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                            STOCK PURCHASE AGREEMENT

                                   dated as of

                                October 31, 1997

                                  by and among

                                THERMATRX, INC.,

                            BSD MEDICAL CORPORATION,

               ORACLE STRATEGIC PARTNERS, L.P., and CHARLES MANKER


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<PAGE>




                            STOCK PURCHASE AGREEMENT



                  STOCK PURCHASE AGREEMENT (the "Agreement") dated as of October
31, 1997, by and among THERMATRX,  INC., a Delaware corporation (the "Company"),
BSD  MEDICAL  CORPORATION,  a Delaware  corporation  ("BSD"),  ORACLE  STRATEGIC
PARTNERS,  L.P.,  a  Delaware  limited  partnership  and/or  one or  more of its
affiliates  ("Oracle"),  and Charles  Manker  ("Manker")  (Oracle and Manker are
sometimes collectively referred to as the "Purchasers").

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


                  WHEREAS, at the Initial Closing (as hereinafter defined),  BSD
is  contributing  certain  prostate  specific  treatment  assets,   patents  and
intellectual  property as more  particularly  described on Exhibit A hereto (the
"BPH Business Assets") as a capital  contribution to the Company and in exchange
for capital stock of the Company; and



                  WHEREAS,  simultaneously  with the  exchange by BSD  described
above,  Oracle and Manker are  purchasing  from the Company,  and the Company is
selling to Oracle and Manker,  the number of shares of the  Company's  Preferred
Stock (as hereinafter defined) as set forth on Exhibit B hereto.



                  NOW,  THEREFORE,  in  consideration of the mutual promises and
representations,  warranties,  covenants and  agreements  set forth herein,  the
parties hereto hereby agree as follows:

                                    ARTICLE I

                      PURCHASE AND SALE OF PREFERRED SHARES

         Section  1.1  Purchase  and  Sale.  On the  terms  and  subject  to the
                       -------------------
conditions  set forth in this  Agreement,  at the  Initial  Closing  and on each
Milestone Closing (as such terms are hereinafter defined), the Company will sell
and each of Oracle and Manker,  will  purchase the number of shares of Preferred
Stock  in the  amounts  and for the  purchase  price  set  forth  opposite  such
Purchaser's name on Exhibit B attached hereto, of the Company's Preferred Stock,
par value $.001 per share (the "Preferred  Stock").  The terms and provisions of
the  Preferred  Stock are set forth in the  Certificate  of  Designation  of the
Company,  a true and correct copy of which is attached  hereto as Exhibit C (the
"Certificate of Designation").  The shares of Preferred Stock purchased pursuant
to this Agreement are referred to herein as the "Preferred Shares."


                                       1
<PAGE>

                                   ARTICLE II

                CLOSINGS; CONTRIBUTION OF THE BPH BUSINESS ASSETS




                  Section 2.1       Transactions at the Initial Closing.
                                    -----------------------------------

(a)  Securities to be Purchased at  the  Initial  Closing.
     ----------------------------------------------------
     At the  Intial  Closing,  the  Company  shall  deliver  to  the  Purchasers
certificates   representing  the  Preferred  Shares   sufficient  to  convey  to
Purchasers good and marketable  title to the Preferred  Shares free and clear of
any and all claims, liens, charges, security interests,  pledges or encumbrances
of any nature  whatsoever  and  together  with all accrued  benefits  and rights
attaching  thereto.  The aggregate purchase price for the Preferred Shares shall
be payable by each of the Purchasers for their number of Preferred Shares at the
Initial  Closing in cash by either wire transfer of immediately  available funds
or certified or cashier's check.

(b) Capital  Contribution
    ---------------------
     On the terms and subject to the conditions set forth in this Agreement,  at
the Initial  Closing,  BSD agrees to contribute  the BPH Business  Assets to the
Company as a capital  contribution.  At the Initial  Closing,  BSD shall deliver
assignment  documents,  sufficient to convey to the Company good and  marketable
title to the BPH  Business  Assets free and clear of any and all claims,  liens,
charges,  security  interests,  pledges or encumbrances of any nature whatsoever
and  together  with all  accrued  benefits  and  rights  attaching  thereto.  In
consideration  for such  capital  contribution,  the  Company  will issue to BSD
fifty-four  thousand  (54,000) shares of the Company's  Common Stock,  par value
$.001 per share (the "Common Stock") resulting in ownership set forth on Exhibit
B hereto.  The shares of Common  Stock  issued  pursuant to this  Agreement  are
referred to herein as the "Common Shares." At the Initial  Closing,  the Company
shall deliver to BSD certificates  representing the Common Shares  sufficient to
convey to BSD good and  marketable  title to the Common Shares free and clear of
any and all claims, liens, charges, security interests,  pledges or encumbrances
of any nature  whatsoever  and  together  with all accrued  benefits  and rights
attaching  thereto.  The Preferred Shares and the Common Shares are collectively
referred to herein as the "Shares".  Shares of Common Stock representing  twelve
and one half (12.5%) percent of the Milestone  Closing  percentage  ownership of
the Company shall be reserved for issuance pursuant to the Company's  management
stock option plan and issued pursuant to Board approval.

(c)Intial Closing; Effective Date
   ------------------------------
     Subject to the terms and  conditions  set forth herein,  the closing of the
transactions  contemplated by this Agreement (the "Initial  Closing") shall take
place at the offices of Kane Kessler,  P.C.,  1350 Avenue of the  Americas,  New
York,  New York  10019,  no later  than ten (10)  business  days  after the date
hereof, or on such other date and at such other place as may be agreed to by the
parties  (the  "Initial  Closing  Date").  All  proceedings  to be taken and all
documents  to be executed at the  Initial  Closing  shall be deemed to have been
taken, delivered and executed simultaneously,  and no proceeding shall be deemed
taken nor  documents  deemed  executed or  delivered  until all have been taken,
delivered and executed.


                                       2
<PAGE>


                  Section 2.2       Future Funding.
                                    --------------

(a) Milestone Funding Obligation.
    ----------------------------
     Upon  receipt by the Company of positive  patient data over a six (6) month
period,  as  measured  by the  American  Urology  Association  ("AUA")  or other
standard symptom scores,  indicating single treatment efficacy and durability in
the  treatment  of benign  conditions  or  diseases  (excluding  cancer)  of the
prostate gland (the  "Milestone") the Purchasers shall purchase from the Company
the additional  number of the Company's  Preferred  Shares at such prices as set
forth in Section 2.2(c) hereof.  The Purchasers'  obligations under this Section
2.2(a) shall be deemed satisfied if the Company obtains equivalent or additional
financing  from third party  sources on terms no less  favorable to BSD than the
terms contemplated by this Agreement.

(b) Option.
    ------
     At any time,  and from time to time in one or more  transactions,  prior to
the consummation of a Milestone Closing (as hereinafter defined), the Purchasers
shall have the option  (the  "Option")  to  purchase  from the  Company up to an
aggregate amount of the additional  number of the Company's  Preferred Shares at
such  prices as set forth in Section  2.2(c).  The  Purchasers'  exercise of its
Option and the  consummation  of the  purchase of the total  number of Preferred
Shares set forth in Section 2.2(c) shall satisfy  Purchasers'  obligation  under
Section 2.2(a).

(c)Securities to be Purchased at Milestone or Option Closing.
   ---------------------------------------------------------
     On the terms and subject to the conditions set forth in this Agreement,  at
the  Milestone  or Option  Closing,  the Company will issue and sell and each of
Oracle and Manker will  purchase the number of shares of Preferred  Stock as set
forth opposite such Purchaser's name on Exhibit B attached hereto (collectively,
the "Milestone or Option Preferred Shares"). At the Milestone or Option Closing,
the Company shall deliver to Purchasers certificates  representing the Milestone
or Option  Preferred  Shares  sufficient  to convey to the  Purchasers  good and
marketable  title to the Milestone or Option  Preferred Shares free and clear of
any and all claims, liens, charges, security interests,  pledges or encumbrances
of any nature  whatsoever  and  together  with all accrued  benefits  and rights
attaching  thereto.  The  purchase  price  payable  by  each  Purchaser  for the
Milestone or Option Preferred Shares is set forth on Exhibit B hereto, and shall
be payable by such  Purchaser at the Closing in cash by either wire  transfer of
immediately available funds or certified or cashier's check.

(d)The Milestone or Option Closing.
   -------------------------------
     The Milestone or Option Closing of the transactions contemplated under this
Agreement (the "Milestone or Option Closing") shall take place at the offices of
Kane Kessler, P.C., 1350 Avenue of the Americas,  26th Floor, New York, New York
at 10:00 a.m., New York time, (i) with respect to a Milestone Closing,  no later
than  forty-five  (45) days after the  Purchasers'  receipt  of notice  from the
Company  regarding the  achievement by the Company of the  Milestone,  (ii) with
respect  to an  Option  Closing,  no later  than  thirty  (30)  days  after  the
Purchasers  have given notice to the Company and BSD of their desire to exercise
their option to purchase  the Option  Preferred  Shares,  (iii) or at such other
place,  time or date as may be  mutually  agreed  upon in writing by the parties
hereto (the "Milestone or Option Closing Date"). The Initial Closing,  Milestone
Closing and the Option  Closing  are  sometimes  hereinafter  referred to as the
"Closings".  The Initial  Closing Date and the Milestone or Option Closing Dates
are sometimes hereinafter referred to as the "Closing Dates".


                                       3
<PAGE>

                  Section 2.3       Deliveries.
                                    ----------

(a) Deliveries.
    ----------
     In addition to the provisions of Section 6.1, at each Closing,  the Company
shall deliver or cause to be delivered to each Purchaser the following:

                                    1.      A stock certificate representing the
                                            Preferred  Shares  purchased by such
                                            Purchaser,  with all necessary stock
                                            issuance or transfer  stamps affixed
                                            thereto,    duly    completed    and
                                            registered   in  the  name  of  each
                                            Purchaser (as set forth on Exhibit B
                                            hereto) on the stock  transfer  book
                                            of the Company.

                                    2.      The Certificates and documents
                                            contemplated by Article VI;

                                    3.      A   wire   transfer   representing
                                            the Purchasers' legal fees.

                                    5.      Such other documents as the
                                            Purchasers shall reasonably request.

(b) Deliveries by Purchasers.
    ------------------------
     In  addition  to the  provisions  of Section  6.2,  at each  Closing,  each
Purchaser,  severally and not jointly,  will deliver or cause to be delivered to
the Company,  payment of the purchase  price in cash by either wire  transfer of
immediately  available  funds or certified or cashier's  check or in  accordance
with  the  Company's  instructions  (which  instructions  shall  be given to the
Purchasers in writing no later than 3 business days prior to each Closing Date).

(c) Legends and Transfer Restrictions.
    ---------------------------------
     The Shares to be delivered by the Company at each Closing  shall be subject
to certain restrictions on transfer and each certificate representing the Shares
shall contain the following legend:

                              "THE SHARES  REPRESENTED BY THIS  CERTIFICATE HAVE
                              NOT BEEN  REGISTERED  UNDER THE  SECURITIES ACT OF
                              1933 AND MAY NOT BE SOLD, ASSIGNED OR TRANSFERRED,
                              IN  THE  ABSENCE  OF  AN  EFFECTIVE   REGISTRATION
                              STATEMENT  UNDER  SAID ACT,  AN OPINION OF COUNSEL
                              REASONABLY  SATISFACTORY  TO THE COMPANY THAT SUCH
                              REGISTRATION   IS  NOT,   IN  THE   CIRCUMSTANCES,
                              REQUIRED,  OR EVIDENCE SATISFACTORY TO THE COMPANY
                              THAT THE SHARES HAVE BEEN SOLD IN COMPLIANCE  WITH
                              RULE 144 PROMULGATED UNDER SAID ACT."

                              "THE   SHARES   OF  STOCK   REPRESENTED   BY  THIS
                              CERTIFICATE  ARE  SUBJECT TO AND ARE  TRANSFERABLE
                              ONLY AS  PROVIDED  IN A STOCK  PURCHASE  AGREEMENT
                              DATED  AS  OF   OCTOBER   __,   1997   AMONG   THE
                              SHAREHOLDERS  OF THE  COMPANY AND THE  COMPANY,  A
                              COPY OF WHICH IS ON FILE AT THE COMPANY'S OFFICE."


                                       4
<PAGE>

                  Section 2.4       Registration Rights.
                                    -------------------

                 (a) Demand and "Piggyback" Registration Rights
                     ------------------------------------------

                         (i) Demand Registration Rights
                             --------------------------
     If at any time after the date hereof  during  which  there is no  effective
registration  statement  relating to any of the Common Shares, the Company shall
be requested in writing by Purchasers  holding at least a majority of the Common
Shares which would be issuable upon  conversion of the Preferred  Shares held by
such Purchasers to effect the registration  under the Securities Act of 1933, as
amended  (the  "Securities  Act")  of  Common  Shares,  the  Company  shall,  as
expeditiously as possible, use its best efforts to effect the registration, on a
form of general use under the  Securities  Act, of all Common  Shares  which the
Company has been  requested to register.  The Company  shall not be obligated to
cause to become effective more than two (2) registration  statements pursuant to
which Common Shares are registered under this Section 2.4(a)(i). Notwithstanding
the  foregoing,  if the Company  shall  furnish to the  Purchasers  requesting a
registration  under this  Section  2.4(a)(i) a  certificate  signed by the Chief
Executive  Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company it would be detrimental to the Company and its
shareholders  for such  registration  statement  to be filed and it is therefore
essential to defer the filing of such registration statement,  the Company shall
have the right to defer  taking  action with respect to such filing for a period
of not  more  than 90 days  after  receipt  of the  request  by the  Purchasers;
provided, however, that the Company may not utilize this right more than once in
any 12-month period. In addition,  the Company shall not be obligated to effect,
or to take any action to  effect,  any  registration  pursuant  to this  Section
2.4(a)(i)  during  the  period  starting  with  the  date 30 days  prior  to the
Company's good faith estimate of the date of filing of, and ending on a date 120
days after the effective date of, a registration  subject to Section  2.4(a)(ii)
hereto;  provided that the Company is actively  employing in good faith its best
efforts to cause  such  registration  statement  to be filed and  thereafter  to
become effective.

(ii) "Piggyback" Registration Rights.
     -------------------------------
     The  Company  shall,  at least  thirty (30) days prior to the filing of any
registration  statement  under the  Securities  Act (other  than a  registration
statement on Form S-8 or Form S-4 or any successor forms) relating to the public
offering of its Common Stock by the Company or any of its security holders, give
written  notice of such proposed  filing and of the proposed date thereof to the
Purchasers and BSD, and if, on or before the twentieth  (20th) day following the
date on which such notice is given,  the Company shall receive a written request
from a Purchaser or BSD requesting that the Company include among the securities
covered by such registration  statement some or all of the Common Shares held by
or to be held after  conversion  by such  Purchaser or BSD,  the Company  shall,
subject  to  Section  2.4(b)   hereof,   include  such  Common  Shares  in  such
registration  statement, if filed, so as to permit such Common Shares to be sold
or disposed of in the manner and on the terms of the offering  thereof set forth
in such request.

                                       5
<PAGE>

(b) Terms and Conditions of Registration.
    ------------------------------------
     Except as otherwise  provided  herein,  in connection with any registration
statement  filed  pursuant to Section 2.4(a)  herein,  the following  provisions
shall apply:

                                 (i)  If  such   registration   statement  shall
be filed pursuant to Section  2.4(a)(ii) hereof and if the managing  underwriter
advises the Company in writing that the inclusion in such  registration  of some
or all of the Common Shares sought to be registered by the Purchasers  creates a
substantial  risk that the proceeds or price per share that will be derived from
such  registration will be reduced or that the number of shares to be registered
at the insistence of the  Purchasers,  plus the number of shares of Common Stock
sought to be registered by the Company and any other stockholders of the Company
is too large a number to be reasonably  sold, then, in such event, the number of
shares sought to be registered for the Company and the other stockholders of the
Company having registration rights, as applicable, shall be reduced, pro rata in
proportion  to the  number of shares  sought to be  registered  to the number of
shares recommended be sold by the managing underwriter.

                                (ii)  If   requested   by  the   Purchasers   in
connection with a registration  statement  filed pursuant to Section  2.4(a)(i),
the Company will enter into an underwriting  agreement with the underwriters for
such  offering,  such  agreement  to be  reasonably  satisfactory  in  form  and
substance to the Company,  the Purchasers and the  underwriters,  and to contain
such  representations,  warranties  and  covenants by the Company and such other
terms as are  customarily  contained  in such  agreements  used by the  managing
underwriter,  including,  without  limitation,  restrictions  of sales of Common
Stock or other securities by the Company as may be reasonably  agreed to between
the Company and such  underwriters,  and indemnities and rights to contributions
to the effect and to the extent  provided in Sections  2.4(c) and 2.4(d) hereof.
The Purchasers  shall be a party to any  underwriting  agreement  relating to an
underwritten sale of their Common Shares and may, at their option,  require that
any or all of the representations, warranties and covenants of the Company to or
for the benefit of such underwriters,  shall also be made to and for the benefit
of the Purchasers. All representations and warranties of the Purchasers shall be
made to or for the benefit of the Company.

                               (iii) The Company shall provide a transfer  agent
and registrar  (which may be the same entity) for the Common  Shares,  not later
than the effective date of such registration.

                                (iv)  All  expenses  in   connection   with  the
preparation  and filing of a  registration  statement  filed pursuant to Section
2.4(a)  shall be borne  solely by the  Company,  except for any  transfer  taxes
payable  with  respect  to the  disposition  of  such  Common  Shares,  and  any
underwriting  discounts and selling commissions  applicable solely to such sales
of Common  Shares,  which shall be paid by the  Purchasers  of the Shares  being
registered.


                                       6
<PAGE>

                                 (v) The Company  shall use its best  efforts to
cause all of the shares covered by such  registration  statement to be listed on
NASDAQ or on such other  securities  exchange as such shares may then be listed,
on  which  similar  shares  are  listed  for  trading,  if the  listing  of such
registered shares is permitted by such exchange.

                                (vi)   Following  the  effective  date  of  such
registration  statement,  the Company shall, upon the request of the Purchasers,
forthwith  supply such number of prospectuses  (including  exhibits  thereto and
preliminary  prospectuses  and amendments and supplements  thereto)  meeting the
requirements  of the Securities Act and such other  documents as are referred to
in the  prospectus as shall be reasonably  requested by the Purchasers to permit
the Purchasers to make a public distribution of their Common Shares.

                                (vii) (A) Each Purchaser agrees that it will not
effect  any sales of Common  Shares  pursuant  to a  registration  described  in
Section  2.4(a) after such  Purchaser  has  received  notice from the Company to
suspend sales as a result of the occurrence or existence of any Suspension Event
(as defined in Section  2.4(b)(vii)(B)  below) until the Company provides notice
to such Purchaser that all Suspension  Events have ceased to exist. In addition,
each  Purchaser  agrees  that it will not  effect  any  sales of  Common  Shares
pursuant to a registration  described in Section 2.4(a) after such Purchaser has
received  notice from the  Company to suspend  sales  because  the  registration
statement  pursuant  to  which  such  sale is to be  effected,  and the  related
prospectus or any supplement  thereto contains an untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading,  until the Company  notifies such Purchaser that the misstatement or
omission has been  corrected.  The Company  hereby  covenants and agrees that it
will use its best efforts to correct any such  misstatement  or omission,  or to
cure  any  Suspension  Event,  and that it will  give  immediate  notice  to the
Purchasers of such correction or cure.

                                (B) Notwithstanding anything to the contrary set
forth  in this  Agreement,  the  Company's  obligation  to  file a  registration
statement  pursuant to Section 2.4(a) hereof and make any filings with any state
securities authority,  to use its best efforts to cause a registration statement
or any state securities  filings to become effective,  or to amend or supplement
such  a  registration  statement  or  any  state  securities  filings  shall  be
temporarily  suspended  in the  event  of  and  during  a  Suspension  Event.  A
"Suspension  Event" shall exist at such times that (i) the Company is conducting
an underwritten primary offering and is advised by the underwriters therein that
sale of Common Shares under the registration statement filed pursuant to Section
2.4(a) hereof would have a material adverse effect on the Company's offering, or
(ii) negotiations  and/or  consummation are pending relating to a transaction or
the occurrence of some other event (x) where any of the foregoing  would require
disclosure  under  applicable  securities  laws  of  material  information  in a
registration  statement (or any other document  incorporated into a registration
statement by reference) or such state securities filings and (y) as to which the
Company has a bona fide  business  purpose,  as  determined in good faith by its

                                       7

<PAGE>

Board of Directors, for preserving  confidentiality or which renders the Company
unable  to  comply  with  the   Securities   and  Exchange   Commission's   (the
"Commission") requirements.  Suspension of the Company's obligations pursuant to
this  Section  2.4(b)(vii)(B)  shall  continue  only for so long as a Suspension
Event is continuing.  The Company shall notify each Purchaser  immediately after
any Suspension Event occurs or ceases to exist.

                                (viii) The Purchasers may select the underwriter
or  underwriters,  if any, who are to undertake any offering and distribution of
the Common  Shares to be included in a  registration  statement  filed under the
provisions of Section 2.4(a)(i) hereof,  subject to the Company's prior approval
of the underwriter, which approval shall not be unreasonably withheld.

                                (ix) The Company  shall use its best  efforts to
register the Common Shares  covered by any such  registration  statements  filed
pursuant to Section 2.4(a) under such securities or Blue Sky laws in addition to
those in which the Company would otherwise sell shares,  as the Purchasers shall
request,  except that neither the Company nor the Purchasers  shall for any such
purpose be  required  to  execute a general  consent to service of process or to
qualify to do business as a foreign  corporation in any jurisdiction where it is
not so  qualified.  The fees and  expenses  incurred  in  connection  with  such
registration shall be borne by the Company.

                                 (x) The Purchasers  shall  cooperate fully with
the Company and provide the Company with all information reasonably requested by
the Company for  inclusion  in the  registration  statement  or as  necessary to
comply with the  Securities  Act.  The Company  shall  cooperate  fully with any
underwriters  selected by the Purchasers and counsel to such  underwriters,  and
shall provide reasonable and customary access to the Company's books and records
(upon receipt from such underwriters of customary confidentiality agreements) in
order to facilitate such underwriters'  review and examination of the Company in
connection with such underwriting.

                                (xi) The Company shall notify the Purchasers, at
any time after  effectiveness when a prospectus  relating thereto is required to
be delivered under the Securities Act within the period mentioned in subdivision
(vii) of this Section 2.4(b), of the happening of any event as a result of which
the  prospectus  included  in such  registration  statement,  as then in effect,
includes an untrue  statement of a material  fact or omits to state any material
fact required to be stated therein or necessary to make the  statements  therein
not misleading in light of circumstances then existing (and upon receipt of such
notice and until a  supplemented  or amended  prospectus  as set forth  below is
available, the Purchasers shall not offer or sell any securities covered by such
registration  statement  and shall return all copies of such  prospectus  to the
Company if  requested  to do so by it),  and at the  request  of the  Purchasers
prepare and furnish the Purchasers as promptly as practicable,  but in any event
within 90 days, a reasonable number of copies of a supplement to or an amendment
of such  prospectus as may be necessary so that, as thereafter  delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a  material  fact or omit to state a  material  fact  required  to be  stated
therein or necessary to make the  statements  therein not misleading in light of
the circumstances then existing.

                                       8
<PAGE>

                               (xii) The Company shall furnish to the Purchasers
at the time of the disposition of the Common Shares, a signed copy of an opinion
of the Company's  regular in-house or outside general counsel,  or other counsel
of the Company's selection reasonably  acceptable to, and which opinion shall be
reasonably  satisfactory  in form and substance to, the Purchasers to the effect
that:  (a) a registration  statement  covering such Common Shares has been filed
with the Commission under the Securities Act and has been declared  effective by
order  of  the  Commission,  (b)  said  registration  statement  and  prospectus
contained  therein  comply  as  to  form  in  all  material  respects  with  the
requirements  of the  Securities  Act,  and nothing  has come to such  counsel's
attention  (after due  inquiry)  which would cause such  counsel to believe that
either said registration  statement or such prospectus (other than the financial
statements  contained  therein,  as to which such  counsel  need not express any
opinion)  contains any untrue  statement of a material  fact or omits to state a
material fact required to be stated  therein or necessary to make the statements
therein (in the case of such  prospectus,  in light of the  circumstances  under
which they were made) not  misleading,  (c) after due inquiry such counsel knows
of no  legal  or  governmental  proceedings  required  to be  described  in such
registration  statement or prospectus which are not described as required, or of
any  contracts  or  documents  of a character  required to be  described in such
registration  statement  or such  prospectus  to be filed as an  exhibit to such
registration  statement or to be incorporated by reference therein which are not
described  and filed as required and (d) to such  counsel's  knowledge,  no stop
order has been issued by the  Commission  suspending the  effectiveness  of such
registration  statement;  it being understood that such opinion may contain such
qualifications  and  assumptions  as are  customary in the  rendering of similar
opinions,  and that such  counsel may rely,  as to all factual  matters  treated
therein,  on  certificates of the Company (copies of which shall be delivered to
the Purchasers).

                              (xiii) The  Company  will use its best  efforts to
comply  with  the  reporting  requirements  of  Sections  13  and  15(d)  of the
Securities  Exchange Act of 1934, as amended (the "Exchange Act"), to the extent
it shall be required to do so pursuant to such sections,  and at all times while
so  required  shall  use its  best  efforts  to  comply  with all  other  public
information  reporting  requirements  of  the  Commission  (including  reporting
requirements  which serve as a condition to utilization of Rule 144  promulgated
by the  Commission  under the  Securities  Act) from time to time in effect  and
relating to the  availability  of an exemption  from the  Securities Act for the
sale of any of the Company's  Common Stock held by the  Purchasers.  The Company
will also  cooperate  with the  Purchasers  in supplying  such  information  and
documentation  as may be necessary  for the  Purchasers to complete and file any
information reporting forms presently or hereafter required by the Commission as
a condition to the  availability of an exemption from the Securities Act for the
sale of any of the Company's Common Stock held by the Purchasers.

                                       9
<PAGE>


 .                 (c)         Indemnification
                              ----------------

                                (i) In the  event  of  the  registration  of any
Common Shares of the Company under the Securities Act pursuant to the provisions
of Sections  2.4(a),  the Company  agrees to  indemnify  and hold  harmless  the
Purchasers,  each  underwriter,  broker or dealer,  if any, and their respective
directors, officers and employees, of such Common Shares, and each other person,
if any,  who  controls  the  holders of the  Shares or the  Common  Shares (or a
permitted  assignee  thereof),  such  underwriter,  broker or dealer  within the
meaning of the  Securities  Act,  from and against  any and all losses,  claims,
damages or liabilities  (or actions in respect  thereof),  joint or several,  to
which the Purchasers (and as applicable)  its directors,  officers or employees,
or such underwriter,  broker or dealer or controlling  person may become subject
under the Securities Act or otherwise,  insofar as such losses,  claims, damages
or  liabilities  (or actions in respect  thereof) arise out of or are based upon
any untrue  statement or alleged untrue statement of any material fact contained
in any  registration  statement  under which such Common Shares were  registered
under  the  Securities  Act,  any  preliminary  prospectus  or final  prospectus
relating to such Common Shares, or any amendment or supplement thereto, or arise
out of or are based upon the  omission or alleged  omission  to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein  not  misleading,  or any  violation  by the  Company  of  any  rule  or
regulation under the Securities Act applicable to the Company or relating to any
action  or  inaction  required  by the  Company  in  connection  with  any  such
registration and will reimburse the Purchasers, each such underwriter, broker or
dealer and  controlling  person,  and their  respective  directors,  officers or
employees, for any legal or other expenses reasonably incurred by the Purchasers
or such underwriter,  broker or dealer or controlling  person in connection with
investigating or defending any such loss,  claim,  damage,  liability or action;
provided,  however,  that the Company will not be liable in any such case to the
extent that any such loss, claim,  damage or liability arises out of or is based
upon an untrue  statement  or alleged  untrue  statement  or omission or alleged
omission made in such registration statement, such preliminary prospectus,  such
final prospectus or such amendment or supplement thereto in reliance upon and in
conformity with written  information  furnished to the Company by the Purchasers
and as applicable,  such Purchasers' directors,  officers or employees,  or such
underwriter,  broker,  dealer or controlling  person for use in the  preparation
thereof.  Such  indemnity  shall  remain  in  full  effect  irrespective  of any
investigation by any person indemnified above.

                              (ii)  In  the  event  of the  registration  of any
Common Shares of the  Purchasers  under the  Securities Act for sale pursuant to
the provisions of this  Agreement,  the  Purchasers  agree to indemnify and hold
harmless the Company,  its directors,  officers and employees,  from and against
any losses,  claims,  damages or  liabilities,  joint or  several,  to which the
Company,  its  directors,  officers or employees,  may become  subject under the
Securities  Act or  otherwise,  insofar  as  such  losses,  claims,  damages  or
liabilities  (or actions in respect  thereof) arise out of or are based upon any
untrue  statement or alleged untrue  statement of any material fact contained in
any registration  statement under which such Common Shares were registered under
the Securities Act, any preliminary  prospectus or final prospectus  relating to
such Common Shares, or any amendment or supplement  thereto,  or arise out of or
are based upon  omission or alleged  omission to state  therein a material  fact
required to be stated  therein or necessary to make the  statements  therein not

                                       10
<PAGE>

misleading,  which untrue  statement or alleged untrue  statement or omission or
alleged  omission  was made  therein in  reliance  upon and in  conformity  with
written  information  furnished to the Company by the  Purchasers for use in the
preparation thereof.  Such indemnity shall remain in full effect irrespective of
any investigation by any person indemnified above.

                              (iii) Promptly after receipt by a person  entitled
to  indemnification  under this  Section  2.4(c) (for  purposes of this  Section
2.4(c),  an "Indemnified  Party") of notice of the commencement of any action or
claim relating to any registration statement filed under Section 2.4(a) or as to
which indemnity may be sought hereunder, such Indemnified Party will, if a claim
for indemnification hereunder in respect thereof is to be made against any other
party hereto (for purposes of this Section  2.4(c),  an  "Indemnifying  Party"),
give  written  notice to such  Indemnifying  Party of the  commencement  of such
action or claim,  but the failure to so notify the  Indemnifying  Party will not
relieve  it from  any  liability  which it may  have to any  Indemnifying  Party
otherwise  than pursuant to the provisions of this Section 2.4(c) and shall also
not relieve the Indemnifying Party of its obligations under this Section 2.4(c),
except to the extent that the  Indemnifying  Party is damaged solely as a result
of the failure to give timely notice. In case any such action is brought against
an Indemnified  Party, and it notifies an Indemnifying Party of the commencement
thereof,  the  Indemnifying  Party  will be  entitled  (at its own  expense)  to
participate  in and,  to the  extent  that it may wish,  jointly  with any other
Indemnifying  Party  similarly  notified,  to assume the  defense  with  counsel
satisfactory  to such  Indemnified  Party,  of such action and/or to settle such
action and, after notice from the Indemnifying  Party to such Indemnified  Party
of its election so to assume the defense thereof,  the  Indemnifying  Party will
not be  liable  to such  Indemnified  Party  for any  legal  or  other  expenses
subsequently  incurred by such Indemnified  Party in connection with the defense
thereof,  other than the reasonable cost of  investigation;  provided,  however,
that no  Indemnifying  Party  and no  Indemnified  Party  shall  enter  into any
settlement  agreement  which would  impose any  liability on such other party or
parties without the prior written consent of such other party or parties.

                        (d) Contribution. If the indemnification provided for in
Section 2.4(c) hereof is unavailable to the Indemnified  Party in respect of any
losses,  claims,  damages or  liabilities  referred  to  herein,  then each such
Indemnifying  Party,  in lieu of  indemnifying  such  Indemnified  Party,  shall
contribute to the amount paid or payable by such  Indemnified  Party as a result
of such losses,  claims,  damages or liabilities  (i) as between the Company and
the  Purchasers  on the one  hand and the  underwriters  on the  other,  in such
proportion as is  appropriate to reflect the relative  benefits  received by the
Company and the  Purchasers  on the one hand and the  underwriters  on the other
from the offering of the Common Shares,  or if such  allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only such
relative  benefits but also the relative fault of the Company and the Purchasers
on the one hand and of the  underwriters  on the  other in  connection  with the
statements  or  omissions  which  resulted in such  losses,  claims,  damages or
liabilities,  as well as any other relevant equitable considerations and (ii) as
between the  Company on the one hand and each  Purchaser  on the other,  in such
proportion as is appropriate to reflect the relative fault of the Company and of
each Purchaser in connection with such  statements or omissions,  as well as any
other relevant equitable considerations.

                                       11
<PAGE>

                                In  no  event  shall  the   obligation   of  any
Indemnifying  Party to  contribute  under this Section  2.4(d) exceed the amount
that  such  Indemnifying  Party  would  have  been  obligated  to  pay by way of
indemnification if the indemnification  provided for under Section 2.4(c) hereof
had been available under the circumstances.

                                The amount  paid or  payable  by an  Indemnified
Party as a result of the losses,  claims, damages and liabilities referred to in
the next  preceding  paragraph  shall  be  deemed  to  include,  subject  to the
limitations  set forth  above,  any  legal or other  expenses  incurred  by such
Indemnified Party in connection with  investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 2.4(d), no Purchaser or
underwriter  shall be required to contribute  any amount in excess of the amount
by which  (i) in the case of a  Purchaser,  the net  proceeds  received  by such
Purchaser from the sale of Common Shares or (ii) in the case of an  underwriter,
the total price at which the Common Shares  purchased by it and  distributed  to
the public were offered to the public  exceeds,  in any such case, the amount of
any damages that such  Purchaser or  underwriter  has otherwise been required to
pay by reason of such untrue or alleged untrue  statement or omission or alleged
omission. No person guilty of fraudulent  misrepresentation  (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to  contribution  from
any person who was not guilty of such fraudulent misrepresentation.

                        (e) Survival. The indemnity and contribution  agreements
contained  in this  Section  2.4 shall  remain  operative  and in full force and
effect  regardless of (i) any termination of this Agreement or any  underwriting
agreement,  (ii) any investigation made by or on behalf of any Indemnified Party
or by or on behalf of the  Company  and  (iii) the  consummation  of the sale or
successive resales of the Common Shares.

                        (f)  Future  Registration  Rights.  Until such time as a
registration  has been declared  effective by the Commission,  the Company shall
not grant to any third party any registration  rights equal to or more favorable
than those contained in this Section 2.4; provided,  however, that the foregoing
prohibition  shall not  prevent  the  Company  from  granting  to a third  party
specific  registration  rights that are equal to those contained in this Section
2.4,  as long as all of the  registration  rights  granted to such third  party,
taken as a whole,  are less  favorable to the third party that those  granted to
the Purchasers  herein.  In the event that a  registration  shall fail to remain
effective (or a stop order shall be entered with respect  thereto)  while any of
the Common Shares remain  unsold,  the  provisions of this Section  2.4(f) shall
become applicable once again.

                        (g) Remedies.  The  Purchasers and each holder of Common
Shares,  in addition to being  entitled  to exercise  all rights  hereto and all
other rights granted by law, including recovery of damages,  will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary  damages  would not be adequate  compensation  for any loss incurred by
reason of a breach by it of the  provisions of this  Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate. In addition to the foregoing,  if the Company fails to comply
with the  registration  obligations of this Article II or if the Company files a
registration  statement to be in technical  compliance with the  requirements of
this  Article  II, but such filed  registration  statement  lacks,  in  material

                                       12
<PAGE>

respects,  the  information  required  to be  contained  in  the  form  of  such
registration statement, the Company shall be fully liable for any and all losses
incurred or suffered by the Purchasers as a result of such failure together with
payment of  liquidated  damages to the  Purchasers in the amount of Seventy Five
Thousand  ($75,000)  Dollars  for every  thirty (30) days that the Company is in
default of this Section.


                                   ARTICLE III

              REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND BSD

                  In order to induce the Purchasers to enter into this Agreement
and to consummate the transactions contemplated hereby, the Company with respect
to its status and BSD with respect to the BPH Business Assets,  hereby represent
and warrant, severally, to the Purchasers as follows:

                  Section  3.1  Corporate  Existence  and  Power.  (a)  BSD is a
corporation duly  incorporated,  validly existing and in good standing under the
laws of the State of Delaware, and has all corporate powers required to carry on
its business as now conducted. BSD is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction  where the character of
the property  owned or leased by it or the nature of its  activities  makes such
qualification necessary,  except for those jurisdictions where the failure to be
so  qualified  would  not,  individually  or in the  aggregate,  have a Material
Adverse  Effect on BSD.  For  purposes  of this  Agreement,  the term  "Material
Adverse Effect" means,  with respect to any person or entity, a material adverse
effect on the condition (financial or otherwise),  business, properties, assets,
liabilities (including contingent liabilities), results of operations or current
prospects  of such  person  or  entity.  Each  jurisdiction  in which  BSD is so
qualified is listed on Schedule  3.1(a) hereto.  BSD has the requisite power and
authority  to (a) own or lease and  operate its  properties  and (b) conduct its
business as presently  conducted.  True and complete copies of BSD's Certificate
of  Incorporation,  as amended,  and Bylaws,  as amended,  have  previously been
provided to the Purchasers.

                        (b) The Company is a corporation duly organized, validly
existing  and in good  standing  under  the laws of the State of  Delaware.  The
Company is duly qualified to transact  business as a foreign  corporation in all
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification and the failure to so qualify would not
have a Material  Adverse Effect on the Company.  Each  jurisdiction in which the
Company is so qualified is listed on Schedule  3.1(b) hereto.  Prior to the date
hereof, the Company has had no properties and has not conducted any business.

                  Section  3.2  Authorization.   The  execution,   delivery  and
performance  by  each  of  the  Company  and  BSD of  this  Agreement,  and  the
consummation of the transactions contemplated hereby (including, but not limited
to, the sale, issuance and delivery of the Shares by the Company, the subsequent
issuance of any additional  securities of the Company as payment of dividends on
the Shares,  when,  if and as declared by the Board of Directors of the Company,

                                       13
<PAGE>

and  the  subsequent  issuance  of the  Common  Shares  upon  conversion  of the
Preferred Shares) have been duly authorized and no additional action is required
for the approval of this Agreement.  This Agreement constitutes the legal, valid
and binding agreement of each of the Company and BSD enforceable against each of
them in  accordance  with its terms,  except as may be  limited  by  bankruptcy,
reorganization,  insolvency,  moratorium and similar laws of general application
relating to or affecting the  enforcement of rights of creditors and except that
enforceability of its obligations hereunder are subject to general principles of
equity (regardless of whether such  enforceability is considered in a proceeding
in equity or at law).

                  Section  3.3   Governmental   Authorization.   The  execution,
delivery and performance by each of the Company and BSD of this  Agreement,  and
the consummation of the transactions  contemplated  hereby  (including,  but not
limited to, the sale,  issuance and  delivery of the Shares by the Company,  the
subsequent  issuance of  additional  Shares as payment of the  dividends  on the
Shares,  when, if and as declared by the Board of Directors of the Company,  and
the  subsequent  issuance of the Common Shares upon  conversion of the Preferred
Shares) by the  Company and BSD require no action by or in respect of, or filing
with, any governmental body, agency, official or authority.

                  Section 3.4 Non-Contravention. Except as set forth on Schedule
3.4, the execution,  delivery and  performance by each of the Company and BSD of
this  Agreement,  and the  consummation  by each of the  Company  and BSD of the
transactions  contemplated hereby do not and will not (a) contravene or conflict
with the Certificate of Incorporation,  Certificate of Designation and Bylaws of
the  Company  or the  Certificate  of  Incorporation  and  Bylaws  of  BSD;  (b)
contravene  or conflict  with or  constitute a violation of any provision of any
law,  regulation,   judgment,  injunction,  order  or  decree  binding  upon  or
applicable  to the Company or to BSD  relating to the BPH Business  Assets,  (c)
constitute a default under or give rise to a right of termination,  cancellation
or acceleration or loss of any benefit under any material agreement, contract or
other  instrument  binding  upon the Company or upon BSD with respect to the BPH
Business  Assets  or under  any  material  license,  franchise,  permit or other
similar  authorization  held by the  Company  or by BSD with  respect to the BPH
Business  Assets;  or (d) result in the creation or  imposition  of any Lien (as
defined below) on any material asset of the Company or the BPH Business  Assets.
For  purposes of this  Agreement,  the term "Lien"  means,  with  respect to any
asset,  any  mortgage,   lien,  pledge,  charge,  security  interest,  claim  or
encumbrance of any kind in respect of such asset.

                  Section  3.5  Compliance  with Law.  To the  knowledge  of the
Company and BSD, each of BSD, with respect to the BPH Business  Assets,  and the
Company is in  compliance  in all  material  respects  with all laws,  rules and
regulations,  judgments,  decrees or orders of any court, administrative agency,
commission,   regulatory   authority   or  other   governmental   authority   or
instrumentality, domestic or foreign, applicable to its operations. There are no
judgments  or orders,  injunctions,  decrees,  stipulations  or awards  (whether
rendered by a court or administrative  agency or by arbitration),  including any
such actions relating to affirmative  action claims or claims of discrimination,
against the Company or against any of its  properties  or  businesses or against
BSD that will have a Material  Adverse Effect on the Company or the BPH Business
Assets.

                                       14
<PAGE>


                  Section 3.6 No  Defaults.  Each of the Company and BSD is not,
nor has either received notice that it would be with the passage of time, giving
of notice,  or both,  (i) in violation of any  provision of its  Certificate  of
Incorporation  (including any  Certificates of  Designation)  and Bylaws (ii) in
default or  violation of any term,  condition or provision of (A) any  judgment,
decree, order,  injunction or stipulation applicable to BSD (with respect to the
BPH  Business  Assets)  or the  Company  or (B) any  material  agreement,  note,
mortgage,  indenture,   contract,  lease  or  instrument,   permit,  concession,
franchise  or  license  to which the  Company  or BSD (with  respect  to the BPH
Business  Assets) is a party or by which the Company or its properties or assets
may be bound or by which BSD (with  respect to the BPH  Business  Assets) may be
bound.

                  Section 3.7 Litigation.  There is no action, suit, proceeding,
judgment,  claim or  investigation  pending  or,  to the best  knowledge  of the
Company or BSD, threatened against the Company or BSD, which could, individually
or in the  aggregate,  have an adverse effect on the Company or the BPH Business
Assets or which in any manner challenges or seeks to prevent,  enjoin,  alter or
materially delay any of the transactions contemplated hereby, or which is likely
to lead to a  claim,  damages  payment,  settlement,  loss,  liability,  cost or
expense to the Company or to BSD with respect to the BPH Business Assets. To the
best  knowledge of the Company and BSD,  there is no basis for the  assertion of
any of the foregoing.

                  Section 3.8 Absence of Certain Changes. Since May 8, 1997 (the
"Determination  Date"),  BSD has  conducted  its  business,  to the extent  such
business  utilizes  or relates to or  includes  the BPH  Business  Assets in the
ordinary course and to its knowledge there has not occurred:

                              (a) Any event  that  would  result  in a  Material
Adverse Effect on the BPH Business Assets;

                              (b) Any damage,  destruction  or loss,  whether or
not covered by insurance,  that would,  individually or in the aggregate, have a
Material Adverse Effect on the BPH Business Assets;

                              (c) Any (i) incurrence, assumption or guarantee by
BSD of any debt for borrowed money involving the BPH Business Assets; (ii) sale,
assignment or transfer of any of its intangible  assets that are part of the BPH
Business  Assets except in the ordinary  course of business,  or cancellation of
any debt or claim relating to the BPH Business Assets; (iii) waiver of any right
(with respect to the BPH Business Assets) of substantial value whether or not in
the  ordinary  course  of  business;   (iv)  other  commitment   (contingent  or
otherwise), with respect to the BPH Business Assets, to do any of the foregoing.

                              (d) Any creation or  assumption by BSD of any Lien
on any of the BPH Business Assets;

                                       15
<PAGE>


                              (e) Any entry into, amendment of,  relinquishment,
termination or non-renewal by BSD of any contract,  license, lease, transaction,
commitment  or other right or  obligation  relating to the BPH Business  Assets,
other than in the ordinary course of business;

                              (g) Any  transfer or grant of a right with respect
to the  trademarks,  trade names,  service marks,  trade secrets,  copyrights or
other intellectual  property rights owned or licensed by BSD relating to the BPH
Business Assets; or

                              (h) To the best knowledge of BSD, any agreement or
arrangement  made by BSD to take any action  which,  if taken  prior to the date
hereof, would have made any representation or warranty set forth in this Article
III untrue or incorrect as of the date when made.

                  Section 3.9 No Undisclosed Liabilities. Except for liabilities
and  obligations   incurred  in  the  ordinary  course  of  business  since  the
Determination  Date,  as of the date  hereof,  (i) BSD,  with respect to the BPH
Business  Assets,  does not  have  any  liabilities  or  obligations  (absolute,
accrued,  contingent or otherwise)  and (ii) to BSD's  knowledge,  there has not
been any aspect of the prior or current  conduct of the  business  of BSD,  with
respect to the BPH  Business  Assets,  which may form the basis for any claim by
any third  party  which if  asserted  could  result in any such  liabilities  or
obligations, which are not fully reflected, reserved against or disclosed in the
consolidated  balance sheet of the BSD.  Schedule 3.9 lists all accounts payable
of BSD with respect to the BPH  Business  Assets as of the date hereof in excess
of $500.00 to any one  payee.  All  indebtedness  reflected  in BSD's  financial
statements,  with  respect to the BPH  Business  Assets or on Schedule  3.9 (for
indebtedness or which has arisen after the Determination Date) has arisen in the
ordinary  course of business and represents  valid  indebtedness of BSD. As used
herein,  the term  "indebtedness"  means all items  which,  in  accordance  with
generally accepted accounting principles,  would be included in the consolidated
balance sheet of BSD as indebtedness or which has arisen after the Determination
Date in the ordinary  course of business and represents  valid  indebtedness  of
BSD.

                  Section  3.10  BSD  Inventory.  BSD  is not  transferring  any
inventory to the Company,  however,  BSD  represents  and warrants  that it owns
sufficient  inventory  to  provide  at least  six (6) "BSD  50"  systems  to the
Company.  BSD will not dispose of such inventory  without giving the Company the
opportunity to purchase any such inventory.

                                       16
<PAGE>


                  Section 3.11 Taxes. Except where a breach of the provisions of
this Section 3.11 would not have a Material  Adverse  Effect on the BPH Business
Assets:

                              (a)   All tax  returns,  statements,  reports  and
forms (including  estimated tax returns and reports and information  returns and
reports)  required  to be filed with any taxing  authority  with  respect to any
taxable  period ending on or before the subject  Closing Date by or on behalf of
BSD have been or will be filed when due (including  any permitted  extensions of
such due  date);  provided,  however,  that BSD  shall  not be in breach of this
Section  3.11(a) in respect of tax  liabilities  which BSD is contesting in good
faith with the relevant tax  authorities,  subject to BSD having made sufficient
reserves of funds in order to satisfy such tax liabilities in full.

                              (b)  BSD  has  timely   paid,   withheld  or  made
provision on its books for all taxes due and payable by BSD.

                              (c) There  are no Liens for taxes  upon any of the
BPH Business  Assets and, to the best  knowledge of BSD, there are no such Liens
threatened or anticipated to be placed upon any of the BPH Business Assets.

                  Section  3.12  Interest  of  Officers,   Directors  and  Other
Affiliates.  Schedule  3.12  sets  forth a  description  of any  interest  held,
directly or  indirectly,  by any  officer,  director or other  affiliate  of the
Company or BSD in any property, real or personal,  tangible or intangible,  used
in or pertaining to the Company's business or the BPH Business Assets, including
any interest in the Intellectual Property (as defined in Section 3.13 hereof).

 .                 Section 3.13   Intellectual Property

                              (a) To the knowledge of the Company,  the business
as currently  proposed to be conducted by the Company will not cause the Company
to infringe or violate any  patents,  trademarks,  service  marks,  trade names,
copyrights, licenses, trade secrets or other intellectual property rights of any
other person or entity.

                              (b)  To  the   knowledge   of  BSD,  the  business
conducted by BSD as it relates to the BPH Business Assets does not and will not,
when  transferred  to the Company,  cause the Company to infringe or violate any
patents,  trademarks,  service marks, trade names,  copyrights,  licenses, trade
secrets or other intellectual property rights of any other person or entity.

                              (c)  Schedule  3.13 sets  forth a  listing  of all
patents,  trademarks,  trade names,  service  marks,  trade  secrets,  formulae,
processes,  copyrights,  franchises  or  other  intellectual  property,  and all
applications for any of the foregoing,  owned or licensed by BSD or in which BSD
has any interest and which is part of the BPH Business Assets (the "Intellectual
Property"),  as well as the owners  thereof,  the  parties to all  licenses  and
applicable  royalties and terms  thereof.  Except as set forth on Schedule 3.13,
the  Intellectual  Property  is free of any  unresolved  ownership  disputes  or
threats with respect to any third party.

                                       17
<PAGE>

                              (d)  Except as set  forth on  Schedule  3.13,  the
Company or BSD, as the case may be, owns or possesses the exclusive right to use
all of the  Intellectual  Property  and no  claim  is  pending,  or to the  best
knowledge of the Company or BSD, as the case may be,  threatened,  to the effect
that the operations of the Company or BSD, as the case may be,  infringe upon or
conflict with the asserted  rights of any other person and there is no basis for
any such claim.

                              (e) The  Company  or BSD,  as the case may be, has
taken all measures it deems reasonable to maintain the Intellectual  Property in
full force and effect. To the best of BSD's knowledge, none of the processes and
formulae,  research  development  results  and other  know-how  relating  to the
business or operations of the Company or of BSD with respect to the BPH Business
Assets, the value of which is contingent upon maintenance of the confidentiality
thereof,  has been disclosed to any person or entity other than employees of BSD
or the Company.

                              (f) The Company currently  possesses all licenses,
sublicenses and permits required to operate the business of the Company.  Except
where such  failure to possess  would not have a Material  Adverse  Effect,  BSD
currently possesses all licenses, sublicenses and permits required to operate or
use the BPH Business Assets.

                              (g) To the Company's and BSD's  knowledge,  except
as set forth on  Schedule  3.13,  there are no  infringers  of the  Intellectual
Property  and the  Company or BSD has not  learned of or  communicated  with any
third  party  considered  by  the  Company  or BSD to be  actually  or  possibly
infringing on any of the Intellectual  Property in any material respect.  Except
as set forth on Schedule 3.13, no part of the  Intellectual  Property  breaches,
violates, infringes or interferes with any rights of any third party or requires
payment  for  the use of any  patent,  trade  name,  trade  secret,  trade-mark,
copyright or other intellectual property right or technology of another.

                              (h) Attached  hereto as Exhibit D is a Transfer of
Trade Secrets Agreement, by and between Vitek, Incorporated and Ronald R. Bowman
and Bio-Systems  Design,  Incorporated  (now known as BSD),  dated July 1, 1979,
whereby,  among  other  things,  BSD has  acquired  the  exclusive  rights  to a
temperature probe (the "Bowman Agreement"). BSD has delivered to Purchasers true
and complete  copies of the Bowman  Agreement and all  amendments  thereto.  The
Bowman  Agreement is in full force and effect and BSD has the full right,  power
and authority to sublicense its rights thereunder to the Company.

                  Section 3.14 Tangible Property.  There is no tangible property
that is included as part of the BPH Business  Assets.  BSD (with  respect to its
operation  of the  BPH  Business)  has not  received  any  notice  that it is in
violation of any existing law or any building,  zoning,  health, safety or other
ordinance, code or regulation. During the past five years there has not been any
significant interruption of BSD's BPH Business.

                                       18
<PAGE>

                  Section 3.15 Vendors and  Customers.  BSD, with respect to its
BPH  Business,  has  satisfactory  relations  and has  engaged  in no actions to
jeopardize  such  satisfactory  relations  with its vendors,  customers  and the
corporations,  partnerships, and individuals whose products are offered for sale
by BSD. No facts,  circumstances  or conditions  exist which create a reasonable
basis for believing that the Company will be unable to continue the relationship
with such vendors and customers on  substantially  the same terms and conditions
as currently  exist with BSD when the BPH Business Assets are transferred to the
Company.

                  Section 3.16 Preemptive  Rights. The issuance of the Shares as
contemplated hereby will not be subject to any preemptive rights.


                  Section 3.17  Insurance.  Schedule  3.17 sets forth a true and
complete  list of all insurance  policies  providing  insurance  coverage of any
nature  relating to the BPH Business  Assets.  Such policies are  sufficient for
compliance by BSD with all  requirements of law, such that the failure to comply
would not have a Material  Adverse  Effect on the BPH Business  Assets,  and all
material  agreements  to which BSD with respect to the BPH Business  Assets is a
party or by which it is bound. All of such policies are in full force and effect
and are valid and  enforceable  in  accordance  with  their  terms,  and BSD has
complied  with all material  terms and  conditions of such  policies,  including
premium  payments.  None  of the  insurance  carriers  has  indicated  to BSD an
intention to cancel any such policy. BSD has no claim pending against any of the
insurance  carriers  under any of such  policies and there has been no actual or
alleged occurrence of any kind which may give rise to any such claim.

                  Section  3.18  Subsidiaries.  Except as set forth on  Schedule
3.18 the Company and BSD have no subsidiaries.

                  Section 3.19 Capitalization.  Immediately prior to the Initial
Closing the authorized  capital stock of the Company consists of (i) One Million
(1,000,000) shares of Common Stock, par value $.001 per share, none of which are
issued and  outstanding  and (ii) One Million  (1,000,000)  shares of  Preferred
Stock,  par value  $.01 per share,  none of which are  issued  and  outstanding.
Exhibit B includes a capitalization  table setting forth the  capitalization  of
the Company on the Initial  Closing Date and on the Milestone or Option  Closing
Date.  No other  shares of capital  stock have been  authorized  or issued.  All
shares of the Company's outstanding capital stock have been duly authorized, are
validly issued and  outstanding,  and are fully paid and  nonassessable  and the
Shares,  when  issued  and  paid  for at  the  Initial  Closing,  will  be  duly
authorized,  validly  issued,  fully paid and  nonassessable.  The  Company  has
reserved (x) out of its authorized but unissued  shares of Common Stock,  solely
for issuance upon the  conversion of the Shares  (including  shares of Preferred
Stock issued in respect of  dividends  on the Shares),  such number of shares of
Common  Stock as shall  from time to time be  issuable  upon  conversion  of all
shares of Preferred Stock at the time outstanding, and (y) out of its authorized
but unissued  shares of Preferred  Stock,  solely for issuance in respect of the
payment of dividends,  a sufficient  number of shares of Preferred  Stock to pay
such  dividends  when,  if and as  declared  by the  Board of  Directors  of the
Company.  Upon the  issuance of shares of Common  Stock upon  conversion  of the
Preferred  Stock,  and upon the issuance of shares of Preferred Stock in payment
of dividends on the  Preferred  Stock,  when, if and as declared by the Board of
Directors of the Company,  such shares of Common Stock and Preferred  Stock,  as
the case may be,  shall  be duly  authorized,  validly  issued,  fully  paid and

                                       19
<PAGE>

nonassessable.  The designations,  powers, preferences,  rights, qualifications,
limitations  and  restrictions in respect of each class and series of authorized
capital  stock  of  the  Company  are  as  set  forth  in  its   Certificate  of
Incorporation  or the  Certificate of  Designation,  and all such  designations,
powers, preferences,  rights,  qualifications,  limitations and restrictions are
valid, binding and enforceable.

                  Section 3.20 Rights, Warrants, Options. Except as set forth on
Schedule 3.20 there are no outstanding (a) securities or instruments convertible
into or  exercisable  for any of the capital stock or other equity  interests of
the Company;  (b) options,  warrants,  subscriptions  or other rights to acquire
capital  stock or other equity  interests of the  Company;  or (c)  commitments,
agreements  or   understandings   of  any  kind,   including   employee  benefit
arrangements,  relating  to the  issuance  or  repurchase  by the Company of any
capital stock or other equity  interests of the Company,  any such securities or
instruments  convertible  or  exercisable  for  securities  or any such options,
warrants or rights.

                  Section 3.21 Employees and Employment Agreements

                        (a)  Employment  Agreements.  Except  as  set  forth  in
Schedule 3.21 there are no employment,  consulting, severance or indemnification
arrangements,  agreements,  or  understandings  between  BSD  and  any  officer,
director, consultant or employee of BSD (the "Employment Agreements") that would
affect BSD's ability to perform its obligations  under the Consulting  Agreement
referred to in Section 6.1(j)  hereof.  Except as set forth in Schedule 3.21 the
terms of employment or engagement of all directors, officers, employees, agents,
consultants  and  professional  advisors  of the  Company  are such  that  their
employment or engagement  may be terminated  upon not more than two weeks notice
given at any time without  liability for payment of  compensation or damages and
the Company has not entered into any agreement or arrangement for the management
of its business or any part thereof other than with its directors or employees.

                        (b) Employees.  (i) No employee,  consultant or agent of
The Company or of BSD is, or to the Company's or BSD's knowledge, will be, based
upon the business and  activities  taken or proposed to be taken by the Company,
in  violation  of  any  term  of any  employment  contract,  confidentiality  or
non-disclosure  agreement  or  any  other  contract,  agreement,  commitment  or
understanding relating to the relationship of such employee, consultant or agent
with the Company or any other party.

                              (ii) Each  significant  employee or  consultant of
the Company or of BSD with access to confidential or proprietary  information of
the Company or of the BPH Business  Assets has executed an agreement  obligating
such  employee,  consultant,  contractor  or  agent  to hold  confidential  such
proprietary information.

                              (iii) The Company is not aware that any officer or
key employee intends to terminate employment with the Company.  Except for Steve
Hanka,  BSD is not aware that any officer or key employee who works for BSD with
respect to the portion of BSD's  business that includes the BPH Business  Assets
intends to terminate employment with BSD.

                                       20
<PAGE>


                  Section 3.22  Agreements.  Schedule 3.22 sets forth all of the
following  contracts and other  agreements to which the Company or to which BSD,
with respect to the BPH Business Assets,  is a party or by or to which it or its
assets or properties  are bound or subject:  (i) contracts and other  agreements
with  any  current  or  former  officer,  director,   employee,   consultant  or
shareholder;  (ii) agreements  with any labor union or association  representing
any employee:  (iii) contracts and other agreements for the sale of publications
or other materials, supplies, equipment, merchandise or services; (iv) contracts
and other  agreements for the purchase or  acquisition  of materials,  supplies,
equipment,  merchandise  or  services;  (v)  licenses or royalty  agreements  or
similar   contracts,   including  the  Bowman   Agreement;   (vi)   warehousing,
distributorship,   depository,  representative,   management,  marketing,  sales
agency, printing or advertising agreements; (vii) contracts and other agreements
for the sale of any of its  assets  or  properties  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 or  properties;  (viii)  joint  venture  agreements
relating to the assets, properties or business of the Company or BSD or by or to
which it or its assets or  properties  are bound or subject;  (ix)  contracts or
other  agreements under which it agrees to indemnify any party, to share the tax
liability of any party or to refrain from competing  with any party;  or (x) any
other material  contract or other agreement  whether or not made in the ordinary
course of  business.  All of the  contracts  and other  agreements  set forth on
Schedule 3.22 and elsewhere  referred to in this Agreement are in full force and
effect and the  Company or BSD,  as the case may be, has paid in full or accrued
all amounts due  thereunder and has satisfied in full or provided for all of its
liabilities and obligations thereunder, and is not in default under any of them,
nor is any  other  party to any such  contract  or other  agreement  in  default
thereunder,  nor does any condition  exist which with notice or lapse of time or
both would constitute a default thereunder.  Except as separately  identified on
Schedule 3.22 neither the Company nor BSD is a party to or bound by any contract
or other agreement which either individually or in the aggregate  materially and
adversely affects its assets, properties,  business, or condition,  financial or
otherwise,  or which was entered into other than in the  ordinary  course of its
business.  Except as  separately  identified  on  Schedule  3.22 no  approval or
consent of any person is needed in order that the contracts or other  agreements
set forth on Schedule 3.22 and other  Schedules and Exhibits  hereto continue in
full  force  and  effect   following  the   consummation  of  the   transactions
contemplated by this Agreement.  Except as otherwise noted in Schedule 3.22 each
of the contracts or other  agreements  referred to in clause (i) of this Section
3.22 can be terminated  upon not more than one year's notice without  payment of
premium or penalty or any other kind of payment.

                  Section 3.23 Absence of Certain  Business  Practices.  Neither
the  Company  nor BSD (with  respect to the BPH  Business  Assets),  nor, to the
Company's  or BSD's best  knowledge,  any  affiliate of the Company or BSD (with
respect  to the BPH  Business  Assets),  any agent of the  Company  or BSD (with
respect to the BPH Business  Assets),  any other  person  acting on behalf of or
associated with the Company or BSD (with respect to the BPH Business Assets), or
any  individual  related  to any of  the  foregoing  persons,  acting  alone  or
together,  has: (a) received,  directly or  indirectly,  any rebates,  payments,
commissions,  promotional allowances or any other economic benefits,  regardless
of their nature or type, from any customer,  supplier, trading company, shipping
company,  governmental employee or other person with whom the Company or BSD has
done business  directly or indirectly;  or (b) directly or indirectly,  given or
agreed to give any gift or similar  benefit to any customer,  supplier,  trading
company,  shipping company,  governmental employee or other person who is or may
be in a position to help or hinder the business of the Company or BSD (or assist

                                       21
<PAGE>

the Company or BSD in connection with any actual or proposed  transaction) which
(i) may  subject  the  Company  or BSD to any  damage or  penalty  in any civil,
criminal or  governmental  litigation  or  proceeding,  (ii) if not given in the
past,  may have had an  adverse  effect  on the  Company  or BSD or (iii) if not
continued in the future, may adversely affect the assets,  business,  operations
or  prospects  of the  Company or BSD or subject  the  Company or BSD to suit or
penalty in any private or governmental litigation or proceeding.

                  Section 3.24      Services or Products

                        (a) To the best  knowledge  of the Company and BSD (with
respect  to the BPH  Business  Assets),  there  exists no set of facts (i) which
could furnish a basis for the recall, withdrawal,  suspension or cancellation of
any registration,  license,  permit or other governmental approval or consent of
any  governmental  or  regulatory  agency with respect to any service or product
developed  or provided by the Company or by BSD with respect to the BPH Business
Assets (a  "Service  or  Product"),  (ii)  which  could  furnish a basis for the
withdrawal, suspension or cancellation by order of any state, federal or foreign
court of law of any  Service or  Product,  or (iii)  which could have an adverse
effect on the continued operation of any facility of the Company or of BSD, with
respect to the BPH Business Assets or which could otherwise cause the Company or
BSD, with respect to the BPH Business Assets, to withdraw, suspend or cancel any
such   Service  or  Product   from  the  market  or  to  change  the   marketing
classification of any such Service or Product.

                        (b) Each  Service or Product  provided  by Company or by
BSD (with  respect to the BPH Business  Assets) has been  provided in accordance
with the specifications  under which such Service or Product normally is and has
been  provided  and  the  provisions  of  all  applicable  laws  or  regulations
including,  without  limitation,  those  of the  United  States  Food  and  Drug
Administration ("FDA").

                        (c) Copies of all  material  correspondence  received or
sent by or on behalf of Company or BSD  (relating  to the BPH  Business  Assets)
from or to the  FDA or any  other  governmental  regulatory  agency,  including,
without  limitation,  any inspection  reports or notices,  have been  previously
delivered to the Purchasers.

                  Section 3.25  Environmental  Matters.  None of the premises or
any other  property  used by the Company or BSD in the past has been used by the
Company or BSD (with  respect to the BPH Business  Assets) or, to the  Company's
and BSD's knowledge after due inquiry,  any other person to manufacture,  treat,
store, or dispose of any hazardous  substance or any other  regulated  material,
and,  to the best of  Company's  and BSD's  knowledge  after due  inquiry,  such
property is free of all such substances and materials. The Company and BSD (with
respect to the BPH Business  Assets),  and any other person for whose conduct it
may be  responsible,  are in  compliance  with all laws,  regulations  and other
federal, state or local governmental requirements, and all applicable judgments,

                                       22
<PAGE>

orders, writs,  notices,  decrees,  permits,  licenses,  approvals,  consents or
injunctions relating to the generation,  management,  handling,  transportation,
treatment,  disposal, storage, delivery,  discharge,  release or emission of any
waste,  pollutant or toxic,  hazardous or other regulated substance  (including,
without  limitation,  asbestos,  radioactive  material and pesticides) or to any
other  actions,   omissions  or  conditions   affecting  the  environment   (the
"Environmental  Laws").  Neither the  Company  nor BSD (with  respect to the BPH
Business  Assets),  nor any other person for whose conduct it may be responsible
has received any complaint, notice, order, or citation of any actual, threatened
or alleged  noncompliance  with any of the  Environmental  Laws, and there is no
proceeding,  suit or  investigation  pending  or,  to the  Company's  and  BSD's
knowledge, threatened against the Company or any such person with respect to any
violation or alleged violation of the Environmental  Laws, and there is no basis
for the institution of any such proceeding, suit or investigation.

                  Section   3.26   Licenses;    Compliance    With    Regulatory
Requirements. To the knowledge of the Company and BSD, BSD's transfer of the BPH
Business  Assets  will  also  include  all  licenses,  franchises,   ordinances,
authorizations,   permits,  certificates,   variances,  exemptions,  orders  and
approvals,  domestic  or foreign  which are  material  to the  operation  of the
business of the Company and the  operation  and use of the BPH  Business  Assets
(collectively,  the  "Licenses").  To the best knowledge of the Company and BSD,
the Company and BSD (with respect to the BPH Business  Assets) are in compliance
with, and have conducted their business so as to comply with, the terms of their
respective Licenses and with all material  applicable laws, rules,  regulations,
ordinances and codes, domestic or foreign,  including laws, rules,  regulations,
ordinances and codes relating to the protection of the environment.  Neither the
Company  nor BSD (with  respect to the BSD  Business  Assets) has engaged in any
activity that would cause revocation or suspension of any material Licenses.  No
action or proceeding looking to or contemplating the revocation or suspension of
any of such  Licenses is pending,  or, to the  knowledge  of the Company or BSD,
threatened.

                  Section 3.27. The copies of the Certificate of  Incorporation,
Certificate  of  Designation  and  By-laws  of the  Company  and  copies  of the
Certificate  of  Incorporation  and By-laws of BSD, and all  amendments to each,
which have been delivered to the Purchasers, are true, correct and complete. The
minute and stock books of the Company and BSD,  which have been delivered to the
Purchasers, are true, correct and complete and contain true and complete records
of all meetings and consents in lieu of meetings of the Board of Directors  (and
any committees thereof) since the time of its organization.

                  Section  3.28  Brokers.  Except for  payment  directly  by the
Company to Ambient Capital Group, Inc. of $125,000.00 at the Initial Closing and
$125,000.00  which will be payable  directly by the  Company to Ambient  Capital
Group, Inc. at the Milestone  Closing,  the Company has not made any commitments
to pay any brokerage,  finder's or other fees or commissions in connection  with
the transactions  contemplated by this Agreement. If any additional such fees or
commissions  are payable to Ambient  Capital  Group,  Inc. they will be the sole
obligation of BSD.

                                       23
<PAGE>

                  Section 3.29 Arm's Length Transactions. Each of the agreements
entered into by the Company and by BSD (with respect to the BPH Business Assets)
have been entered into in good faith and represent transactions that are no more
favorable  to the parties  thereto  than would be  available  in an arm's length
transaction  between such parties.  Except as set forth on Schedule 3.29,  there
are no Related Person Transactions (as defined in Section 5.2.2 hereof).

                  Section  3.30 Liens.  BSD owns  outright  and upon the Initial
Closing  will  transfer to Company good and  marketable  title to all of the BPH
Business  Assets free and clear of any Lien except for (i)  properties  disposed
of, or subject to purchase or sales orders,  in the ordinary  course of business
since  the   Determination   Date;  (ii)  Liens  securing  taxes,   assessments,
governmental  charges  or  levies,  or  the  claims  of  materialmen,  carriers,
landlords  and like persons,  which are not yet due and payable;  or (iii) minor
Liens of a character which do not  substantially  impair the BPH Business Assets
or materially detract from the business conducted thereby.

                  Section 3.31 Regulatory  Matters.  True and complete copies of
all letters and other written  communications between BSD or the Company and the
FDA which relate to the BPH Business  Assets  ("Regulatory  Matters")  have been
delivered to the Purchasers. To the knowledge of the Company and BSD there is no
pending  Regulatory  Matter which has or may  reasonably  be expected to have, a
Material  Adverse  Effect upon BSD's ability to develop,  test,  manufacture  or
distribute  products  or which could  reasonably  be expected to have a Material
Adverse  Effect upon the  Company or upon BSD, in each case with  respect to the
BPH Business  Assets.  To the  Company's and BSD's best  knowledge,  BSD and the
Company are in compliance with all  requirements of the FDA and other regulatory
authorities  applicable  to  the  conduct  of  their  respective  businesses  as
currently conducted,  except where the failure so to comply would not reasonably
be expected to have a Material  Adverse  Effect as  described  in the  preceding
sentence.

                  Section 3.32 Disclosure. No representation or warranty made by
the  Company or BSD in this  Agreement,  including  any  exhibits  or  schedules
hereto,  contains or will contain any untrue  statement of a material  fact,  or
omits or will omit to state a material fact  necessary to make the statements or
facts contained  herein or therein not misleading in light of the  circumstances
under  which  they were  furnished.  To the best of BSD's  knowledge,  except as
disclosed in Schedule 3.32, there is no material event, fact or condition (other
than general business or economic  conditions which affect businesses  generally
or adverse FDA rulings) that materially  adversely affects the proposed business
of the Company or the BPH Business Assets,  or that reasonably could be expected
to do so, that has not been set forth in this  Agreement  or in the  Exhibits or
Schedules attached hereto.


                                       24
<PAGE>

                                   ARTICLE IV

                        REPRESENTATIONS AND WARRANTIES OF
                                 THE PURCHASERS

                  Each Purchaser, as the case may be, severally and not jointly,
hereby represents and warrants to the Company and BSD as follows:

                  Section 4.1  Existence  and Power.  Oracle is duly  organized,
validly  existing and in good standing under the laws of the jurisdiction of its
organization.  Oracle has all powers  required  to carry on its  business as now
conducted.

                  Section  4.2  Authorization.   The  execution,   delivery  and
performance by each Purchaser of this  Agreement,  and the  consummation by each
Purchaser of the transactions  contemplated  hereby has been duly authorized and
no  additional  action is  required  for the  approval of this  Agreement.  This
Agreement   constitutes  a  valid  and  binding  agreement  of  each  Purchaser,
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy,  reorganization,  insolvency, moratorium and similar laws of general
application  relating to or affecting the enforcement of rights of creditors and
except that enforceability of its obligations  thereunder are subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

                  Section  4.3   Governmental   Authorization.   The  execution,
delivery  and  performance  by  each  Purchaser  of  this  Agreement,   and  the
consummation of the transactions  contemplated  hereby by each Purchaser require
no action by or in respect of, or filing with, any  governmental  body,  agency,
official or authority,  which  individually  or in the  aggregate,  would have a
Material Adverse Effect on each such Purchaser.

                  Section 4.4  Non-Contravention.  The  execution,  delivery and
performance by Oracle of this Agreement,  and the  consummation by Oracle of the
transactions contemplated hereby do not and will not: (a) contravene or conflict
with the Certificate of Limited Partnership or other organizational  document of
Oracle; or (b) contravene or conflict with or constitute a material violation of
any material provision of any law, regulation,  judgment,  injunction,  order or
decree binding upon or applicable to Oracle,  which  contravention,  conflict or
violation would have a Material Adverse Effect on Oracle.

                  Section 4.5 Litigation.  There is no action, suit, proceeding,
claim or  investigation  pending  or to the best of each  Purchaser's  knowledge
threatened, which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated hereby.

                  Section 4.6 Investment. Each Purchaser is acquiring the Shares
purchased  by it  hereunder  for its own account for  investment  and until such
Shares are registered  pursuant to the Registration,  not with a view to, or for
sale in connection  with, any  distribution  thereof,  nor with the intention of

                                       25
<PAGE>

distribution  or selling the same;  provided,  however,  that each Purchaser may
transfer  Shares among one or more of its  affiliates,  so long as such transfer
does not violate applicable  securities laws. Each Purchaser is aware the Shares
have not been  registered  under the  Securities Act or under  applicable  state
securities or blue sky laws and that until the Shares are registered pursuant to
the registration  statement,  the certificate  representing the Shares will bear
the legend set forth in Section 2.3 hereof.  Each  Purchaser  is an  "accredited
investor" as such term is defined in Rule 501 of  Regulation  D, as  promulgated
under the Securities Act.

                  Section 4.7 No Brokers.  No broker,  finder,  agent or similar
intermediary  has been  retained  by the  Purchasers  in  connection  with  this
Agreement or the transactions contemplated hereby.


         COVENANTS AND AGREEMENTS

                  Section 5.1 Actions Requiring Purchasers' Consent. The Company
with respect to its business and BSD only with respect to those actions that may
significantly or materially affect or relate to the BPH Business Assets covenant
and agree that none of the following actions will take place prior or subsequent
to the Initial  Closing,  without the prior  written  consent of the  Purchasers
being first obtained:

                  5.1.1 the sale, transfer,  assignment or encumbrance of any of
                  the BPH  Business  Assets or any asset  related  to or used in
                  connection with the BPH Business Assets;

                  5.1.2  the  granting  of any  licenses  or  entering  into any
                  similar  arrangements  relating  to any of  the  BPH  Business
                  Assets;

                  5.1.3    any filings or correspondence with the FDA;

                  5.1.4 an authorization  or issuance by the Company  (excluding
                  BSD) of any additional shares (with the exception of shares of
                  Common  Stock  issued at a price equal or greater  than $13.33
                  per share), or classes of shares, or any warrants,  options or
                  other rights to purchase any interest in the Company's  shares
                  or adoption of any employee  stock option plan for the benefit
                  of the  Company's  employees  or any change,  modification  or
                  alteration  of any of the  terms  of any  warrant,  option  or
                  similar  right  to  purchase  any  interest  in the  Company's
                  shares;

                  5.1.5 the entering into by the Company  (excluding BSD) of any
                  bank or other non-trade indebtedness for borrowed money;

                                       26
<PAGE>

                  5.1.6  the  liquidation,  dissolution  or  winding-up  of  the
                  Company  or  any  of  its   subsidiaries   or  any  merger  or
                  consolidation  of the Company or any  subsidiary  with or into
                  another  entity  or the sale of all or  substantially  all the
                  assets of the Company or any subsidiary;

                  5.1.7    the payment of any dividend by the Company;

                  5.1.8  the  repurchase  by the  Company  of any  shares of the
                  Company's capital stock;

                  5.1.9 any amendment to any of the Company's  charter documents
                  which relates to the Company's capital structure;

                  5.1.10   any Related Person Transactions (as defined herein);

                  5.1.11 any material change in the compensation of the five (5)
                  highest compensated  employees and/or officers of the Company;
                  and

                  5.1.12  otherwise  take any action,  directly  or  indirectly,
                  which  would   undermine   the  intent  and  purpose  of  this
                  Agreement.

                  Section 5.2    Additional Covenants.

                  5.2.1 To the extent that BSD maintains any of the BPH Business
                  Assets after the Closing,  BSD shall  maintain  insurance  and
                  cause each of its subsidiaries to maintain insurance as to the
                  BPH Business  Assets and its related  products  and  business,
                  with financially  sound and reputable  insurers,  against such
                  casualties  and  contingencies  and of such  types and in such
                  amounts as is customary for companies similarly situated.

                  5.2.2  Except for  transactions  approved by a majority of the
                  disinterested directors of the Board of Directors, neither BSD
                  (with respect to the BPH Business  Assets) nor the Company nor
                  any of their  subsidiaries  shall  enter into any  transaction
                  with any director, officer, employee or holder of more than 5%
                  of the  outstanding  capital  stock of any  class or series of
                  capital   stock  of  the   Company   or  BSD  or  any  of  its
                  subsidiaries,  member of the family of any such person, or any
                  corporation,  partnership,  trust or other entity in which any
                  such person,  or member of the family of any such person, is a
                  director,  officer, trustee, partner or holder of more than 5%
                  of the outstanding  capital stock thereof,  with the exception
                  of transactions  which are consummated  upon terms that are no
                  less favorable than would be available if such transaction had
                  been effected at  arms-length,  in the reasonable  judgment of
                  the Board of Directors ("Related Person Transactions").

                                       27
<PAGE>

                  5.2.3 The Company and BSD,  with  respect to the BPH  Business
                  Assets,  shall comply and cause any  subsidiary to comply with
                  all applicable laws, rules, regulations and orders.

                  5.2.4 The Company and BSD,  with  respect to the BPH  Business
                  Assets, shall keep, and cause any subsidiary to keep, adequate
                  records  and books of account in which  accurate  and  correct
                  entries will be made in  accordance  with  generally  accepted
                  accounting principles consistently applied.

                  5.2.5 The  Company  shall not make any change in the nature of
                  its  business.  BSD shall not make any change in the nature of
                  the  BPH  Business  Assets  without   consultation   with  the
                  Purchasers.  BSD shall comply with its  obligations  under the
                  Bowman  Agreement  and cause  such  license  to remain in full
                  force and  effect and shall not agree to any  modification  of
                  the Bowman Agreement  without the prior written consent of the
                  Company.

                  Section 5.3    Reporting Obligations.

                  BSD or the  Company,  as  appropriate,  shall  furnish  to the
Purchasers:

                  5.3.1 As soon as practicable after receipt thereof,  copies of
                  any written communications, including, without limitation, any
                  communications  with  the  FDA,  relating  to any  of the  BPH
                  Business Assets;

                  5.3.2 Promptly after the commencement  thereof,  notice of all
                  actions,  suits,  claims,   proceedings,   investigations  and
                  inquiries that could  materially  adversely affect the Company
                  or the BPH Business Assets in any manner;

                  5.3.3  Promptly,  from  time to  time,  any  infringement  of,
                  challenge  to the  validity  or  ownership  of,  or use of the
                  Intellectual  Property that may come to the Company's or BSD's
                  attention.

                  5.3.4  Promptly,  from time to time,  such  other  information
                  regarding  the  business,   prospects,   financial  condition,
                  operations,  property  or  affairs  of the  Company or the BPH
                  Business Assets as the Purchasers reasonably may request; and

                  5.3.5  Representatives  of the Purchasers shall be entitled to
                  inspect the  properties,  books and records of the Company and
                  BSD  and  their   subsidiaries  and  interview  the  officers,
                  directors  and senior  employees  of the  Company  and BSD and
                  their   subsidiaries,   including   the   Company's  or  BSD's
                  accountants,  attorneys  and  other  advisors,  regarding  the
                  business  of the Company and the BPH  Business  Assets  during
                  regular business hours after reasonable notice to BSD.

                                       28
<PAGE>

                  Section 5.4  Confidentiality.  Each party shall, and shall use
its reasonable  efforts to cause its affiliates,  directors,  officers,  agents,
advisors, employees and authorized representatives (collectively,  "Agents") to,
(i) hold in  confidence  all  confidential  information  obtained by it from the
disclosing  party or such  disclosing  party's Agents pursuant to this Agreement
(unless such information (a) is or becomes generally  available to the public or
the  publishing  industry  other  than  as a  result  of  wrongful  acts  of the
non-disclosing  party, (b) is in the possession of the  non-disclosing  party or
its Agents prior to such disclosure (not by unlawful means), (c) is disclosed to
the non-disclosing  party or its Agents on a non-confidential  basis by a person
other  than the  disclosing  party or its  Agents  that,  to the  non-disclosing
party's  knowledge is not restricted  from  disclosing  such  information to the
non-disclosing party by any contractual, fiduciary or other legal obligation, or
(d)  is  developed  by the  non-disclosing  party  without  the  benefit  of the
confidential  information)  and (ii) use all such data and  information  for the
purpose of consummating the transactions  contemplated hereby,  except, that the
parties may disclose such  information  (x) as required by law pursuant to court
order, or, if  non-disclosure  is likely to subject the party to some penalty or
liability as evidenced by opinion of  independent  counsel or (y) in  connection
with  legal  proceedings   relating  to  or  arising  out  of  the  transactions
contemplated  hereby. In the event a party is required by clauses (x) and (y) of
the  preceding  sentence  to  disclose  any  confidential   information  of  the
disclosing  party  such  non-disclosing  party  will  (i)  promptly  notify  the
disclosing  party of the existence,  terms and  circumstances  surrounding  such
required disclosure,  (ii) consult with the disclosing party on the advisability
of taking legally available steps to resist or narrow such request, and (iii) if
disclosure  of such  information  is required,  furnish only such portion of the
information  as it is legally  compelled to disclose and exercise its reasonable
best efforts to obtain,  at the disclosing  party's  expense,  an order or other
reliable assurance that confidential  treatment will be accorded to such portion
of the disclosed  information  that the disclosing  party may designate.  In the
event this Agreement is terminated,  each party shall within three business days
return or destroy  (and  certify to the other party the  destruction  of), if so
requested by the other party, all nonpublic  documents  obtained from such other
party in connection  with the  transactions  contemplated  hereby and any copies
thereof  which  may  have  been  made by such  first  party  and  shall  use its
reasonable  efforts to cause its Agents to whom such  documents  were  furnished
promptly to return or destroy  (and  certify to the other party the  destruction
of) such documents and any copies thereof any of them may have had.

                  Section 5.5 Public Announcements.  Neither the Purchaser,  the
Company  nor BSD shall (and each shall use its  reasonable  efforts to cause its
subsidiaries,   affiliates,   directors,   officers,  employees  and  authorized
representatives  not to), issue any press release,  make any public announcement
or furnish any written  statement  to its  employees or  stockholders  generally
concerning the transactions  contemplated by this Agreement  without the consent
of the other  parties,  which  consent  shall not be  unreasonably  withheld  or
delayed.

                  Section 5.6 Exclusivity. (a) Each of the Company and BSD agree
that unless this  Agreement has been  terminated by the mutual  agreement of the
parties,   neither   the   Company,   BSD  nor  their   respective   affiliates,
representatives,  employees or agents (collectively,  "Agents") will, commencing
on the date of this  Agreement  and  continuing  through  November 30, 1997 (the


                                       29
<PAGE>

"Exclusive Period"), directly or indirectly, (i) solicit, encourage or negotiate
any proposal  (whether  solicited or unsolicited)  for, or execute any agreement
relating to, a sale of all or any part of the Shares or the Company's  assets or
the BPH Business  Assets or a sale of any equity or debt security of the Company
or BSD or any merger,  consolidation,  recapitalization  or similar  transaction
involving  the  Company or BSD with any other  party,  which,  in any such case,
would  include or relate to the BPH  Business  Assets (any of the  foregoing  is
referred  to  as  an  "Acquisition  Proposal"),  (ii)  provide  any  information
regarding  the Company,  BSD or the Shares to any third party for the purpose of
soliciting,  encouraging  or  negotiating  an  Acquisition  Proposal  (it  being
understood  that nothing  contained in clauses (i) or (ii) above shall  restrict
the Company, BSD or any of its Agents from providing  information as required by
legal process), or (iii) operate the business of the Company or the BPH Business
Assets other than in the ordinary course of business in a manner that negatively
impacts BSD's ability to transfer the BPH Business Assets.

                  (b) In the event that BSD does not consummate the  transaction
contemplated  hereby as a result of BSD's breach of Section 5.6(a)  hereof,  BSD
shall be liable to the Purchasers for all costs and expenses  actually  incurred
by the  Purchasers in pursuit of the  transaction,  together with the payment of
liquidated damages to the Purchaser in the agreed upon amount of $250,000.

                  Section 5.7 Board  Representation;  Advisory Fees. (a) Until a
future  Financing  Event,  as  such  term  is  defined  in  the  Certificate  of
Designation,  the Board of  Directors  of the Company  shall  consist of one (1)
representative of Oracle, one (1) representative of BSD, Manker and at least two
(2)  independent  third-party  directors  elected by Oracle and BSD. The parties
hereto  agree to vote their  Shares to elect the Board of Directors as set forth
in  this  Section  5.7.  The  Company  shall  diligently  attempt  to  obtain  a
commercially  reasonable  directors and officers liability insurance policy that
is reasonably satisfactory to the Purchasers.

                  (b) The  Company  hereby  grants to the  Purchasers  the first
option to provide and/or  participate  in any future  financing that the Company
may require.  The  Purchasers  shall be entitled to customary,  appropriate  and
reasonable  advisory fees in the event that the Purchasers provide  acquisition,
financing or other advisory services to the Company.

                  Section  5.8  Restriction  on  Transfer.  (a) As  long  as any
Preferred  Shares  remain  issued and  outstanding,  BSD shall not,  directly or
indirectly,  sell, assign or otherwise transfer, pledge as security, mortgage or
otherwise  encumber  any Shares  until a date  which is at least the  earlier of
twenty four (24) months after the Initial  Closing Date and six (6) months after
the Milestone or Option Closing Date.

                  (b) The parties  recognize  that there is no ready  market for
the Shares and that the success of the Company is and will  continue to be based
upon the  effort of and  relationship  between  the  parties.  Accordingly,  BSD
acknowledges  that  the  provisions  of  this  Section  5.8 are  reasonable  and
necessary  for the  protection  of the Company and that any breach or threatened


                                       30
<PAGE>

breach of this Section would, in all likelihood,  cause irreparable  injury. For
this  reason,  among  others,  if BSD breaches or threatens to breach any of the
provisions  contained in this Section 5.8, the Company and the Purchasers  shall
be entitled to obtain a temporary  restraining  order,  an  injunction  or other
equitable relief from any court having jurisdiction.  No bond or surety shall be
required.   In  addition,   nothing  contained  herein  shall  be  construed  as
prohibiting or preventing the Company or the Purchasers  from pursuing any other
available remedies for any actual or threatened breach.

                  Section  5.9 EDAP and  Urologix  Royalty  Payments.  Except as
otherwise provided herein, BSD shall retain the right to receive the royalty and
other payments that may become payable under the certain License Agreements with
EDAP Technomed, Inc. ("EDAP") and Urologix.

                  Section 5.10 Urologix Lawsuit.  (a) During the ninety (90) day
period  following the Initial Closing Date (the "Settlement  Phase"),  BSD shall
retain the right to settle the current  litigation  with Urologix (the "Urologix
Lawsuit").  During the Settlement  Phase, the Company agrees to consult with BSD
concerning the settlement discussions.

                  (b) If  after  the  expiration  of the  Settlement  Phase  the
Urologix  Lawsuit has not been finally  settled,  the Company  shall assume full
responsibility  for the  prosecution  and/or  defense of the  Urologix  Lawsuit,
including   responsibility  for  the  costs  and  expenses  and  all  settlement
negotiations  and decisions.  BSD shall have the right to approve any settlement
that  requires  the payment of money by BSD and the Company  agrees that it will
not assign any of the  patents  listed on Exhibit A to  Urologix as part of such
settlement.  Any damages or other awards obtained by the Company in settling the
Urologix  Lawsuit shall be divided  between the Company and BSD in proportion to
the amount of legal costs and expenses  (including any expenses  incurred during
the  Settlement  Phase) paid by each company.  BSD and the Company shall provide
each other with appropriate  invoices and other statements in order to determine
the amount of costs and expenses incurred in the Urologix Lawsuit.  In the event
of such transfer,  BSD shall deliver,  or cause to be delivered,  to the Company
(i) an assignment  of such rights  concerning  the Urologix  Lawsuit in form and
substance   satisfactory  to  the   Purchasers,   and  (ii)  all  documents  and
correspondence relating to the Urologix Lawsuit.


                                   ARTICLE VI

                            CONDITIONS TO THE CLOSING


                  Section 6.1  Conditions  to  Obligations  of Purchasers to the
Initial  Closing.  The  obligations  of Purchasers  hereunder are subject to the
fulfillment or  satisfaction,  on and as of the Initial Closing Date, of each of
the  following  conditions  (any  one or  more of  which  may be  waived  by the
Purchasers  in their  sole  discretion,  but  only in a  writing  signed  by the
Purchasers):

                  (a) Opinion. The Purchasers shall have received the opinion of
Parsons Behle & Latimer,  counsel to BSD, in a form  reasonably  satisfactory to
the Purchasers.

                                       31
<PAGE>

                  (b)  Secretary's   Certificate.   The  Purchasers  shall  have
received a  certificate  of the  Secretary  of the  Company and BSD (in form and
substance  satisfactory to the Purchasers)  certifying (i) that attached thereto
are true and complete copies of the Certificate of Incorporation, Certificate of
Designation  and Bylaws of Company  and the  Certificate  of  Incorporation  and
By-laws of BSD, (ii) that attached  thereto are true and complete  copies of the
resolutions  of the  Board of  Directors  of  Company  and BSD  authorizing  the
execution,  delivery and performance of this Agreement and any other  documents,
instruments  and  certificates  required  to be  executed  by  it in  connection
herewith  and  approving  the  consummation  of the  transactions  in the manner
contemplated  hereby  including,  but not  limited  to,  the  authorization  and
issuance of the Shares,  (iii) the names and true  signatures of the officers of
the Company and of BSD signing  this  Agreement  and all other  documents  to be
delivered in connection with this Agreement,  and (iv) such other matters as the
Purchasers may reasonably request.

                  (c) Filing of Certificate of  Designation.  The Certificate of
Designation of Company  substantially  in the form attached hereto as Exhibit C,
shall have been filed with the Secretary of State of the State of Delaware.

                  (d) Performance;  Representation  and Warranties.  Each of the
Company and BSD shall have performed and complied in all material  respects with
all agreements and conditions  contained in this Agreement which are required to
be  performed  or  complied  with by each of  them  prior  to or at the  Initial
Closing,  the  representation  and  warranties  of the Company and BSD contained
herein shall be true and correct on and as of the Initial Closing Date as though
made  on such  date,  and  the  Company  and BSD  shall  have  delivered  to the
Purchasers a certificate of a duly authorized officer of each of the Company and
BSD to such effect.

                  (e) Approvals,  Etc.  Approval and consent of all  appropriate
governmental regulatory agencies and the receipt of approval and/or consent from
all other appropriate  parties, and all consents which may be required under any
of the Company's  agreements (or  otherwise),  with respect to the  transactions
contemplated  hereby shall have been  obtained,  including  all  assignments  or
consents required by the FDA.

                  (f) No Material  Adverse Effect.  There shall have occurred no
event  which,  in the  Purchasers'  reasonable  discretion,  could  result  in a
Material  Adverse  Effect on the Company or the BSD Business  Assets between the
date  hereof and the date of the  Initial  Closing and the Company and BSD (with
respect to the BPH  Business  Assets)  shall have  operated  its business in the
ordinary course, consistent with its past practices during such period.

                  (g)  No  Litigation.  Except  for  the  Urologix  Lawsuit,  no
litigation,  arbitration or other legal or administrative  proceeding shall have
been  commenced  or be  pending by or before  any  court,  arbitration  panel or
governmental  authority or official,  and no statute,  rule or regulation of any
foreign or domestic,  national or local  government or agency thereof shall have
been enacted after the date of this Agreement, and no judicial or administrative


                                       32
<PAGE>

decision shall have been rendered which enjoins or prohibits, or seeks to enjoin
or prohibit, the consummation of all or any of the transactions  contemplated by
this Agreement.

                  (h)  Employment  Agreement.  Manker shall have entered into an
employment agreement with the Company on terms that are reasonably  satisfactory
to the  Purchaser,  to act as the President and Chief  Executive  Officer of the
Company.

                  (i) Non-Competition  Agreement.  BSD shall have entered into a
non competition  agreement with the Company in  substantially  the form attached
hereto as Exhibit E.

                  (j)  Consulting  Agreement.  BSD  shall  have  entered  into a
Consulting  Agreement with the Company in substantially the form attached hereto
as Exhibit F.

                  (k) Supply  Agreement.  BSD shall have  entered  into a Supply
Agreement with the Company in substantially  the form attached hereto as Exhibit
G.

                  (l)  Oracle/Manker.  Oracle and Manker shall have entered into
an  agreement,  in form and  substance  satisfactory  to Oracle,  governing  the
control and disposition of the Shares owned by Manker.

                  (m)  Transfer  Documents.  BSD  shall  have  delivered  to the
Company any and all  agreements  and other  documents,  including  all patent or
trademark  assignments and bills of sale,  required to transfer the BPH Business
Assets to the  Company  in form and  substance  reasonably  satisfactory  to the
Purchasers.

                  (n)  Assignment.  BSD shall have  delivered  to the Company an
assignment of the  Medizin-Technik  Agreement in form and  substance  reasonably
satisfactory to the Purchasers.

                  (o)  Bowman  Sub-License.  BSD  shall  have  delivered  to the
Company a sub-license of the Bowman  Agreement in form and substance  reasonably
satisfactory to the Purchasers.

                  (p) License  Agreement  for Other  Technology.  BSD shall have
delivered to the Company a perpetual  royalty-free license for all other patents
and  intellectual  property  relating  to the  treatment  of any  conditions  or
diseases (excluding malignant cancers) of the prostate gland, including, but not
limited to, benign prostatic hyperplasia (BPH) and prostatitis (the "Business of
the Company")  that is not part of the patents and  intellectual  property being
assigned to the Company,  in form and substance  reasonably  satisfactory to the
Purchasers.

                  (q)  Company  License  to  BSD.  BSD  shall  have  received  a
perpetual  royalty free  license from the Company for the use of the  technology
being   transferred  by  BSD  to  the  Company  relating  to  the  treatment  by
thermotherapy  of malignant or benign  diseases (the "Business of BSD"), in form
and substance reasonably satisfactory to BSD, the Company and the Purchasers.

                                       33
<PAGE>

                  (r) Delivery of Schedules.  BSD shall use its diligent efforts
to deliver to the  Purchasers  within seven (7) days hereof  Schedules 3.4, 3.9,
3.12, 3.13, 3.17, 3.21, 3.22, 3.29, 3.32 and 7.1 to this Agreement.  If it fails
to do so, then each such Schedule  shall be deemed to have been delivered and to
state  "none,"  except for Schedule  3.13 which shall be deemed to set forth the
Intellectual Property listed on Exhibit A. In the event that such Schedules,  if
delivered,  shall not be satisfactory to the Purchasers in any respect, then, in
addition to any other rights or remedies that Purchasers may have hereunder, the
Purchasers shall have the right to terminate this Agreement.

                  (s) IDE Assignment. BSD shall have delivered to the Company an
assignment  of its rights  under all of its IDE's  relating to the BPH  Business
Assets,  in form  appropriate  and suitable for filing with the US Food and Drug
Administration  (FDA) and  promptly  upon the Initial  Closing  shall effect all
filings  reasonably  requested by the Company and  permitted by  applicable  law
which are  necessary  for BSD to transfer  such IDE's to the Company;  provided,
however,  that to the extent any such  requested  filings  or  transfer  are not
permitted by  applicable  law BSD shall  reasonably  cooperate  with the Company
prior to and after the Initial Closing to vest, to the fullest extent  possible,
the Company with all rights to the IDE's.

                  Section 6.2  Conditions to  Obligations  of the  Purchasers to
Milestone or Option Closing. The obligations of Purchasers hereunder are subject
to the fulfillment or satisfaction, on and as of the Milestone or Option Closing
Date,  of each of the  following  conditions  (any one or more of  which  may be
waived by the Purchasers in their sole discretion,  but only in a writing signed
by the Purchasers):

                  (a)  Secretary's   Certificate.   The  Purchasers  shall  have
received a  certificate  of the  Secretary of the Company (in form and substance
satisfactory  to the Purchasers)  certifying (i) that attached  thereto are true
and  complete  copies  of  the  Certificate  of  Incorporation,  Certificate  of
Designation and Bylaws of the Company,  (ii) that attached  thereto are true and
complete  copies of the  resolutions  of the Board of  Directors  of the Company
authorizing  the execution,  delivery and  performance of this Agreement and any
other documents,  instruments and certificates  required to be executed by it in
connection  herewith and approving the  consummation of the  transactions in the
manner contemplated hereby including,  but not limited to, the authorization and
issuance of the Shares,  (iii) the names and true  signatures of the officers of
the Company  signing this  Agreement and all other  documents to be delivered in
connection  with this  Agreement,  and (iv) such other matters as the Purchasers
may reasonably request.

                  (b) Performance;  Representation  and Warranties.  Each of the
Company  and BSD shall have  performed  and  complied in all  respects  with all
agreements and conditions  contained in this Agreement  which are required to be
performed  or complied  with by Company or BSD prior to or at the  Milestone  or


                                       34
<PAGE>

Option  Closing,  the  representations  and  warranties  of the  Company and BSD
contained  herein shall be true and correct on and as of the Milestone or Option
Closing  Date as though  made on such date,  and the  Company and BSD shall have
delivered to the Purchasers a certificate of a duly  authorized  officer of each
of the Company and BSD to such effect.

                  (c) Approvals,  Etc.  Approval and consent of all  appropriate
governmental regulatory agencies and the receipt of approval and/or consent from
all other appropriate  parties, and all consents which may be required under any
of the Company's  agreements (or  otherwise),  with respect to the  transactions
contemplated hereby shall have been obtained.

                  (d) No Material  Adverse Effect.  There shall have occurred no
event  which,  in the  Purchasers'  reasonable  discretion,  could  result  in a
Material  Adverse Effect on the Company  between the date hereof and the date of
the Milestone or Option Closing and the Company shall have operated its business
in the ordinary course, consistent with its past practices during such period.

                  Section 6.3  Conditions to  Obligations of the Company and BSD
to the Initial  Closing.  The  obligations  of the Company and BSD hereunder are
subject to the  fulfillment or  satisfaction,  on and as of the Initial  Closing
Date, of the following conditions (which may be waived by the Company or BSD, in
their sole discretion, but only in a writing signed by Company or BSD):

                  (a)   Performance;   Representations   and   Warranties.   The
Purchasers shall have performed and complied in all respects with all agreements
and conditions contained in this Agreement which are required to be performed or
complied with by the Purchasers prior to or at the Closing,  the representations
and warranties of each Purchaser,  severally and not jointly,  contained  herein
shall be true and correct on and as of the  Closing  Date as though made on such
date,  and the  Purchasers  shall have delivered to the Company a certificate to
such effect.

                  (b) Investment Capability.  The Purchasers shall have provided
the Company and BSD with evidence reasonably satisfactory to the Company and BSD
of Purchasers' ability to satisfy its funding obligations  pursuant to Article I
and Article II hereof.

                  (c)  Company  License  to  BSD.  BSD  shall  have  received  a
perpetual  royalty free  license from the Company for the use of the  technology
being   transferred  by  BSD  to  the  Company  relating  to  the  treatment  by
thermotherapy  of malignant or benign  diseases (the "Business of BSD"), in form
and substance reasonably satisfactory to BSD, the Company and the Purchasers.

                  (d)  Employment  Agreement.  Manker shall have entered into an
employment agreement with the Company on terms that are reasonably  satisfactory
to the  Company,  to act as the  President  and Chief  Executive  Officer of the
Company.

                                       35
<PAGE>

                  (e) Non-Competition Agreement; Consulting Agreement and Supply
Agreement.  The Company  shall have  entered into a Non  Competition  Agreement,
Consulting  Agreement and Supply Agreement with BSD in  substantially  the forms
attached hereto as Exhibits E, F and G, respectively.

                                   ARTICLE VII

                                    COVENANTS

                  Section  7.1  Interim  Operations.  During the period from the
date of this  Agreement to the later of the  Milestone or Option  Closing  Date,
except with the  Purchasers'  prior  specific  written  consent or as  expressly
contemplated  by this Agreement,  BSD, with respect to the BPH Business  Assets,
and the Company shall operate its business only in the ordinary and usual course
consistent with past practices and to preserve intact its business  organization
and good will in all material respects. Additionally, during the period from the
date of this  Agreement to the later of the  Milestone or Option  Closing  Date,
BSD,  with  respect to the BPH  Business  Assets for items (xi),  (xiv) and (xv)
below and only with respect to those  actions which  materially  affects the BPH
Business Assets for all other items below,  and the Company,  will not to do any
of the following (unless otherwise  expressly  contemplated by this Agreement or
permitted in writing by the Purchasers):

                  (i) amend its Certificate of Incorporation, any Certificate of
                  Designation or By-Laws, as the case may be;

                  (ii) issue,  sell or authorize for issuance or sale, shares of
                  any class of its securities (including, but not limited to, by
                  way of stock split or dividend) or any subscriptions, options,
                  warrants,  rights or covertible securities,  or enter into any
                  agreements or  commitments  of any character  obligating it to
                  issue or sell any such securities;


                  (iii)  redeem,  purchase  or  otherwise  acquire,  directly or
                  indirectly,  any shares of its  capital  stock or any  option,
                  warrant or other right to purchase or acquire any such shares;

                  (iv)  declare  or  pay  any  dividend  or  other  distribution
                  (whether in cash, stock or other property) with respect to its
                  capital stock;

                  (v) voluntarily sell, transfer,  surrender, abandon or dispose
                  of  any  of  its  assets  or  property  rights   (tangible  or
                  intangible),  other than in the  ordinary  course of  business
                  consistent with past practices;

                  (vi) grant or make any mortgage or pledge or subject itself or


                                       36
<PAGE>

                  any  of its  properties  or  assets  to any  lien,  charge  or
                  encumbrance of any kind,  except liens for taxes not currently
                  due;

                  (vii) create,  incur or assume any liability or  indebtedness,
                  except in the ordinary course of business consistent with past
                  practices;

                  (viii)  make  or  commit  to  make  any  capital  expenditures
                  exceeding in the aggregate Ten Thousand Dollars ($10,000.00);

                  (ix) become subject to any guaranty;

                  (x)  grant  any  increase  (outside  the  ordinary  course  of
                  business  consistent with past practices) in the  compensation
                  payable  or  to  become  payable  to  directors,  officers  or
                  employees  (including,  without limitation,  any such increase
                  pursuant to any bonus,  pension,  profit-sharing or other plan
                  or commitment);

                  (xi)  except  as  listed  on  Schedule  7.1,  enter  into  any
                  agreement  which  would be a Material  Agreement,  or amend or
                  terminate any existing  Material  Agreement,  which is outside
                  the  ordinary   course  of  business   consistent   with  past
                  practices.  With respect to the foregoing,  the Company or BSD
                  shall provide the Purchasers  with a complete list of any such
                  Material  Agreement not entered into in the ordinary course of
                  business between the date hereof and the Closing Date;

                  (xii)  alter the manner of  keeping  its  books,  accounts  or
                  records,  or change in any  manner  the  accounting  practices
                  therein reflected;

                  (xiii)  except as set forth on  Schedule  7.1,  enter into any
                  commitment or transaction other than in the ordinary course of
                  business consistent with past practices;

                  (xiv) do any act,  or omit to do any act which  would  cause a
                  violation or breach of any of the representations,  warranties
                  or  covenants  of  the  Company  or  BSD  set  forth  in  this
                  Agreement;

                  (xv) take any action  which has a material  adverse  effect on
                  the condition (financial or otherwise), results of operations,
                  assets, liabilities,  properties, business or prospects of the
                  Company or BPH Business  Assets,  or on employee,  customer or
                  supplier relations;

                  (xvi)  alter  in  any  manner  any  existing  working  capital
                  facilities; or

                                       37
<PAGE>

                  (xvii) agree,  whether in writing or  otherwise,  to do any of
                  the foregoing.

                  Section 7.2 Access.  BSD shall  afford to the  Purchasers  and
their  agents and  representatives,  access  throughout  the period prior to the
Closing  Date to the  properties,  books,  records  and  contracts  of BSD (with
respect  to the  BPH  Business  Assets),  for  the  purpose  of  permitting  the
Purchasers to fully  investigate and perform a due diligence review of BSD as it
relates to the BPH Business  Assets and  properties,  and  financial  condition,
provided that such access shall be granted during normal  business hours in such
a manner as to not unreasoably  interfere with BSD's normal business operations.
During such period,  BSD shall furnish promptly to the Purchasers  copies of (i)
all  correspondence  received  or sent  by or on  behalf  of BSD  from or to any
governmental  authority and (ii) all other  information  and documents,  in each
case  concerning  the BPH Business  Assets and personnel as the  Purchasers  may
reasonably request.

                  Section 7.3 Confidentiality  (through Closing Date). Except as
otherwise  required in the  performance of obligations  under this Agreement and
except as otherwise  required by law, any non-public  information  received by a
party or its advisors from the other party pursuant to this Article VII shall be
kept  confidential and shall not be used or disclosed for any purpose other than
in  furtherance  of  the  transactions  contemplated  by  this  Agreement.  Such
confidential  information  includes,  without limitation,  audited and unaudited
financial  statements that show BSD's current and projected  costs, and detailed
financial information  supporting such statements.  The Purchasers shall not use
(or  permit to be used) any  confidential  information  in any manner to compete
against BSD, whether with respect to corporate  acquisitions,  sales, financing,
development,   management,   investment,   or  otherwise.   The   obligation  of
confidentiality  shall not extend to  information  (a) which is or shall  become
generally  available  to the public  other  than as a result of an  unauthorized
disclosure by a party to this Agreement or a person to whom a party has provided
such  information,  (b) which was  available  to a party to this  Agreement on a
nonconfidential basis prior to its disclosure by one party to the other pursuant
to this  Agreement  or (c) which is  disclosed  by the  Purchasers  in any legal
proceeding  requiring any such  disclosure.  Upon termination of this Agreement,
each party shall promptly return any Confidential  Information received from the
other party and, upon request,  shall destroy any copies of such  information in
its possession. The covenants of the parties contained in this Section 7.3 shall
survive any termination of this Agreement until the earlier of (i) two (2) years
from the date hereof,  or (ii) the date when such information  becomes generally
available to the public, but shall terminate at the Closing,  if it occurs, with
respect to information concerning the Company.

                  Section 7.4  Notification.  Each party to this Agreement shall
promptly  notify  each other party in writing of the  occurrence,  or pending or
threatened  occurrence,  of any event that would consttute a breach or violation
of this  Agreement  by any  party or that  would  cause  any  representation  or
warranty made by the notifying party in this Agreement to be false or misleading
in any respect  (including without  limitation,  any event or circumstance which
would have been  required to be disclosed on any schedule to this  Agreement had
such event or  circumstance  occurred or existed on or prior to the date of this
Agreement).  Any  such  notification  shall  not  limit  or  alter  any  of  the


                                       38
<PAGE>

representations,  warranties  or  covenants  of the  parties  set  forth in this
Agreement  nor any rights or remedies a party may have with  respect to a breach
of any representation, warranty or covenant.

                  Section  7.5  Information.  The Company  shall  furnish to the
Purchasers and BSD:

                  (a) (i) as soon as practicable and in any event within 15 days
after  the end of each  month and (ii) as soon as  practicable  and in any event
within 30 days after the close of each fiscal quarter in each fiscal year of the
Company, an unaudited balance sheet of the Company, a statement of income of the
Company,  and a statement of cash flows of the Company, as at the end of and for
the period  commencing  at the end of the  previous  fiscal year and ending with
such month and quarter,  as the case may be, setting forth in  comparative  form
the  corresponding  figures for the appropriate  periods of the preceding fiscal
year  prepared by the Company,  all in  reasonable  detail and  certified by the
chief  accounting  officer  of the  Company to be true and  correct,  subject to
normal recurring year-end audit adjustments,  and the Company shall use its best
efforts to ensure  that all such  financial  statements  comply  with  generally
accepted accounting principles;

                  (b) as soon as practicable and in any event within ninety (90)
days after the close of each fiscal year then ended,  of the Company,  a balance
sheet of the Company,  a statement of income of the Company,  and a statement of
cash flows of the Company,  as at the end of and for the fiscal year then ended,
setting  forth  the  corresponding  figures  of  the  previous  fiscal  year  in
comparative  form,  all  in  reasonable   detail  and  certified   (without  any
qualification  or exception deemed material by the Purchaser) by the independent
certified public accountants of the Company;

                  (c) as soon as practicable  and in any event within forty (45)
days after the close of each of the first three  quarters of each fiscal year of
the  Company  and within  ninety  (90) days after the close of each such  fiscal
year, a certificate  signed by the chief  executive  officer and chief financial
officer of the Company,  stating that a review of the  activities of the Company
during such period has been made under their immediate  supervision  with a view
to determining whether the Company has observed,  performed and fulfilled all of
its obligations under this Agreement and the results of such review;

                  (d) as soon as practicable and in any event within ninety (90)
days after the close of each fiscal year then ended, of the Company, an analysis
of the performance of the Company,  certified by the Chief Executive  Officer of
the Company, comparing the financial statements of the Company for the year then
ended with the projections;

                  (e) promptly  upon receipt  thereof,  copies of all  financial
reports (including,  without limitation,  management letters), if any, submitted
to the Company by its  auditors,  in  connection  with each  annual,  interim or
special audit of their respective books by such auditors;



                                       39
<PAGE>

                  (f) if requested,  prior to January 31 in each year, a summary
of business plans and/or financial operating  projections for the fiscal year of
the Company for such year in form and detail satisfactory to the Purchasers;

                  (g) promptly upon the commencement thereof,  written notice of
any  litigation,  including  arbitrations,  and of any  proceedings  before  any
governmental agency which would, if successful,  materially and adversely affect
the Company or where the amount involved exceeds $25,000;

                  (h) promptly upon any  occurrence  thereof,  written notice of
the termination or default under any contract,  or aggregate number of contracts
within any one hundred  and fifty (150) day period,  pursuant to which more than
five percent (5%) of the gross revenues of the Company are generated;

                  (i) within 30 days after request by either Purchaser,  reports
showing  outstanding  accounts  receivables and aging schedules relating thereto
for the preceding month; and

                  (j)  with  reasonable   promptness,   such  other  information
respecting the business,  operations  and financial  condition of the Company as
the Purchasers or BSD may from time to time reasonably request.

                  Section 7.6 Taxes and Claims.  The Company  shall duly pay and
discharge (a) all taxes,  assessments and  governmental  charges upon or against
the Company or properties or assets prior to the date on which penalties  attach
thereto, unless and to the extent that such taxes are being diligently contested
in good faith and by appropriate proceedings,  and appropriate reserves therefor
have been established,  and (b) all lawful claims, whether for labor, materials,
supplies,  services or anything else which might or could,  if unpaid,  become a
lien or charge upon the  properties  or assets of the Company  unless and to the
extent only that the same are being  diligently  contested  in good faith and by
appropriate proceedings and appropriate reserves therefor have been established.

                  Section 7.7 Insurance.

                  (a)  The  Company  shall  (i)  keep  all  of  its   properties
adequately insured at all times with responsible insurance carriers against loss
or damage by fire and other  hazards,  (ii) maintain  adequate  insurance at all
times with responsible insurance carriers against liability on account of damage
to persons and property and under all applicable  workmen's  compensation  laws,
and (iii) maintain adequate insurance covering such other risks as the Purchaser
may  reasonably  request.  The Company  shall name Oracle and BSD as  additional
insureds and as loss payees on all such policies, as well as on all key-man life
insurance  policies of the  Company,  whether  presently  existing or  hereafter
obtained.  For the purposes of this Section  7.7(a),  insurance  shall be deemed
adequate  if the same is not less  extensive  in  coverage  and  amount  than is
customarily  maintained  by  other  persons  engaged  in the  same or a  similar
business similarly situated.



                                       40
<PAGE>

                  (b) The Company  shall,  from time to time upon request of the
Purchasers,  promptly furnish or cause to be furnished to the Purchasers and BSD
evidence, in form and substance  satisfactory to them, of the maintenance of all
insurance  required  by this  Section  7.7 to be  maintained.  From time to time
during the term hereof,  the Purchasers and BSD shall have the right upon notice
to the Company, to require the Company to maintain additional insurance coverage
or insurance  coverage in  additional  amounts if for any reason the  Purchasers
reasonably  determine that the existing  insurance  maintained by the Company is
insufficient.

                  Section 7.8   Books and Reserves. The Company shall:

                  (a) maintain,  at all times, true and complete books,  records
and accounts in which true and correct entries shall be made of its transactions
in accordance with generally accepted accounting principles consistently applied
and  consistent   with  those  applied  in  the  preparation  of  its  financial
statements, and

                  (b) by means of appropriate quarterly entries,  reflect in its
accounts  and in all  financial  statements  furnished  proper  liabilities  and
reserves  for all taxes and  proper  reserves  for  depreciation,  renewals  and
replacements, obsolescence and amortization of its properties and bad debts, all
in  accordance  with  generally  accepted  accounting  principles   consistently
applied, as above described.

                  Section 7.9 Condition of Property.  The Company shall keep its
properties in good repair,  working order and condition  and, from time to time,
make all needful  and proper  repairs,  renewals,  replacements,  additions  and
improvements  thereto,  so that the  business  carried  on may be  properly  and
advantageously  conducted  at all  times in  accordance  with  prudent  business
management.

                  Section  7.10   Inspection.   The  Company   shall  allow  any
representative  of the  Purchasers to visit and inspect any of the properties of
the Company,  to examine the books of account and other records and files of the
Company, to make copies thereof and to discuss the affairs,  business,  finances
and accounts of the Company with its officers and  employees,  all during normal
business hours and as often as the Purchasers may request.

                  Section 7.11  Perform  Covenants.  The Company  shall (a) make
full and timely payment of the principal of and interest and premium, if any, on
all  indebtedness  of the Company to the  Purchasers,  whether  now  existing or
hereafter  arising,  (b) duly comply with all the terms and covenants  contained
herein and in each of the  instruments  and documents given to the Purchasers in
connection with or pursuant to this  Agreement,  all at the times and places and
in the manner set forth  herein or therein,  and (c) at all times  maintain  the
liens,  if any,  and security  interests  provided for under or pursuant to this
Agreement  and any  instrument or document  delivered in connection  herewith as
valid and  perfected  liens  and  security  interests  on the  property  covered
thereby.

                  Section 7.12 Further  Assurances.  Each party hereto shall, at


                                       41
<PAGE>

its cost and expense,  upon  reasonable  request of any other party duly execute
and deliver, or cause to be duly executed and delivered, such further agreements
and  instruments  and do and  cause  to be  done  such  further  acts  as may be
reasonably  necessary or proper in the opinion of the other parties to carry out
more  effectually the provisions and purposes of this Agreement  including,  but
not limited to, entering into those agreements as listed in Article VI.

                  Section 7.13  Officers'  Certificate.  The Company agrees that
for so long as any shares of Convertible Preferred Stock is outstanding, Charles
Manker, or his successor as President and Chief Executive Officer of the Company
shall deliver to Oracle  within five (5) days on the end of each fiscal  quarter
an officers'  certificate  restating and reaffirming all of the  representations
and warranties and the compliance with all covenants and continuing  obligations
contained herein.

                  Section 7.14  Negative  Covenants.  For  eighteen  (18) months
after the Initial Closing,  the Company will not, without the consent of Oracle,
take or effect any of the following transactions or acts:

                  (a)  Any  amendment,  alteration  or  repeal  of  any  of  the
provisions of the Certificate of Incorporation,  Certificate of Designation,  or
the By-laws of the Company including,  but not limited to (i) an increase in the
number of  authorized  shares  of the  Preferred  Stock,  (ii) any  change  that
adversely affects the rights, preferences or powers of the Preferred Stock or of
the holders  thereof,  or (iii) any decrease in the required time for the giving
of any  notice  to which  the  holders  of  Convertible  Preferred  Stock may be
entitled;

                  (b) The  authorization  or creation of, or the increase in the
number  of  authorized  shares  of any  stock  of  any  class,  or any  security
convertible into stock of any class, or the authorization or creation of any new
class of preferred  stock (or any action which would result in another series of
preferred stock), ranking prior to or on a parity with the Convertible Preferred
Stock with respect to rights upon a liquidation or in any other respect;

                  (c)  Adoption and  implementation  by the Company of strategic
and  operating  plans  including  but not  limited to any plan that  changes the
business  of the  Company  or that  involves  the  entry of the  Company  into a
business   not   currently   conducted   by  the  Company  and  the  design  and
implementation of any clinical trials;

                  (d) The  employment of a new Chief  Executive  Officer,  Chief
Financial Officer,  Chief Operating Officer or President of the Company, and the
termination of such existing executives and the employment of any new employees;

                  (e) Make or  commit  any  capital  expenditures  in  excess of
$100,000;

                  (f)  Reorganization,  recapitalization,  sale of stock, tender
offer  or  sale,  conveyance,  or  otherwise  dispose  of  or  encumber  all  or


                                       42
<PAGE>

substantially  all of its property or business or merge into or consolidate with
any other  corporation  (other than a wholly owned  subsidiary  corporation)  or
effect any transaction or series of related  transactions in which more than 50%
of the voting power of the corporation is disposed of;

                  (g) Approval of any legal settlement;

                  (h) Approval of any related party transaction;

                  (i) Any other  transaction  directly or  indirectly,  take any
action, or permit any action to be taken, solely or primarily for the purpose of
increasing  the value of any class of stock of the Company if the effect of such
action is reasonably likely to reduce the value, security, rights or preferences
of the Preferred Stock.

                  (j)  Redeem,  purchase  or  otherwise  acquire,   directly  or
indirectly,  any shares of its  capital  stock or any  option,  warrant or other
right to purchase or acquire any such shares;

                  (k) Declare or pay any dividend or other distribution (whether
in cash, stock or other property) with respect to its capital stock;

                  (l) Voluntarily sell, transfer,  surrender, abandon or dispose
of any of its assets or property rights (tangible or intangible),  other than in
the ordinary course of business consistent with past practices;

                  (m) Grant or make any mortgage or pledge or subject  itself or
any of its properties or assets to any material  lien,  charge or encumbrance of
any kind, except liens for taxes not currently due;

                  (n) Create,  incur or assume any liability or  indebtedness in
excess of $100,000;

                  (o) Become subject to any material guaranty;

                  (p) Grant  any  increase  in the  compensation  payable  or to
become payable to directors or officers (including, without limitation, any such
increase  pursuant to any bonus,  pension,  profit-sharing,  incentive option or
other plan or commitment);

                  (q) Alter  the  manner  of  keeping  its  books,  accounts  or
records, or change in any manner the accounting practices therein reflected;

                  (r) Enter into any commitment or transaction other than in the
ordinary course of business consistent with past practices or make any change in
the nature of its business;

                                       43
<PAGE>

                  (s) Do any act, or omit to do any act, or permit to the extent
within the  Company's  control,  any act or  omission to act which would cause a
violation or breach of any of its  representations,  warranties or covenants set
forth herein or the related documents thereto;

                  (t) Intentionally  take any action which would have a material
adverse effect on the condition (financial or otherwise), results of operations,
assets,  liabilities,  properties,  business or prospects of the Company,  or on
employee, customer or supplier relations;

                  (u) Otherwise take any action,  directly or indirectly,  which
would undermine the intent and purpose of this Agreement; or

                  (v) Agree,  whether in writing or otherwise,  to do any of the
foregoing.

                  Section 7.15 Use of Proceeds.  Set forth on Exhibit H attached
hereto is the Company's  operating plan (the  "Operating  Plan") which contains,
among other things,  the use of proceeds from the sale of the Preferred  Shares.
The Company  covenants and agrees that the proceeds of the sale of the Preferred
Shares  shall be used by the Company  only for working  capital  purposes and to
finance Company's  development,  engineering,  manufacturing,  clinical studies,
marketing,  distribution  and FDA approval of a  patented/proprietary  microwave
technology  for the  treatment  of any  conditions  or diseases of the  prostate
gland, including but not limited to Benign Prostatic Hyperplasia and Prostatitis
(excluding malignant cancers of the prostate),  in accordance with the financial
projections and initial operating plan of the Company. Additionally, the Company
agrees to reserve  $125,000 after each Closing for the payment of the investment
banking fees described in Section 3.28.

                  Section 7.16  Liquidation of Company.  If within eighteen (18)
months after the Initial Closing Date the Company has failed to achieve at least
fifty (50%)  percent of the financial  projections  and targets set forth on the
Operating Plan, then the Purchasers shall have the right to merge,  sell (either
all of the stock or assets of the Company)  consolidate or dissolve the Company.
Upon the Purchasers'  election to dissolve the Company,  the Company shall cease
to carry on its business and shall wind-up its affairs and  liquidate.  Any such
liquidation  or  dissolution of the Company shall be conducted by an independent
third party whose objective shall be to maximize  shareholder value,  consistent
with the  respective  rights of the  shareholders  of the  Company  as set forth
herein, in the Certificate of Incorporation of the Company, as amended from time
to time, and the Certificate of Designation of the Company.


                                  ARTICLE VIII

                                 INDEMNIFICATION

                  Section  8.1  Survival  of  Representations   and  Warranties;
Indemnity.

                                       44
<PAGE>

                  (a) Survival of Representations.  Except as otherwise provided
herein, the representations, warranties, covenants and agreements of Company and
BSD contained in or made pursuant to this Agreement  shall survive the execution
and  delivery of this  Agreement  and each  Closing  Date and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Purchasers.

                  (b) Indemnification.  (A) Each of the Company, with respect to
its  representations,  warranties  and  covenants,  and BSD, with respect to its
representations,  warranties and covenants,  agree,  severally, to indemnify and
hold harmless each Purchaser, its affiliates,  and its respective successors and
assigns,  from and against any losses,  damages, or expenses which are caused by
or arise out of (i) any breach or default in the  performance  by the Company or
BSD of any covenant or agreement  made by the Company or BSD in this  Agreement;
(ii) any breach of warranty or representation made by the Company or BSD in this
Agreement; and (iii) any and all actions, suits,  proceedings,  claims, demands,
judgments,  costs and expenses  (including  reasonable  legal fees and expenses)
incident to any of the foregoing. (B) Each Purchaser, severally and not jointly,
agrees  to  indemnify  and  hold  harmless  Company,  its  affiliates,  and  its
respective  successors  and assigns,  from and against any losses,  damages,  or
expenses  which are  caused by or arise out of (i) any  breach or default in the
performance  by  such  Purchaser  of any  covenant  or  agreement  made  by such
Purchaser in this Agreement;  (ii) any breach of warranty or representation made
by such  Purchaser  in this  Agreement;  and (iii) any and all  actions,  suits,
proceedings,   claims,  demands,   judgments,   costs  and  expenses  (including
reasonable legal fees and expenses) incident to any of the foregoing.

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

                       An  Indemnified  Party under this Agreement  shall,  with
respect to claims asserted  against such party by any third party,  give written
notice to the  Indemnifying  party of any  liability  which might give rise to a
claim for indemnity under this Agreement  within sixty (60) business days of the
receipt  of any  written  claim from any such  third  party,  but not later than
twenty (20) days prior to the date any answer or responsive pleading is due, and
with  respect  to  other  matters  for  which  the  Indemnified  Party  may seek
indemnification,  give prompt  written notice to the  Indemnifying  party of any
liability  which might give rise to a claim for  indemnity;  provided,  however,
that  any  failure  to give  such  notice  will  not  waive  any  rights  of the
Indemnified Party except to the extent the rights of the Indemnifying  Party are
materially prejudiced.

                       The  Indemnifying  Party  shall  have the  right,  at its
election, to take over the defense or settlement of such claim by giving written
notice to the  Indemnified  Party at least  fifteen  (15) days prior to the time
when an answer or other  responsive  pleading or notice with respect  thereto is
required.  If the  Indemnifying  Party makes such  election,  it may conduct the


                                       45
<PAGE>

defense  of  such  claim  through  counsel  of  its  choosing  (subject  to  the
Indemnified  Party's  approval  of such  counsel,  which  approval  shall not be
unreasonably  withheld),  shall be solely  responsible  for the expenses of such
defense and shall be bound by the results of its  defense or  settlement  of the
claim.  The  Indemnifying  Party shall not settle any such claim  without  prior
notice to and  consultation  with the Indemnified  Party, and no such settlement
involving  any  equitable  relief or which  might have an adverse  effect on the
Indemnified  Party  may  be  agreed  to  without  the  written  consent  of  the
Indemnified Party (which consent shall not be unreasonably withheld). So long as
the  Indemnifying  Party is diligently  contesting any such claim in good faith,
the  Indemnified  Party may pay or settle such claim only at its own expense and
the  Indemnifying  Party will not be responsible  for the fees of separate legal
counsel to the  Indemnified  Party,  unless the named parties to any  proceeding
include  both  parties and  representation  of both  parties by the same counsel
would be inappropriate.  If the Indemnifying  Party does not make such election,
or having  made  such  election  does  not,  in the  reasonable  opinion  of the
Indemnified Party proceed  diligently to defend such claim, then the Indemnified
Party may (after written notice to the  Indemnifying  Party),  at the expense of
the Indemnifying  Party, elect to take over the defense of and proceed to handle
such claim in its  discretion and the  Indemnifying  Party shall be bound by any
defense or  settlement  that the  Indemnified  Party may make in good faith with
respect to such claim.  In connection  therewith,  the  Indemnifying  Party will
fully cooperate with the Indemnified Party should the Indemnified Party elect to
take over the defense of any such claim.

                       The parties  agree to cooperate  in defending  such third
party claims and the Indemnified  Party shall provide such  cooperation and such
access to its books,  records and  properties  as the  Indemnifying  Party shall
reasonably  request  with  respect to any matter  for which  indemnification  is
sought  hereunder;  and the parties hereto agree to cooperate with each other in
order to ensure the proper and adequate defense thereof.

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

                                       46
<PAGE>

                                   ARTICLE IX

                                  MISCELLANEOUS

                   Section 9.1 Termination.  This Agreement may be terminated at
any  time  prior  to the  Initial  Closing  by  either  the  Company  and BSD or
Purchasers,  upon written  notice to the other (i) if the Closing shall not have
been consummated on or before ten (10) business days after the date hereof, (ii)
if there  shall be any law or  regulation  that  makes the  consummation  of the
transactions  contemplated hereby illegal or otherwise  prohibited,  or (iii) if
consummation  of  the  transactions   contemplated   hereby  would  violate  any
nonappealable  final order, decree or judgment of any court or governmental body
having competent  jurisdiction.  If this Agreement is terminated as permitted by
this Section 9.1, such  termination  shall be without  liability of either party
(or  any  shareholder,   director,   officer,  employee,  agent,  consultant  or
representative  of such  party) to the other party to this  Agreement;  provided
that if such termination  shall result from the failure of BSD to act reasonably
in  fulfilling  a  condition  within  BSD's  control to the  performance  of the
obligations of the other party or to perform a covenant of this  Agreement,  BSD
shall be  fully  liable  for any and all  losses  incurred  or  suffered  by the
Purchasers  as a result of such  failure  or breach  together  with  payment  of
liquidated  damages to the Purchasers in the amount of $250,000.  The provisions
of Sections 5.4, 5.5, 5.6, 9.1, 9.3 and 9.5 shall survive any termination hereof
pursuant to this Section 9.1.

                   Section  9.2  Further   Assurances.   Each  party  agrees  to
cooperate fully with the other parties and to execute such further  instruments,
documents and agreements and to give such further  written  assurances as may be
reasonably  requested  by any other  party to better  evidence  and  reflect the
transactions  described herein and contemplated  hereby and to carry into effect
the intents and purposes of this Agreement.

                   Section  9.3  Fees  and   Expenses.   The  Company  shall  be
responsible for the payment of the Purchaser's  legal fees and costs relating to
the  transactions  contemplated by this  Agreement.  In the event this Agreement
terminates for any reason, BSD shall pay to the Purchasers $15,000 within thirty
(30)  days of the date of any such  termination.  All such  legal  fees  will be
payable by the Company at each Closing. Notwithstanding anything to the contrary
contained  herein,  the expenses of the Registration  shall be borne entirely by
the Company and shall not be subject to the foregoing  limitation.  The terms of
this Section 9.3 shall survive any termination of this Agreement.

                   Section 9.4 Notices.  Whenever any party hereto desires or is
required to give any notice,  demand, or request with respect to this Agreement,
each such communication shall be in writing and shall be effective only if it is
delivered by personal service or mailed,  United States  registered or certified
mail,  postage  prepaid,  return receipt  requested (and shall be deemed to have
been received  three(3) days after deposit into the United States mail), or sent
by prepaid overnight courier,  facsimile or confirmed  telecopier,  addressed as
follows:

                                       47
<PAGE>

         If to Oracle:




                                    c/o Oracle Strategic Partners, L.P.
                                    712 Fifth Avenue, 45th Floor
                                    New York, New York  10019
                                    Attention: Larry Feinberg and Joseph Dowling
                                    Fax No.: (212) 459-0863

         With a copy to:

                                    Kane Kessler, P.C.
                                    1350 Avenue of the Americas
                                    26th Floor
                                    New York, New York 10019
                                    Attention:  Robert L. Lawrence, Esq.
                                    Fax No.: (212) 245-3009

         If to the Company or Manker:

                                    c/o Charles F. Manker
                                    35 N. Green Bay Road
                                    Lake Forest, IL 60045
                                    Fax No.: (847) 234-4333

         If to BSD:

                                    BSD Medical Corporation
                                    2188 West 2200 South
                                    Salt Lake City, UT  84119
                                    Attention:  Mr. Paul Turner
                                    Fax No.: (801) 972-5930

         With a copy to:

                                    Parsons Behle & Latimer
                                    One Utah Center
                                    201 South Main Street
                                    18th Floor
                                    Salt Lake City, UT  84111
                                    Attention: J. Gordon Hansen, Esq.
                                    Fax No.: (801) 536-6111

Unless otherwise stated above, such communications  shall be effective when they
are received by the addressee thereof in conformity with this Section. Any party
may change its address for such  communications  by giving notice thereof to the
other parties in conformity with this Section.



                                       48
<PAGE>

                   Section 9.5 Governing Law and Jurisdiction.

                   9.5.1 This Agreement shall be construed in all respects under
                   the laws of the State of Delaware,  without  reference to its
                   conflicts of law provisions.

                   9.5.2 The  Company,  BSD and the  Purchasers  hereby agree to
                   submit to the exclusive jurisdiction of the courts located in
                   the State of Delaware and hereby waive, to the fullest extent
                   permitted by law, any  objection  based on venue or forum non
                   conveniens with respect to any action instituted therein, and
                   agree that any dispute concerning the conduct of any party in
                   connection  with this  Agreement or otherwise  shall be heard
                   only in the federal courts described above.

                   9.5.3 The  Company  and BSD and the  Purchasers  each  hereby
                   waive  personal  service of any and all  process  upon it and
                   consent  that all such service of process may be made by hand
                   delivery or mail to the Company and BSD and the Purchasers at
                   the addresses set forth in, and in accordance  with,  Section
                   9.4 of  this  Agreement.  Each  of the  Company,  BSD and the
                   Purchasers hereby consent to service of process as aforesaid.

                   Section  9.6  Binding  upon  Successors  and  Assigns.   This
Agreement is personal to each of the parties and may not be assigned without the
written consent of the other parties; provided,  however, that Oracle and Manker
shall be permitted to assign their rights under this  Agreement to any entity in
which  both are either  partners,  members or  stockholders  for the  purpose of
holding  the  Shares  owned  by  them,  in  which  case  all  references  to the
"Purchasers" shall be deemed references to such entity.

                   Section 9.7 Severability. If any provision of this Agreement,
or the application thereof,  shall for any reason or to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall continue in full force and effect and in
no way be affected, impaired or invalidated.

                   Section 9.8 Entire Agreement.  This Agreement,  including the
Schedules  and  Exhibits   referenced  herein,  and  the  other  agreements  and
instruments  referenced herein constitute the entire understanding and agreement
of the parties  with respect to the subject  matter  hereof and  supersedes  all
prior agreements and understandings.

                   Section  9.9 Other  Remedies.  Except as  otherwise  provided
herein,  any and all remedies herein  expressly  conferred upon a party shall be
deemed cumulative with and not exclusive of any other remedy conferred hereby or
by law, or in equity on such party, and the exercise of any one remedy shall not
preclude the exercise of any other.

                   Section 9.10 Amendment and Waivers.  Any term or provision of
this Agreement may be amended,  and the observance of any term of this Agreement


                                       49
<PAGE>

may  be  waived  (either  generally  or  in a  particular  instance  and  either
retroactively or prospectively)  only by a writing signed by all parties hereto.
The waiver by a party of any breach hereof or default in the performance  hereof
shall  not be  deemed  to  constitute  a  waiver  of any  other  default  or any
succeeding breach or default.  This Agreement may not be amended or supplemented
by any party  hereto  except  pursuant  to a written  amendment  executed by all
parties.

                   Section  9.11 No Waiver.  The failure of any party to enforce
any of the provisions  hereof shall not be construed to be a waiver of the right
of such party thereafter to enforce such provisions.

                   Section  9.12  Construction  of  Agreement;   Knowledge.  For
purposes of this Agreement,  the term  "knowledge,"  when used in reference to a
corporation  means  the  actual  knowledge  of the  executive  officers  of such
corporation  after such  officers  shall have made inquiry that is customary and
appropriate under the circumstances to which reference is made, and when used in
reference to an individual  means the actual  knowledge of such individual after
the individual  shall have made inquiry that is customary and appropriate  under
the circumstances to which reference is made.


                   Section 9.13 Counterparts.  This Agreement may be executed in
any number of  counterparts,  each of which  shall be an original as against any
party whose signature appears thereon and all of which together shall constitute
one and the same  instrument.  This  Agreement  shall become binding when one or
more  counterparts  hereof,  individually  or  taken  together,  shall  bear the
signatures of all of the parties reflected hereon as signatories.

                   Section 9.14 No Third Party Beneficiary. Nothing expressed or
implied in this Agreement is intended, or shall be construed,  to confer upon or
give any  person  other than the  parties  hereto  and their  respective  heirs,
personal  representatives,  legal  representatives,   successors  and  permitted
assigns, any rights or remedies under or by reason of this Agreement.

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

                                                 ORACLE STRATEGIC PARTNERS, L.P.



                                                 By:    ________________________
                                                        Larry Feinberg
                                                        Managing General Partner

                                 THERMATRX, INC.


                                                  By:   ________________________
                                                  Name: ________________________
                                                  Title:________________________

                                       50
<PAGE>
                                                  BSD MEDICAL CORPORATION


                                                  By:   ________________________
                                                  Name: ________________________
                                                  Title:________________________

                                                  ______________________________
                                                  CHARLES MANKER

                                       51
<PAGE>


                         INDEX OF EXHIBITS AND SCHEDULES



                                    EXHIBITS

Exhibit A                                   BPH Business Assets

Exhibit B                                   List of Purchasers and Amounts 
                                            thereof

Exhibit C                                   Certificate of Designation

Exhibit D                                   Bowman License

Exhibit E                                   Non-Competition Agreement

Exhibit F                                   Consulting Agreement

Exhibit G                                   Supply Agreement

Exhibit H                                   Company Operating Plan



<PAGE>

                                    Exhibit A



BSD shall transfer to the Company the business and all of its assets,  excluding
any  inventory  and capital  equipment,  whether real or  personal,  tangible or
intangible,  relating to the treatment of any conditions or diseases  (excluding
malignant cancers) of the prostate gland, including,  but not limited to, benign
prostatic  hyperplasia (BPH) and prostatitis (the "BPH Business  Assets").  Such
BPH Business Assets include,  but are not limited to the following (with respect
to items 1 - 4 below, where there is an overlap with cancer therapy materials or
products,  then each party shall have the right to use or duplicate  for its own
use such  materials,  and such  duplication  and use  shall be at the  Company's
expense):

1.       Sales and Marketing Assets

         Although  the  following  shall be the  property  of the  Company,  the
Company shall not, unless  permitted by written  agreement,  use,  distribute or
otherwise employ BSD's name or logo.

         a) all  advertising,  sales and  promotional  materials  including film
            negatives,   layout  sheets,  or  other  materials  used  to  create
            brochures or literature for the BSD 50 system or BPH related systems

         b) documents, files, books and records, training manuals, instructions,
            or other similar materials, in whatever form or storage medium.

         c) all sales contacts,  distribution lists, account manifests, sales or
            accounting  software or data,  invoice  copies and any and all other
            information related to past or contemplated sales of the Product (as
            hereinafter defined).

2.       Manufacturing and Design Assets

         Without  limitation,  BSD shall  provide the Company  with the complete
ability to manufacture,  design, or redesign the Product, including at least the
following:

         a) all  drawings,   circuit  board   layouts,   mechanical   and  other
            specification sheets

         b) all  production  or design  know-how  related  to any  aspect of the
            applicator, thermistors, or generator/control box; the Company shall
            have the right to receive  training  from  relevant BSD personnel in
            any aspect of the manufacture or design of the Product, however, BSD
            shall be reimbursed for all direct expenses related to such training


<PAGE>

         c) component source lists

         d) all  information  necessary  for  the  complete  manufacture  of the
            Product  including  relevant FDA control  procedure manuals or other
            documentation  necessary to meet relevant  regulatory  standards for
            manufacture of the Product

         e) all  FDA  filings  related  to  the  Product,  including  production
            tracking materials or documentation

         f) all FDA requirements  manuals or information  related to the Product
            or its manufacture

         g) all Product or BPH Business Asset related software including,  EPROM
            codes or EPROM  programming  capability  and any assets  required to
            generate appropriately programmed Product related components

For purposes of this Agreement,  the term "Product" shall  collectively mean any
of the following items, together or individually (i) the microwave generator and
control box, including  software,  temperature control module thermistor (probe)
interfaces, or other "Bowman" related technology; (ii) the applicator, including
the antenna and probe sheaths; (iii) the "Bowman" thermistors (probes); and (iv)
any  related  hardware  or  software  required  to  administer  a BPH  microwave
treatment  including  output  related  software  or other data  collection/input
means.

3.       Regulatory Assets

         a) all FDA  filings  and  approvals  related to the  Product  including
            sub-components

         b) all IDE materials and files

         c) all other  Product  information  related to FDA actions,  approvals,
            sanctions,  either past or contemplated  which exists as know-how or
            files.

4.       Other Assets

         All Product related assets, including, but not limited to:

         a) data and scientific materials


<PAGE>

         b) sub-component specifications or test sheets

         c) inbound and outbound QC and testing procedures manuals and know-how

         d) information  concerning  testing and manufacturing  tools,  devices,
            jigs, or other equipment.

While all of the above assets shall be owned by the Company, the Company may, at
its discretion,  leave such property at BSD so long as the Company desires.  The
Company shall forego no rights as a result of such action.


5.       Licenses and Intellectual Property

         a) BSD grants to the Company an exclusive  sublicense  under the Bowman
            Agreement  of all of its  rights to the  Bowman  probe  (thermistor)
            technology, which sublicense may be terminated by the Company at any
            time.

         b) BSD grants to the Company a license which shall be exclusive  except
            for licenses  existing on the date hereof,  for the treatment of any
            conditions or diseases (excluding malignant cancers) of the prostate
            gland,  including,  but not limited to, benign prostatic hyperplasia
            (BPH) and  prostatitis  only,  under all United  States and  foreign
            patents,  patent rights,  copyrights,  registered  and  unregistered
            trademarks,  trade  names,  servicemarks,  service  names,  designs,
            technology,   know-how,   processes,   trade  secrets,   inventions,
            proprietary data, formulae, research and development data, and other
            intangible property, and any and all applications for the foregoing,
            relating  to or  used  in or  useful  to the  BPH  Business  Assets,
            including,  but not limited to U.S. Patents 4,448,198 and 4,658,836.
            This exclusive  license  includes the right, but not the obligation,
            to seek a remedy for the violation of any of the foregoing rights in
            the licensed  area by any third party.  BSD shall not have the right
            to seek a remedy for the violation of any of the foregoing rights in
            the  licensed  area by any  third  party  until  such  time that the
            Company declines to exercise its rights to do so.

         c) BSD assigns to the Company all of its right,  title, and interest in
            and to U.S. Patents 4,967,765; 5,220,927; 5,249,585; and 5,334,435.

<PAGE>

                                    Exhibit B

SECTION 1.1-Initial Closing

         NAME                       PRICE                     NUMBER OF SHARES

Oracle                            $3,000,000                  35,000 Preferred

Manker                               250,000                  11,000 Preferred

SECTION 2.2-Milestone or Option Closing

         NAME                       PRICE                     NUMBER OF SHARES

Oracle                              $3,000,000                         *

Manker                                 250,000                         *

Capitalization Table

                        Initial Closing            Milestone or Option Closing
Stockholder:        Percentage Ownership*            Percentage Ownership   *
         
         
         
            
BSD                           54%                           30%

Oracle                        35%                           45%

Manker                        11%                           12.5%

Management Stock
Option Plan                    *                            12.5%

------------------
* The  Capitalization  Table  reflects  the  ownership of the Company on a fully
diluted basis,  assuming conversion of the Preferred Stock into Common Stock and
the issuance and conversion of all management options. Such additional shares of
Preferred Stock will be issued at the Milestone or Option  Closing,  as the case
may be, in order to give effect to percentages  reflected in the  Capitalization
Table. Shares of Common Stock ("Option Shares") representing twelve and one half
(12.5%)  percent of the Milestone  Closing  percentage  ownership of the Company
will be reserved for issuance pursuant to the Company's  management stock option
plan and issued  pursuant to Board  approval.  The "Initial  Closing  Percentage
Ownership" column excludes Option Shares.


<PAGE>


                     AMENDMENT TO STOCK PURCHASE AGREEMENT

                  AMENDMENT TO STOCK PURCHASE AGREEMENT by and among BSD Medical
Corporation  ("BSD"),  Thermatrx,  Inc. (the "Company") and Thermatrx Investment
Holdings LLC  (assignee of Oracle  Strategic  Partners,  L.P.) dated October 31,
1997 (the "Stock Purchase Agreement").  Capitalized terms used herein defined in
the Stock  Purchase  Agreement  shall have the meanings set forth therein unless
otherwise defined herein.

                  The parties hereby agree,  effective as of the date hereof, to
amend the Stock Purchase Agreement as follows:

                  1. The  Certificate of  Designation  set forth as Exhibit C to
the  Stock  Purchase  Agreement  is hereby  replaced  in its  entirety  with the
Restated Certificate of Incorporation  attached hereto and all references to the
Certificate  of  Designation  in the Stock  Purchase  Agreement  shall be deemed
references to the Restated Certificate of Incorporation.

                  2. Section 6.1 (q) on page 33 of the Stock Purchase  Agreement
shall be amended to read as follows: "(q) Company License to BSD. BSD shall have
received a perpetual  royalty  free  license from the Company for the use of the
technology  being  transferred by BSD to the Company  relating to the treatment,
excluding  the Business of the  Company,  by heat therapy of malignant or benign
diseases (the "Business of BSD"), in form and substance reasonably  satisfactory
to BSD, the Company and the Purchasers."
                 

                  3. The following  subparagraph (d) shall be added to Section 5
of Exhibit A of the Stock Purchase Agreement:


                  "(d) BSD assigns to the Company the  invention  identified  by
                  BSD file  #B6366  CIP1."  Except  as  specifically  set  forth
                  herein,  the Stock  Purchase  Agreement  shall  remain in full
                  force and effect without modification.


                  IN WITNESS WHEREOF,  the parties have caused this Amendment to
be executed on the 13th day of November, 1997.


                                              BSD Medical Corporation



                                              By:  /s/   Paul F. Turner
                                                   ------------------------
                                                   Paul Turner
                                                   President and Chairman


                                              Thermatrx, Inc.



                                              By:  /s/   Charles Manker
                                                   ------------------------
                                                   Charles Manker
                                                   President


                                              Thermatrx Investment Holdings LLC

                                              By:  Oracle Strategic 
                                                   Partners L.P. as Manager

                                              By:  /s/   Larry Feinberg
                                                   ------------------------
                                                   Larry Feinberg
                                                   Manager