Document:

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                                                                     EXHIBIT 4.2

                               INSMED INCORPORATED

                            2000 STOCK INCENTIVE PLAN
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                               INSMED INCORPORATED
                            2000 STOCK INCENTIVE PLAN

ARTICLE I DEFINITIONS..........................................................4

   1.01. Acquiring Person......................................................4
   1.02. Administrator.........................................................4
   1.03. Affiliate.............................................................4
   1.04. Agreement.............................................................4
   1.05. Associate.............................................................4
   1.06. Board.................................................................4
   1.07. Change in Control.....................................................5
   1.08. Code..................................................................5
   1.09. Committee.............................................................5
   1.10. Common Stock..........................................................6
   1.11. Company...............................................................6
   1.12. Continuing Director...................................................6
   1.13. Control Affiliate.....................................................6
   1.14. Exchange Act..........................................................6
   1.15. Fair Market Value.....................................................6
   1.16. Option................................................................6
   1.17. Participant...........................................................7
   1.18. Performance Shares....................................................7
   1.19. Person................................................................7
   1.20. Plan..................................................................7
   1.21. Related Entity........................................................7
   1.22. Rule 16b-3............................................................7
   1.23. Stock Award...........................................................8

ARTICLE II PURPOSES............................................................8

ARTICLE III ADMINISTRATION.....................................................8

ARTICLE IV ELIGIBILITY.........................................................9

ARTICLE V COMMON STOCK SUBJECT TO PLAN.........................................9

   5.01. Common Stock Issued...................................................9
   5.02. Aggregate Limit......................................................10
   5.03. Reallocation of Shares...............................................10

ARTICLE VI OPTIONS............................................................10

   6.01. Award................................................................10
   6.02. Option Price.........................................................11
   6.03. Maximum Option Period................................................11

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   6.04. Nontransferability...................................................11
   6.05. Transferable Options.................................................11
   6.06. Status as Employee or Service Provider...............................12
   6.07. Exercise.............................................................12
   6.08. Payment..............................................................12
   6.09. Shareholder Rights...................................................12
   6.10. Disposition of Shares................................................13

ARTICLE VII PERFORMANCE SHARE AWARDS..........................................13

   7.01. Award................................................................13
   7.02. Earning the Award....................................................13
   7.03. Payment..............................................................14
   7.04. Shareholder Rights...................................................14
   7.05. Nontransferability...................................................14
   7.06. Transferable Performance Shares......................................14
   7.07. Status as Employee or Service Provider...............................14

ARTICLE VIII STOCK AWARDS.....................................................15

   8.01. Award................................................................15
   8.02. Vesting..............................................................15
   8.03. Performance Objectives...............................................15
   8.04. Status as Employee or Service Provider...............................15
   8.05. Shareholder Rights...................................................16

ARTICLE IX ADJUSTMENT UPON CHANGE IN COMMON STOCK.............................16

ARTICLE X COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES...............17

ARTICLE XI GENERAL PROVISIONS.................................................18

   11.01. Effect on Employment and Service....................................18
   11.02. Unfunded Plan.......................................................18
   11.03. Rules of Construction...............................................18

ARTICLE XII AMENDMENT.........................................................18

ARTICLE XIII DURATION OF PLAN.................................................19

ARTICLE XIV EFFECTIVE DATE OF PLAN............................................19

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                               INSMED INCORPORATED
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                                    ARTICLE I
                                   DEFINITIONS
                                   -----------

1.01.    Acquiring Person
         ----------------

         Acquiring Person means a Person who, considered alone or together with
all Control Affiliates and Associates of that Person, is or becomes directly or
indirectly the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of securities representing at least fifty percent (50%) of the Company's
then outstanding securities entitled to vote generally in the election of the
Board.

1.02.    Administrator
         -------------

         Administrator means the Board, the Committee, or any delegate of the
Committee that is appointed in accordance with Article III.

1.03.    Affiliate
         ---------

         Affiliate means any "parent corporation" or "subsidiary corporation"
(within the meaning of Section 424 of the Code) of the Company, including a
corporation that becomes an Affiliate after the adoption of this Plan.

1.04.    Agreement
         ---------

         Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Stock Award, an award of Performance Shares or an Option
granted to such Participant.

1.05.    Associate
         ---------

         Associate, with respect to any Person, is defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act. An Associate does not
include the Company or a majority-owned subsidiary of the Company.

1.06.    Board
         -----

         Board means the Board of Directors of the Company.

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1.07.    Change in Control
         -----------------

         Change in Control means (i) a Person is or becomes an Acquiring Person;
(ii) holders of the securities of the Company entitled to vote thereon approve
any agreement with a Person (or, if such approval is not required by applicable
law and is not solicited by the Company, the closing of such an agreement) that
involves the transfer of all or substantially all of the Company's total assets
on a consolidated basis, as last reported in the Company's consolidated
financial statements filed with the Securities and Exchange Commission; (iii)
holders of the securities of the Company entitled to vote thereon approve a
transaction (or, if such approval is not required by applicable law and is not
solicited by the Company, the closing of such a transaction) pursuant to which
the Company will undergo a merger, consolidation, or statutory share exchange
with a Person, regardless of whether the Company is intended to be the surviving
or resulting entity after the merger, consolidation, or statutory share
exchange, other than a transaction that results in the voting securities of the
          ----------
Company carrying the right to vote in elections of persons to the Board
outstanding immediately prior to the closing of the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the
Company's voting securities carrying the right to vote in elections of persons
to the Company's Board, or such securities of such surviving entity, outstanding
immediately after the closing of such transaction; (iv) the Continuing Directors
cease for any reason to constitute a majority of the Board; or (v) holders of
the securities of the Company entitled to vote thereon approve a plan of
complete liquidation of the Company or an agreement for the sale or liquidation
by the Company of substantially all of the Company's assets (or, if such
approval is not required by applicable law and is not solicited by the Company,
the commencement of actions constituting such a plan or the closing of such an
agreement).

1.08.    Code
         ----

         Code means the Internal Revenue Code of 1986, and any amendments
thereto.

1.09.    Committee
         ---------

         Committee means the Compensation Committee of the Board or, if the
Compensation Committee is not composed solely of two or more persons who satisfy
the "non-employee director" and "outside director" requirements of Rule 16b-3
and Section 162(m) of the Code, respectively, Committee means such other

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                              INSMED INCORPORATED
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committee of the Board composed  solely of two or more  individuals  who satisfy
such criteria.

1.10.    Common Stock
         ------------

         Common Stock means the common stock of the Company.

1.11.    Company
         -------

         Company means Insmed Incorporated.

1.12.    Continuing Director
         -------------------

         Continuing Director means any member of the Board, while a member of
the Board and (i) who was a member of the Board immediately following the
closing of the transactions contemplated by the Form S-4 filed by the Company
with the Securities and Exchange Commission in 2000, or (ii) whose nomination
for or election to the Board was recommended or approved by a majority of the
Continuing Directors.

1.13.    Control Affiliate
         -----------------

         Control Affiliate with respect to any Person, means an affiliate as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.

1.14.    Exchange Act
         ------------

         Exchange Act means the Securities Exchange Act of 1934, as amended.

1.15.    Fair Market Value
         -----------------

         Fair Market Value means, on any given date, the reported "closing"
price of a share of Common Stock on the primary exchange on which shares of
Common Stock are listed. If, on any given date, no share of Common Stock is
traded on an established stock exchange, then Fair Market Value shall be
determined with reference to the next preceding day that the Common Stock was so
traded.

1.16.    Option
         ------

         Option means a stock option granted under this Plan that entitles the
holder to purchase from the Company a stated number of shares of Common Stock at
the price set forth in an Agreement. Where capitalized, the word "Option" is not
intended to

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include any option granted by an Affiliate as to which the Company has assumed
the Affiliate's obligation to deliver Common Stock.

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                               INSMED INCORPORATED
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1.17.    Participant
         -----------

         Participant means an employee of the Company or an Affiliate, a member
of the Board (whether or not such Board member is employed by the Company or an
Affiliate), or any non-employee advisor or service provider of the Company or an
Affiliate, who satisfies the requirements of Article IV and is selected by the
Administrator to receive, a Stock Award, an Option, a Performance Share, or a
combination thereof.

1.18.    Performance Shares
         ------------------

         Performance Shares means an award, in the amount determined by the
Administrator, stated with reference to a specified number of shares of Common
Stock, that in accordance with the terms of an Agreement entitles the holder to
receive a cash payment or shares of Common Stock or a combination thereof.

1.19.    Person
         ------

         Person means any human being, firm, corporation, partnership, or other
entity. "Person" also includes any human being, firm, corporation, partnership,
or other entity as defined in sections 13(d)(3) and 14(d)(2) of the Exchange
Act. The term "Person" does not include the Company or any Related Entity, and
the term Person does not include any employee-benefit plan maintained by the
Company or any Related Entity, and any person or entity organized, appointed, or
established by the Company or any Related Entity for or pursuant to the terms of
any such employee-benefit plan, unless the Board determines that such an
employee-benefit plan or such person or entity is a "Person".

1.20.    Plan
         ----

         Plan means the Insmed Incorporated 2000 Stock Incentive Plan.

1.21.    Related Entity
         --------------

         Related Entity means any entity that is part of a controlled group of
corporations or is under common control with the Company within the meaning of
Sections 1563(a), 414(b) or 414(c) of the Code.

1.22.    Rule 16b-3
         ----------

         Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act.

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1.23.    Stock Award
         -----------

         Stock Award means shares of Common Stock awarded to a Participant under
Article VIII.

                                   ARTICLE II
                                    PURPOSES
                                    --------

         The Plan is intended to assist the Company and its Affiliates in
recruiting and retaining individuals or entities with ability and initiative by
enabling such persons to participate in the future success of the Company and
its Affiliates and to associate their interests with those of the Company and
its shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive stock options") and Options
not so qualifying, and the grant of Stock Awards and Performance Shares, and to
permit issuance of shares of Common Stock on exercise of options granted by an
Affiliate if the Company has assumed the obligations of the Affiliate under
those options, all in accordance with the Plan and procedures that may be
established by the Administrator. No Option that is intended to be an incentive
stock option shall be invalid for failure to qualify as an incentive stock
option. The proceeds received by the Company from the sale of shares of Common
Stock pursuant to this Plan shall be used for general corporate purposes.

                                   ARTICLE III
                                 ADMINISTRATION
                                 --------------

         The Plan shall be administered by the Administrator. The Administrator
shall have authority to grant Stock Awards, Performance Shares, and Options upon
such terms (not inconsistent with the provisions of this Plan), as the
Administrator may consider appropriate. Such terms may include conditions (in
addition to those contained in this Plan), on the exercisability of all or any
part of an Option or on the transferability or forfeitability of a Stock Award
or an award of Performance Shares. Notwithstanding any such conditions, the
Administrator may, in its discretion, (i) accelerate the time at which any
Option may be exercised, or the time at which a Stock Award may become
transferable or nonforfeitable, or the time at which an award of Performance
Shares may be settled, including without limitation, providing for any of the
foregoing upon a Change in Control, or (ii) suspend the forfeiture of

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any award made under this Plan. In addition, the Administrator shall have
complete authority to interpret all provisions of this Plan; to prescribe the
form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator or in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Committee shall be liable for any act done
in good faith with respect to this Plan or any Agreement, Option, Stock Award or
award of Performance Shares. All expenses of administering this Plan shall be
borne by the Company.

         The Committee, in its discretion, may delegate to one or more officers
of the Company all or part of the Committee's authority and duties with respect
to grants and awards to individuals who are not subject to the reporting and
other provisions of Section 16 of the Exchange Act. The Committee may revoke or
amend the terms of a delegation at any time but such action shall not invalidate
any prior actions of the Committee's delegate or delegates that were consistent
with the terms of the Plan.

                                   ARTICLE IV
                                   ELIGIBILITY
                                   -----------

         Any employee of the Company or an Affiliate, any member of the Board
(whether or not such Board member is employed by the Company or an Affiliate),
and any other Person who provides services to the Company or an Affiliate is
eligible to participate in this Plan if the Administrator, in its sole
discretion, determines that such Person has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Company or
an Affiliate.

                                    ARTICLE V
                          COMMON STOCK SUBJECT TO PLAN
                          ----------------------------

5.01.    Common Stock Issued
         -------------------

         Upon the award of Common Stock pursuant to a Stock Award or in
settlement of a Performance Share award, the Company may issue Common Stock

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from its authorized but unissued Common Stock. Upon the exercise of any Option
or an option granted by an Affiliate of the Company if the Company has assumed
the obligations of the Affiliate under those options, the Company may deliver to
the Participant (or the Participant's broker if the Participant so directs),
shares of Common Stock from its authorized but unissued Common Stock.

5.02.    Aggregate Limit
         ---------------

         The maximum aggregate number of shares of Common Stock that may be
issued under this Plan as of the date it is adopted by the Board is 12,000,000
shares. That maximum number of shares will be increased each January 1 during
the term of the Plan by a number of shares equal to 1.0% of the number of shares
of Common Stock outstanding on the preceding December 31. In no event, however,
may the annual increases cause the maximum number of shares that may be issued
under the Plan to exceed 25,000,000 shares of Common Stock. The maximum
aggregate number of shares of Common Stock that may be issued under this Plan
shall be subject to adjustment as provided in Article IX.

5.03.    Reallocation of Shares
         ----------------------

         If an Option or an option granted by an Affiliate as to which the
Company has assumed the Affiliate's obligation to deliver Common Stock is
terminated, in whole or in part, for any reason other than its exercise the
number of shares allocated to the Option, option, or portion thereof may be
reallocated to other Options, Performance Shares, and Stock Awards to be granted
under this Plan. If an award of Performance Shares is terminated, in whole or in
part, for any reason other than its settlement with shares of Common Stock, the
number of shares allocated to the Performance Share award or portion thereof may
be reallocated to other Options, Performance Shares and Stock Awards to be
granted under this Plan. If a Stock Award is forfeited, in whole or in part, for
any reason, the number of shares of Common Stock allocated to the Stock Award or
portion thereof may be reallocated to other Options, Performance Shares, and
Stock Awards to be granted under this Plan.

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                                   ARTICLE VI
                                     OPTIONS
                                     -------

6.01.    Award
         -----

         In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an Option is to be granted and will specify
the number of shares of Common Stock covered by such awards; provided, however,
that no Participant may be granted Options in any calendar year covering more
than 1,000,000 shares of Common Stock.

6.02.    Option Price
         ------------

         The price per share for shares of Common Stock purchased on the
exercise of an Option shall be determined by the Administrator on the date of
grant, but shall not be less than the Fair Market Value on the date the Option
is granted in the case of an Option intended to qualify as an incentive stock
option.

6.03.    Maximum Option Period
         ---------------------

         The maximum period in which an Option may be exercised shall be
determined by the Administrator on the date of grant, except that no Option that
is an incentive stock option shall be exercisable after the expiration of ten
years from the date such Option was granted. The terms of any Option that is an
incentive stock option may provide that it is exercisable for a period less than
such maximum period.

6.04.    Nontransferability
         ------------------

         Except as provided in Section 6.05, each Option granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution. In the event of any transfer of an Option (by the Participant or
his transferee), the Option must be transferred to the same person or persons or
entity or entities. Except as provided in Section 6.05, during the lifetime of
the Participant to whom the Option is granted, the Option may be exercised only
by the Participant. No right or interest of a Participant in any Option shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.

6.05.    Transferable Options
         --------------------

         Section 6.04 to the contrary notwithstanding, if the Agreement
provides, an Option that is not an incentive stock option may be transferred by
a Participant to the Participant's spouse, children or grandchildren, to trusts
for the benefit of such persons, or to a partnership in which those persons are
the only partners, or to such other persons or entities permitted under Rule
16b-3 as in effect from time to time on such terms and conditions as may be
permitted under Rule 16b-3, as in effect from time to time. The holder of an
Option transferred pursuant to this Section shall be

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bound by the same terms and conditions that governed the Option during the
period that it was held by the Participant; provided, however, that such
transferee may not transfer the Option except by will or the laws of descent and
distribution.

6.06.    Status as Employee or Service Provider
         --------------------------------------

         For purposes of determining the applicability of Section 422 of the
Code (relating to incentive stock options), or in the event that the terms of
any Option provide that it may be exercised only during employment or service or
within a specified period of time after termination of employment or service,
the Administrator may decide to what extent leaves of absence for governmental
or military service, illness, temporary disability, or other reasons shall not
be deemed interruptions of continuous employment or service.

6.07.    Exercise
         --------

         Subject to the provisions of this Plan and the applicable Agreement, an
Option may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Administrator shall
determine; provided, however, that incentive stock options (granted under the
Plan and all plans of the Company and its Affiliates) may not be first
exercisable in a calendar year for shares of Common Stock having a Fair Market
Value (determined as of the date an Option is granted) exceeding $100,000. An
Option granted under this Plan may be exercised with respect to any number of
whole shares less than the full number for which the Option could be exercised.
A partial exercise of an Option shall not affect the right to exercise the
Option from time to time in accordance with this Plan and the applicable
Agreement with respect to the remaining shares subject to the Option.

6.08.    Payment
         -------

         Subject to rules established by the Administrator and unless otherwise
provided in an Agreement, payment of all or part of the Option price may be made
in cash (including cash paid by a broker pursuant to a Participant's
instructions to sell shares subject to the Option and deliver the exercise
price), a cash equivalent acceptable to the Administrator, or with shares of
Common Stock. If shares of Common Stock are used to pay all or part of the
Option price, the sum of the cash and cash equivalent and the Fair Market Value
(determined as of the day preceding the date of exercise) of the shares
surrendered must not be less than the Option price of the shares for which the
Option is being exercised.

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6.09.    Shareholder Rights
         ------------------

         No Participant shall have any rights as a shareholder with respect to
shares subject to his Option until the date of exercise of such Option.

6.10.    Disposition of Shares
         ---------------------

         A Participant shall notify the Company of any sale or other disposition
of shares acquired pursuant to an Option that was an incentive stock option if
such sale or disposition occurs (i) within two years of the grant of an Option
or (ii) within one year of the issuance of shares to the Participant. Such
notice shall be in writing and directed to the Secretary of the Company.

                                   ARTICLE VII
                            PERFORMANCE SHARE AWARDS
                            ------------------------

7.01.    Award
         -----

         In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an award of Performance Shares is to be made
and will specify the number of shares covered by such awards; provided, however,
that no Participant may receive an award of Performance Shares in any calendar
year for more than 500,000 shares of Common Stock.

7.02.    Earning the Award
         -----------------

         The Administrator, on the date of the grant of an award, shall
prescribe that the Performance Shares, or portion thereof, will be earned, and
the Participant will be entitled to receive payment pursuant to the award of
Performance Shares, only upon the satisfaction by the Company, an Affiliate or
the Participant of performance objectives and such other criteria as may be
prescribed by the Administrator for the performance measurement period. The
performance objectives may be based on Fair Market Value, Common Stock price
appreciation, gross revenues, operating profit, or net earnings before or after
taxes, return on equity, earnings per share, total earnings, earnings growth,
return on capital, return on assets, return on sales, cash flow per share, book
value per share, market share, economic value added, market value added,
productivity, level of expenses, new product development, peer group comparisons
of any of the foregoing, or other measures as the Administrator may select. No
payments will be made with respect to Performance Shares unless, and then only
to the extent that, the Administrator certifies that such objectives have been
achieved.

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7.03.    Payment
         -------

         In the discretion of the Administrator, the amount payable when an
award of Performance Shares is earned may be settled in cash, by the issuance of
shares of Common Stock, or a combination thereof.

7.04.    Shareholder Rights
         ------------------

         No Participant shall, as a result of receiving an award of Performance
Shares, have any rights as a shareholder until (and then only to the extent
that) the award of Performance Shares is earned and settled in shares of Common
Stock. After an award of Performance Shares is earned and settled in shares, a
Participant will have all the rights of a shareholder as described in Section
8.05.

7.05.    Nontransferability
         ------------------

         Except as provided in Section 7.06, Performance Shares granted under
this Plan shall be nontransferable except by will or by the laws of descent and
distribution. No right or interest of a Participant in any Performance Shares
shall be liable for, or subject to, any lien, obligation, or liability of such
Participant.

7.06.    Transferable Performance Shares
         -------------------------------

         Section 7.05 to the contrary notwithstanding, if the Agreement
provides, an award of Performance Shares may be transferred by a Participant to
the Participant's spouse, children or grandchildren, to trusts for the benefit
of such persons, to a partnership in which such persons are the only partners,
or to such other persons or entities permitted under Rule 16b-3 as in effect
from time to time on such terms and conditions as may be permitted under Rule
16b-3 as in effect from time to time. The holder of Performance Shares
transferred pursuant to this Section shall be bound by the same terms and
conditions that governed the Performance Shares during the period that they were
held by the Participant; provided, however that such transferee may not transfer
Performance Shares except by will or the laws of descent and distribution.

7.07.    Status as Employee or Service Provider
         --------------------------------------

         In the event that the terms of any Performance Share award provide that
no payment will be made unless the Participant completes a stated period of
employment or service, the Administrator may decide to what extent leaves of

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absence for government or military service, illness, temporary disability, or
other reasons shall not be deemed interruptions of continuous employment or
service.

                                  ARTICLE VIII
                                  STOCK AWARDS
                                  ------------

8.01.    Award
         -----

         In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom a Stock Award is to be made and will specify
the number of shares covered by such awards; provided, however, that no
Participant may receive Stock Awards in any calendar year for more than 500,000
shares.

8.02.    Vesting
         -------

         The Administrator, on the date of the award, may prescribe that a
Participant's rights in a Stock Award shall be forfeitable or otherwise
restricted for a period of time or subject to such conditions as may be set
forth in the Agreement.

8.03.    Performance Objectives
         ----------------------

         In accordance with Section 8.02, the Administrator may prescribe that
Stock Awards will become vested or transferable or both based on objectives
stated with respect to the Participant's continued employment or service with
the Company or an Affiliate for a specified period, or the Company's, an
Affiliate's, or the Participant's achievement of performance related objectives
such as those measured by Fair Market Value, Common Stock stock price
appreciation, gross, operating, or net earnings before or after taxes, return on
equity, earnings per share, total earnings, earnings growth, return on capital,
return on assets, return on sales, cash flow per share, book value per share,
market share, economic value added, market value added, productivity, level of
expenses, new product development, peer group comparisons of any of the
foregoing, or other measures the Administrator may select. If the Administrator,
on the date of award, prescribes that a Stock Award shall become nonforfeitable
and transferable only upon the attainment of performance objectives, the shares
subject to such Stock Award shall become nonforfeitable and transferable only to
the extent that the Administrator certifies that such objectives have been
achieved.

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8.04.    Status as Employee or Service Provider
         --------------------------------------

         In the event that the terms of any Stock Award provide that shares may
become transferable and nonforfeitable thereunder only after completion of a
specified period of employment or service, the Administrator may decide in each
case to what extent leaves of absence for governmental or military service,
illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment or service.

8.05.    Shareholder Rights
         ------------------

         Prior to their forfeiture (in accordance with the applicable Agreement
and while the shares of Common Stock granted pursuant to the Stock Award may be
forfeited or are nontransferable), a Participant will have all rights of a
shareholder with respect to a Stock Award, including the right to receive
dividends and vote the shares; provided, however, that during such period (i) a
Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of shares granted pursuant to a Stock Award, (ii) the Company shall
retain custody of the certificates evidencing shares granted pursuant to a Stock
Award, and (iii) the Participant will deliver to the Company a stock power,
endorsed in blank, with respect to each Stock Award. The limitations set forth
in the preceding sentence shall not apply after the shares granted under the
Stock Award are transferable and are no longer forfeitable.

                                   ARTICLE IX
                     ADJUSTMENT UPON CHANGE IN COMMON STOCK
                     --------------------------------------

         The maximum number of shares as to which Options, Performance Shares,
and Stock Awards may be granted pursuant to this Plan; the terms of outstanding
Stock Awards, Options, and Performance Shares; and the per individual
limitations on the number of shares of Common Stock for which Options,
Performance Shares, and Stock Awards may be granted shall be adjusted as the
Committee shall determine to be equitably required in the event that (i) the
Company (a) effects one or more stock dividends, stock split-ups, subdivisions
or consolidations of shares or (b) engages in a transaction to which Section 424
of the Code applies or, (ii) there occurs any other event which, in the judgment
of the Committee necessitates such action. Any determination made under this
Article IX by the Committee shall be final and conclusive.

         The issuance by the Company of stock of any class, or securities
convertible into stock of any class, for cash or property, or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon

                                      -17-
<PAGE>

                               INSMED INCORPORATED
                            2000 STOCK INCENTIVE PLAN

conversion of stock or obligations of the Company convertible into such stock or
other securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the maximum number of shares as to which Options,
Performance Shares, and Stock Awards may be granted; the per individual
limitations on the number of shares for which Options, Performance Shares, and
Stock Awards may be granted; or the terms of outstanding Stock Awards, Options,
or Performance Shares.

         The Board or Committee may make Stock Awards and may grant Options and
Performance Shares in substitution for performance shares, phantom shares, stock
awards, stock options, stock appreciation rights, or similar awards held by an
individual who becomes an employee or service provider of the Company or an
Affiliate in connection with a transaction described in the first paragraph of
this Article IX. Notwithstanding any provision of the Plan (other than the
limitation of Section 5.02), the terms of such substituted Stock Awards, Option
or Performance Shares shall be as the Board or Committee, in its discretion,
determines is appropriate.

                                    ARTICLE X
                       COMPLIANCE WITH LAW AND APPROVAL OF
                                REGULATORY BODIES
                                -----------------

         No Option shall be exercisable, no shares of Common Stock shall be
issued, no certificates for shares of Common Stock shall be delivered, and no
payment shall be made under this Plan except in compliance with all applicable
federal and state laws and regulations (including, without limitation,
withholding tax requirements), any listing agreement to which the Company is a
party, and the rules of all domestic stock exchanges on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any stock certificate issued to evidence
shares of Common Stock when a Stock Award is granted, Performance Share is
settled or for which an Option is exercised may bear such legends and statements
as the Administrator may deem advisable to assure compliance with federal and
state laws and regulations. No Option shall be exercisable, no Stock Award or
Performance Share shall be granted, no shares of Common Stock shall be issued,
no certificate for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan until the Company has obtained such consent or
approval as the Administrator may deem advisable from regulatory bodies having
jurisdiction over such matters.

                                      -18-
<PAGE>

                               INSMED INCORPORATED
                            2000 STOCK INCENTIVE PLAN

                                   ARTICLE XI
                               GENERAL PROVISIONS
                               ------------------

11.01.   Effect on Employment and Service
         --------------------------------

         Neither the adoption of this Plan, its operation, nor any documents
describing or referring to this Plan (or any part thereof), shall confer upon
any individual any right to continue in the employ or service of the Company or
an Affiliate or in any way affect any right and power of the Company or an
Affiliate to terminate the employment or service of any individual at any time
with or without assigning a reason therefor.

11.02.   Unfunded Plan
         -------------

         The Plan, insofar as it provides for grants, shall be unfunded, and the
Company shall not be required to segregate any assets that may at any time be
represented by grants under this Plan. Any liability of the Company to any
person with respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.

11.03.   Rules of Construction
         ---------------------

         Headings are given to the articles and sections of this Plan solely as
a convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.

                                   ARTICLE XII
                                    AMENDMENT
                                    ---------

         The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan. No amendment shall, without a
Participant's consent, adversely affect any rights of such Participant under any
Stock

                                      -19-
<PAGE>

                               INSMED INCORPORATED
                            2000 STOCK INCENTIVE PLAN

Award, Option, or Performance Share outstanding at the time such amendment is
made.

                                  ARTICLE XIII
                                DURATION OF PLAN
                                ----------------

         No Stock Award, Option or Performance Share, may be granted under this
Plan more than ten years after the earlier of the date that this Plan is adopted
by the Board or approved by the shareholders in accordance with Article XIV.
Stock Awards, Options, and Performance Shares granted before that date shall
remain valid in accordance with their terms.

                                   ARTICLE XIV
                             EFFECTIVE DATE OF PLAN
                             ----------------------

         Options, Stock Awards and Performance Shares may be granted under this
Plan upon its adoption by the Board; provided that, unless this Plan is approved
by a majority of the votes cast by the Company's shareholders, voting either in
person or by proxy, at a duly held shareholders' meeting at which a quorum is
present or by the written unanimous consent of the shareholders within twelve
months before or after this Plan is adopted by the Board, no Option shall be
exercisable, no Performance Share shall be settled, and no Stock Award shall be
effective.

                                      -20--42-

     AGREEMENT,  made  this 22 day of  March  2000,  by and  between  Manchester
Equipment Co., Inc., a Corporation organized and existing under and by virtue of
the laws of the State of New York,  with a  principal  place of  business at 160
Oser  Avenue,  Hauppauge,  New  York  11788  (hereinafter  referred  to  as  the
"Purchaser or  Manchester"),  Philip J. Ferranti,  an individual  residing at 16
Thoroughbred Trail, Penfield, New York 14526, and Kenneth Chellam, an individual
residing at 50 Timber Brook Lane, Penfield, New York 14526 (hereinafter referred
to as the "Seller" or "Sellers" and/or  "Shareholder",  or "Shareholders" and/or
"Members"), Texport Technology Group, Inc., a Corporation organized and existing
under the virtue of the laws of the State of New York, with a principal place of
business at 106 Dispatch  Drive,  East Rochester,  New York 14445,  and Learning
Technology Group, LLC, a Limited Liability Company, organized and existing under
the  virtue  of the laws of the  State of New York,  with a  principal  place of
business at 106 Dispatch  Drive,  East  Rochester,  New York 14445  (hereinafter
referred to as the "Companies").

                              W I T N E S S E T H:

     WHEREAS,  the Companies  are the owners and operators of a computer  sales,
service and repair  businesses  conducted at 106 Dispatch Drive, East Rochester,
New York 14445 and the Sellers and/or  Shareholders  are the sole  stockholders,
directors,  and chief  executive  officers  in the  Companies,  and as such they
represent  that they hold such capital stock without  charge or lien against it,
and

     WHEREAS, the Sellers and/or Shareholders have made certain  representations
and warranties as to the "Companies Assets". and "Companies Liabilities" as more
particularly defined in the within Agreement or Schedules annexed thereto, and

     WHEREAS,  the Purchaser  desires to purchase one hundred  (100%) percent of
the right,  title and interest of the Selling  Shareholders in the capital stock
of the Companies.

                                        1

<PAGE>

     Now, Therefore, in consideration of the sum of One ($1.00) Dollar and other
good and valuable  consideration,  receipt of which is hereby acknowledged,  and
the  mutual  agreements  hereinafter  set forth,  the  parties  hereto  agree as
follows:

     Definitions:  The following terms shall have the meaning hereby assigned in
this  Agreement  as well as any  other  Agreement  which is  collateral  hereto:

     "Assets" means all right,  title,  and interest in and to all of the assets
of the Companies or the Companies as set forth on Exhibit "A",  including all of
their (a) real property,  leaseholds and sub-lease holds therein,  improvements,
fixtures,  and  fittings  thereon,  and  easements,   rights-of-way,  and  other
appurtenants thereto (such as appurtenant rights in and to public streets),  (b)
tangible  personal  property  (such as  machinery,  equipment,  Inventory),  (c)
intellectual property,  goodwill associated therewith, the trade names, licenses
and  sub-licenses   granted  and  obtained  with  respect  thereto,  and  rights
thereunder,  remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions,  (d) leases,  sub-leases,
and  rights  thereunder,  (e)  agreements,   contracts,  indentures,  mortgages,
instruments,  security interests,  guaranties,  other similar arrangements,  and
rights thereunder,  (f) accounts, notes, and other receivables,  (g) securities,
if any, (h) claims, deposits, prepayments,  refunds, causes of action, choses in
action,  rights  of  recovery,  rights  of set off,  and  rights  of  recoupment
(including  any such item  relating  to the payment of Taxes),  (i)  franchises,
approvals, permits, licenses, order, registrations, certificates, variances, and
similar rights obtained from governments and governmental  agencies,  (j) books,
records, ledgers, files, documents, correspondence,  lists, plats, architectural
plans,  drawings,  and  specifications,   creative  materials,  advertising  and
promotional materials, studies, reports, and other printed or written materials,
(k) any cash, (l) the corporate charters,  qualifications to conduct business as
a foreign  corporation,  arrangements with registered agents relating to foreign
qualifications, taxpayer and other identifications numbers, seals, minute books,
stock transfer books, blank stock certificates,, and other documents relating to
the organization,  maintenance, and existence of the Companies as a corporation;
(m) any of the rights of the Companies under this Agreement.

                                        2

<PAGE>

         "Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations,  charges, complaints,  claims, demands, injunctions,  judgments,
orders, decrees, rulings,  damages, dues, penalties,  fines, costs, amounts paid
in settlement,  Liabilities,  obligations,  Taxes, liens, losses,  expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.

     "Affiliate"  has the  meaning  set forth in Rule  12b-2 of the  regulations
promulgated under the Securities Exchange Act.

     "Affiliated  Group" means any  affiliated  group within the meaning of Code
Sec.  1504(a) or any similar group  defined under a similar  provision of state,
local, or foreign law.

     "Basis" means any past or present fact,  situation,  circumstance,  status,
condition,  activity,  practice,  plan,  occurrence,  event,  incident,  action,
failure  to act,  or  transaction  that  forms or could  form the  basis for any
specified consequence.

     "Cash" means cash and cash equivalents (including marketable securities and
short term  investments)  calculated in accordance  with GAAP applied on a basis
consistent with the preparation of the Closing Date Financial Statements.

     "Closing" has the meaning set forth in Paragraph "THIRD" below.

     "Closing Date" has the meaning set forth in Paragraph "THIRD" below.

     "Closing Date Financial  Statements" means the financial  statements of the
Companies to be prepared by the Companies at its cost  reflecting  the financial
condition of the Companies as of the day prior to the Closing Date,  prepared in
accordance  with GAAP and in accordance with the Companies'  previous  financial
statements  and to be  delivered to the Parties  within  ninety (90) days of the
Closing Date and  accepted by the Parties in writing.  In the event of a dispute
regarding the Closing Date Financial  Statements which cannot be resolved by the
Parties  within  fifteen  (15) days of delivery of the  Closing  Date  Financial
Statements,  the  Closing  Date  Financial  Statements  shall be reviewed by the
Jericho,  New York office of KPMG Peat  Marwick,  which costs of review shall be
divided equally by the Sellers and the Companies.

         "Code" means the Internal Revenue Code of 1986, as amended.

                                        3

<PAGE>

     "Confidential  Information" means any information concerning the businesses
and affairs of the  Companies  that is not already  generally  available  to the
public.

     "Contingent  Payments" has the meaning set forth on Paragraph "SECOND:  B)"
below.

     "Controlled  Group of Corporations"  has the meaning set forth in Code Sec.
1563.

     "Employee  Benefit Plan" means the Coastal  Office  Products,  Inc.  Profit
Sharing Plan.

     "Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.

3(2)

     "Employee  Welfare  Benefit  Plan" has the  meaning set forth in ERISA Sec.
3(1).

     "Environmental,   Health,   and  Safety   Laws"  means  the   Comprehensive
Environmental  Response,  Compensation  and Liability Act of 1980,  the Resource
Conservation  and Recovery Act of 1976, and the  Occupational  Safety and Health
Act of 1970,  each as amended,  together with all other laws  (including  rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges  thereunder) of federal,  state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment,  public
health and safety,  or employee  health and safety,  including  laws relating to
emissions,   discharges,   releases,   or  threatened  releases  of  pollutants,
contaminants, or chemical,  industrial,  hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture,  processing,  distribution,  use, treatment, storage, disposal,
transport,  or handling of pollutants,  contaminants,  or chemical,  industrial,
hazardous, or toxic materials or wastes.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     "Extremely  Hazardous  Substance"  has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.

     "GAAP" means United States generally accepted  accounting  principles as in
effect from time to time.

     "Hart-Scott-Rodino Act" means the Hart-Scott-Rodino  Antitrust Improvements
Act of 1976, as amended.

     "Indemnified  Party" has the meaning set forth in the Indemnity  Agreements
annexed hereto.

                                        4

<PAGE>

         "Indemnifying  Party"  has  the  meaning  set  forth  in the  Indemnity
Agreements annexed hereto.

         "Intellectual  Property" means (a) all inventions,  (whether patentable
or  unpatentable  and  whether or not  reduced to  practice),  all  improvements
thereto, and all patents, patent applications, and patent disclosures,  together
with   all   re-issuance,   continuations,   continuations-in-part,   revisions,
extensions,  and  re-examinations  thereof,  (b) all trademarks,  service marks,
trade  dress,  logos,  trade  names,  and  corporate  names,  together  with all
translations,  adaptations,  derivations, and combinations thereof and including
all goodwill  associated  therewith,  and all applications,  registrations,  and
renewals in connection  therewith,  (c) all copyrightable works, all copyrights,
and all applications,  registrations,  and renewals in connection therewith, (d)
all mask works and all applications,  registrations,  and renewals in connection
therewith,   (e)  all  trade  secrets  and  confidential   business  information
(including ideas, research and development,  know-how,  formulas,  compositions,
manufacturing and production processes and techniques,  technical data, designs,
drawings,  specifications,   customer  and  supplier  lists,  pricing  and  cost
information,  and business and marketing plans and proposals),  (f) all computer
software (including data and related  documentation),  (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form or
medium).

         "Inventory" means all goods in process and finished goods, manufactured
and purchased parts and supplies and other items deemed  inventory in accordance
with GAAP in the operation of the Companies' business.

         "Knowledge" means actual knowledge after reasonable investigation.

         "Liabilities" means (a) all Liabilities of the Companies as recorded on
the 1999  balance  sheet,  and as adjusted  for the passage of time  through the
Closing  Date in  accordance  with past custom and  practice and in the ordinary
course of business  of the  Companies  and to be  recorded  on the Closing  Date
Financial  Statements,  and subject to the  representations  and  warranties  of
Seller and the Companies herein, (b) all obligations of the Companies under the

                                        5

<PAGE>
agreements,  contracts,  leases, licenses, and other arrangements referred to in
the  definition  of Assets  either (i) to  furnish  goods,  services,  and other
non-Cash  benefits to another  party after the Closing of (ii) to pay for goods,
services,  and other  non-Cash  benefits  that another  party will furnish to it
after the  Closing,  (c) any  Liability  of the  Companies  for unpaid Taxes for
periods  prior to the Closing  which were not due and payable  prior to Closing,
(d) any Liability or obligation under any insurance policy, health or medical or
life  insurance  plan of the Companies in effect as of the Closing Date,  costs,
amounts paid in  settlement,  losses,  expenses,  or otherwise  and whether such
indemnification is pursuant to any statute, charter documents, bylaw, agreement,
or otherwise,  any Liability of the Companies for costs and expenses incurred in
connection  with the Agreement and the  transactions  contemplated  hereby,  any
Liability or obligation of the Companies under this Agreement,  any Liability or
obligation of the Companies,  the Employee Benefit Plan, any Liability resulting
from any breach of contract,  breach of warranty, tort infringement or violation
of law.

         "Liability"  means any  liability  (whether  known or unknown,  whether
asserted or  un-asserted,  whether  absolute or contingent,  whether  accrued or
un-accrued,  whether  liquidated or  unliquidated,  and whether due or to become
due), including any liability for Taxes.

     "Manchester  Options"  means the  options to acquire  shares of  Manchester
delivered to Sellers in accordance with the employment agreements  substantially
in the form annexed hereto.

     "Multi-employer Plan" has the meaning set forth in ERISA Sec. 3(37).

     "Non Contingent Price" has the meaning set forth in Paragraph "SECOND:  A)"
below.

     "Ordinary  Course of  Business"  means  the  ordinary  course  of  business
consistent with past custom and practice (including with respect to quantity and
frequency),  excluded  therefrom is the  transaction  contemplated by the within
Agreement.

     "Party" has the meaning set forth in the preface above.

     "Person" means an individual, a partnership, a corporation, an association,
a  joint  stock  Companies,   a  trust,  a  joint  venture,   an  unincorporated
organization, or a governmental entity (or any department,  agency, or political
subdivision thereof).

                                        6

<PAGE>

     "Pre-Tax  Earnings" includes all revenues earned during the period less all
expenses  incurred or accrued during the period except for taxes computed on the
basis of income.  For  purposes  of this  Agreement,  Pre-Tax  Profit  shall not
include amortization of goodwill.

     "Prohibited  Transaction"  has the meaning set forth in ERISA Sec.  406 and
Code Sec. 4975.

     "Purchase Price" has the meaning set forth in Paragraph "SECOND" below.

     "Reportable Event" has the meaning set forth in ERISA Sec. 4043.

     "Seller" means Philip J. Ferranti and Kenneth  Chellam,  as Shareholders in
Texport  Technology  Group,  Inc., and as Members in Learning  Technology Group,
LLC.

     "Security Interest" means any mortgage, pledge, lien, encumbrance,  charge,
or other  security  interest,  other  than (a)  mechanic's,  material  men's and
similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the
taxpayer  is  contesting  in good faith  through  appropriate  proceedings,  (c)
purchase  money liens and liens  securing  rental  payments  under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.

     "Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary  thereof)  owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.

     "Tax" means any federal,  state, local, or foreign income,  gross receipts,
license, payroll,  employment,  excise, severance,  stamp, occupation,  premium,
windfall profits,  environmental  (including taxes under Code Sec. 59A), customs
duties,  capital stock,  franchise,  profits,  withholding,  social security (or
similar),  unemployment,  disability,  real property,  personal property, sales,
use,  transfer,  registration,  value  added,  alternative  or  add-on  minimum,
estimated, or other tax or any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.

     "Tax Return" means any return,  declaration,  report,  claim for refund, or
information  return or statement  relating to Taxes,  including  any Schedule or
attachment thereto, and including any amendment thereof.

     "Third Party Claim" has the meaning set forth in  Paragraph  "EIGHTH:  (d)"
below.

                                        7

<PAGE>

FIRST: SALE OF STOCK- The Sellers agree to sell, transfer and assign one hundred
(100%) percent of the issued outstanding capital stock of the Companies; to wit:
100 shares,  as to Texport  Technology  Group,  Inc., and 100% of the membership
interests as to the Learning  Technology  Group,  LLC, pursuant to the terms and
conditions hereinafter set forth.

SECOND:  PURCHASE  PRICE-  The  Purchaser  agrees to buy all of the  issued  and
outstanding  shares of the  capital  stock of Seller  constituting  one  hundred
(100%) percent of all the issued and outstanding  stock in the Companies,  for a
Purchase Price of Four Hundred Thousand and 00/100 ($400,000.00)  Dollars,  plus
the  amount  of the  "Contingent  Payments"  (Paragraph  "SECOND:  B) 1 and  2")
actually paid to the Sellers pursuant to the "Contingent Payments" provisions.

     The Purchase Price is to be allocated as between Texport  Technology Group,
Inc. and the Learning Technology Group, LLC, as follows:

     Purchase  Price  as  above  calculated  as  to  Texport  Technology  Group,
Inc.-Sixty (60%) percent.

     Purchase  Price  as  above  calculated  as to  Learning  Technology  Group,
LLC-Forty (40%) percent.

         The aforesaid  Purchase  Price shall be subject to the  conditions  for
"Contingent  Payments"  in favor of the  Sellers or  Purchaser  respectively  in
accordance with the following terms and conditions:

         A)       NON-CONTINGENT PAYMENTS:
                  1)  $400,000.00+/- in cash payable at Closing.

         B)       CONTINGENT PAYMENTS:
                  1) $500,000.00+/- in cash payable on or before March 22, 2001,
contingent  upon the  Companies  achieving  the  projections  as to revenue  and
pre-tax  earnings,  for the period  consisting  of twelve  (12)  months from the
Closing  of the with  Agreement  (Year  1),  as more  particularly  set forth in
sub-paragraph 3) below.

                                        8

<PAGE>

     2) $500,000.00+/-  in cash payable on or before March 22, 2002,  contingent
upon the Companies achieving the projections as to revenue and pre-tax earnings,
for the period  commencing  the first (1st) day of the  thirteenth  (13th) month
after Closing,  and concluding on the last day of the twenty-fourth (24th) month
after Closing of the within  Agreement (Year 2), as more  particularly set forth
in sub-paragraph 3) below.

     3) The "Contingent Payments" due on March 22 2001, and March 22 , 2002 will
be subject to the following conditions:

       a.                               Revenue             Pre-tax Earnings
                                        -------             ----------------
            Year 1                      $14.8 Million       $700,000
            Year 2                      $18.5 Million       $1.3 Million

       b.   Actual Revenue and          % of Contingent     Actual Amount of
            Pre-tax Earnings            Payment to be       Contingent Payment
            Targets Met                 Paid                to be Paid
            -----------                 ----                ----------

            135% and over               150%                $750,000
            120% - 134%                 125%                $625,000
            110%-119%                   110%                $550,000
            100%-109%                   100%                $500,000
            90%-99%                      75%                $375,000
            80%-89%                      50%                $250,000
            below 80%                     0%                $0

     In the  event of a  variation  as  between  the  percentages  of  "revenue"
achieved and the percentages of "Pre-tax Earnings"  achieved,  the lower of said
percentages  achieved will be the factor used in determining  the percentage and
the amount of a "Contingent Payment" to be paid.

     Example:  Year One- The Revenue  met is  ninety-five  (95%)  percent of the
target number and "Pre-tax Earnings" are eighty-five (85%) percent of the target
number.  The amount of the "Contingent  Payment" to be paid would be fifty (50%)
percent ($250,000.00) as based on the above chart.

     C.  DEFINITIONS OF PRE-TAX  EARNINGS:  Reference is herein made to "Pre-Tax
Earnings" as contained in Paragraphs  "SECOND: B) 1), 2), and 3)", of the within
Agreement:

                                        9

<PAGE>

         The  following  provisions  will govern the  determination  of "Pre-Tax
Earnings" solely for the purposes of the foregoing Paragraphs:

     a)  "Pre-Tax   Earnings"  will  be  determined  using  Generally   Accepted
Accounting  Principles  applied on a consistent basis,  except as amended by the
conditions set forth in the within Paragraph (all parts).

     b)  "Pre-Tax   Earnings"  will  be  calculated   prior  to  accounting  for
amortization of Goodwill.

     c)  The   Companies   shall  not  pay  any   discretionary   "Bonus"  to  a
Seller-Employee  that has the effect of reducing or eliminating any payments due
to Seller-Employees under this "Definitive Purchase Agreement".

     d) On each anniversary date of employment, and during the initial three (3)
year  term of the  Employment  Agreements  with the  Seller-Employees,  a charge
equaling  the  closing  price  of  Manchester  Common  Stock  on the date of the
execution of the within  Agreement,  times Ten Thousand (10,000) will be applied
as an expense  for the  purpose  of  amortizing  the cost of the  "grant" of Ten
Thousand (10,000) Shares of Manchester Common Stock to the Seller-Employees,  as
same are combined for purposes of the within Paragraph.

          (i) "Charge" is herein  defined as such sum that equals the Manchester
          closing stock price on the date of closing,  times 10,000,  divided by
          the  number  of  years  of  the   initial   term  of  the   Employment
          Agreements.".

     e)  Manchester  will not  assign or  allocate  overhead  or other  costs or
expenses to the Companies  other than those  allocations  which  Manchester pays
directly on behalf of the  Companies,  or which is directly  allocatable  to the
Companies.

     f) Manchester  may allocate as cost to the Companies  certain  expenses for
normal and customary  operations as may  reasonably be determined by Manchester,
which  may  include  expenses  incurred  to  integrate  the  Manchester  and the
Companies'  business  systems and operations,  and/or upgrades of the Companies'
offices, equipment, computer system, etc.

                                       10

<PAGE>

     g) For the period ending  twenty-four (24) months from Closing,  Manchester
(other  than  for the  "Termination  for  Cause"  provisions  of the  Employment
Agreements)  will  not  terminate,  close or  discontinue  the  business  of the
Companies;   Provided,   However,   the  foregoing   provision  is  specifically
conditioned  upon the Companies  achieving  certain minimum revenue and "Pre-Tax
Earnings"  for  years  one  and two  subsequent  to  Closing.  For  purposes  of
definition,  such  "minimum" is herein deemed to be eighty (80%) percent or more
of Year 1 and Year 2 revenues and "Pre-Tax Earnings"  (Paragraph  "SECOND: B) 3)
a.") standards, calculated on a quarter annual basis.

         D.       APPLICABILITY OF PURCHASE PRICE:

     The  Purchase  Price,  Non-contingent  Payments (A.  above) and  Contingent
Payments  (B.  above),  are  applicable  as to both of the Selling  Shareholders
collectively,  and are  not to be  deemed  as  payable  to  each of the  Selling
Shareholders individually.

THIRD:  CLOSING - The  Closing  shall  take  place at the  offices  of  Kressel,
Rothlein & Roth, Esqs., 684 Broadway,  Massapequa, New York 11758, Attorneys for
the Purchaser, on or about          , 2000.

     A) At the Closing, the Seller shall deliver to the Purchaser:

     1. Certificate -

          A certificate or certification  dated the Closing date,  signed by the
     Secretary of the Companies setting forth:

          (a) The  authorized,  outstanding  and unissued  capital  stock of the
          Companies;

          (b)  The  names  and   addresses   of  the   holders  (of  record  and
          beneficially) of such authorized and outstanding stock, and the number
          of shares owned by each;

          (c) The names and  addresses  of all  directors  and  officers  of the
          Companies; and

                                       11

<PAGE>

          (d) The names of the  officers  authorized  to execute and deliver the
          documents and related instruments deliverable hereunder.

2. Stock Certificates-
   -------------------

     Certificates  for the Seller's stock,  duly endorsed and with all necessary
documentary  transfer  tax stamps  affixed and  canceled.  The  Companies  shall
thereupon  issue  new  certificates  representing  shares  to  be  delivered  to
Purchaser.

 3.       Corporate Records-
          ------------------

     The  complete  and  correct   corporate   minute  books,   Certificate   of
Incorporation,  By-Laws,  stock  certificates  and stock transfer records of the
Companies,  and a current  Certificate  of Good Standing  issued by the State of
Incorporation..

  4.       Resignations-
           -------------

     The  written  resignations  of Sellers as  officers  and  directors  of the
Companies, effective upon consummation of the Closing.

 5.       Contracts-
          ----------

     Originals of any and all written  Contracts  entered into by the Companies,
which are presently in effect.

     6.  Creditors-
         ----------

     A  Schedule  of all  accounts  payable by the  Companies  as of the date of
Closing which have accrued or been amended subsequent to the within Agreement.

7. Warranties-
   -----------

     (a) An  Affidavit  of Warranty  and  representation  by each of the Sellers
individually 1) that he is the owner of the shares of stock being transferred to
the Purchaser;  2) that he owns said stock free and clear of all encumbrances of
any kind; 3) that said shares have not been hypothecated or in any way alienated
and  that he is a  resident  of the  State of New  York ; 4) that  there  are no
actions,  litigations,  judgments or executions now in force or pending  against
the  Seller  or  the  Companies,   nor  have  any  petitions  in  bankruptcy  or
arrangements been filed by or against the Seller or the Companies; 5) that the

                                       12

<PAGE>
sale of said  stock  does not render him  insolvent;  6) that the  Schedules  of
assets and liabilities are true and complete  representations of the liabilities
and assets of the Companies.

     (b) 1) An Affidavit of Warranty by the Sellers individually which affidavit
shall  expressly  warrant  that the Lease to the  Companies,  a copy of which is
annexed  hereto,  is, in effect at the time of Closing;  2) that such tenancy is
free and clear of any and all defaults;  3) that the tenancy established thereby
is a valid leasehold interest as represented therein.

8. Indemnifications-
   -----------------

     At  Closing  Seller  will  deliver  indemnifications  in the form set forth
annexed hereto.

9. Schedule of Assets-
   -------------------

     A  Schedule  of any and all  assets  as of the date of  Closing  evidencing
additions or deletions  which have  occurred  subsequent to the execution of the
within Agreement.

10.    General Releases-
       -----------------

     a) The Selling  Shareholders shall deliver releases to the Companies in the
form annexed.

  B) At the Closing the Purchaser shall deliver the following:

     1) An Indemnity Agreement in the form annexed.

     2) Certified checks or appropriate wire transfers totaling $400,000.00,  as
per Paragraph "SECOND: A) 1)".
               -------

     3) Options as  required  under the  Employment  Agreements  referred  to in
Paragraph "FOURTH".
           -------

     4) The "grant" of 5,000 shares of Manchester  Common Stock  (restricted) to
each of the Selling Shareholders, subject to the vesting conditions set forth in
the Employment Agreements referred to in Paragraph "FOURTH".

                                                    ------
                                       13

 <PAGE>

     5)  Certificate  of  Resolution of the Board of Directors  authorizing  the
within transaction.

FOURTH:  EMPLOYMENT  AGREEMENT-  Each of the  Selling  Shareholders  and Texport
Technology Group, Inc. and the Learning  Technology Group, Inc.,  simultaneously
with the Closing,  shall enter into an Employment Agreement in the forms annexed
hereto.

FIFTH:  BOOKS  AND  RECORDS-  All of the books and  records,  including  but not
limited to journals and work sheets, tax returns, bank statements,  accountant's
records, daily diaries,  contracts and other materials used for the operation of
the  Companies  shall remain intact at the  Companies,  and shall not be removed
from the Companies' offices without the permission of the Purchaser.

SIXTH:  BROKER-FINDER  INDEMNITY-  Each of the  Parties  hereto  represents  and
warrants that it has not employed any broker or finder in  connection  with this
Agreement,  or the transaction  contemplated hereby, and agrees to indemnify the
other Party and hold it harmless from any and all  liabilities  (including,  but
not limited to, reasonable Attorneys fees and disbursements and Court costs paid
or incurred in connection with any such  liabilities) for brokerage  commissions
or finder's fees in connection  with this Agreement  asserted by any party based
upon  arrangements  or  agreements  made or  claimed  to have been made by or in
behalf of such indemnifying party.

SEVENTH:          A.        Pre-Closing Obligations-

     Parties hereby  covenant and agree to cause the following to occur from the
date of execution hereof to the Closing:

     1.1  Seller,  Shareholder  and Companies  shall afford to the Attorneys and
          other authorized representatives,  free and full access during regular
          business hours, to the books, records, personnel and properties of the
          Companies.

                                       14

<PAGE>

     1.2  Purchaser  shall have the right to make copies of the general  ledger,
          general journal, cash receipts and disbursements books, purchase book,
          accounts  receivable and accounts  payable  records,  payroll records,
          canceled  checks,  bank  statements and copies of all city,  state and
          federal tax returns filed by the Companies.

     1.3  The  Companies'  business  shall  be  conducted  only in the  ordinary
          course.

     1.4  The Companies shall maintain in force its insurance policies currently
          in effect as of the date hereof, except to the extent that they may be
          replaced  with  equivalent  policies  at lower  rates  approved by the
          Seller.  If  in  the  Purchaser's  opinion,   additional  coverage  is
          reasonably  necessary to keep adequately insured all properties of the
          Companies, Seller shall cause the Companies, at the written request of
          the  Purchaser,   and  at  the  Companies'  expense,  to  obtain  such
          additional insurance from financially sound and reputable insurers for
          a period  ending no sooner  than the close of  business on the Closing
          date.

     1.5  Without the prior written consent of the Purchaser, no change shall be
          made in the Certificate of Incorporation or By-Laws of the Companies.

     1.6  No  Change  shall be made in the  Companies'  authorized,  issued  and
          outstanding capital stock, and no options,  warrants,  rights or calls
          shall be granted with respect to any shares of such capital stock.

     1.7  No dividend or other distribution or payment shall be declared or made
          in respect of any shares of the Companies' stock.

     1.8  No  contract,  commitment,  or  other  business  transaction  shall be
          entered into or terminated by the Companies without  Purchaser's prior
          written  approval,  except  such  as  are in the  ordinary  course  of
          business.

     1.9  Except  as  expressly  provided  herein,  the  Companies  will not (i)
          mortgage,  pledge or subject to lien or any other  encumbrance  any of
          its assets,  tangible or  intangible;  (ii) sell or transfer any fixed
          assets;  (iii)  cancel any debts or claims  except in each case in the
          ordinary  course of  business,  or (iv) sell,  assign or transfer  any
          patents,  trademarks,  trade  names,  copyrights,  licenses  or  other
          intangible assets.

                                       15

<PAGE>

     1.10 The  Companies  will not  increase  compensation  to be paid or become
          payable to any officer, director, employee or agent (except regular or
          periodic  increases),  nor enter into any  purchase or sales  Contract
          except in the regular course of business,  or make any material change
          in sales, marketing, pricing or distribution policies.

     1.11 Each of the Parties  will use its best  efforts to take all action and
          to  do  all  things  necessary,  proper,  or  advisable  in  order  to
          consummate and make effective the  transactions  contemplated  by this
          Agreement.

     1.12 The  Companies  will keep its  business and  properties  substantially
          intact, including its present operations, physical facilities, working
          conditions,  and  relationships  with lessors,  licensors,  suppliers,
          customers, and employees.

     1.13 Each party will give prompt  written  notice to the other Party of any
          material  adverse  development  causing  a  breach  of any of its  own
          representations and warranties.

     B) Post-Closing Covenants-
        -----------------------

     The  Parties  agree as follows  with  respect to the period  following  the
Closing:

     (a)  General:  In case at any time after the Closing any further  action is
necessary or desirable to carry out the purposes of this Agreement,  each of the
Parties will take such further  action  (including the execution and delivery of
such  further  instruments  and  documents)  as the other Party  reasonably  may
request,  all at the sole cost and expense of the  requesting  Party (unless the
requesting  Party is  entitled  to  indemnification  therefore  pursuant  to the
Indemnity Agreement annexed hereto.

                                       16

<PAGE>

     (b) Litigation  Support: In the event and for so long as any Party actively
is  contesting  or  defending  against any action,  suit,  proceeding,  hearing,
investigation,  charge,  complaint,  claim, or demand in connection with (i) any
transaction  contemplated  under this  Agreement or between any other  agreement
collateral hereto, (ii) any fact, situation,  circumstance,  status,  condition,
activity,  practice, plan, occurrence,  event, incident, action, failure to act,
or  transaction  on or prior to the Closing Date  involving  the business of the
Companies as conducted prior to the Closing Date, the other Party will cooperate
with the  contesting  or  defending  Party and its  counsel  in the  contest  or
defense, make available its personnel,  and provide such testimony and access to
its books and records as shall be  necessary in  connection  with the contest or
defense,  all at the sole cost and expense of the contesting or defending  Party
(unless  the  contesting  or  defending  Party is  entitled  to  indemnification
therefor under an Indemnity Agreement annexed hereto.

EIGHTH:  Representations  and Warranties- Sellers and Companies hereby covenant,
represent and warrant to the  Purchaser  that the  statements  contained in this
Paragraph  "EIGHTH"  are true and correct , both as of the date hereof and as of
the  Closing  date,( as though  made then and as though  the  Closing  Date were
substituted for the date of this Agreement) as follows:

          1. Corporate Matters

             -----------------

     (a)  Valid  Corporate   Existence-Texport   Technology  Group,  Inc.  is  a
Corporation  duly organized and validly  existing and in good standing under the
laws of the State of New York,  and the Learning  Technology  Group,  Inc., is a
Limited  Liability  Company  duly  organized  and validly  existing  and in good
standing under the laws of the State of New York.

     (b)  Authority-  The  Companies  have all  requisite  corporate  power  and
authority to own its assets and properties,  and to carry on its business as now
conducted.  Sellers have the power and  authority to enter into this  Agreement,
and to  carry  out the  transactions  contemplated  hereby,  including,  without
limitation,  the authority to transfer the Companies'  stock as herein provided.
The consent of any third party or parties,  including any governmental agency or
instrumentality, to the within proposed transaction, is not required.

     (c)  Capitalization;  Stockholders of the Companies- The Companies have the
number of shares of authorized,  issued and outstanding  shares of capital stock
as set forth below:

                                       17

<PAGE>

                         Texport Technology Group, Inc.

                              200     authorized,
                              ---
                              100       issued.
                              ---
                         Learning Technology Group, Inc.

                              -0-     authorized,
                              ---
                              -0-      issued.
                              ---

     Sellers are the owners  beneficially  and of record of one  hundred  (100%)
percent of all issued and outstanding capital stock of the Companies.  There are
no  outstanding  options,   Contracts,   calls,  demands,   commitments,   stock
restriction  agreements or encumbrances of any character relating to its capital
stock in said Companies, and no securities of the Companies outstanding which by
their terms are convertible into capital stock.

     (d)  Subsidiaries-  The Companies do not own any capital stock or any other
interest in any other business entity, whether incorporated or unincorporated.

     (e)  Enforceability-  This Agreement  constitutes a binding and enforceable
agreement of both parties.

     (f)  Actions,  Claims,  etc.- There are no claims,  suits,  proceedings  or
investigations,  governmental  or  private,  pending  or,  so far as is known to
Seller, threatened, nor any order, injunction or decree outstanding,  against or
relating to the Companies or its property,  assets or business.  Seller does not
know or have any  reasonable  grounds to know of any basis for any such  claims,
actions, suits, proceedings,  investigations or orders,  injunctions or decrees;
and Seller is not knowingly in violation of any  applicable  law,  regulation or
ordinance  and is  not  knowingly  or  otherwise  in  violation  of  any  order,
injunction  or decree,  or any other  requirement  of any  governmental  body or
Court, relating to its property or business.

     (g)  Collective  Bargaining-Employees-  The Companies  have no  employment,
union or  collective  bargaining  agreements.  During  the past five (5)  Fiscal
Years,  the Companies have had no "labor unrest"  situations,  and no pending or
threatened labor strikes, or other labor troubles. During the past three (3)

                                       18

<PAGE>
Fiscal Years, the Companies have had no "unfair labor" practice complaints filed
against  them.  At  present,  there are no pending or  threatened  requests  for
arbitration,  grievance  proceedings,  labor disputes,  strikes, or disturbances
affecting the Companies, and there have been no recent union negotiations. There
are no retired employees of the Companies who are presently  receiving,  or will
be entitled to receive any payments of any nature.  There are no written or oral
employment  or  consulting  agreements  to which the Companies are a party to or
bound by. There are no deferred  compensation  programs  affecting any officers,
directors, employees or members of the Companies.

     (h) Miscellaneous-  The Companies have not (i) issued,  delivered or agreed
to issue or deliver  any stock,  bonds or other  corporate  securities  (whether
authorized and unissued or held in the treasury),  or granted or agreed to grant
any  options,  warrants  or other  rights  calling for the issue  thereof;  (ii)
borrowed or agreed to borrow any funds or  incurred,  or become  subject to, any
obligation  or  liability   (absolute  or  contingent)  except  obligations  and
liabilities  (other than tort  liabilities)  incurred in the ordinary  course of
business;  (iii) paid any obligation or liability (absolute or contingent) other
than  current  liabilities  incurred in the ordinary  course of  business;  (iv)
declared  or made,  or agreed to declare or make any  payment  of  dividends  or
distributions  of any  assets of any kind  whatsoever  to its  stockholders,  or
purchased, or agreed to purchase, any of the Companies' common stock; (v) except
in the ordinary course of business and as  contemplated by this Agreement,  sold
or transferred,  or agreed to sell or transfer,  any of its assets,  property or
rights or canceled, or agreed to cancel, any debts or claims; (vi) except in the
ordinary  course of business,  entered or agreed to enter into any  agreement or
arrangement  granting  any  preferential  rights to purchase  any of the assets,
property or rights of the Companies or requiring the consent of any party to the
transfer and assignment of any such assets,  property or rights;  (vii) suffered
any  losses  or  waived  any  rights  of  value  which  in  the   aggregate  are
extraordinary  or material  considering the business of the Companies taken as a
whole;  (viii) except in the ordinary course of business,  made or permitted any
amendment or termination of any Contract,  agreement or license to which it is a
party if such amendment or termination is material considering the business of

                                       19

<PAGE>
the Companies  taken as a whole;  (ix) except in accordance  with its normal and
usual  practice  made any  accrual or  arrangement  for or payment of bonuses or
special  compensation  of any kind or any  severance  or  termination  pay t any
present or former officer of employee;  (x) except in accordance with its normal
and usual  practice,  increased the salary of any officer or employee;  (xi) the
Companies are not qualified to do business in any foreign  country and any other
States other than New York, and therefore the Companies are not required to file
tax  returns  in any other  country  or State  other  than New York,  nor do the
Companies  maintain an office in any other foreign  country or State;  and (xii)
the Companies have not received any  correspondence,  reports,  and/or  notices,
relating to any laws and regulations  administered by any federal, state, local,
or foreign governmental agency for the five (5) years last past.

     (i) Title to Assets- The Companies have good and marketable  title to, or a
valid leasehold  interest in, the properties and assets used by them, located on
their  premises,  or shown on the most recent  financial  statements or acquired
after the date  thereof,  free and clear of all Security  Interests,  except for
properties and assets  disposed of in the Ordinary  Course of Business since the
date of the most recent  balance sheet.  Without  limiting the generality of the
foregoing,  the Companies have good and  marketable  title to all of the Assets,
free and clear of any Security  Interest or restriction  on transfer,  except as
follows:

     (i) There has been no change in the  accounting  policies or  procedures of
the Companies during the five (5) years prior to the date hereof.

     (j)  Financial  Statements-  Attached  hereto as Exhibit 1 are the received
balance  sheets and  statements of income and cash flow as of and for the period
from  January 1, 1999 to December 31, 1999,  collectively,  the "1999  Financial
Statements". The 1999 Financial Statements (including the Notes thereto, if any)
have been  prepared  in  accordance  with GAAP  applied  on a  consistent  basis
throughout the periods covered thereby,  present fairly the financial  condition
of the Companies as of such dates and the results of operations of the Companies
for such periods, are correct and complete, and are consistent with the books

                                       20

<PAGE>
and records of the Companies (which books and records are correct and complete);
Provided,  However,  that the 1999  Financial  Statements  are subject to normal
year-end  adjustments  (which  will  not  be  material  individually  or in  the
aggregate).

     (k) Events Subsequent to December 31, 1999 Financial  Statements-
         -------------------------------------------------------------

     Since the December 31, 1999  Financial  Statements,  there has not been any
material  adverse  change  in the  business,  financial  condition,  operations,
results of operations,  or future  prospects of the Companies.  Without limiting
the generality of the foregoing, since that date:

     (i)  The Companies have not sold, leased,  transferred,  or assigned any of
          its   assets,   tangible  or   intangible,   other  than  for  a  fair
          consideration in the Ordinary Course of Business;

     (ii) The Companies have not entered into any agreement, contract, lease, or
          license  (or  series of related  agreements,  contracts,  leases,  and
          licenses) other than in the Ordinary Course of Business;

     (iii)No party  has  accelerated,  terminated,  modified,  or  canceled  any
          agreement,   contract,   lease,  or  license  (or  series  of  related
          agreements,  contracts,  leases,  and licenses) to which the Companies
          are a party or are bound;

     (iv) The Companies  have not imposed any Security  Interest upon any of its
          assets, tangible or intangible;

     (v)  The  Companies  have not made any  capital  expenditure  (or series of
          related capital expenditures);

     (vi) The Companies  have not issued any note,  bond, or other debt security
          or created,  incurred,  assumed,  or guaranteed any  indebtedness  for
          borrowed money or capitalized lease;

     (vii)The  Companies  have not delayed or postponed  the payment of accounts
          payable and other  Liabilities  other than in the  Ordinary  Course of
          Business;

                                       21

<PAGE>

     (viii) The Companies have not canceled,  compromised,  waived,  or released
          any right or claim (or series of related  rights,  and  claims)  other
          than in the Ordinary Course of Business;

     (ix) The  Companies  have not  granted any  license or  sub-license  of any
          rights under or with respect to any Intellectual Property;

     (x)  Except  for the stock  held by the  Sellers,  the  Companies  have not
          issued,  sold, or otherwise  disposed of any of its capital stock,  or
          granted any options,  warrants,  or other rights to purchase or obtain
          (including upon conversion,  exchange, or exercise) any of its capital
          stock;

     (xi) The Companies  have not declared,  set aside,  or paid any dividend or
          made any  distribution  with respect to its capital stock  (whether in
          cash or in kind) or redeemed,  purchased, or otherwise acquired any of
          its capital stock;

     (xii)The Companies have not experienced any material  damage,  destruction,
          or loss (whether or not covered by insurance) to its property;

     (xiii) The  Companies  have not made any loan to, or entered into any other
          transaction with, any of the directors, officers, and employees of the
          Companies other than in the Ordinary Course of Business;

     (xiv)The  Companies  have not  entered  into  any  employment  contract  or
          collective  bargaining  agreement,  written or oral,  or modified  the
          terms of any existing  employment  contract or  collective  bargaining
          agreement;

     (xv) The Companies  have not granted any increase in the base  compensation
          of any of its  directors,  officers,  and other  than in the  Ordinary
          Course of Business;

     (xvi)The Companies have not adopted,  amended,  modified, or terminated any
          bonus, profit-sharing,  incentive, severance, or other plan, contract,
          or commitment for the benefit of any of the directors,  officers,  and
          employees  of the  Companies  or taken any such action with respect to
          the existing Employee Benefit Plan;

                                       22

<PAGE>

     (xvii) The Companies have not made any other change in employment terms for
          any of its  directors,  officers,  and  employees  other  than  in the
          Ordinary Course of Business;

     (xviii) The  Companies  have not made or pledged to make any  charitable or
          other  capital  contribution  other  than in the  Ordinary  Course  of
          Business;

     (xix)The Companies have not paid any amount to any third party with respect
          to any  Liability or obligation  other than in the Ordinary  Course of
          Business;

     (xx) There has not been any other  material  occurrence,  event,  incident,
          action,  failure to act,  or  transaction  other than in the  Ordinary
          Course of Business involving the Companies.

     (l) Undisclosed  Liabilities- The Companies do not have any Liability (and,
to its  and/or  the  Sellers'  knowledge,  there is no Basis for any  present or
future action, suit,  proceeding,  hearing,  investigation,  charge,  complaint,
claim, or demand against any of them giving rise to any  Liability),  except for
(i)  Liabilities  set  forth  on the face of the  December  31,  1999  Financial
Statements  (rather than in any notes thereto) and (ii)  Liabilities  which have
arisen after the December 31, 1999 Financial Statement in the Ordinary Course of
Business  (none of which  results  from,  arises out of,  relates  to, is in the
nature of, or was caused by any breach of contract,  breach of  warranty,  tort,
infringement, or violation of law).

     (m)  Legal  Compliance-To  its  knowledge  the  Companies  have  materially
complied with all applicable laws (including rules,  regulations,  codes, plans,
injunctions,  judgments,  orders,  decrees,  rulings, and charges thereunder) of
federal,  state, local, and foreign governments (and all agencies thereof),  and
no action, suit, proceeding, hearing,  investigation,  charge, complaint, claim,
demand,  or notice  has been filed or, to its  and/or  the  Sellers'  knowledge,
commenced  against any of them  alleging  any failure so to comply  except where
failure to comply would not have any material  adverse effect upon the Companies
or its business.

                                       23

<PAGE>

     (n) Tax Matters-
         ------------

     (i) The  Companies  have filed all Tax Returns that it was required to file
prior to the Closing Date. All such Tax Returns were correct and complete in all
respects.  All  Taxes  owed by the  Companies  (whether  or not shown on any Tax
Return) have been paid.  The Companies  currently is not the  beneficiary of any
extension  of time within  which to file any Tax Return.  No claim has ever been
made by an  authority  in a  jurisdiction  where the  Companies  do not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There are
no Security Interests affecting any of the assets of the Companies that arose in
connection with any failure (or alleged failure) to pay any Tax;

     (ii) The Companies  have withheld and paid all Taxes  required to have been
withheld and paid in  connection  with  amounts  paid or owing to any  employee,
independent contractor, creditor, stockholder, or other third party;

     (iii)  Neither the  Companies  nor any  director  nor officer (or  employee
responsible  for Tax matters)  expects any  authority  to assess any  additional
Taxes with  respect to the  Companies  for any period for which Tax Returns have
been filed.  There is no dispute or claim  concerning  any Tax  Liability of the
Companies  either (A) claimed or raised by any authority in writing or (B) as to
which any directors and officers (and employees  responsible for Tax matters) of
the Companies;

     (iv) The  Companies  have not waived any  statute of  limitations  in as to
liabilities  or Taxes of any  nature  or agreed  to any  extension  of time with
respect to any liabilities or Tax assessments or deficiencies;

                                       24

<PAGE>

     (v) The  Companies  have  not  filed  a  consent  under  Code  Sec.  341(f)
concerning collapsible corporations. The Companies have not been a United States
real  property  holding  corporation  within the meaning of Code Sec.  897(c)(2)
during the  applicable  period  specified  in Code Sec. 987  (c)(1)(A)(ii).  The
Companies  have not been a member of an Affiliated  Group filing a  consolidated
federal  income Tax Return or (B) has any  Liability for the Taxes of any Person
under any provision of federal,  state,  local, or foreign law), as a transferee
or successor by contract, or otherwise;

     (vi) There are no pending or threatened disputes with regard to tax matters
involving the Companies; (vii) There are no tax indemnification, tax sharing, or
tax  allocation  agreements  involving  the  Companies  and other  members of an
affiliated group, including any joint venture agreements that have the effect of
tax allocations agreements;

     (viii) The  Companies  have  received no legal or  accounting  tax opinions
during the five (5) years prior to the date hereof relating to the tax reporting
of the Companies.

     (o) Real Property-
         --------------

     The Companies do not own any real property. The premises presently occupied
by the  Companies  are  leased,  pursuant  to a  written  Lease  therefore.  The
Companies have not been the subject of any zoning,  variances,  and/or local use
permits.

     (p)  Intellectual  Property-
          -----------------------

     (i) The  Companies  own or have  the  right  to use  pursuant  to  license,
sub-licenses,  agreement,  or permission all Intellectual Property necessary for
the  operation  of  its  businesses  as  presently   conducted.   Each  item  of
Intellectual  Property owned or used by the Companies  immediately  prior to the
Closing hereunder will be owned or available for use by the Companies subsequent
to the Closing hereunder;

                                       25

<PAGE>

     (ii)  To the  best  of the  Seller's  knowledge,  the  Companies  have  not
interfered  with,  infringed  upon,  misappropriated,  or  otherwise  come  into
conflict with any Intellectual Property rights of third parties, and neither the
Companies nor its directors and officers (any employees with  responsibility for
Intellectual Property matters) has ever received any charge,  complaint,  claim,
demand,    or   notice   alleging   any   such    interference,    infringement,
misappropriation,  or violation  (including  any claim that the  Companies  must
license or  refrain  from using any  Intellectual  Property  rights of any third
party),  to the  knowledge of the Sellers and the knowledge of the Companies and
its directors and officers (any employees with  responsibility  for Intellectual
Property  matters),   no  third  party  has  interfered  with,  infringed  upon,
misappropriated,  or otherwise come into conflict with any Intellectual Property
rights of the Companies;

     (iii)  The  Companies  have no  patent  registrations  and/or  applications
therefore.  The Companies have no trademark,  service mark,  and/or trade dress,
registrations and/or applications. The Companies have no copyright registrations
and/or applications;

     (iv) The Companies have no manual or other written  document  detailing the
procedures for maintaining the secrecy of any trade secrets.

     (q) Tangible Assets-
         ----------------

     The Companies own or lease all buildings,  machinery,  equipment, and other
tangible  assets  necessary  for the conduct of their  businesses  as  presently
conducted.  To the Seller's  knowledge,  each such  tangible  asset is free from
defects  (patent and latent),  has been  maintained  in  accordance  with normal
industry practice,  is in good operating condition and repair (subject to normal
wear and tear), and is suitable for the purposes for which it presently is used.
There are no professional appraisals of any material property of the Companies.

     (r) Inventory-
         -----------

     The  inventory of the  Companies  consists of  manufactured  and  purchased
parts,  goods in process,  and finished goods,  all of which is merchantable and
fit for the purpose for which it was procured, and none of which is slow-moving,
obsolete, damaged, or defective.

     (s)  Contracts-
          ----------

     The Schedule of Contracts as annexed hereto,  lists all contracts and other
agreements to which the Companies are a party, including but not limited to:

     (i)  any  agreement  (or  group of  related  agreements)  for the  lease of
          personal  property to or from any person providing for lease payments;

     (ii) any  agreement  (or group of related  agreements)  for the purchase or
          sale  of raw  material,  commodities,  supplies,  products,  or  other
          personal property, or for the furnishing or receipt of services;

     (iii) any agreement concerning a partnership or joint venture;

                                       26

<PAGE>

     (iv) any  agreement  (or group of related  agreements)  under  which it has
          created,  incurred,   assumed,  or  guaranteed  any  indebtedness  for
          borrowed money, or any capitalized lease obligation, or under which it
          has  imposed a Security  Interest  on any of its  assets,  tangible or
          intangible;

     (v)  any agreement concerning confidentiality or non-competition;

     (vi) any profit sharing, stock option, stock purchase,  stock appreciation,
          deferred   compensation,   severance,   or  other   material  plan  or
          arrangement  for the  benefit  of the  current  or  former  directors,
          officers, and employees;

     (vii)any  collective  bargaining  agreement;

     (viii) any agreement for the  employment of any  individual on a full-time,
          part-time, consulting, or other basis;

     (ix) any agreement  under which it has advanced or loaned any amount to any
          of the directors,  officers,  and employees other than in the Ordinary
          Course of Business;

     (x)  any agreement under which the consequences of a default or termination
          could have an effect on the business, financial condition, operations,
          results of operations, or future prospects of the Companies; or

     (xi) any other agreement.

         The Companies are not a party to any significant  oral contracts and/or
commitments of any nature.

     The Companies  have  delivered to Manchester a correct and complete copy of
each written  agreement  listed in Schedule of  Contracts  (as amended to date).
With respect to each such agreement; (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue to be
legal, valid,  binding,  enforceable,  and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby subject
to the  right of any  third  party to  consent  to such  assignment;  (C) to its
knowledge, no party is in breach or default; and no event has occurred which

                                       27

<PAGE>
with notice or lapse of time would  constitute  a breach or  default,  or permit
termination,  modification, or acceleration, under the agreement; and (D) to its
knowledge, no party has repudiated any provision of the Agreement.

     The  Companies  are  not a party  to any  contracts  that  are  subject  to
re-negotiations,  nor are  any  contracts  currently  being  re-negotiated.  The
Companies are not a party to any agreements that are not to be performed  within
three (3)  months of the date  hereof,  or  involving  in excess of  Twenty-five
Thousand  and  00/100  ($25,000.00)  Dollars,  whether or not  entered  into the
ordinary  course of business,  except (a) agreements for the sale of merchandise
entered into in the ordinary course of business,  and/or (b) agreements referred
to  elsewhere  in the within  document.  The  Companies  are not  subject to any
contracts pertaining to advertising or public relations agencies,  other than an
Agreement with "Yellow  Pages".  The Companies are not a party to any agreements
relating to the supply of  materials  and/or raw  materials  and supplies of any
nature.  The  Companies  are  not a  party  to  any  agreement  relating  to the
acquisition of any business  constituting a part of the Companies,  or a sale or
proposed sale of any businesses  owned by the Companies within the past five (5)
years.  The  Companies  are not a party to any joint  venture  or other  type of
partnership  agreement.  The  Companies are not a party to any  agreements  with
suppliers,  independent agents,  sales persons, or others involving the payments
of  commissions  or  other  consideration  or  discounts  with  respect  to  the
manufacture,  sale, or distribution of the Companies' products or services.  The
Companies  are not a party to any  agreements  restricting  the abilities of the
Companies  to compete  in any line of  business  with any  person or entity,  or
committing the Companies to continue in any line of business. To their knowledge
there  are  no  present  facts  or  circumstances  that  may  give  rise  to the
cancellation  or termination  of, or claims for damages or loss under any of the
agreements  that the  Companies  are presently a party to. The Companies are not
presently in the process of negotiation as to any leases, licenses,  agreements,
and contracts,  involving the payment by the Companies of more than  Twenty-five
Thousand and 00/100 ($25,000.00)  Dollars,  in the aggregate.  The Companies are
not a party to any  agreements  granting  to the  Companies  any  right of first
refusal to acquire any business or assets, or pursuant to which the Companies

                                       28

<PAGE>

have granted any such rights.  The  Companies  are not a party to any  contracts
and/or  arrangements for trucking and/or other types of delivery,  and as to any
warehouse  space other than presently  used by the Companies.  The Companies are
not presently a party to any material  research and/or  development  agreements.
The Companies are not a party to any technology  license  agreements,  either as
Licensor or Licensee therein.

         For definition purposes:  "Accounts  Receivable" set forth in Paragraph
"EIGHTH  (t)  (i) a) and b),  and  (ii) a) and b),  shall  be the  total  of the
Accounts Receivable Schedule(s), net of so-called "Doubtful Accounts". "Doubtful
Accounts" must be established  pursuant to a Schedule  therefor,  which Schedule
shall  itemize  the  Customer  name,  amount  due,  and the  date of the  unpaid
invoice(s).

         Accounts  Receivable  for  purposes  of the within  Paragraph  (t) (all
parts), shall be calculated "net" of applicable sales taxes.

     (t) Notes and Accounts Receivable- All notes and accounts receivable of the
Companies are reflected properly on the Companies' books and records,  are valid
receivables   subject  to  no  set  offs  or  counterclaims,   are  current  and
collectible,  and will be  collected  in  accordance  with their  terms at their
recorded  amounts,  as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of the Companies.

     (i)  Accounts  Receivable  that remain unpaid in excess of ninety (90) days
          as of the date of Closing, shall be treated as follows:

          a)   The total of such Accounts  Receivable  will be deducted from the
               $400,000.00  non-contingent  payment (Paragraph "SECOND: A)") and
               will be deposited into a special escrow account;

          b)   Upon the expiration of one hundred  twenty (120) days  subsequent
               to Closing,  the escrow fund will be apportioned as follows:  the
               amount  of  such  Accounts  Receivable  received  during  the one
               hundred  twenty (120) day period  subsequent to Closing,  will be
               paid to the  Sellers.  The  amount  of such  Accounts  Receivable
               remaining  unpaid at the  expiration  of such one hundred  twenty
               (120) day period, shall be paid to Manchester and be deemed as a

                                       29

  <PAGE>
               reduction of the Purchase Price  (Paragraph  "SECOND").  Accounts
               Receivable  actually received after such one hundred twenty (120)
               day period will be paid to the Sellers, and deemed an addition to
               the  Purchase  Price.  This  provision  shall  also  apply to the
               "Contingent  Payments"  (Paragraph  "EIGHTH (t) (ii) a) and b)").
               The cost of collection of such Accounts Receivable, if any, other
               than  normal  billing   procedures,   will  be  retained  by  the
               Companies.

          (ii) Accounts  receivable  that remain unpaid in excess of ninety (90)
     days as of the either of the "Contingent  Payment"  dates,  2001, and 2002,
     shall be treated as follows:

          a)   The total of such accounts  receivable  will be deducted from the
               "Contingent  Payments"  (Paragraph  "SECOND:  B)"),  and  will be
               deposited into a special escrow  account;

          b)   Upon the expiration of one hundred  twenty (120) days  subsequent
               to each of the "Contingent  Payment" dates,  the escrow fund will
               be apportioned as follows: the amount of such accounts receivable
               received   during  the  one  hundred   twenty  (120)  day  period
               subsequent to each of the  "Contingent  Payment"  dates,  will be
               paid to the  Sellers.  The  amount  of such  accounts  receivable
               remain  unpaid  at the  expiration  of each of such  one  hundred
               twenty (120) day periods,  shall be paid to Manchester  and shall
               be  deemed  as a  reduction  of  the  Purchase  Price  (Paragraph
               "SECOND").

     (u)  Powers of  Attorney-  There  are no  outstanding  Powers  of  Attorney
executed on behalf of the Companies.

     (v) Insurance- The Schedule of Insurance Agreements annexed sets forth each
insurance policy (including  policies providing property,  casualty,  liability,
and workers'  compensation  coverage and bond and surety  arrangements) to which
the  Companies  are  currently  a  party,  a named  insured,  or  otherwise  the
beneficiary of coverage:

                                       30

<PAGE>

     With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the Companies are not in
breach or default  (including  with  respect to the  payment of  premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time,  would  constitute  such a  breach  or  default,  or  permit  termination,
modification, or acceleration,  under the policy; and (C) no party to the policy
has repudiated any provision thereof.

     (w) Product Warranty-Each product manufactured,  sold, leased, or delivered
by the  Companies  have  been in  conformity  with  all  applicable  contractual
commitments  and all express and implied  warranties,  and the  Companies to the
best of  Seller's  knowledge,  has no  liability  (and there is no basis for any
present or future action,  suit,  proceeding,  hearing,  investigation,  charge,
complaint,  claim,  or demand  against any of them giving rise to any liability)
for  replacement or repair  thereof or other damages in connection  therewith as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice. No product manufactured, sold, leased, or delivered by
the Companies are subject to any guaranty,  warranty,  or other indemnity beyond
the applicable standard terms and conditions of sale or lease.

     (x) Product  Liability-  To the best of Seller's  knowledge,  the Companies
have no liability (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation,  charge, complaint, claim, or demand against
any of  them  giving  rise  to any  liability)  arising  out  of any  injury  to
individuals or property as a result of the ownership, possession, or use by it.

     (y)  Employees-  To the best of the Seller's  knowledge no  executive,  key
employee,  or group of  employees of the  Companies  have any plans to terminate
employment.  The  Companies  are  not a  party  to or  bound  by any  collective
bargaining agreement, nor has it experienced any strikes, grievances,  claims of
unfair labor practices, or other collective bargaining disputes.

          (z) Employee  Benefits-

(a)  Each  such  Employee  Benefit  Plan  (and  each  related  trust,  insurance
     contract,  or fund)  complies in form and in operation in all respects with
     the applicable requirements of ERISA, the Code, and other applicable laws.

                                       31

<PAGE>

(b)  To the best of Seller's knowledge, each such Employee Benefit Plan which is
     an Employee  Pension  Benefit Plan meets the  requirements  of a "qualified
     plan" under Code Sec. 401(a).

(c)  The Companies have delivered to the Purchaser  correct and complete  copies
     of the plan documents and summary plan descriptions.

(d)  The Companies do not currently maintain,  has never maintained,  and has no
     liability with respect to any Multi-employer Plan.

(e)  The Schedule of Employee  Benefit Plans annexed hereto sets forth all other
     fringe benefits such as medical, health or life insurance plans provided by
     the Companies to its employees.  The Companies  shall deliver a copy of all
     such plans to Manchester prior to Closing.

     (aa) Guaranties-
          -----------

     The Companies are not  guarantors or otherwise  liable for any liability or
obligation (including indebtedness) of any other person.

    (bb) Environment, Health, and Safety-
         --------------------------------

     To  the  Seller's   knowledge,   the  Companies   have  complied  with  all
Environmental,  Health,  and  Safety  Laws,  and no  action,  suit,  proceeding,
hearing,  investigation,  charge,  complaint,  claim, demand, or notice has been
filed or  commenced  against  any of them  alleging  any  failure  so to comply.
Without  limiting the generality of the preceding  sentence,  the Companies have
obtained  and been in  compliance  with all of the terms and  conditions  of all
permits,  licenses,  and other  authorizations which are required under, and has
complied  with  all  other  limitations,  restrictions,  conditions,  standards,
prohibitions,  requirements,  obligations,  Schedules,  and timetables which are
contained in, all Environmental, Health, and Safety Laws.

     (cc)  Disclosure-
           ------------

     The representations and warranties contained in this Paragraph "EIGHTH", do
not  contain  any  untrue  statement  of a  material  fact or omit to state  any
material fact.

                                       32

<PAGE>

NINTH:   REPRESENTATIONS AND WARRANTIES OF MANCHESTER-
------   ---------------------------------------------
                  1. Manchester represents and warrants to The Companies and the
Sellers that the  statements  contained in  Paragraph  "NINTH",  are correct and
complete as of the date of this Agreement and will be correct and complete as of
the  Closing  Date (as  though  made then and as though  the  Closing  Date were
substituted for the date of this Agreement throughout this Paragraph "NINTH").

     (a) Organization of Manchester: Manchester is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of the
State of New York.

     (b)  Authorization of Transaction:  Manchester has full power and authority
(including  full  corporate  power and  authority)  to execute and deliver  this
Agreement and to perform its obligations  hereunder.  This Agreement constitutes
the  valid  and  legally  binding  obligation  of  Manchester,   enforceable  in
accordance with its terms and conditions.

     (c)  Non-contravention:  Neither  the  execution  and the  delivery of this
Agreement,  nor the consummation of the transactions  contemplated  hereby, will
(i) violate any constitution,  statute, regulation, rule, injunction,  judgment,
order,  decree,   ruling,  charge,  or  other  restriction  of  any  government,
governmental agency, or court to which Manchester is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under,  result in the  acceleration of, create in any party the right to
accelerate,  terminate,  modify,  or  cancel,  or require  any notice  under any
agreement,  contract, lease, license,  instrument, or other arrangement to which
Manchester is a party or by which it is bound or to which any of its  respective
assets is  subject.  Manchester  needs not give any notice  to,  make any filing
with, or obtain any  authorization,  consent,  or approval of any  government or
governmental  agency in order for the  Parties to  consummate  the  transactions
contemplated by this Agreement.

                                       33

<PAGE>

TENTH:   CONDITIONS TO OBLIGATIONS TO CLOSE-

------   -----------------------------------
                  A.       Conditions to Obligation of Manchester-
                           --------------------------------------

     The obligation of Purchaser to consummate the  transactions to be performed
by each of them in connection with the Closing is subject to satisfaction of the
following conditions:

          (i)  The  representations  and  warranties  of  the  Sellers  and  the
     Companies set forth in Paragraph  "EIGHTH" above, shall be true and correct
     in all material respects at and as of the Closing Date;

          (ii) The Companies  and the Sellers shall have  performed and complied
     with all of its covenants  hereunder in all material  respects  through the
     Closing;

          (iii) No action, suit, or proceeding shall be pending before any court
     or quasi-judicial or administrative agency of any federal, state, local, or
     foreign  jurisdiction  or before  any  arbitrator  wherein  an  unfavorable
     injunction,  judgment,  order, decree,  ruling, or charge would (A) prevent
     consummation of any of the transactions contemplated by this Agreement, (B)
     cause  any  of  the  transactions  contemplated  by  this  Agreement  to be
     rescinded  following  consummation,  (C)  affect  adversely  the  right  of
     Purchaser to operate the businesses of the Companies conducted prior to the
     Closing, or (D) affect adversely its right to own its assets and to operate
     its businesses (and no such injunction, judgment, order, decree, ruling, or
     charge shall be in effect);

          (iv) The Sellers shall have  delivered to Manchester a certificate  to
     the effect that each of the conditions  set forth in the within  Paragraph,
     are satisfied in all respects;

          (v)  Manchester  shall have received from counsel to the Companies and
     the  shareholders  an opinion  in form and  substance  as  annexed  hereto,
     addressed to Manchester and dated as of the Closing Date;

          (vi) All actions to be taken by the  Shareholders and the Companies in
     connection with  consummation of the transactions  contemplated  hereby and
     all certificates,  opinions,  instruments,  and other documents required to
     effect the transactions contemplated hereby will be reasonably satisfactory
     in form and substance to Manchester.

                                       34

<PAGE>

     Manchester may waive any condition specified in this Paragraph "TENTH: A.",
if it executes a writing so stating at or prior to the Closing.

          B. Conditions to Obligation of the Shareholders-
             ---------------------------------------------

     The obligation of the  Shareholders  to consummate the  transactions  to be
performed by it in connection with the Closing is subject to satisfaction of the
following conditions:

          (i) The  representations and warranties set forth in Paragraph "NINTH"
     above,  shall be true and correct in all material respects at and as of the
     Closing Date;

          (ii) Each of  Manchester  and the Companies  shall have  performed and
     complied  with all of its  covenants  hereunder  in all  material  respects
     through the Closing;

          (iii) No action,  suit, or  proceeding  shall be pending or threatened
     before any court or quasi-judicial or administrative agency of any federal,
     state,  local, or foreign  jurisdiction or before any arbitrator wherein an
     unfavorable  injunction,  judgment,  order, decree, ruling, or charge would
     (A) prevent  consummation  or any of the  transactions  contemplated by the
     Agreement  or (B)  cause  any  of the  transactions  contemplated  by  this
     Agreement to be rescinded  following  consummation (and no such injunction,
     judgment order, decree, ruling, or charge shall be in effect);

          (iv) Manchester shall have delivered to the Shareholders a certificate
     to the effect that each of the conditions  specified  above is satisfied in
     all respects;

          (v) The Shareholders shall have received from counsel to Manchester an
     opinion in form and  substance  as annexed  hereto;

          (vi)  All  actions  to be  taken  by  Manchester  in  connection  with
     consummation of the transactions  contemplated hereby and all certificates,
     opinions,   instruments,   and  other  documents  required  to  effect  the
     transactions  contemplated  hereby will be reasonably  satisfactory in form
     and substance to the Shareholders.

ELEVENTH:         TERMINATION-
---------         ------------

     A. Termination of Agreement-
        -------------------------

     1. The Parties may terminate this Agreement as provided below:

                                       35

<PAGE>

          (i) The Parties may terminate this Agreement by mutual written consent
     at any time  prior to the  Closing;

          (ii)  Manchester may terminate this Agreement by giving written notice
     to the  Sellers  at any time  prior to the  Closing  (A) in the  event  the
     Sellers  or  the  Companies  have  breached  any  material  representation,
     warranty,  or covenant contained in this Agreement in any material respect,
     Manchester  has  notified  the  Sellers of the  breach,  and the breach has
     continued  without  cure for a period of ten (10) days  after the notice of
     breach or (B) if the Closing shall not have occurred on or before March 22,
     2000;

          (iii) The Sellers or the  Companies may  terminate  this  Agreement by
     giving written notice to Manchester at any time prior to the Closing (A) in
     the event Manchester has breached any material representation, warranty, or
     covenant contained in this Agreement in any material respect, the Companies
     have  notified  Manchester  of the  breach,  and the breach  has  continued
     without  cure for a period of ten (10) days  after the  notice of breach of
     (B) if the Closing shall not have occurred on or before March 22 , 2000.

TWELFTH:          MISCELLANEOUS PROVISIONS-
--------          -------------------------

     (a) Scope of  Agreement  - The  Parties do not intend to confer any benefit
hereunder  on any person,  firm or  corporation,  other than the Sellers and the
Purchasers.  Without  limiting  the  generality  of the  foregoing,  each of the
parties  may, by written  notice to the other and  without  consent of any other
person,  firm or corporation  (i) extend the time for  performance of any of the
obligations or other acts of the other Party; (ii) waive any inaccuracies in the
representations  and warranties of the other party  contained in this Agreement;
(iii) waive compliance with any of the covenants of the other party contained in
this Agreement;  or (iv) waive  performance of any of the obligations under this
Agreement by the other party.

     (b) Binding  Agreement - This Agreement  shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.

                                       36

<PAGE>

     (c) Exhibits - All Exhibits,  Schedules and  Appendices  annexed hereto and
the  documents  and  instruments  delivered  simultaneously  herewith and at the
Closing  are  expressly  made a part  of  this  Agreement  as  fully  as  though
completely set forth herein,  and all references to this Agreement  herein or in
any of such writings, shall be deemed to refer to and include all such writings.

     (d)  Entire  Agreement,  etc.  -  This  Agreement  constitutes  the  entire
understanding  between the parties  pertaining to the subject matter hereof.  No
interpretation,  change,  termination or waiver of any of the provisions  hereof
shall be binding upon either party unless in writing.  No waiver by either party
of any  provision of or default under this  Agreement  shall affect the right of
such party  thereafter to enforce said provision or any other provision  hereof,
or to exercise any right or remedy in the event of any other default, whether or
not  similar.  The  invalidity  of any  provision  hereof  shall not  affect the
validity of any other such provision.

     (e) Further  Instruments - On and after the Closing date,  upon the request
of either  party,  the other party  shall do all such  further  acts,  and shall
execute,  acknowledge and deliver all such further instruments and documents, as
may  reasonably  be  necessary,  desirable  or  appropriate  to  carry  out  the
transactions  contemplated  by  this  Agreement,  all of  such  documents  to be
reasonably satisfactory to such other Party's Counsel in form and content.

     (f) Survival of  Representations,  etc. - The parties agree that all of the
representations, warranties, covenants, agreements and undertakings contained in
this Agreement shall survive Closing.

     (g) Applicable  Law - This Agreement and all the agreements  annexed hereto
as exhibits  shall be governed by and construed in  accordance  with the laws of
the State of New York.

                                       37

<PAGE>

     (h)  Venue  - The  venue  of any  action  commenced  by any  party  to this
agreement or any agreement annexed hereto as an exhibit shall be in a court with
subject  matter  jurisdiction  situated in the County of  Suffolk,  State of New
York. For purposes  hereof,  this  agreement and all  agreements  annexed hereto
shall be deemed to have been entered into within the County of Suffolk, State of
New York.

     (i) Paragraph  Headings - Paragraph  headings have been inserted herein for
convenience  only, and do not form a part of the Agreement.  (j)  Counterparts -
This Agreement may be executed in any number of separate  counterparts,  each of
which shall be deemed to be an original and which together shall  constitute one
and the same instrument.

     (k) Notices - Any payment, notices, request, instructions, consent or other
documents to be given hereunder shall be in writing and delivered  personally or
sent by certified or registered mail, postage prepaid as follows:

     If to the Purchaser, addressed to:

                         Manchester Equipment Co., Inc.

                           160 Oser Avenue

                            Hauppauge, New York 11788

     with a copy thereof addressed to:

                           Joel Rothlein, Esq.
                           Kressel, Rothlein & Roth, Esqs.
                           684 Broadway
                           Massapequa, New York 11758

     If to the Sellers, addressed to:

                           Philip J. Ferranti

                                       AND

                           Kenneth Chellam

     with a copy thereof addressed to:

                           Michael McConville, Esq.
                           McConville, Considine, Cooman & Morin, P.C.
                           25 East Main Street
                           Rochester, NY 14614

                                       38

<PAGE>

         Either party may change the persons and addresses to which any payment,
notice, request,  instruction,  consent or other document is to be sent to it by
giving  written  notice  of any such  change to the  other  party in the  manner
provided  for  herein  for  giving  notice.   Any  payment,   notice,   request,
instruction,  consent or other document mailed hereunder shall be deemed to have
been received when mailed.

     (l) Prior  Agreements  - Except for the letter of intent which is deemed to
have merged  herein,  the parties  agree that all prior  agreements  between the
parties,  whether  oral or written,  are  herewith  made null and void and of no
effect, legal or equitable.

     (m) Press  Releases  and Public  Announcements  - No Party  shall issue any
press release or make any public announcement  relating to the subject matter of
this Agreement  prior to the Closing  without the prior written  approval of the
other Party; Provided, However, that any Party may make any public disclosure it
believes in good faith is required by  applicable  law or any listing or trading
agreement   concerning  its  publicly-traded   securities  (in  which  case  the
disclosing  Party will use  reasonable  best  efforts to advise the other  party
prior to making the disclosure).

     (n)  Amendments  and  Waivers  - No  amendment  of any  provision  of  this
Agreement  shall be valid  unless the same shall be in writing and signed by the
Purchaser, the Sellers and the Companies: No waiver by any Party of any default,
misrepresentation,   or  breach  of  warranty  or  covenant  hereunder,  whether
intentional  or not,  shall be  deemed  to  extend  to any  prior or  subsequent
default,  misrepresentation,  or breach of  warranty or  covenant  hereunder  or
affect in any way any rights  arising by virtue of any prior or subsequent  such
occurrence.

     (o)  Severability - Any term or provision of this Agreement that is invalid
or  unenforceable  in any  situation  in any  jurisdiction  shall not affect the
validity or  enforceability  of the remaining terms and provisions hereof or the
validity or  enforceability  of the  offending  term of  provision  in any other
situation or in any other jurisdiction.

     (p) Expenses and Tax  Liability - Sellers will be  responsible  for any and
all taxes that may be  incurred  based upon the  consideration  received  by the
Sellers for the sale and transfer contemplated by this Agreement.

                                       39

<PAGE>

     (q) Construction - The Parties have participated jointly in the negotiation
and drafting of this Agreement.  In the event an ambiguity or question of intent
or  interpretation  arises,  this  Agreement  shall be  construed  as if drafted
jointly  by the  Parties  and no  presumption  or  burden of proof  shall  arise
favoring  or  disfavoring  any Party by virtue of the  authorship  of any of the
provisions of this  Agreement.  Any reference to any federal,  state,  local, or
foreign  statute  or law  shall  be  deemed  also  to  refer  to all  rules  and
regulations promulgated thereunder,  unless the context requires otherwise.  The
word  "including"  shall  mean  including  without  limitation.  Nothing  in the
Schedules  annexed to this  Agreement  shall be deemed  adequate  to disclose an
exception  to a  representation  or warranty  made herein  unless such  Schedule
identifies  the  exception  with  reasonable  particularity  and  describes  the
relevant  facts in reasonable  detail.  Without  limiting the  generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed  adequate to disclose an  exception to a  representation  or
warranty made herein (unless the  representation  or warranty has to do with the
existence of the document or other item  itself).  The Parties  intend that each
representation,  warranty,  and covenant contained herein shall have independent
significance,  if any  Party  has  breached  any  representation,  warranty,  or
covenant  contained  herein in any respect,  the fact that there exists  another
representation,  warranty,  or  covenant  relating  to the same  subject  matter
(regardless  of the  relative  levels  of  specificity)  which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.

     (r) Specific Performance - Each of the Parties acknowledges and agrees that
the other Party would be damaged  irreparably in the event any of the provisions
of this  Agreement are not performed in accordance  with their specific terms or
otherwise are breached.  Accordingly,  each of the Parties agrees that the other
Party shall be entitled to an injunction or injunctions  to prevent  breaches of
the provisions of this Agreement and to enforce  specifically this Agreement and
the terms and  provisions  hereof in any action  instituted  in any Court of the
United States or any State hereof having  jurisdiction  over the Parties and the
matter (subject to the provisions set forth in Paragraph "TWELFTH:  (s)" below),
in  addition  to any  other  remedy  to which it may be  entitled,  at law or in
equity.

                                       40

<PAGE>

     (s)  Submission  to  Jurisdiction  - Each  of the  Parties  submits  to the
jurisdiction of any State or Federal Court sitting in Suffolk County,  New York,
in any action or  proceeding  arising out of or relating to this  Agreement  and
agrees that all claims in respect of the action or  proceeding  may be heard and
determined in any such Court.  Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other Court. Each
of the Parties waives any defense of  inconvenient  forum to the  maintenance of
any action or  proceeding  so brought  and  waives  any bond,  surety,  or other
security  that might be required of any other Party with respect  thereto.  Each
Party agrees that a final  Judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the Judgment or in any other manner
provided by law or in equity.

                  IN WITNESS  WHEREOF,  the  Companies and the  Purchasers  have
executed this Agreement by its  authorized  officers and the Sellers have caused
their individual signatures to be affixed hereto on the day and year first above
written.

In the Precence Of

  ss/ Michael McConville                 ss/ Philip J. Ferranti
---------------------------              ----------------------

  ss/ Michael McConville                  ss/ Kenneth Chellam

  ----------------------                  -------------------

                                        Manchester Equipment Co., Inc.

                                        By:  ss/ Joseph Looney, CFO
                                        ---  ----------------------

                                        Texport Technology Groupo, Inc.

  ss/ Michael McConville                By: ss/ Kenneth Chellam
  ----------------------                -----------------------

                                        Learning Technology Group, Inc.

   ss/ Michael McConville                By:  ss/ Philip Ferranti
   ----------------------                ---  -------------------
                                       41

<PAGE>

         Rider to Definitive  Purchase  Agreement  dated March 22 , 2000, by and
between  Manchester  Equipment Co.,  Inc., a Corporation  organized and existing
under and by virtue of the laws of the State of New York, with a principal place
of business at 160 Oser Avenue,  Hauppauge, New York 11788 (hereinafter referred
to as the "Purchaser or Manchester"), Philip J. Ferranti, an individual residing
at 16 Thoroughbred  Trail,  Penfield,  New York 14526, and Kenneth  Chellam,  an
individual  residing  at  50  Timber  Brook  Lane,  Penfield,   New  York  14526
(hereinafter referred to as the "Seller" or "Sellers" and/or  "Shareholder",  or
"Shareholders"and/or  "Members"),  Texport Technology Group, Inc., a Corporation
organized  and  existing  under the virtue of the laws of the State of New York,
with a principal  place of business at 106 Dispatch Drive,  East Rochester,  New
York 14445, and Learning  Technology Group,  LLC, a Limited  Liability  Company,
organized  and  existing  under the virtue of the laws of the State of New York,
with their principal  place of business at 106 Dispatch  Drive,  East Rochester,
New York 14445 (hereinafter referred to as the "Companies").

     Reference  is  herein  made  to a  certain  "Officers  Loans"  owed  by the
Companies to each of the Sellers herein.

     As of the date hereof, the balance of said "Officers Loans",  together with
the interest due thereon is as follows:

     Philip J. Ferranti, Thirteen Thousand Four Hundred Ten ($13,410.00) Dollars

     Kenneth  Chellam,  Thirteen  Thousand Four Hundred Ten (13,410.00)  Dollars

     Manchester  herein agrees to cause the repayment of said  "Officers  Loans"
pursuant to the following Schedules:

<PAGE>

     Philip J.  Ferranti-  the sum of One  Thousand  One Hundred  Seventeen  and
50/100 ($1,117.50) Dollars, on April 22, 2000, and a similar sum of One Thousand
One Hundred Seventeen and 50/100 ($1,117.50)  Dollars, on the 22 day of each and
every  month  thereafter,  for a total  twelve  (12)  such  consecutive  monthly
payments.

     Kenneth  Chellam- the sum of One Thousand One Hundred  Seventeen and 50/100
($1,117.50)  Dollars,  on April 22, 2000,  and a similar sum of One Thousand One
Hundred  Seventeen  and 50/100  ($1,117.50)  Dollars,  on the 22 day of each and
every  month  thereafter,  for a total  twelve  (12)  such  consecutive  monthly
payments.

         The foregoing repayments shall bear no interest.

In the Presence Of:

      ss/ Michael McConville             ss/  Philip J. Ferranti
      ----------------------                  ------------------

                                             Philip J. Ferranti

       ss/ Michael McConville            ss/ Keneth Chellam
       ----------------------            ------------------

                                             Kenneth Chellam

                                          Manchester Equipment Co., Inc.

                                          By:    ss/     Joseph Looney, CFO

                                          Texport Technology Group, Inc.

     Ss/ Michael McConville               By:   ss/    Kenneth Chellam
     ----------------------                     ---    ---------------

                                          Learning Technology Group, Inc.

      Ss/ Michael McConville              By:  ss/   Philip J. Ferranti
-----------------------------             --------------------------

<PAGE>
POST CLOSING RIDER TO
DEFINITIVE PURCHASE AGREEMENT
DATED MARCH 22, 2000, AS BETWEEN

MANCHESTER  EQUIPMENT CO., INC.,  PHILIP J. FERRANTI,  KENNETH CHELLAM,  TEXPORT
TECHNOLOGY GROUP, INC., AND LEARNING TECHNOLOGY GROUP, LLC.

1.   Reference is herein made to  paragraphs  Second B1, Second B2, Second B3 of
     the Definitive Purchase Agreement.

          A.  The  provisions  of said  paragraphs  are  herein  deemed  amended
     pursuant to the addition of the following provision:

          "Notwithstanding  the contingent  payment due dates of March 22 as set
     forth in said  paragraphs,  it is  understood  and agreed  that March 22 is
     intended to be the reference  date as to Revenue and Pre Tax Earnings.  The
     contingent  payments,  if any,  will be  payable on or before May 22 of the
     subject year."

2.   With the exception of the  provisions of the foregoing  paragraph,  all the
     remaining terms and conditions of the Definitive  Purchase  Agreement shall
     remain in full force and effect.

Dated:   May  9, 2000
                                    MANCHESTER EQUIPMENT CO., INC.

                                    By: ss/ Joseph Looney
                                    ---------------------

                                    ss/ Philip J. Ferranti
                                    ----------------------
                                    Philip J. Ferranti

                                     ss/ Kenneth Chellam
                                     -------------------
                                    Kenneth Chellam

                                    TEXPORT TECHNOLOGY GROUP, INC.

                                    By: ss/ Joseph Looney
                                        ------------------

                                    LEARNING TECHNOLOGY GROUP, LLC

                                    By:  Joseph Looney
                                        ---------------

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