Document:

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                                                               Exhibit 10.8

D.I.Y. Home Warehouse, Inc.
5811 Canal Road, Suite 180                           August 4, 2000
Cleveland, Ohio 44125

Dear Scott:

Upon execution by D.I.Y. Home Warehouse, Inc., having a principle place of
business located at 5811 Canal Road, Valley View, Ohio 44125 ("Merchant"),
this letter shall serve as the agreement (the "Agreement") between Merchant
and Schottenstein Bernstein Capital Group, LLC having a principle place of
business located at 1800 Moler Road, Columbus, Ohio 43207 (the "Agent") for
Agent to act as Merchant's sole and exclusive agent to sell all of the
merchandise (the "Merchandise") in Merchant's stores listed on Schedule A
attached (collectively, the "Stores" or individually a "Store") by means of a
"Store Closing," and or "Total Liquidation," sale (the "Sale"). In
consideration of the mutual promises and covenants contained herein and other
good and valuable consideration, Merchant and Agent agree as follows:

1.   AGENCY. Merchant appoints Agent its exclusive agent for the purpose of
conducting the Sale of the Merchandise located at the Stores. Agent shall be
responsible, with Merchant's assistance, for securing any required licenses
and permits and complying with any "going-out-of-business" laws, rules,
ordinances and regulations. Merchant shall pay any fees and expenses incurred
in connection therewith and Agent will post any bonds required in connection
with such licenses and permits.

2.   INVENTORY. As soon as practicable after Merchant's acceptance of this
Agreement, Merchant shall cause to be taken a "retail dollar" and or SKU
physical inventory of the Merchandise at the Stores (the "Inventory Count").
The date that the Inventory Count is taken in each Store shall be referred to
as to each Store as the "Inventory Date". The Inventory Count shall be taken
by RGIS or another independent inventory service mutually designated by
Merchant and Agent (the "Inventory Service") the cost of which shall be shared
equally by Merchant and Agent. Each Store shall be closed during the Inventory
Count and during the Inventory Count, neither Merchant nor Agent shall enter
such Store without each having a representative present, except in the case of
an emergency. Merchant and Agent, will provide one or more representative at
the Store during the Inventory Count. The Inventory Count shall be taken on
the basis of the lowest ticketed price of each item of Merchandise except for
(i) out of season inventory which shall be valued at fifty (50%) percent of
the lowest ticketed price and (ii) damaged, display and clearance Merchandise
price for which Merchant and Agent shall agree upon a price. Merchant shall
remove from the Sale any item of damaged, clearance, or display Merchandise
for which a price cannot be agreed upon as well as Merchandise as to which
Merchant and Agent cannot agree upon the seasonality. Notwithstanding any of
the above, the reduction in the Retail Value, resulting from Merchant and
Agent's pricing of damaged, display and clearance Merchandise, shall not
exceed Fifty Thousand Dollars ($50,000) per Store.

3.   RETAIL VALUE. The term "Retail Value" herein shall mean the aggregate of
the item values of the respective items of all the Merchandise. Merchandise
shall include all goods owned by Merchant and located at the Stores on the
Inventory Date except: (i) goods which Merchant shall have reasonably shown to
belong to sublessees, licensees or concessionaires of Merchant or to have been
placed in the Stores on consignment; and (ii) furniture, fixtures, equipment
and improvements to realty located in the Stores. The ticketed price of any
item of Merchandise shall not include any sales or gross receipts taxes. If
any item of Merchandise has more than one ticket, the lower retail price shall
prevail unless Merchant establishes that such Merchandise was inadvertently
priced incorrectly. Merchandise arriving at the Stores following the Start
Date ("On Order Merchandise"), shall be valued at the lowest ticketed price
less the discount then prevailing in the Stores.

4.   SALE TERM. The Sale shall start no later than August 31, 2000 (the "Start
Date"), and shall end no later than the close of business at each Store,
approximately eight weeks thereafter, unless extended by agreement of the
parties (the "End Date"). Agent may terminate the Sale prior to the End Date
at any Store in its reasonable discretion. At the conclusion of the Sale,
Agent agrees to leave the Stores in "broom clean" condition, with all
Merchandise (regardless of the condition) being removed by Agent, except for

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removal of furniture, fixtures, equipment and remaining Supplies (as defined
in Section 10 hereof) and to leave the Stores in the same condition as on the
Start Date, ordinary wear and tear excepted.

5.   GUARANTEED PAYMENT. Agent guarantees that Merchant shall receive an amount
equal to forty-nine and one-half percent (49.5%) of the Retail Value (the
"Guaranteed Payment") of the Merchandise. In the event that the aggregate
value of all the Merchandise shall be less than Five Million Seven Hundred
Thousand Dollars ($5,700,000), the Merchant will transfer to the Stores'
inventory of a mix and quality to be agreed upon so that the inventory level
is equal to or greater than $5,700,000.

In addition to the Guaranteed Payment, Merchant will be entitled to sixty
percent (60%) of the Net Profit of the Sale. For purposes of this Agreement,
Net Profit of the Sale is the gross proceeds of the sale after payment of the
Guaranteed Payment, Expenses of Sale and payment to Agent of an amount equal
to one percent (1%) of the Retail Value.

Merchant shall retain all amounts collected during the Sale, as well as any
insurance proceeds resulting from the loss of any Merchandise subject to this
Agreement (the "Proceeds"), out of which it shall pay Expenses of Sale, as set
forth below, and satisfy the Guaranteed Payment. After satisfaction of the
Guaranteed Payment and payment of Expenses of Sale, and subject to the sharing
of the Net Profit of the Sale set forth above, Agent shall be entitled to
receive its share of the Proceeds as its commission herein. As security for
the Guaranteed Payment and Expenses of Sale, Agent will deliver to Merchant an
irrevocable Letter of Credit, in a form attached hereto as Schedule B from
Wells Fargo Bank in the amount of $2,115,000 having an expiration date of not
earlier than November 30, 2000. Reductions in the Letter of Credit amount will
be permitted as appropriate. In the event, following the End Date, that
Proceeds from the Sale are insufficient to satisfy the Guaranteed Amount and
Expenses of Sale, Merchant shall be entitled to draw down upon the Letter of
Credit for the amount of the deficiency.

6.   SALE CONDUCT. Agent shall conduct the Sale in the name of Merchant in full
and complete compliance with applicable laws, rules, or ordinances in the
manner in which Agent in its discretion reasonably deems fit, including, but
not limited to, advertising, pricing of Merchandise, number and type of
personnel, Store hours, Store maintenance and security. Agent may advertise
the Sale as a Store Closing, or Total Liquidation or similar type sale in
accordance with applicable law and applicable leasehold agreements.
Notwithstanding the Guaranteed Payment, Agent acknowledges that Merchant will
after the End Date have a significant number of stores in Ohio which will
continue to operate under Merchant's name. As a result, Agent will conduct the
Sale using its best efforts and in such a manner as to minimize any bad
publicity or loss of goodwill arising from the conduct of the Sale. Agent may
use Merchant's employees to the extent Agent deems feasible, and Agent may
select and schedule the number and type of Merchant's employees required for
the Sale, however, Merchant's employees shall at all times remain employees of
Merchant. On and after the Start Date, Merchant shall pay, as an Expense of
Sale, as hereinafter defined, the gross wage payroll paid to Merchant's
employees used in the Stores by the Agent during the Sale plus (a) the related
payroll taxes (including FICA and Unemployment), (b) Worker's Compensation and
(c) health care insurance benefits (subsections (a), (b) and (c) collectively,
the "Benefits") not in excess of nineteen percent (19%) of said gross payroll
(the "Fringe Benefit Cap"). Any amounts in excess of the Fringe Benefit Cap
shall be at Merchant's Expense, as hereinafter defined.

Merchant and Agent acknowledge and agree, that (i) nothing herein nor any of
Agent's actions taken in respect hereto shall be deemed to constitute an
assumption by Agent of any of Merchant's obligations relating to any of
Merchant's employees including, without limitation, vacation, pension,
withdrawal, severance pay, vacation pay, sick leave or pay, maternity leave or
pay, Worker Adjustment Retraining Act ("WARN") claims (if any) and other
termination type claims and obligations; and (ii) Merchant hereby indemnifies
Agent in respect to any claims asserted by any of Merchant's employees, except
as to claims arising out of the negligence or wrongful act or omission of
Agent, and Merchant is solely and specifically responsible for all of
Merchant's obligations under any collective bargaining agreements and any
purported oral service contracts.

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7.   EXPENSES OF SALE. Merchant shall collect all Proceeds out of which shall be
paid all "Expenses of Sale." In the event that Proceeds are not sufficient to
pay such Expenses of Sale, Merchant shall be entitled to draw down upon the
Letter of Credit, as set forth in Paragraph 5, for the amount of the
deficiency after the End Date. Expenses of Sale shall be (i) the actual gross
wage payroll paid to Merchant's employees used in the Stores by the Agent
during the Sale plus the cost of the Benefits for such employees not to exceed
the Fringe Benefit Cap; (ii) advertising expense; (iii) signage for the Sale;
(iv) security in the Stores; (v) bank card fees and charge backs; (vi)
telephone charges for the Stores in excess of base charges; (vii) Agent's
supervision expenses, including supervisor bonuses not to exceed thirty-five
percent (35%) of supervisor's salary; (viii) any other expenses directly
attributable to the Sale authorized by Agent and (ix) occupancy costs on a per
diem per Store basis as per attached Schedule C. Agent shall bill Merchant
weekly for any Expenses of Sale paid by Agent which shall be promptly paid
from Proceeds collected by Merchant.

8.   MERCHANT'S EXPENSES. During the Sale, Merchant shall be responsible for
payment of the following items none of which shall be deemed an Expense of
Sale: (i) all occupancy costs not included in Schedule C; (ii) any Benefits in
excess of the Fringe Benefit Cap; (iii) all other employee benefits, including
but not limited to union dues, termination pay, pension benefits, severance
pay, vacation pay, sick leave or pay, maternity leave or pay and WARN claims
(if any); (iv) major maintenance; and (v) costs not directly attributable to
the Sale.

9.   TAXES. Merchant shall collect all sales, excise and gross receipts taxes
(and not income taxes) (collectively the "Sales Taxes") payable to any taxing
authority having jurisdiction, which taxes shall be added to the sales price
and be paid by the customer at the time Merchandise is purchased. Merchant
shall indemnify and hold Agent harmless from and against any and all costs
(including, but not limited to, reasonable attorneys' fees), assessments,
fines or penalties which Agent may incur as a direct or indirect consequence
of the failure by Merchant to pay Sales Taxes to the proper taxing authorities
and/or the failure by Merchant to promptly file with taxing authorities any
and all returns, reports and other documents required by applicable law to be
filed or delivered to such taxing authorities.

10.   SUPPLIES. Agent shall have the right to use in connection with the Sale,
without any charge, all signs and promotional materials, furniture, equipment,
fixtures and supplies, including, but not limited to, bags, boxes, twine,
paper and similar sales materials ("Supplies"), located at the Stores on the
Start Date. Agent shall have no obligation to account to Merchant for any of
the Supplies used during the Sale, but all Supplies remaining in the Stores on
the End Date shall be left on the premises and remain Merchant's property.
Should additional Supplies be required in the Stores during the Sale, Merchant
agrees to promptly provide such additional Supplies to Agent, if available at
Merchant's cost plus shipping costs, such cost to be an Expense of Sale.
Merchant covenants and warrants that it has not and will not remove any
Supplies from the Stores in contemplation of this Agreement.

11.   CREDIT CARDS, GIFT CERTIFICATES AND RETURNS. All sales shall be for cash
or upon bank credit cards (excluding private label cards). During the Sale,
all bank credit card sales shall be through Merchant's bank credit card
system. All bank card fees including charge backs in connection with the Sale
shall be an Expense of Sale. Agent will be responsible for any reserves
required by Merchant's bank credit card provider. For fourteen (14) days
following the Start Date, Agent shall accept customer returns of first quality
goods purchased prior to the Start Date. Items accepted for return shall be
added to Merchandise for the purpose of calculating Retail Value, but shall
not reduce Proceeds. All sales shall be advertised, "FINAL," and all sales
receipts shall be marked "FINAL," by Agent. Agent shall accept Merchant's gift
certificates during the Sale. Gift Certificates shall be treated as cash and
the value thereof added to Proceeds. Agent shall, on behalf of Merchant, offer
refunds to customers with goods on layaway. The amounts refunded to layaway
customers shall not reduce Proceeds.

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12.      MERCHANT'S WARRANTIES.     Merchant hereby warrants and represents:

a.   Merchant is a corporation, duly and validly existing and in good standing
under the laws of the State of Ohio. Merchant is and during the Sale will be
authorized and duly qualified as a corporation to do business and is in good
standing in the jurisdiction in which the Stores are located.

b.   (i) This Agreement and all other documents executed by Merchant in
accordance with this Agreement are the valid and binding obligations of
Merchant enforceable in accordance with their terms; (ii) Merchant has taken
all necessary corporate action required to authorize the execution,
performance and delivery of this Agreement and the related documents; (iii) no
court order or decree of any federal, state or local government authority, or
other action known to Merchant, is in effect which will or may prevent or
impair consummation of the transactions contemplated by this Agreement; and
(iv) the consent of any person or entity, including any landlord, is not
required with respect to the transaction contemplated herein.

c.   Except for the lien of National City Commercial Finance, Merchant owns and
will own at the Start Date and during the Sale good and marketable title to
all of the Merchandise (together with the proceeds and accounts receivable
arising therefrom), free and clear of all liens, mortgages, pledges, charges,
encumbrances, equities or claims whatsoever. Agent shall be entitled to retain
all proceeds, subject to section 5, free and clear of all liens, mortgages,
pledges, charges, encumbrances, equities or claims whatsoever.

d.   Except for the balancing of inventory between the Stores, Merchant shall
not ship goods into or out of the Stores without Agent's consent, which
consent will not be unreasonably withheld, nor raise any prices of the
Merchandise in contemplation of the Sale. The mix of Merchandise in the Stores
shall be comparable to that found in the Merchant's ongoing stores.

e.   No actions or proceedings have been instituted against Merchant or have
been threatened, preventing or which may prevent the consummation of the
transactions contemplated by this Agreement. Merchant is reasonably current on
all accounts payable, due and owing to parties whose cooperation is necessary
for operation of the Sale, including but not limited to landlords, newspapers
and utilities.

f.   No notice of terminable default under the leases, licenses or subleases
relating to the Stores have been noticed thereunder, and such leases do not
prohibit the transactions under this Agreement or of the Sale contemplated
herein.

g.   Merchant represents and warrants that it will not prior to or during the
Sale grant any lien or encumbrance on the Merchandise or the Proceeds.

h.   There is no outstanding order, judgment, injunction award or decree of any
court, governmental or regulatory body or arbitration tribunal by which the
Merchant or the Merchandise is bound which would materially interfere with the
transactions herein, and as of the date of execution herein there is no
action, suit, claim, legal, administrative or arbitral proceedings (whether or
not the defense thereof or liabilities in respect thereof are covered by
insurance) against the Merchant or the Merchandise which would, if determined
adversely to the Merchant, be likely to have a material adverse effect upon
the transactions contemplated hereby, nor to the best of Merchant's knowledge
are there any facts which are likely to give rise to any such action, suit,
claim or legal, administrative or arbitral proceeding or investigation.

i.   The Retail Value of the Merchandise shall be not less than Five Million
Seven Hundred Thousand Dollars ($5,700,000).

j.   Agent shall be permitted to pass on all applicable manufacturers warranties
to customers.

k.   Merchant represents and warrants that it has not raised any prices in
contemplation of the Inventory Count and that all pricing, including pricing
of On-Order merchandise and merchandise from the distribution center will be
done in accordance with Merchant's historic practices.

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l.   The Stores will have been operated up through the Start Date in a manner
consistent with Merchant's ongoing stores.

m.   No point of sale activity shall have occurred outside the ordinary course
of business.

n.   Merchandise offered for Sale by Agent with a discount of no lower than ten
percent (10%) shall be lower in price then the same Merchandise advertised in
Merchant's circulars scheduled to run on August 13. In the event of any such
discrepancy herein, Agent shall be entitled to offer customers the lower of
the two prices. Agent's sole remedy shall be a credit from Merchant for the
amount of the discrepancy.

13.  AGENT'S WARRANTIES.        Agent hereby warrants and represents:

a.   Agent is a limited liability corporation, duly and validly existing and in
good standing under the laws of the State of Delaware. Agent is, and during
the Sale will be, authorized and duly qualified to do business in each
jurisdiction where the failure to so qualify would have a material adverse
effect on Agent's ability to perform hereunder.

b.   (i) This Agreement and all other documents executed by Agent in accordance
with this Agreement are the valid and binding obligations of Agent enforceable
in accordance with their terms; (ii) Agent has taken all necessary action
required to authorize the execution, performance and delivery of this
Agreement and the related documents; (iii) no court order or decree of any
federal, state or local government authority, or other action known to Agent,
is in effect which will or may prevent or impair consummation of the
transactions contemplated by this Agreement; and (iv) the consent of any
person or entity, is not required with respect to the transactions
contemplated herein.

c.   There is no outstanding order, judgment, injunction award or decree of any
court, governmental or regulatory body or arbitration tribunal by which the
Agent is bound which would materially interfere with the transactions herein,
and there shall be no action, suit, claim, legal, administrative or arbitral
proceedings (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) against the Agent which would, if determined
adversely to the Agent, be likely to have a material adverse effect upon the
transactions contemplated hereby, nor are there any facts which are likely to
give rise to any such action, suit, claim or legal, administrative or arbitral
proceeding or investigation.

14.  NON COMPETE. During the Sale, neither Merchant nor any affiliate of
Merchant shall run a store closing, liquidation or similar sale in competition
with the Sale at any store trading under the D.I.Y. Home Warehouse name within
the advertising area of the Stores without the prior written approval of
Agent.

15.  INSURANCE. a.  Merchant at its expense shall continue until the End Date,
in such amounts as Merchant currently has in effect, all of Merchant's
liability insurance policies, including but not limited to, comprehensive
public liability policies covering injuries to persons and property in or in
connection with Merchant's operation of the Stores and, from and after the
acceptance by Merchant of this Agreement, shall cause Agent to be named as
additional insured, as its interests may appear, with respect to all such
policies. On or before the Start Date, Merchant shall deliver to Agent
certificates evidencing such insurance policies, setting forth the duration
thereof and the naming of Agent as an additional insured, as its interests may
appear, in accordance with the provisions hereof, all in form reasonably
satisfactory to Agent. Merchant shall be responsible for the payment of all
deductibles, retentions or self-insured amounts under such policies except in
the event liability arises by reason of the negligence or wrongful act or
omission of Agent or Agent's independent contractors.

b.   Merchant at its expense shall provide fire, theft and extended coverage
casualty insurance on the Merchandise in a total amount at least equal to the
retail value thereof. From and after the Start Date, said coverage will
contain a loss payable clause in favor of Merchant's lender and Agent, as
their interests may appear. In the event of a loss to the Merchandise included
in the Inventory Count occurring on or after the

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Start Date, the proceeds of such insurance attributable to the Merchandise
shall be paid to Agent and such proceeds shall be included as part of the
Proceeds. On or before the Start Date, Merchant shall deliver to Agent
certificates evidencing such insurance policies, setting forth the duration
thereof and the naming of Agent as a loss payee in accordance with the
provisions hereof, all in form reasonably acceptable to Agent. Merchant shall
be responsible for the payment of all deductibles or self-insured amounts
under such policies except in the event liability arises by reason of the
negligence or wrongful act or omission of Agent or Agent's independent
contractors.

c.   Merchant shall at all times during the Sale maintain in full force and
effect Worker's Compensation Insurance in compliance with all statutory
requirements.

d.   During the performance and length of this Agreement, Agent will maintain
workers compensation, commercial general liability and automobile liability
insurance and will name Merchant as an additional insured on all such
policies.

16.  PEACEFUL POSSESSION. Merchant agrees during the Sale to grant and provide
Agent peaceful and quiet possession of the Stores and to take no action
relating to the Stores which would disturb such possession, including, without
limitation, any action to modify or terminate any existing ADT or similar
security system or cash register maintenance agreements or remove any of the
furniture, fixtures or equipment from the Stores. Merchant agrees to maintain
in operation at the expense of Merchant for the benefit of Agent (i) the point
of sale equipment in the Stores and (ii) the management information systems.

17.  INDEMNIFICATION. Agent and Merchant each agree to indemnify and defend and
hold harmless the other from any and all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable attorneys'
fees, costs and expenses, asserted against, resulting to or imposed upon
Merchant or Agent, directly or indirectly, by reason of or resulting from
either's (i) material breach or failure to comply with any of the agreements,
covenants, representations or warranties contained in this Agreement, or (ii)
any negligent or wrongful act or omission of either or its employees.

18.  DEFAULT. a. For the purpose of this Agreement, an "Event of Default" shall
be deemed to have occurred:

(1)  upon the failure by Merchant or Agent to perform promptly and fully any
material obligation or covenant hereunder or any material obligation or
covenant in any document delivered pursuant hereto or any collateral agreement
to this Agreement after having received five (5) days' prior written notice,
except in the case of a nonmonetary default which is incapable of being cured
within such notice period and diligently proceeds to cure said default and (a)
the party in default has taken all steps necessary to commence to cure such
default within such notice period and (b) such failure to cure, in the case of
a default by Merchant, will not adversely affect, in any material way, Agent's
ability to conduct the Sale in the manner contemplated herein;

(2)  if any of the warranties or representations made by Merchant or Agent
herein proves to be untrue or false in a material way; or

(3)  if any breach of this Agreement by Merchant results in the Agent being
unable to conduct or complete the Sale at any Store as contemplated herein.

b.   In the event of an interruption of the Sale and/or occurrence of an Event
of Default resulting from any act or omission of Merchant which prevents Agent
from conducting or completing the Sale at any Store as provided by this
Agreement, Agent may, at its option, either (i) proceed with the Sale at the
Store location(s) affected; or (ii) require Merchant, at Merchant's expense,
to move the Merchandise to another reasonably proximate Store designated by
Agent; or (iii) notify Merchant as to the termination of the Sale as to the
particular Store location, in which event, Agent shall be made whole and (i)
Agent shall be reimbursed for all its out of pocket expenses referable to such
Store; and (ii) Merchant shall be entitled to

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retain all Proceeds at such Store prior to the interruption or Event of
Default as well as any remaining Merchandise. Merchant acknowledges that Agent
would be irreparably injured in the event of any failure by Merchant to
promptly and fully perform any obligation hereunder if such failure directly
or indirectly interferes with the conduct by Agent of the Sale, and hereby
consents, in the event of any such failure or in the event that any such
failure is threatened or appears imminent, to the entry of an injunction
specifically enforcing the terms of this Agreement.

c.   No right or remedy granted in or pursuant to this Agreement shall be
exclusive of any other right or remedy so granted or otherwise available.
Every such right or remedy shall be cumulative and shall be in addition to
every other right or remedy so granted or existing at law or in equity or by
statute, or created, granted or existing pursuant to any agreement to which
Agent and/or Merchant is or may hereafter become a party.

19.  JURISDICTION. This Agreement shall be governed and construed in accordance
with the laws of the State of Ohio without regard to the conflicts of laws
principles thereof.

20.  ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties with respect to these transactions and supersedes and cancels all
prior agreements including, but not limited to all proposals, letters of
intent or representations, written or oral, with respect thereto.

21.  MODIFICATIONS. This Agreement may not be modified except in a writing
executed by each of the parties.

22.  ASSIGNMENT. Except as specifically provided in this Section, or upon
written consent of the parties hereto, this Agreement shall not inure to the
benefit of, or, shall not be assignable to, any person or entity other than
Merchant and Agent. All of the terms and provisions of this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the successors in
interest of the respective parties hereto.

23.  NOTICES. All notices under this Agreement shall be sent by hand, by
recognized overnight courier service or by certified mail, return receipt
requested to: (a) Merchant at the address listed on the first page hereof, to
the attention of Mr. Clifford Reynolds , President, with a copy to Mr. Harold
O. Maxfield, Jr., Cavitch, Familo, Durkin and Frutkin Co. L.P.A, 14th Floor,
East Ohio Building, Cleveland, Ohio 44114; (b) Agent, at the address listed on
the first page hereof to the attention of Scott Bernstein, Esq. All notices
delivered hereunder will be effective upon receipt.

24.  CONFIDENTIAL NATURE OF TRANSACTION.The parties agree to keep the existence
of this transaction confidential until Merchant announces the closing of the
Stores to its employees. Agent agrees to notify all employees and/or agents
that have or will have knowledge of this transaction of the confidential
nature of this transaction. The parties agree that they will jointly approve
any news release(s) regarding this transaction. Agent acknowledges that
Merchant may suffer significant damages if the existence of this transaction
becomes known to customers and/or employees.

25.  COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. Such execution may be by facsimile.
Any party signing via facsimile shall forward an original hard copy of such
signature to the other party, but the failure to send said original signature
shall not affect the enforceability of this Agreement against such party, the
parties hereto agreeing that a facsimile signature may be treated as an
original signature hereunder.

<PAGE>   8

Please acknowledge your acceptance hereof by signing a copy and returning it
to us.

Very truly yours,
SCHOTTENSTEIN BERNSTEIN CAPITAL GROUP, LLC

By:               /s/ Scott Berstein
                  ------------------

Its:              Principal
                  ---------

ACCEPTED THIS 7th DAY OF August, 2000.

D.I.Y. HOME WAREHOUSE, INC.
By:               /s/ R. Scott Eynon
                 --------------------
Printed Name:     R. Scott Eynon
                 ----------------
Title:            V.P. Operations
                 ----------------

<PAGE>   9

                                   Schedules

                              Schedule A - Stores
                     Schedule B - Form of Letter of Credit
                        Schedule C - Per Diem Occupancy

<PAGE>   10

                                TALLMADE STORE

                              1040 East Tallmadge
                                  Akron, Ohio

                              NORTH RANDALL STORE

                             4601 Northfield Road
                              North Randall, Ohio

                                  SCHEDULE A

<PAGE>   11

                               LETTER OF CREDIT
                              GUARANTEED PAYMENT

                         IRREVOCABLE LETTER OF CREDIT

Beneficiary                           Applicant
-----------                           ---------

                                      Schottenstein Bernstein Capital Group, LLC
                                      1800 Moler Road
                                      Columbus, Ohio  43207

                                      Amount
                                      ------

                                      USD  $2,115,000.00 (U.S. Dollars)

Expiry:  November 30, 2000

Dear Sir(s):

We hereby issue in your favor our Irrevocable Letter of Credit in the amount
of Two Million One Hundred Fifteen Thousand and 00/100 Dollars ($2,115,000.00)
U.S. Dollars.

We hereby irrevocably authorize you to draw on us, in an aggregate amount not
to exceed the amount of this Letter of Credit, by your draft or drafts,
payable at sight, drawn on Wells Fargo Bank bearing the clause: "Drawn under
Wells Fargo Bank Letter of Credit No. _______" and accompanied by your
certificate appropriately completed and signed by you in the form of the
attached Annex A.

Special Conditions:

1.   Wells Fargo Bank is not responsible for any calculations confirming the
proper amount of the draft pursuant to the attached Annex A, Certificate for
Drawing.

2.   This original Letter of Credit my be returned with any drawing hereunder
which results in the full or partial payment of the amount of this Letter of
Credit.

3.   Upon delivery to us of a Reduction Certificate, the amount of this Letter
of Credit shall be reduced by the amount set forth in such Reduction
Certificate.

4.   Upon delivery to us of a certificate from you in the form of Annex C, the
expiry date shall be the date set forth in such certificate, which in no event
shall be later than November 30, 2000.

                            SCHEDULE B, Page 1 of 3

<PAGE>   12

We certify that your draft drawn and in conformity with the terms of this
Letter of Credit will be duly honored on presentation after receipt if
presented to us on or before the expiry date. Payment upon the draft shall be
made by us to you in immediately available funds by wire transfer to your
account in the United States specified for payment in the draft presented to
us at the earliest opportunity.

We hereby undertake that we will not modify, revoke or terminate this Letter
of Credit without your written consent.

Yours Faithfully,

WELLS FARGO BANK

------------------------------------
Authorized Signature

                            SCHEDULE B, Page 2 of 3

<PAGE>   13

         CERTIFICATE FOR DRAWING

The undersigned, being the President of, hereby certifies with reference to
Wells Fargo, Letter of Credit No. _______ that:

1.   The amount of the sight draft which accompanies this drawing certificate is
$_________________.

2.   The undersigned has determined that the Proceeds are insufficient to
satisfy the Guaranteed Payment, Expenses of Sale, as those terms are defined
in the Agreement, dated _____________ (the "Agreement"), by and between D.I.Y.
Home Warehouse, Inc. and Schottenstein Bernstein Capital Group, LLC.

3.   Merchant is not in material default under the terms of the Agreement.

4.   ___________ three (3) business days notice to the Agent of its intent to
submit the sight draft which accompanies this certificate.

5.   Capitalized terms used herein but not defined shall have the meanings set
forth in the Agreement.

IN WITNESS WHEREOF, __________d this Certificate for Drawing to be executed
and delivered as of the _______ day of ____________, 2000.

_________________________________________

By:      ____________________________________
         President

Sworn to before me this

______ day of ____________, 2000.

_______________________________
Notary Public

                            SCHEDULE B, Page 3 of 3

<PAGE>   14

                              DIY HOME WAREHOUSE
                                  SCHEDULE C
                               PER DIEM SCHEDULE

<TABLE>
<CAPTION>

                                                                     6 Months ended 6/00
                                                                      2              11
                                       DAILY         TOTAL        N. Randall      N. Akron
                                       -----        ------
<S>                                  <C>            <C>             <C>             <C>
OCCUPANCY RENT                       1,403.84       255,498         255,498            --
OCCUPANCY MORTGAGE INTEREST               --            --              --             --
OCCUPANCY DISPOSAL                      26.09         4,749           2,313          2,436
OCCUPANCY RE TAX                       455.10        82,829          48,491         34,338
OCCUPANCY UTILITIES                    679.93       123,748          58,999         64,749
                                     --------
                                     2,564.97
</TABLE><PAGE>   1
                                                                   Exhibit 10.18

                        MANUFACTURE AND SUPPLY AGREEMENT

         THIS MANUFACTURE AND SUPPLY AGREEMENT is made as of August 4, 2000 (the
"Effective Date,"), by and between Opticon Medical Inc. ("Company"), a Delaware
corporation having its principal place of business at 7001 Post Road, Suite 100,
Dublin, OH 43016, and Medical Elastomer Development, Inc. ("Supplier"), an Ohio
corporation having its principal place of business at 1700 Highland Road, P.O.
Box 1030, Twinsburg, Ohio 44087-9030.

                                    RECITALS

         A. The Company has developed and continues to develop certain
proprietary urological and urinary incontinence devices more particularly
described herein. Such devices are the subject of issued and pending U.S. and
foreign patents owned by the Company.

         B. Supplier has certain proprietary processes and expertise relating to
the manufacture of medical component parts.

         C. Supplier is willing to manufacture and supply to Company, and
Company is willing to purchase from Supplier, component parts of such urological
and urinary incontinence devices, all on the terms and conditions set forth
herein.

         NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto have agreed as follows:

                                    ARTICLE I
                                   DEFINITIONS

         As used herein, the following terms shall have the meanings set forth
below:

         1.1 "Affiliate" shall mean any entity controlling, controlled by or
under common control with a party hereto. For purposes hereof, "control" shall
mean ownership, directly or indirectly, of more than fifty percent (50%) of the
securities having the right to vote for election of directors, in the case of a
corporation, and more than fifty percent (50%) of the beneficial interest in the
capital, in the case of a business entity other than a corporation.

         1.2 "Agreement" shall mean this Manufacture and Supply Agreement, as
amended from time to time.

         1.3 "Confidential Information" shall mean all proprietary information
of a party, regardless of whether disclosed prior or subsequent to the Effective
Date, including without limitation any know-how, specifications, diagrams,
information, data, materials, prototypes or models relating to any of the
markets, customers, suppliers, inventions, products, procedures, designs,
research and development, business plans, financial projections, organizations,
employees or consultants or any other similar aspects of the present or future
business of either party, the secrecy of which confers a competitive advantage
upon that party. The Confidential

<PAGE>   2

Information of Company shall include, without limitation, the Specifications.
The Confidential Information of Supplier shall include, without limitation, the
Manufacturing Processes (hereinafter defined) used in the manufacture of the
Products.

         1.4 "FDA" shall mean the United States Food and Drug Administration.

         1.5 "Force Majeure" shall mean an event or condition as described in
this Section 1.5, not existing as of the date of this Agreement, not reasonably
foreseeable as of such date and not reasonably within the control of either
party, which prevents in whole or in material part the performance by one of the
parties of its obligations hereunder or which renders the performance of such
obligations so difficult or costly as to make such performance commercially
unreasonable. Force Majeure events or conditions include, without limitation:
governmental action, riots, disturbance, war, strikes, lockouts, slowdowns,
prolonged shortage of energy supplies, shortages of materials not reasonably
within Supplier's control, epidemics, and natural or physical disasters such as
fire, flood, hurricane, typhoon, earthquake, lightning and explosion.

         1.6 "Good Manufacturing Practices" ("GMP") shall mean those practices
in the manufacture of medical devices which are recognized as good manufacturing
practices within the United States pursuant to FDA guidelines and international
standards pursuant to ISO 9000 guidelines and other administrative
interpretations and rulings in connection therewith.

         1.7 "Manufacturing Processes" shall mean the processes used in the
manufacture of the medical component parts including, without limitation,
molding processes, injection size, shot size, temperature, injection pressure,
injection speed, cure time, molding time, demolding process, closure rate,
vacuum pressure, clamping pressure, injection delays, equipment make and size.

         1.8 "Products" shall mean the medical device component parts listed on
Exhibit A and any modifications thereof The parties may amend Exhibit A to
include additional kinds or types of medical device component parts upon mutual
agreement as to specifications, prices and other terms of manufacture and
supply.

         1.9 "Specifications" shall mean those dimensional and material
specifications for the Products as are provided by Company to Supplier from time
to time.

                                    ARTICLE 2
                 DEVELOPMENT, MANUFACTURE AND SUPPLY OF PRODUCTS

         2.1 MANUFACTURE AND SUPPLY OF PRODUCTS. Subject to the terms and
conditions set forth in this Agreement, Supplier shall manufacture and sell to
the Company Products ordered by the Company according to the Specifications. The
Products manufactured by Supplier are component parts of medical devices. The
assembly of the Products into medical devices will not be performed by Supplier
and Supplier has no responsibility or liability for such assembly. All
manufacturing of Products. shall be made at facilities owned or operated by
Supplier, and Supplier shall not subcontract any part thereof to any third
party. All Products manufactured hereunder shall meet the Specifications and
shall be manufactured in accordance with Good

                                       2
<PAGE>   3
Manufacturing Practices. All Products shall be labeled and packaged in
accordance with Company's reasonable written instructions therefor. During the
term of this Agreement, the Company agrees to (**REDACTED**) purchase of
Products under this Agreement (**REDACTED**) for sale to end users and/or others
(except for design testing), either directly or indirectly through wholesalers,
distributors, or health care providers, worldwide.

         2.2 MATERIALS AND PROCESS CHANGES. All materials and processes used by
Supplier shall be approved by Company. The Company shall base its approval or
disapproval of any manufacturing process proposed by Supplier upon the Company's
examination of samples of Products resulting from such manufacturing process.
The Company acknowledges and agrees that the Manufacturing Processes for the
Products are the intellectual property of Supplier exclusively, and that the
Company and/or its Affiliates have no rights in the Manufacturing Processes and
are granted no rights in the Manufacturing Processes by this Agreement or
otherwise. Notwithstanding any other provision of this Agreement, Supplier shall
under no circumstances be required to disclose, transfer or assign the
Manufacturing Processes for the Products to the Company or to any other person
or entity, except that Supplier shall make such disclosures to governmental
authorities as required by such governmental authorities in the course of any
FDA or other governmental regulatory inspections, and Supplier shall be required
to disclose the Manufacturing Processes in regard to the Products to a third
party manufacturer in the event that Supplier is unable to manufacture Products
because of a force majeure event. In the case of such a force majeure event, the
disclosure by Supplier of the Manufacturing Processes to the third party
manufacturer shall be contingent upon such third party manufacturer having first
entered into an agreement, upon terms deemed acceptable by Supplier, which terms
shall include, without limitation, such third party manufacturer's agreement not
to disclose the Manufacturing Processes to any other person or entity,
including, without limitation, the Company, except for disclosures to
governmental authorities required by such governmental authorities in the course
of an FDA inspection. After approval, any changes in materials or Manufacturing
Processes for a Product, and any engineering or other charges or price
increases, shall be subject to the prior written approval of the Company, except
as otherwise provided in this Agreement. Any agreed engineering and other
charges for changes in Manufacturing Processes shall be separately negotiated
and invoiced to the Company. Any changes to the Manufacturing Processes shall
(**REDACTED**) comply with the FDA's Quality System Regulation design review
requirements.

         2.3 PURCHASE OF PRODUCTS. Subject to the terms and conditions set forth
in this Agreement, the Company shall, from time to time during the term of this
Agreement, purchase from Supplier (**REDACTED**) Products as provided in this
Agreement.

         2.4 FORECASTS. The Company shall provide Supplier with a twelve (12)
month forecast indicating the Company's anticipated purchases of Products during
each month of such period. The first twelve month forecast shall be delivered
within sixty (60) days following execution of this Agreement. During the term of
this Agreement, such forecasts shall be updated by the Company on a quarterly
basis, which updated forecasts must be sent by the Company no later than thirty
(30) days prior to the first day of each succeeding quarter. Such forecasts
shall be on-binding and shall not be deemed to be orders for Products or to
create any minimum purchase

                                       3
<PAGE>   4

obligation on the part of Company. Supplier and the Company shall meet annually
to review the annual forecast and forecast process hereunder.

         2.5 PURCHASE ORDERS. The Company shall, from time to time, submit
written purchase orders for the purchase of its requirements for the Products,
which shall set forth the quantities ordered, the requested delivery dates,
shipping instructions and shipping addresses. The Company shall be entitled to
use its standard form of purchase order; provided, however that such purchase
orders shall not impose any terms not contained in this Agreement or alter any
of the terms contained in this Agreement. In the event of any conflict between
the terms of any purchase order delivered by Company hereunder and the terms of
this Agreement, the terms of this Agreement shall control.

         2.6 ACCEPTANCE OR REJECTION OF PURCHASE ORDERS. Supplier shall
acknowledge the Company's purchase orders in writing and shall be entitled to
reject any purchase orders for quantities greater than 120% of the forecasted
purchase. Any purchase order for quantities equal to or less than 120% of the
most recently updated forecasted purchase shall be accepted by Supplier,
provided that the foregoing shall not limit any right of Supplier to reject a
purchase order under other provisions of this Agreement.

         2.7 RIGHT TO TRANSFER MANUFACTURING. Upon termination of this Agreement
or the expiration of its term, the Company shall have the right to transfer the
manufacturing to a facility designated by Company and, subject to the
limitations of Section 2.2, Supplier shall thereupon provide to Company or such
designee all documentation, designs, models, custom tooling and molds, and other
materials relating to the Products that were specifically designed or created
either (a) by the Company, or (b) for the Company by Supplier or third-party
contractors. Supplier agrees to assign and does hereby assign to the Company all
of its right, title and interest in and to such documentation, designs, models,
custom tooling, molds and materials, including all intellectual property rights
therein.

         2.8 RIGHTS IN TECHNOLOGY.
             --------------------

             (a) Nothing herein shall be construed to give Supplier any rights
in any patent, copyright, trademark, service mark, trade name, trade secret,
know-how or other intellectual property of the Company in and to the
Specifications, the Products, any modifications or enhancements thereto, or any
work product created under this Agreement or prior agreements (collectively, the
"Company Technology") as such rights exist on the date hereof or as may be
developed or acquired hereafter. The Company acknowledges and agrees that the
Manufacturing Processes for the Products are not Company Technology. Supplier
disclaims any rights in the Company Technology and hereby agrees that except for
the Supplier Technology (as such term is defined below and which definition
includes, without limitation, the Manufacturing Processes for the Products) all
work product, designs, specifications, improvements, inventions and
documentation relating to the Company Technology created by Supplier in its
performance of this Agreement, including any works that may be jointly created
by the Company and Supplier, shall be Company Technology and will be the sole
and exclusive property of the Company. Upon expiration or termination of this
Agreement, Supplier shall cease and desist from use of the Company Technology
for any purpose and in any manner.

                                       4
<PAGE>   5

             (b) Supplier agrees to assign and does hereby assign the worldwide
right, title and interest in and to all intellectual property rights in Company
Technology developed pursuant to this Agreement including any and all
copyrights, patent rights, trade secret rights and other proprietary rights
therein.

             (c) Except as provided in Section 2.7, nothing herein shall be
construed to give Company any rights in any patent, copyright, trademark,
service mark, trade name, trade secret, know-how or other intellectual property
of Supplier (collectively, the "Supplier Technology") as such rights exist on
the date hereof or may be developed or acquired by the Supplier hereafter. The
Company disclaims any rights in the Supplier Technology as it exists on the date
hereof and hereby agrees that the Supplier Technology developed in the course of
Supplier's performance hereunder shall be the sole and exclusive property of
Supplier.

         2.9 NOTICE REQUIREMENTS. Supplier shall notify the Company within five
(5) days of Supplier's knowledge of, or receipt of notice regarding, (a) any
defect in or problem with the raw materials used to manufacture the Products,
(b) any failure of Supplier to comply with validated manufacturing practices or
processes, or (c) any failure of Supplier to manufacture Products in conformance
with the Specifications. If a recall of a Product is mandated because of a
failure of Supplier to comply with validated manufacturing practices or
processes, or because of a failure of Supplier to manufacture the Product in
conformance with the Specifications, Supplier shall supply reasonable assistance
to the Company in the Company's recall efforts.

         2.10 PAYMENT FOR TOOL AND DESIGN COSTS. The Company shall pay Supplier
for Supplier's tool and design costs as set forth in Exhibit B. During the time
period within 120 days of the Effective Date of this Agreement, the parties may
amend Exhibit B by mutual written agreement. The Company shall provide a fifty
percent down payment to Supplier on the tool and design costs upon the Company's
placement of an order for tooling and shall pay the remaining fifty percent as
set forth in Section 4.2 hereof. If the Company does not order tooling by
November 1, 2000, then, upon such subsequent ordering of tooling by the Company,
Supplier shall provide evidence to the Company of any increase in Supplier's
tool and design costs and the Company shall pay to Supplier an amount for the
tooling and design which is equal to the amount set forth on Exhibit B, plus the
increase in costs.

                                    ARTICLE 3
                       DELIVERY AND ACCEPTANCE OF PRODUCTS

         3.1 DELIVERY. Supplier shall cause all orders of Products to be
delivered F.O.B. Supplier's factory on or before the delivery date set forth in
the applicable purchase order. Title and risk of loss of Products shall pass to
the Company at the time the Products are delivered by Supplier to the carrier
for shipment.

         3.2 SHIPPING. The Products shall be shipped to the destination set
forth on the applicable purchase order according to a shipping method specified
by the Company, or if none is so specified, according to Supplier's standard
shipping practices.

                                       5
<PAGE>   6

         3.3 CERTIFICATION, INSPECTION, ACCEPTANCE AND REMEDIES. Supplier shall
provide such quality and product inspection reports and certification assuring
compliance to the warranties of this Agreement as shall be reasonably requested
by the Company, which shall be in a form acceptable for FDA or other
governmental regulatory submissions. Supplier and the Company shall mutually
establish QA/QC procedures for the Products. The Company shall have the right to
inspect and test the Products at any stage of production at Supplier's
manufacturing facilities at any time upon five (5) days' notice and Supplier
shall provide all reasonable facilities and assistance required for such
inspection and testing of the Products by the Company. Such inspection and
testing shall not unreasonably interfere with Supplier's operations. The
foregoing inspection rights shall not relieve Supplier of its obligations
hereunder to provide inspection reports and certification regarding warranty
compliance. Any product inspection by the Company prior to delivery of the
Products shall not waive the Company's obligation and duty to inspect and accept
or reject the Products upon delivery. The Company shall have the obligation and
duty to inspect each delivery of Products, within 30 days of receipt thereof to
determine whether the Products meet the Specifications and have been
manufactured in accordance with Good Manufacturing Practices. If the Company
determines that any of the Products does not meet such Specifications, was not
manufactured in accordance with GMP, or is adulterated or misbranded within the
meaning of the United States Food, Drug and Cosmetic Act, as amended (the
"Act"), it shall, within such 30 day period, so notify Supplier in writing,
stating the specific failure to comply with the Specifications, GNT or the Act,
shall provide evidence of the failure or defect to Supplier, and shall return
the defective Products (and the remaining lot or delivery) to Supplier, at
Supplier's expense. Supplier agrees to replace, at no cost to the Company, any
Products supplied by Supplier hereunder for which there is evidence showing
nonconformity to the Specifications following inspection by the Company
hereunder, provided that such nonconformity is not due to any act or omission by
the Company, its agents or representatives, or any third party, including,
without limitation, the failure to use, handle, maintain, or store Products as
directed, as labeled or as required by the Specifications. Upon reasonable prior
notice, the Company has the right to audit Supplier to assure conformance to
Specifications and adequacy of GMPs related to the Products, provided such audit
does not unreasonably interfere with Supplier's operations.

                                    ARTICLE 4
                                      PRICE

         4.1 PURCHASE PRICE OF PRODUCTS. The purchase price of the Products
shall be as set forth on Exhibit B attached hereto. Notwithstanding the
foregoing, the Company agrees that, following the initial anniversary date of
the Agreement, Supplier may thereafter annually increase the purchase price of
the Products to pass through the cost to it of any increase in the cost of raw
materials. Furthermore, if there is a modification of a Product, then Supplier
shall provide evidence to the Company of any increase in Supplier's costs, and
the Company shall pay to Supplier a price for the Product which is increased by
such costs. Such prices are exclusive of, and the Company shall bear, all taxes,
fees, duties or tariffs which may be levied upon Supplier by any government or
governmental agency by reason of the sale or transport of Products hereunder, or
measured by the value of the Products, other than taxes imposed on Supplier's
net income, taxes imposed by reason of any independent activity of Supplier, and
any penalties or fines imposed on Supplier for any reason.

                                       6
<PAGE>   7

         4.2 PAYMENT. The purchase price and other costs for Products supplied
hereunder shall be invoiced by Supplier upon shipment. Such invoices shall not
impose any terms not contained in this Agreement or alter any of the terms
contained in this Agreement. In the event of any conflict between the terms of
any invoice delivered by Supplier hereunder and the terms of this Agreement, the
terms of this Agreement shall control. All amounts shall be due and payable 30
days after receipt of invoice. The Company shall pay Supplier the remaining
fifty percent of the tool and design costs for the tooling for a Product no
later than thirty (10) days after the Company's approval of a first article
parts sample meeting Specifications of such Product, or within six months of
sample submission, said samples meeting Specifications to the Company, whichever
is earlier.

                                    ARTICLE 5
                                   WARRANTIES

         5.1 COMPLIANCE WITH GOOD MANUFACTURING PRACTICES. Supplier warrants to
the Company that the manufacture of Products supplied hereunder shall be in
strict conformity with Good Manufacturing Practices, and in accordance with the
manufacturing information contained in any FDA or other governmental regulatory
application or approval for the Products.

         5.2 REGULATORY REQUIREMENTS. Supplier warrants to the Company that no
Product manufactured by Supplier under this Agreement will be adulterated or
misbranded by Supplier within the meaning of the Act, or comparable governmental
regulatory provisions, or within the meaning of any other applicable law in
which the definition of adulteration or misbranding are substantially the same
as those contained in such Acts as such laws are constituted and effective at
the time of such shipment or delivery.

         5.3 PRODUCT SPECIFICATIONS. Supplier warrants to the Company that all
Products manufactured by Supplier shall be in strict compliance with the
Specifications; that is, manufactured to print tolerance, dimensional and
material specifications. Supplier's warranty is to the Company only and shall
extend for a period of twelve (12) months after the Products are shipped from
Supplier's facility.

         5.4 DISCLAIMER. THE WARRANTIES SET FORTH IN THIS ARTICLE 5 ARE IN LIEU
OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY DISCLAIMED AND
EXCLUDED BY SUPPLIER, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. SUPPLIER'S SOLE
LIABILITY FOR A BREACH OF THE WARRANTIES SET FORTH IN ARTICLE 5 SHALL BE LIMITED
TO THE REPLACEMENT OF ANY DEFECTIVE PRODUCTS OR THE RETURN OF THE PURCHASE PRICE
THEREFOR.

                                    ARTICLE 6
                            LIMITATIONS ON LIABILITY

                                       7
<PAGE>   8

         6.1 LIMITATION OF LIABILITY. EXCEPT AS PROVIDED IN ARTICLE 5, SUPPLIER
SHALL NOT BE LIABLE TO THE COMPANY FOR ANY LOSS, EXPENSE OR DAMAGE ARISING OUT
OF OR RESULTING FROM A BREACH OF WARRANTY. IN ANY EVENT SUPPLIER SHALL NOT BE
LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL, OR PUNITIVE LOSS
OR DAMAGES.

                                    ARTICLE 7
                                 INDEMNIFICATION

         7.1 INDEMNIFICATION BY SUPPLIER. Supplier hereby agrees to indemnify
and hold harmless the Company, its Affiliates and their respective officers,
directors, employees and agents from and against all liabilities, damages,
losses, costs and expenses (including reasonable attorneys' fees) arising out of
or relating to claims, suits or proceedings brought by a third party alleging
that personal injury or death has resulted solely from the manufacture by
Supplier of Products not in conformance with the Specifications, including,
without limitation, any liabilities caused by negligence, gross negligence or
willful misconduct of or attributable to Supplier in its failure to manufacture
Products in conformance with the Specifications.

         7.2 INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to
indemnify and hold harmless Supplier, its Affiliates and their respective
officers, directors, employees and agents from and against all liabilities,
damages, losses, costs and expenses (including reasonable attorneys' fees)
arising out of claims, suits or proceedings brought by a third party alleging
that personal injury or death has resulted from any cause other than the
manufacture by Supplier of Products not in conformance with the Specifications,
including, without limitation, claims, suits or proceedings based upon
negligence, gross negligence or willful misconduct of or attributable to the
Company or any of its Affiliates.

         7.3 INTELLECTUAL PROPERTY INDEMNIFICATION.

             (a) The Company agrees to defend, hold harmless and indemnify
Supplier against all claims, demands, losses, suits, damages, liability and
expenses (including reasonable attorneys' fees) arising out of any suit, claim
or action for actual or alleged direct or contributory infringement of, or
inducement to infringe, any United States or foreign patent, trademark,
copyright, or industrial design right by reason of the manufacture, use or sale
of any of the Products, including, without limitation, infringement arising out
of compliance with the Specifications.

             (b) Supplier agrees to defend, hold harmless and indemnify the
Company against all claims, demands, losses, suits, damages, liability and
expenses (including reasonable attorneys' fees) arising out of any suit, claim
or action for actual or alleged direct or contributory infringement of, or
inducement to infringe, any United States or foreign patent, trademark,
copyright or industrial design right by reason of Supplier's use of the
Manufacturing Processes in regard to the Products.

         7.4 PROCEDURE FOR INDEMNIFICATION. Whenever an indemnified party
becomes aware of a claim, suit or proceeding as to which it believes it is
entitled to indemnification under this

                                       8
<PAGE>   9

Article 7, it shall give notice in writing to the indemnifying party, shall
permit indemnifying party to assume exclusive control of the defense or
settlement of the matter, and shall provide, at the expense of indemnifying
party, all authority, information and assistance which indemnifying party may
reasonably request for purposes of such defense. An indemnified party may engage
its own counsel, at its own expense, to monitor the defense of any such matter.
In no event shall the indemnified party be entitled to settle any claim as to
which indemnification is sought without the consent of the indemnifying party,
which consent shall not be unreasonably withheld.

         7.5 SURVIVAL. The obligations of indemnification, cooperation and
subrogation under this Article 7 shall survive the termination of this Agreement
for any reason.

                                    ARTICLE 8
                                 CONFIDENTIALITY

         8.1 NON-USE AND NON-DISCLOSURE. Each party acknowledges and agrees that
all the other party's Confidential Information is confidential and proprietary
to the disclosing party. Each party shall not use or disclose to any third party
the other party's Confidential Information without the other party's prior
written consent for any purpose other than as permitted or required hereunder.
Each party shall take the same reasonable measures necessary to prevent any
disclosure by its employees, agents, contractors, sublicensees, or consultants
of the other party's Confidential Information as it applies to the protection of
its own Confidential Information.

         8.2 EXCLUSIONS. Information shall not be considered Confidential
Information hereunder if it:

             (a)   was already in the possession of the receiving party prior to
                   its initial receipt from the disclosing party, as shown by
                   the receiving party's books and records;

             (b)   is, or becomes, part of the public knowledge or literature
                   through no fault, act or omission of the receiving party,
                   provided, information relating to the Products shall not be
                   deemed to have entered the public domain by reason of having
                   been filed with any regulatory agency;

             (c)   is, or becomes, available to the receiving party from a
                   source other than the disclosing party, which source has
                   rightfully obtained the same information and has no
                   obligation of confidentiality to the disclosing party with
                   respect to it;

             (d)   is made available on an unrestricted basis by the disclosing
                   party to a third party unaffiliated with the disclosing
                   party; or

             (e)   is required to be revealed by the receiving party pursuant to
                   law, provided, however, that prior to any such disclosure,
                   the receiving party shall give reasonable notice to the
                   disclosing party of such legal requirement and shall
                   cooperate with the disclosing party in reasonable legal
                   efforts to seek

                                       9
<PAGE>   10

                   a protective order or to otherwise limit or mitigate any such
                   revelation so as to preserve the proprietary nature of any
                   Confidential Information contained therein.

         8.3 DURATION: SURVIVING OBLIGATION. Each party's obligations of non-use
and non-disclosure of the other party's Confidential Information shall apply
during the term of this Agreement and shall also survive for a period of five
(5) years after its termination for any reason.

         8.4 Supplier acknowledges that it is aware that the U.S. securities
laws prohibit any person who has material nonpublic information about Opticon
from purchasing or selling securities of Opticon, or from communicating such
information to any person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.

                                    ARTICLE 9
                              TERM AND TERMINATION

         9.1 TERM OF AGREEMENT. Unless terminated as provided in Section 9.2
below, the term of this Agreement shall commence on the Effective Date and shall
continue until a date that is (**REDACTED**) after the first commercial sale of
Products by the Company following government regulatory clearance.

         9.2 TERMINATION. This Agreement may be terminated prior to the
expiration of the term hereof as follows:

             (a)   Either party may terminate this Agreement at any time by
                   giving notice in writing to the other party if the other
                   party files a petition of any type as to its bankruptcy, is
                   declared bankrupt, becomes insolvent, makes an assignment for
                   the benefit of creditors, goes into liquidation or
                   receivership;

             (b)   Either party may terminate this Agreement at any time by
                   giving notice in writing to the other party if the other
                   party is in material breach of its obligations under this
                   Agreement and has failed to cure such breach within ninety
                   (90) days of the receipt of written notice from the
                   non-breaching party specifying such breach;

             (c)   If the Company shall receive a bona fide offer, from a third
                   party unaffiliated with the Company, to manufacture and
                   supply a Product to the Company, under the same terms and
                   conditions as are set forth in this Agreement, except at a
                   lower price per unit of Product than is then being charged to
                   the Company by Supplier, the Company shall provide Supplier
                   with written notice of such bona fide offer, Supplier shall
                   have ninety (90) days from its receipt of such written notice
                   in which to notify the Company that it shall manufacture and
                   supply the Product to the Company

                                       10
<PAGE>   11

                   at such price as is set forth in such bona fide third-party
                   offer. If Supplier shall fail to so notify the Company, then
                   the Company may enter into an agreement with such
                   unaffiliated third party for the manufacture and supply to
                   the Company of the Product pursuant to the terms and
                   conditions of the bona fide offer.

             (d)   The Company may terminate this Agreement upon ninety (90)
                   days prior written notice to the Supplier if the Supplier
                   shall have consistently failed to have timely met the
                   delivery dates for the Products.

             (e)   The parties may agree in writing to terminate this Agreement
                   for their mutual convenience at any time and for any reason,
                   subject to such terms and conditions as they may adopt.

         9.3 RIGHTS AND OBLIGATIONS ON TERMINATION. If this Agreement is
terminated for any reason, the parties shall have the following rights and
obligations:

             (a)   Termination of this Agreement shall not release either party
                   from the obligation to make payment of all amounts then or
                   thereafter due and payable; and

             (b)   The parties' respective rights and obligations under Sections
                   2.7 and 2.8, and under Articles 5 [Warranties], 6 [Limitation
                   on Liability], 7 [Indemnification], 8 [Confidentiality], 10
                   [Dispute Resolution], 11 [Force majeure] and 12
                   [Miscellaneous] shall survive such termination of this
                   Agreement.

                                   ARTICLE 10
                               DISPUTE RESOLUTION

         10.1 NEGOTIATION. The parties agree to consult and negotiate in good
faith to try to resolve any dispute, controversy or claim that arises out of or
relates to this Agreement. The parties agree that, except as provided in Section
10.2, neither party will initiate formal dispute resolution under this Agreement
unless and until such party has provided a written statement of the claim to the
other party, and any relevant supporting documentation, and the respective
Presidents or other designated executive officers of the parties shall have met
in person to attempt to achieve such an amicable resolution of such situation;
provided, however, that in no event shall a party be required to delay
initiation of formal dispute resolution hereunder for more than a period of 30
days following such notice.

         10.2 RESERVATION FOR LITIGATION. Notwithstanding Sections 10.1 and
10.3, each party expressly reserves the right to seek judicial relief from a
court of competent jurisdiction if the other party is or appears to be in
violation of its obligations of non-use and non-disclosure under Article 8
above, including, without limitation, any injunction or other preliminary relief
Nothing in this Section 10.2 shall preclude a party from also seeking such
interim relief with respect to any disputes or claims arising under this
Agreement as may be available under the AAA rules as provided in Section 10.3.

                                       11
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         10.3 ARBITRATION. Subject to the reservation of the parties under
Section 10.2, all disputes, claims or controversies arising out of or in
connection with this Agreement shall be finally settled under then current
commercial arbitration rules of the American Arbitration Association ("AAA"), as
modified by Section 10.4 below. Judgment upon the award rendered by the
arbitrators may be entered in any court of competent jurisdiction. The place of
arbitration shall be Columbus, Ohio. The arbitration shall be conducted by three
neutral arbitrators selected by mutual agreement of the parties or, if that is
not possible within 30 days of the initial demand for such arbitration, by the
AAA. At least one arbitrator shall have knowledge of and experience in the
medical device industry.

         10.4 SPECIAL RULES. Notwithstanding any provision to the contrary in
the AAA rules, the parties hereby stipulate that any arbitration hereunder shall
be subject to the following special rules:

             (a)  Each party shall have the right to request from the
                  arbitrators, and the arbitrators shall order upon good cause
                  shown, reasonable and limited pre-hearing discovery, including
                  (i) exchange of witness lists, (ii) depositions under oath of
                  named witnesses, (iii) written interrogatories, and
                  (iv) document requests;

             (b)  Upon conclusion of the pre-hearing discovery, the arbitrators
                  shall promptly hold a hearing upon the evidence to be
                  presented by the parties and shall promptly render an award
                  based upon this Agreement and the substantive law of the State
                  of Ohio applicable to contracts made and to be performed
                  therein and by the arbitration laws of the United States, and
                  shall accompany their award with a written explanation of the
                  reasons for their award;

             (c)  The arbitrators may not award or assess punitive damages
                  against either party; and

             (d)  Each party shall bear its own costs and expenses of the
                  arbitration and one-half (1/2) of the fees and costs of the
                  arbitrators, subject to the power of the arbitrators, in their
                  sole discretion, to award all such reasonable costs, expenses
                  and fees to the prevailing party.

         10.5 SURVIVAL. The duty of the parties to arbitrate any dispute,
controversy or claim under this Article 10 shall survive the termination of this
Agreement for any reason.

                                   ARTICLE 11
                                  FORCE MAJEURE

         11.1 NOTICE. Upon giving notice to the other party, the party whose
performance is affected by an event of Force Majeure shall be released without
any liability on its part from the performance of its obligations under this
Agreement, except for the obligation to pay any

                                       12
<PAGE>   13

amounts due and owing hereunder, but only to the extent and only for the period
that such performance is so affected by the event of Force Majeure. Such notice
shall include a description of the nature of the event of Force Majeure, and its
cause and possible consequences. The party claiming Force Majeure shall promptly
notify the other party of the termination of such event.

         11.2 CONFIRMATION. The party invoking Force Majeure shall provide to
the other party confirmation of the existence of the circumstances constituting
Force Majeure. Such evidence may consist of a statement or certificate of an
appropriate governmental department or agency where available, or a statement
describing in detail the facts claimed to constitute Force Majeure.

         11.3 SUSPENSION OF PERFORMANCE. During the period that the performance
by one of the parties of its obligations under this Agreement has been suspended
by reason of an event of Force Majeure, the other party may likewise suspend the
performance of all or part of its obligations hereunder to the extent that such
suspension is commercially reasonable. If the Force Majeure event causes a
suspension of Supplier's performance of its obligations under this Agreement to
(i) manufacture the Products in conformity with the Specifications, or (ii)
fully or timely deliver Products ordered by the Company, then the Company may
make alternative arrangements for the manufacture and supply of the Products for
such period of time that Supplier's performance is suspended. In such event,
subject to the limitations of Section 2.2, Supplier will permit the Company to
temporarily take possession of molds, tooling, drawings and other materials or
documentation necessary to transfer of production of Products to another
manufacturer during such period.

         11.4 TERMINATION. Notwithstanding any provision of this Agreement to
the contrary, should the period of Force Majeure continue for more than 120
consecutive days, either party may immediately terminate this Agreement without
liability to the other party, except for payments due to such date, upon giving
written notice to the other party.

                                   ARTICLE 12
                               GENERAL PROVISIONS

         12.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and thereof and
supersedes all the parties' previous correspondence, term sheets,
understandings, agreements and representations, oral or written, between the
parties.

         12.2 RELATIONSHIP. The parties are independent contractors and shall
not be deemed to have formed any partnership, joint venture or other
relationship. Neither party shall make, or represent to any other person that it
has the power or authority to make, any financial or other commitment on behalf
of the other party.

         12.3 ASSIGNMENT. Neither party shall assign or otherwise transfer its
rights or obligations under this Agreement except with the prior written consent
of the other party; provided that no such consent for a transfer to an entity
shall be required and all rights and obligations arising hereunder shall inure
to the benefit of that entity if it (a) is an Affiliate of

                                       13
<PAGE>   14

either party, (b) is the successor in interest of one party by reason of sale,
merger or operation of-law, or (c) has acquired all or substantially all of the
assets and business of a party and has assumed such party's obligations under
this Agreement. Each party shall provide written notice of any such transfer to
such an entity.

         12.4 AMENDMENT. This Agreement may not be modified or amended, in whole
or in part, except by a written agreement signed by both parties.

         12.5 SEVERABILITY. If one or more of the provisions of this Agreement
is subsequently declared invalid or unenforceable, this Agreement shall be
treated as though that provision were not in this Agreement, and this shall not
affect the validity or enforceability of the remaining provisions of this
Agreement (unless those provisions that are invalidated or unenforceable are
clearly material and inseparable from the other provisions). The Agreement as
modified shall be applied and construed to reflect substantially the good faith
intent of the parties and to achieve the economic effects originally intended by
the terms hereof.

         12.6 NOTICES, LANGUAGE. Except as may be otherwise provided in this
Agreement, any notice, demand or request given, made or required to be made
shall be in writing and shall be effective, unless otherwise provided herein,
when received after delivery by (a) certified mail, postage prepaid; (b)
facsimile with electronic confirmation of receipt; or (c) by express mail or a
reputable courier at the addresses set forth on the first page of this Agreement
or to any other address that a party specifies in writing.

         12.7 WAIVER. Either party's failure or delay in exercising any remedy
for default shall not be deemed a waiver of that or any subsequent default of
that provision or of any other provision hereof

         12.8 COUNTERPARTS. This Agreement shall be executed in two (2) or more
counterparts, each of which shall be deemed an original.

         12.9 GOVERNING LAW. This Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of Ohio,
excluding its choice of law rules.

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

OPTICON MEDICAL, INC.                  MEDICAL ELASTOMER DEVELOPMENT, INC.

By                                     By
  ----------------------------------      -------------------------------

Title                                  Title
     -------------------------------         ----------------------------

                                       14
<PAGE>   15

                                    EXHIBIT A
                                  PRODUCT LIST

Supplier shall manufacture the following kinds or types of medical device
component parts:

(**REDACTED**)

                                       15
<PAGE>   16

                                    EXHIBIT B
                     PRODUCT PRICES AND TOOL & DESIGN COSTS

(**REDACTED**)

                                       16

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