
                  Company............................................Recitals
                  Confidentiality Agreements.........................6.1



                                       49


<PAGE>

                  Consultants........................................4.13(b)
                  Consulting Agreement...............................8.1(n)
                  Determination Date.................................2.1
                  DLJ................................................5.6
                  Employee Receivables...............................4.21(b)
                  Employees..........................................4.15(a)
                  Employment Agreement...............................8.1(m)
                  ERISA..............................................4.15(a)
                  ERISA Affiliate....................................4.15(c)
                  Escrow Agent.......................................2.3(a)
                  Escrow Agreement...................................2.3(a)
                  Estimated Purchase Price...........................2.2
                  Expenses...........................................10.1(a)(iv)
                  Financial Statements...............................4.7
                  FIRPTA Affidavit...................................8.1(i)
                  HSR Act............................................4.5(b)
                  Indemnification Escrow Account.....................2.3(b)
                  Indemnification Escrow Amount......................2.3(b)
                  Intellectual Property..............................4.13(a)
                  January Memo.......................................4.3(b)
                  June 30, 1999 Balance Sheet........................4.7
                  Loss...............................................11.15
                  Material Adverse Effect............................4.1
                  Material Contracts.................................4.14
                  Maximum Obligation.................................10.2(b)
                  Nonbreaching Parties...............................11.4
                  Non-Competition and Non-Solicitation Agreement.....8.1(p)
                  Options............................................Recitals
                  Options Exercise ..................................4.3(a)
                  Outstanding Receivables............................4.21(b)
                  Pearl Consulting Agreement.........................6.8
                  Pension Plan.......................................4.15(b)
                  Personal Property Leases...........................4.12(a)
                  Plans..............................................4.15(b)
                  Printing Services Agreement........................8.1(o)
                  Purchase Price.....................................2.1
                  Purchase Price Escrow Amount.......................2.3(a)
                  Purchaser..........................................Recitals
                  Purchaser Documents................................5.2
                  Purchaser Group....................................6.1
                  Purchaser Indemnified Parties......................10.1(a)
                  Real Property Leases...............................4.11
                  Receivable Escrow Amount...........................2.3(c)
                  Related Costs......................................10.4
                  Retcom Confidentiality Agreement...................6.1
                  Securities Act.....................................5.5


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<PAGE>


                  Seller Documents...................................4.2
                  Seller Indemnified Parties.........................10.1(c)
                  Sellers' Representatives...........................11.14
                  Shares.............................................Recitals
                  Sharing Ratios.....................................2.1
                  Sleepeck Confidentiality Agreement.................6.1
                  Sleepeck Printing..................................4.21(c)
                  Supplemental Closing...............................2.4(a)
                  System.............................................4.26
                  TCA................................................7.2
                  TCB................................................7.2
                  Uncollected Receivables Amount.....................2.3(c)
                  1998 Interim Balance Sheet.........................2.1
                  1998 Working Capital...............................2.1



                  Section 11.2 Survival.

                  The parties hereto hereby agree that the  representations  and
warranties  and agreements  contained in this  Agreement or in any  certificate,
document or  instrument  delivered in  connection  herewith,  shall  survive the
execution and delivery of this Agreement and the Closing  hereunder,  regardless
of any investigation made by the parties hereto (except as otherwise provided in
Section 6.1),  and that claims based upon any of them may be asserted in writing
until  January 2, 2001;  provided,  however,  that  claims  with  respect to the
representations  and  warranties  contained  in Sections  4.2, 4.3 and 4.6 shall
survive for three (3) years from the Closing  Date and all claims based on fraud
shall  survive  for  the  applicable  statute  of  limitations.  The  agreements
contained in Articles  VII and X shall  survive the Closing in  accordance  with
their respective terms.

                  Section 11.3 Expenses.

                  Whether  or  not  the  transactions  contemplated  hereby  are
consummated,  each party shall bear its own fees and expenses in connection with
the proposed transaction, including but not limited to attorney's,  accountant's
and  consultant's  fees,  provided that the  Purchaser,  solely,  shall bear the
expense  of all  filings  fees  required  under  the  HSR Act or any  other  law
regarding competition; and provided further, that in the event this Agreement is
terminated  at any time prior to Closing by either the Sellers or the  Purchaser
for  material  breach  or  default  by the  other  party  of the  terms  of this
Agreement,  and such breach or default,  in the aggregate,  could  reasonably be
expected to result in a Loss of at least $50,000,  then the breaching party will
pay  or  reimburse  the  Sellers  or the  Purchaser,  as the  case  may be  (the
"Nonbreaching  Parties"),  for the out-of-pocket  costs and expenses incurred by
the Nonbreaching  Parties (but if the Purchaser is the breaching party, then the
Purchaser  shall not be liable for the fees and  expenses of more than  Dilworth
Paxon LLP as counsel for the Sellers and if one of the Sellers is the  breaching
party,  then the Sellers  shall not be liable for the fees and  expenses of more
than one set of counsel for the  Purchaser) in connection  with the  preparation
and negotiation of the Agreement and the parties' due diligence investigations.



                                       51

<PAGE>


                  Section 11.4 Specific Performance.

                  (a) The Sellers  acknowledge  and agree that in the event of a
breach of this Agreement by the Sellers, including the Sellers' failure to close
the  transactions  contemplated  hereby  in  accordance  with the  terms of this
Agreement,  the  Purchaser  would be  irreparably  damaged and would not have an
adequate  remedy at law.  Therefore,  the  obligations of the Sellers under this
Agreement,  including,  without limitation,  the Sellers' obligation to sell the
Shares  to  the  Purchaser,  shall  be  enforceable  by  a  decree  of  specific
performance  issued  by any court of  competent  jurisdiction,  and  appropriate
injunctive relief may be applied for and granted in connection  therewith.  Such
remedies  shall,  however,  be  cumulative  and not  exclusive  and  shall be in
addition to any other  remedies which any party may have under this Agreement or
otherwise.

                  Section 11.5 Further Assurances.

                  The Sellers and the  Purchaser  shall execute and deliver such
other documents or agreements and to take such other action as may be reasonably
necessary  or  desirable  for  the  implementation  of  this  Agreement  and the
consummation of the transactions contemplated hereby.

                  Section 11.6 Arbitration.

                  Except as herein may be provided to the contrary, all disputes
between the Sellers and Purchaser, including, without limitation, those relating
to this Agreement,  shall be resolved by arbitration as provided in this Section
11.6. This agreement to arbitrate shall survive the rescission or termination of
this Agreement.  All arbitration  shall be conducted  pursuant to the Commercial
Arbitration Rules of the American Arbitration Association and shall be conducted
in the Borough of Manhattan,  The City of New York, unless otherwise agreed in a
signed  writing by all of the parties to any such  arbitration.  The decision of
the arbitrators shall be final and binding on all parties. All arbitration shall
be undertaken pursuant to the Federal Arbitration Act, where applicable, and the
decision  of the  arbitrators  shall be  enforceable  in any court of  competent
jurisdiction.

                  Section 11.7 Entire Agreement; Amendments and Waivers.

                  This Agreement  (including the schedules and exhibits  hereto)
and the  Confidentiality  Agreements  represent  the  entire  understanding  and
agreement  between the parties  hereto with respect to the subject matter hereof
(and  supersedes  the letter of intent  dated July 27, 1999) and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument  making  specific  reference  to this  Agreement  signed by the party
against whom  enforcement of any such  amendment,  supplement,  modification  or
waiver is sought. Except as otherwise provided in Sections 8.1 or 8.2, no action
taken  pursuant  to  this   Agreement,   including   without   limitation,   any
investigation  by or on behalf of any  party,  shall be deemed to  constitute  a
waiver by the party taking such action of  compliance  with any  representation,
warranty,  covenant or agreement  contained  herein.  Subject to Section 6.1, if
applicable,  the waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent  breach. No failure on the



                                       53
<PAGE>

part of any party to exercise,  and no delay in exercising,  any right, power or
remedy  hereunder  shall  operate as a waiver  thereof,  except as  provided  in
Section 11.2, nor shall any single or partial  exercise of such right,  power or
remedy by such  party  preclude  any other or  further  exercise  thereof or the
exercise  of any other  right,  power or  remedy.  All  remedies  hereunder  are
cumulative and are not exclusive of any other remedies provided by law.

                  Section 11.8 Governing Law.

                  This   Agreement   shall  be  governed  by  and  construed  in
accordance  with  the laws of the  State  of New  York,  without  regard  to the
conflicts of laws principles thereof.

                  Section 11.9 Table of Contents and Headings.

                  The table of contents and section  headings of this  Agreement
are  for  reference  purposes  only  and  are  to be  given  no  effect  in  the
construction or interpretation of this Agreement.

                  Section 11.10 Notices.

                  All  notices  and other  communications  under this  Agreement
shall be in writing  and shall be deemed  given  when  delivered  personally  or
mailed by certified mail,  return receipt  requested,  to the parties (and shall
also be transmitted by facsimile to the Persons receiving copies thereof) at the
following  addresses (or to such other address as a party may have  specified by
notice given to the other party pursuant to this provision):

                  If to the Purchaser:

                           Arcade Marketing, Inc.
                           120 East 56th Street
                           Twelfth Floor
                           New York, New York  10022
                           Attention:  Chief Executive Officer
                           Fax:     (212) 223-5776

                  and to:

                           Arcade Marketing, Inc.
                           1815 East Main Street
                           Chattanooga, Tennessee  37404
                           Attention:  Chief Financial Officer
                           Fax:     (423) 622-4635









                                       53


<PAGE>


                  with a copy to:

                           Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                           590 Madison Avenue
                           New York, New York  10022
                           Attention:  Edward D. Sopher
                           Fax:     (212) 872-1002

                  If to the Sellers:

                           Jay Gartlan
                           c/o Retail Communications Corp.
                           350 Fifth Avenue
                           Suite 7920
                           New York, New York  10018
                           Fax:     (212) 465-8135

                  with a copy to:

                           Dilworth Paxson LLP
                           457 Haddonfield Road
                           Suite 700
                           Cherry Hill, New Jersey  08002
                           Attention:  Harold G. Cohen
                           Fax:     (609) 663-8855

                  and to:

                           Sleepeck Printing Company
                           815 Twenty-Fifth Avenue
                           Bellwood, Illinois  60104
                           Attention:  Vice President - Finance
                           Fax:     (708) 544-8928












                                       54

<PAGE>


                  with a copy to:

                           Jenner & Block
                           One IBM Plaza
                           Chicago, Illinois 60611
                           Attention:  Arthur Martin
                           Fax:     (312) 527-0484

                  If to Michael Berman:

                           1346 Curtis Road
                           Southampton, Pennsylvania  18966
                           Attention:  Michael Berman
                           Fax:     (215) 953-5069

                  with a copy to:

                           Tenzer Greenblatt LLP
                           The Chrysler Building
                           405 Lexington Avenue
                           New York, New York  10174
                           Attention:  Michael S. Mullman
                           Fax:     (212) 885-5001

                  Section 11.11 Severability.

                  If  any   provision   of  this   Agreement   is   invalid   or
unenforceable, the balance of this Agreement shall remain in effect.

                  Section 11.12 Binding Effect; Assignment.

                  This Agreement  shall be binding upon and inure to the benefit
of the parties and their respective successors and permitted assigns. Nothing in
this Agreement  shall create or be deemed to create any third party  beneficiary
rights in any person or entity not a party to this Agreement  except as provided
below. No assignment of this Agreement or of any rights or obligations hereunder
may be made by either  the  Sellers or the  Purchaser  (by  operation  of law or
otherwise) without the prior written consent of the other parties hereto and any
attempted  assignment  without the required  consents  shall be void;  provided,
however,  that the Purchaser may assign this  Agreement and any or all rights or
obligations hereunder (including,  without limitation, the Purchaser's rights to
purchase  the  Shares  and  the  Purchaser's  rights  to  seek   indemnification
hereunder) to any Affiliate of the Purchaser;  provided,  however, that any such
assignment to an Affiliate of the  Purchaser  shall not relieve the Purchaser of
its  obligations  hereunder  or  under  any  Purchaser  Document.  Upon any such
permitted  assignment,  the references in this Agreement to the Purchaser  shall
also apply to any such assignee unless the context otherwise requires.



                                       55

<PAGE>

                  Section 11.13 Sellers' Representatives.

                  Jay  Gartlan,  Michael  Berman  and  a  designee  of  Sleepeck
Printing,  acting by  majority,  or such  other  persons as shall  succeed  them
pursuant to this Section  11.13,  are hereby  designated as the  representatives
(the  "Sellers'  Representatives")  to act for and  represent  the Sellers  with
respect  to all  matters  arising  out of  Article X hereof  and in those  other
matters  with  respect  to which  this  Agreement  specifies  that the  Sellers'
Representatives  shall so act,  as well as matters  which  require  notice to be
given to the Sellers under this Agreement.

                  Each Seller hereby fully authorizes and empowers each Sellers'
Representative  to act for such Seller and for all other  Sellers in the matters
to which authority is delegated to the Sellers' Representative in this Agreement
(the "Agreement  Duties"),  and agrees that each Sellers'  Representative  shall
have such  authority  in addition to what is  expressly  set forth  herein as is
necessary  to  facilitate  disposition  of all such  Agreement  Duties  and that
actions taken pursuant to that additional authority shall be comprehended within
the term Agreement  Duties.  Each Seller further agrees and acknowledges that in
acting as a Sellers'  Representative,  no  Sellers'  Representative  assumes the
status of a  fiduciary  for the Sellers or any of them,  but serves  solely as a
volunteer for the  convenience of all, and each Seller hereby agrees and assents
to, and waives any right to make any claim  based  upon,  each and every real or
apparent conflict of interest each Sellers' Representative may have with respect
to such Agreement Duties.  Each Seller agrees that each Sellers'  Representative
shall be  entitled  to payment of all  expenses  they incur in  discharging  the
Agreement Duties, and reasonable compensation for their time spent in so acting,
from the Sellers in accordance with their Sharing Ratios or, if available,  from
funds  held   pursuant  to  the  Escrow   Agreement,   and  that  the   Sellers'
Representatives shall have no liability to any Seller for any action or omission
to act in the  discharge  of the  Agreement  Duties,  except in the event of the
Sellers'  Representatives'  gross negligence or willful misconduct.  The Sellers
agree jointly and  severally to indemnify and hold each Sellers'  Representative
harmless  from and  against any claims made  against  them  arising out of their
actions or failures to act in the discharge of the Agreement Duties and from and
against  all  costs  and  expenses,   including  attorneys'  fees,  incurred  in
investigating, defending and resolving any such claim, except to the extent that
any such  claims  are  determined  to arise out of gross  negligence  or willful
misconduct.

                  Section 11.14Disclaimer of Certain Kinds of Damages.

                  Notwithstanding   any  other   provision  of  this   Agreement
(including  those  provisions  which use and define the term  "Loss"),  no party
shall be  liable  to  another,  whether  for  breach of  contract,  warranty  or
representation,  for consequential damages,  including loss of revenues, loss of
profits,  down time, extra production or labor costs or increased overhead,  and
no party shall be liable to another for punitive damages.

                            [SIGNATURE PAGES FOLLOW]



                                       56
<PAGE>


                  IN WITNESS WHEREOF,  the parties have caused this Agreement to
be executed as of the day first written above.

PURCHASER:                             AKI, INC.


                                       By:  /S/ WILLIAM FOX
                                            ---------------
                                       Name:William Fox
                                       Title:    President

SELLERS:                               /S/ MICHAEL  BERGMAN
                                       --------------------
                                       Michael Berman


                                       /S/ PAUL PEARL
                                       --------------
                                       Paul Pearl


                                       /S/ JAY GARTLAN
                                       ---------------
                                       Jay Gartlan


                                       /S/ STUART FLEISCHER
                                       --------------------
                                       Stuart Fleischer


                                       SLEEPECK PRINTING COMPANY


                                       By:  /S/ MICHAEL W. SLEEPECK
                                            -----------------------
                                       Name:    Michael W. Sleepeck
                                       Title:   President

                                       RETAIL TCA CORPORATION


                                       By:  /S/ STUART FLEISCHER
                                            --------------------
                                       Name:    Stuart Fleischer
                                       Title:   President

                                       RETAIL TCB CORPORATION


                                       By:  /S/ PAUL PEARL
                                            --------------
                                       Name:    Paul Pearl
                                       Title:   President


                                       57