WARRANT

 EXHIBIT 10(c)
                                                                EXECUTION COPY

                                    WARRANT

                          TO PURCHASE COMMON STOCK OF

                         HANGER ORTHOPEDIC GROUP, INC.

                        Issuance Date: November 1, 1996

                       Number of Shares of Common Stock:
                        800,000 (subject to adjustment)

                               TABLE OF CONTENTS

                                                                          PAGE

ARTICLE 1.  DEFINITIONS....................................................  1

ARTICLE 2.  EXERCISE OF WARRANT............................................  5
         2.1  Manner of Exercise...........................................  5
         2.2  Exercise Price...............................................  6
         2.3  Payment of Taxes.............................................  7
         2.4  Fractional Shares............................................  7
         2.5  Continued Validity...........................................  7

ARTICLE 3.             TRANSFER, DIVISION AND COMBINATION, ADDITIONAL
                       WARRANTS............................................  7
         3.1  Transfer ....................................................  7
         3.2  Division and Combination.....................................  7
         3.3  Expenses ....................................................  8
         3.4  Maintenance of Books.........................................  8

ARTICLE 4. REDUCTION IN NUMBER OF ISSUABLE SHARES OF WARRANT
         STOCK.............................................................  8
         4.1  Share Reduction..............................................  8
         4.2  Pro Rata Effect..............................................  8
         4.3  New Warrants.................................................  8

ARTICLE 5.  ADJUSTMENTS....................................................  8
         5.1  Stock Splits, Combinations, etc..............................  8
         5.2  Reclassification, Combinations, Mergers, etc.................  9
         5.3  Issuance of Options or Convertible Securities................ 10
         5.4  Dividends and Distributions.................................. 10
         5.5  Self-Tenders................................................. 11
         5.6  Issuance of Additional Shares of Common Stock................ 11
         5.7  Certain Distributions........................................ 12
         5.8  Consideration Received....................................... 12
         5.9  Deferral or Exclusion of Certain Adjustments................. 12
         5.10  Changes in Options and Convertible Securities............... 12
         5.11  Expiration of Options and Convertible Securities............ 12
         5.12  Other Adjustments........................................... 13
         5.13  Other Action Affecting Common Stock......................... 13

ARTICLE 6.  NOTICES TO WARRANT HOLDERS..................................... 13
         6.1  Notice of Adjustments........................................ 13
         6.2  Notice of Certain Corporate Action........................... 14

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                                                                          PAGE

ARTICLE 7.  NO IMPAIRMENT.................................................. 14

ARTICLE 8.   COMMON STOCK; RESERVATION AND AUTHORIZATION
             OF REGISTRATION WITH OR APPROVAL OF ANY
             GOVERNMENTAL AUTHORITY........................................ 14

ARTICLE 9.  TAKING OF RECORD; STOCK AND WARRANT
                                      TRANSFER BOOKS....................... 15

ARTICLE 10.  RESTRICTIONS ON TRANSFERABILITY............................... 15
         10.1  Restrictive Legend.......................................... 15
         10.2  Restriction on Transfers.................................... 16
         10.3  Listing on Securities Exchange or NASDAQ.................... 16

ARTICLE 11.  REGISTRATION RIGHTS........................................... 17
         11.1  Incidental Registrations.................................... 17
         11.2  Registration on Request..................................... 18
         11.3  Registration Procedures..................................... 19
         11.5  Rule 144.................................................... 25
         11.6  Selection of Counsel........................................ 25
         11.7  Holdback Agreement.......................................... 25

ARTICLE 12.  LOSS OR MUTILATION............................................ 25

ARTICLE 13.  OFFICE OF THE COMPANY......................................... 26

ARTICLE 14.  FINANCIAL AND BUSINESS INFORMATION............................ 26

ARTICLE 15.  LIMITATION OF LIABILITY....................................... 26

ARTICLE 16.  MISCELLANEOUS................................................. 27
         16.1  Nonwaiver and Expenses...................................... 27
         16.2  Notice Generally............................................ 27
         16.3  Successors and Assigns...................................... 27
         16.4  Amendment................................................... 28
         16.5  Severability................................................ 28
         16.6  Headings.................................................... 28
         16.7  GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE............ 28
         16.8  MUTUAL WAIVER OF JURY TRIAL................................. 28

EXHIBIT A      SUBSCRIPTION FORM
EXHIBIT B      ASSIGNMENT FORM

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NEITHER THIS WARRANT NOR THE  SECURITIES  ISSUABLE UPON  EXERCISE  HEREOF HAVE
BEEN  REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR ANY STATE
SECURITIES LAWS. THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
MAY  NOT  BE  TRANSFERRED,  SOLD,  ASSIGNED,  EXCHANGED,  MORTGAGED,  PLEDGED,
HYPOTHECATED OR OTHERWISE  DISPOSED OF OR ENCUMBERED  WITHOUT  COMPLIANCE WITH
THE  PROVISIONS  OF, AND ARE OTHERWISE  RESTRICTED BY THE  PROVISIONS  OF, THE
SECURITIES ACT OF 1933, AS AMENDED,  THE RULES AND REGULATIONS  THEREUNDER AND
THIS WARRANT.

                                    WARRANT

                         TO PURCHASE 800,000 SHARES OF
                    COMMON STOCK (SUBJECT TO ADJUSTMENT) OF

                         HANGER ORTHOPEDIC GROUP, INC.

          THIS IS TO CERTIFY THAT, for value received,  PARIBAS PRINCIPAL INC.
(the  "INITIAL  HOLDER"),  or its  registered  assigns,  is the owner of eight
hundred thousand  (800,000) Warrants (as hereinafter  defined),  which entitle
the Holder (as hereinafter  defined), at any time prior to the Expiration Date
(as hereinafter  defined),  to purchase from HANGER ORTHOPEDIC GROUP,  INC., a
Delaware corporation (the "COMPANY"),  eight hundred thousand (800,000) shares
of Common Stock (as hereinafter  defined and such number subject to adjustment
as provided herein), in whole or in part,  including  fractional parts, all on
the terms and conditions and pursuant to the provisions hereinafter set forth.

          ARTICLE 1. DEFINITIONS

          As used in this  Warrant,  the following  terms have the  respective
meanings set forth below:

          "ADDITIONAL  SHARES OF COMMON STOCK" shall mean all shares of Common
     Stock  issued by the  Company  after the  Issuance  Date,  other than the
     Warrant Stock.

          "AFFILIATE"  shall  mean,  as to any  Person,  (i) any other  Person
     directly  or  indirectly  controlling,  controlled  by,  or under  common
     control with such Person or (ii) any director, officer or partner of such
     Person or any Person specified in clause (i) above.

          "AGGREGATE  EXERCISE PRICE" shall mean, with respect to the exercise
     of all or a portion of the Warrant,  the Exercise Price multiplied by the
     number of shares of Warrant Stock purchased upon such exercise.

          "BUSINESS  DAY" shall mean any day that is not a Saturday  or Sunday
     or a day on which  banks are  required or  permitted  to be closed in the
     State of New York or the State of Maryland.

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          "COMMISSION"  shall mean the Securities  and Exchange  Commission or
     any other federal agency then  administering the Securities Act and other
     federal securities laws.

          "COMMON  STOCK"  shall mean the  collective  reference to the common
     stock of the Company,  par value $.01 per share,  as  constituted  on the
     Issuance  Date,  and any capital  stock into which such Common  Stock may
     thereafter  be changed,  and shall also include (i) capital  stock of the
     Company of any other class (regardless of how denominated)  issued to the
     holders of shares of Common  Stock upon any  reclassification  thereof in
     which  the  shares  of Common  Stock  are  converted  into a new class of
     capital  stock  and (ii)  shares  of  common  stock of any  successor  or
     acquiring  corporation  (as  defined  in  Section  5.2)  received  by  or
     distributed  to  the  holders  of  Common  Stock  of the  Company  in the
     circumstances contemplated by Section 5.2.

          "CONVERTIBLE SECURITIES" shall have the meaning set forth in Section
     5.3 hereof.

          "CVCA"  shall  mean  Chase  Venture  Capital  Associates,   L.P.,  a
     California limited partnership.

          "DEMAND  PARTY" shall mean any other Holder or Holders that,  either
     individually  or in  aggregate  with all  other  Holders  with whom it is
     acting together to demand registration,  own(s) at least 50% of the total
     number of  Registrable  Securities  (whether  in the form of  Warrants or
     Warrant Stock).

          "EXCHANGE  ACT" shall mean the  Securities  Exchange Act of 1934, as
     amended, or any similar federal statute, and the rules and regulations of
     the Commission  thereunder,  all as the same shall be in effect from time
     to time.

          "EXERCISE PERIOD" shall mean the period during which this Warrant is
     exercisable pursuant to Section 2.1.

          "EXERCISE  PRICE"  shall have the  meaning  set forth in Section 2.2
     hereof.

          "EXPIRATION   DATE"   shall  mean  the  date  which  is  the  eighth
     anniversary of the Issuance Date.

          "FAIR  VALUE"  shall  mean,  with  respect to the  valuation  of any
     evidences of indebtedness, other securities, properties, assets, options,
     warrants or  subscription  or  purchase  rights,  the fair  market  value
     thereof  as  determined  in good faith by the Board of  Directors  of the
     Company and, if required by the Majority Holders, supported by an opinion
     from an investment banking firm acceptable to the Majority Holders, which
     approval  shall  not  be   unreasonably   withheld,   of  such  Valuation
     Properties;  PROVIDED,  HOWEVER that the Fair Value of any Notes tendered
     in connection  with any exercise of this Warrant  pursuant to Section 2.1
     shall be equal to the principal  amount of such  tendered  Notes plus any
     accrued and unpaid interest or other obligations owed in respect thereof.

          "GAAP" shall mean generally  accepted  accounting  principles in the
     United States of America as from time to time in effect.

          "HOLDER"  shall  mean the  Person  in whose  name  this  Warrant  is
     registered on the books of the Company maintained for such purpose or the
     Person holding any Warrant Stock, including,  without limitation, in each
     case, transferees thereof.

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          "ISSUANCE DATE" shall mean November 1, 1996.

          "MAJORITY  HOLDERS"  shall mean the Holders of Warrants  exercisable
     for in excess of 50% of the  aggregate  number of shares of Common  Stock
     then receivable upon exercise of all Warrants.

          "MARKET PRICE" shall mean, as of any exercise date or other relevant
     date,  the average of the per share  closing  prices of a share of Common
     Stock for the 10 consecutive Trading Days immediately preceding such date
     on the  principal  national  securities  exchange in the United States on
     which the shares of Common Stock are listed or admitted to trading, or if
     not listed or admitted to trading on any national  securities exchange on
     such Trading  Day, on the  National  Association  of  Securities  Dealers
     Automated  Quotations  National Market System, or if the shares of Common
     Stock are not listed or  admitted to trading on any  national  securities
     exchange or quoted on such  National  Market  System on such Trading Day,
     the  average  of the  closing  bid and asked  prices of a share of Common
     Stock in the over-the-counter  market on such Trading Day as furnished by
     any New York Stock Exchange member firm selected from time to time by the
     Company.  If the  Common  Stock  is not  quoted  or  listed  by any  such
     organization, exchange or market, the Market Price of the Common Stock as
     of such exercise or other relevant date shall be determined in good faith
     by the Board of Directors of the Company.

          "NASD" shall mean the National  Association  of Securities  Dealers,
     Inc., or any successor entity thereto.

          "NASDAQ" shall mean the National  Association of Securities  Dealers
     Automatic Quotation System.

          "NOTES" the 8.00% Senior  Subordinated  Notes issued pursuant to the
     Note Purchase Agreement.

          "NOTE PURCHASE  AGREEMENT" shall mean the Senior  Subordinated  Note
     Purchase Agreement, dated as of November 1, 1996, among the Company, CVCA
     and Paribas.

          "OPTIONS" shall have the meaning set forth in Section 5.3 hereof.

          "OUTSTANDING"  shall mean, when used with reference to Common Stock,
     at any date as of which the number of shares thereof is to be determined,
     all issued shares of Common Stock, except shares then owned or held by or
     for the account of the Company or any  Subsidiary,  and shall include all
     shares  issuable  in respect  of  outstanding  scrip or any  certificates
     representing fractional interests in shares of Common Stock.

          "PARIBAS" shall mean Paribas Principal, Inc.

          "PERMITTED  ISSUANCES"  shall mean the  issuance of shares of Common
     Stock  upon  exercise  of  rights  to  acquire  shares  of  Common  Stock
     exercisable  pursuant to options held by  employees  or  directors  under
     stock  option plans which may from time to time be adopted by the Company
     after the Issuance Date.

          "PERSON"   shall   mean   any   individual,   sole   proprietorship,
     partnership,    joint   venture,   trust,   incorporated    organization,
     association, corporation, institution, public benefit corporation,

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     entity or government (whether federal,  state, county, city, municipal or
     otherwise, including, without limitation, any instrumentality,  division,
     agency, body or department thereof).

          "REGISTRABLE  SECURITIES"  shall mean (i) the  Warrants and (ii) the
     Warrant Stock. As to any particular Registrable Securities,  once issued,
     such  securities  shall  cease to be  Registrable  Securities  when (i) a
     registration  statement  with  respect  to the sale by the Holder of such
     securities  shall have become effective under the Securities Act and such
     securities   shall  have  been  disposed  of  in  accordance   with  such
     registration statement,  (ii) such securities shall have been distributed
     to the public pursuant to Rule 144 (or any successor provision) under the
     Securities  Act,  (iii)  such   securities   shall  have  been  otherwise
     transferred,  new  certificates  for such securities not bearing a legend
     restricting further transfer shall have been delivered by the Company and
     subsequent  disposition of such securities shall not require registration
     or qualification of such securities under the Securities Act or any state
     securities or blue sky law then in force, or (iv) such  securities  shall
     have ceased to be Outstanding.

          "REGISTRATION  EXPENSES" shall mean any and all expenses incident to
     performance  of  or  compliance   with  Article  11  of  this  Agreement,
     including,  without limitation,  (i) all Commission and stock exchange or
     NASD registration and filing fees (including, if applicable, the fees and
     expenses  of any  "qualified  independent  underwriter,"  as such term is
     defined in  Schedule E to the By-laws of the NASD,  and of its  counsel),
     (ii) all fees and expenses of complying with  securities or blue sky laws
     (including  fees and  disbursements  of counsel for the  underwriters  in
     connection with blue sky  qualifications of the Registrable  Securities),
     (iii) all printing,  messenger and delivery  expenses,  (iv) all fees and
     expenses  incurred  in  connection  with the  listing of the  Registrable
     Securities  on any  securities  exchange  pursuant  to  clause  (viii) of
     Section 11.3 and all rating agency fees,  (v) the fees and  disbursements
     of counsel  for the Company and of its  independent  public  accountants,
     including  the  expenses  of any special  audits  and/or  "cold  comfort"
     letters required by or incident to such performance and compliance,  (vi)
     the reasonable fees and  disbursements  of counsel  selected  pursuant to
     Section 11.6 hereof by the Holders of the  Registrable  Securities  being
     registered  to  represent  such  Holders  in  connection  with  each such
     registration,   (vii)  any  fees  and   disbursements   of   underwriters
     customarily  paid by the  issuers  or sellers  of  securities,  including
     liability  insurance if the Company so desires or if the  underwriters so
     require,  and the  reasonable  fees and  expenses of any special  experts
     retained in  connection  with the requested  registration,  but excluding
     underwriting  discounts and  commissions  and certain  transfer taxes, if
     any,  and  (viii)  other  reasonable  out-of-pocket  expenses  of Holders
     (PROVIDED that such expenses shall not include  expenses of counsel other
     than those provided for in clause (vi) above).

          "RESPONSIBLE  OFFICER" shall mean the chief executive officer of the
     Company,  the president of the Company or the chief financial  officer of
     the Company.

          "SECURITIES  ACT" shall mean the Securities Act of 1933, as amended,
     or any similar  federal  statute,  and the rules and  regulations  of the
     Commission thereunder, all as the same shall be in effect at the time.

          "SUBSIDIARY"  shall mean any  corporation  of which an  aggregate of
     more than 50% of the  outstanding  stock having  ordinary voting power to
     elect  a  majority  of  the  board  of  directors  of  such   corporation
     (irrespective  of  whether,  at the  time,  stock of any  other  class or
     classes of such  corporation  shall have or might  have  voting  power by
     reason of the happening of any  contingency) is at the time,  directly or
     indirectly,  owned of record or beneficially by the Company and/or one or
     more other Subsidiaries of the Company.

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          "TENDER  OFFER"  shall mean any public  offer to  substantially  all
     holders of Common  Stock to purchase at least 50% of the Common  Stock at
     the time outstanding.

          "TRADING  DAY" shall mean each  weekday  other than any day on which
     any Common Stock is not traded on any national  securities  exchange,  on
     NASDAQ or in the over-the-counter market.

          "TRANSFER"  shall  mean any  disposition  of any  Warrant or Warrant
     Stock or of any interest in either thereof, which would constitute a sale
     or transfer of a beneficial  interest  thereof  within the meaning of the
     Securities  Act  (excluding  any  transfer to an Affiliate of the Initial
     Holder).

          "WARRANT  STOCK"  shall  mean all shares of Common  Stock  issued or
     issuable  upon the exercise  hereof,  including any such shares of Common
     Stock transferred to any transferee of such Holder.

          "WARRANTS"  shall mean this  Warrant  and all  warrants  issued upon
     transfer,  division  or  combination  of, or in  substitution  for,  this
     Warrant.  All  Warrants  shall at all times be  identical as to terms and
     conditions  and date,  except as to the number of shares of Common  Stock
     for which they may be exercised.

          ARTICLE 2. EXERCISE OF WARRANT

          2.1 MANNER OF  EXERCISE.  At any time and from time to time from and
after the Issuance Date and until 5:00 P.M.,  New York time, on the Expiration
Date,  Holder may exercise this  Warrant,  on any Business Day, for all or any
part of the number of shares of the Common Stock issuable hereunder;  PROVIDED
that  Holder may not  exercise  this  Warrant if after  giving  effect to such
exercise  the total  number of shares of Common  Stock  issued  upon  exercise
hereof would exceed the product of:

          (i)  (a)  0.45, if such date of exercise is on or prior to November 1,
                    1997; or
               (b)  0.50, if such date of exercise is on or prior to May 1, 1998
                    but after November 1, 1997; or
               (c)  1.00, if such date is after May 1, 1998; times

          (ii) the  total  number of shares  of  Common  Stock  issuable  upon
               exercise  hereof  as of the  Issuance  Date (as such  number of
               shares  shall  have  been   adjusted   pursuant  to  Article  5
               immediately prior to such exercise).

          In order to exercise this Warrant, in whole or in part, Holder shall
deliver to the Company at its principal  office at 7700 Old  Georgetown  Road,
Bethesda,  Maryland 20814 or at the office or agency designated by the Company
pursuant to Article 13, (i) a written notice of Holder's  election to exercise
this Warrant,  which notice shall specify the number of shares of Common Stock
to which the exercise shall relate and (ii) this Warrant. Such notice shall be
substantially  in the form of the  subscription  form  appearing at the end of
this Warrant as Exhibit A (the "SUBSCRIPTION  FORM"),  duly executed by Holder
or its agent or attorney.

          Upon  receipt  by the  Company  of (a)  this  Warrant  and  (b)  the
Subscription  Form with the applicable box checked thereon,  the Company shall
issue the number of shares of Common Stock set forth in the next paragraph.

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          To the extent  Holder has checked the box on the  Subscription  Form
contemplating  payment of either (x) the Aggregate  Exercise  Price in cash or
(y) pursuant to the  surrender by Holder of Notes having a Fair Value equal to
the Aggregate Exercise Price in connection with an exercise hereof,  then upon
payment,  by  certified  or  official  bank check  payable to the order of the
Company  or by wire  transfer  of  immediately  available  funds to an account
designated by the Company,  of the Aggregate  Exercise Price for the shares of
Warrant  Stock to be purchased  pursuant to the  exercise of the Warrant,  the
Company  shall,  as promptly as  practicable,  and in any event within two (2)
Business Days thereafter, execute or cause to be executed and deliver or cause
to be delivered  to Holder a  certificate  or  certificates  representing  the
aggregate number of shares of Common Stock issuable upon such exercise. To the
extent  Holder has checked the box on the  Subscription  Form by which  Holder
elects not to pay the  Aggregate  Exercise  Price in cash and  instead to make
such payment by way of Warrant  surrender,  the Company shall,  as promptly as
practicable,  and in any event within two (2) Business  Days  thereafter,  (i)
execute or cause to be executed and deliver or cause to be delivered to Holder
a certificate or certificates  representing  the aggregate number of shares of
Common  Stock to be issued to Holder upon such  "cashless"  exercise  and (ii)
cancel the number of shares of Warrant  Stock  issuable  upon exercise of this
Warrant  having an  aggregate  value (based on the Market Price at the time of
exercise minus the Exercise  Price) equal to the Aggregate  Exercise Price for
the number of shares described in clause (i) above.

          In either case, the stock  certificate or  certificates so delivered
shall be in such denomination or denominations as such Holder shall request in
the  Subscription  Form and  shall be  registered  in the name of  Holder  or,
subject  to  Article  10,  such  other  name as  shall  be  designated  in the
Subscription Form.

          This  Warrant  shall  be  deemed  to have  been  exercised  and such
certificate or certificates shall be deemed to have been issued, and Holder or
any other Person so  designated  to be named  therein  shall be deemed to have
become a holder of record of such shares for all purposes,  as of the date the
notice is received by the Company.

          If this  Warrant  shall have been  exercised  in part,  the  Company
shall, at the time of delivery of the certificate or certificates representing
the Warrant Stock issued upon such  exercise,  deliver to Holder a new Warrant
evidencing the right of Holder to receive the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such exercise less
the number of shares issued  pursuant to such exercise of this Warrant and/or,
where applicable, less the number of shares surrendered in non-cash payment in
connection with such exercise,  which new Warrant shall in all respects (other
than number of shares) be identical to this Warrant.

          2.2 EXERCISE PRICE.  Subject to adjustment as hereinafter set forth,
the price payable upon exercise hereof (the "Exercise Price"), with respect to
each share of Common Stock, shall be:

          (a) with  respect to 335,150  shares of Common  Stock (the  "SECTION
     2.2(A) WARRANT STOCK") issuable upon exercise hereof, $6.375; and

          (b) with  respect to 464,850  shares of Common  Stock (the  "SECTION
     2.2(B) WARRANT STOCK") issuable upon exercise hereof, $4.00865.

          2.3 PAYMENT OF TAXES.  All shares of Common Stock  issuable upon the
exercise of this Warrant shall be validly issued, fully paid and nonassessable
and shall have been issued free from any preemptive or similar right and shall
be free and clear of any lien,  claim or similar  charge or  restriction.  The
Company shall pay all expenses in connection with, and all documentary,  stamp
or similar  issue or  transfer  taxes,  if any,  and all other taxes and other
governmental charges that may be

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imposed  with  respect  to, the issue and  delivery of this  Warrant,  and all
shares  of  capital  stock  and  other  securities  or  property  issuable  or
deliverable  upon the exercise of this Warrant,  and shall  indemnify and hold
any Holder, its directors, agents, general and limited partners and Affiliates
from any taxes, interest and penalties which may become payable by any of such
Persons as a result of the  failure or delay by the  Company to pay such taxes
or charges.  The Company  shall not be  required,  however,  to pay any tax or
other charge imposed in connection with any transfer  involved in the issue of
any  certificate  for shares of Common Stock  issuable  upon  exercise of this
Warrant in any name other than that of Holder and its Affiliates.

          2.4  FRACTIONAL  SHARES.  The Company shall not be required to issue
fractional shares of Common Stock on the exercise of Warrants. If any fraction
of a share of Common  Stock would be  issuable on the  exercise of any Warrant
(or  specified  portion  thereof),  the Company shall pay to the Holder of the
Warrant  an  amount  in  cash  equal  to  such  fraction   multiplied  by  the
then-current  Market Price per share of Common Stock. For the purposes of this
Section  2.3,  the date from which the Market  Price of Common  Stock shall be
computed shall be the date on which notice is received by the Company pursuant
to Section 2.1.

          2.5  CONTINUED  VALIDITY.  A Holder of shares of Warrant Stock shall
continue to be entitled  with respect to such shares to all rights and subject
to all  obligations  to which it would have been entitled or subject as Holder
of this Warrant under Articles 10, 11, 14 and 16 of this Warrant.

          ARTICLE 3. TRANSFER, DIVISION AND COMBINATION, ADDITIONAL WARRANTS

          3.1  TRANSFER.  Subject to compliance  with Article 10,  transfer of
this  Warrant  and all  rights  hereunder,  in  whole  or in  part,  shall  be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal  office of the Company  referred to
in Section 2.1 or the office or agency  designated by the Company  pursuant to
Article 13, together with a written  assignment of this Warrant  substantially
in the form of  Exhibit  B hereto  duly  executed  by  Holder  or its agent or
attorney and funds  sufficient to pay any transfer  taxes payable  pursuant to
Section  2.3 upon the making of such  transfer.  Upon such  surrender  and, if
required,  such payment, the Company shall, subject to Article 10, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the  denomination  specified in such  instrument of  assignment,  and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned,  and this Warrant  shall  promptly be  cancelled.  A Warrant,  if
properly  assigned in  compliance  with  Article 10, may be exercised by a new
Holder for the receipt of shares of Common Stock without  having a new Warrant
issued.  If  requested  by the  Company,  a new Holder  shall  acknowledge  in
writing,  in  form  reasonably  satisfactory  to the  Company,  such  Holder's
continuing obligations under Articles 10 and 16.

          3.2  DIVISION AND  COMBINATION.  Subject to Article 10, this Warrant
may be divided or combined with other Warrants upon presentation hereof at the
aforesaid  office or agency of the  Company,  together  with a written  notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney.  Subject to compliance with Section
3.1 and with  Article  10, as to any  transfer  which may be  involved in such
division or  combination,  the Company shall execute and deliver a new Warrant
or Warrants in exchange  for the Warrant or Warrants to be divided or combined
in accordance with such notice.

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          3.3 EXPENSES.  The Company shall  prepare,  issue and deliver at its
own expense (other than transfer taxes not payable by the Company  pursuant to
Section 2.3) the new Warrant or Warrants under this Article 3.

          3.4  MAINTENANCE OF BOOKS.  The Company  agrees to maintain,  at its
aforesaid  office or agency,  books for the  registration  or  transfer of the
Warrants.

          ARTICLE 4. REDUCTION IN NUMBER OF ISSUABLE SHARES OF WARRANT STOCK

          4.1 SHARE  REDUCTION.  If, prior to May 1, 1998,  the Company  shall
have  repaid  in full all  amounts  borrowed  pursuant  to the  Note  Purchase
Agreement  on or prior to the dates set forth in clause  (i)  below,  then the
number of shares of Common Stock  issuable upon exercise of this Warrant as of
the close of business on the date of such repayment  shall be reduced (but not
below  zero) by that  number of shares  which is equal to the  product of: (i)
0.55,  if such date of repayment is on or prior to November 1, 1997,  or 0.50,
if such date of repayment is on or prior to May 1, 1998 but after  November 1,
1997;  and (ii) the total  number of shares  of  Common  Stock  issuable  upon
exercise  hereof as of the Issuance  Date (as such number of shares shall have
been adjusted pursuant to Article 5 prior to such close of business).

          4.2 PRO RATA EFFECT. Any reduction in shares pursuant to Section 4.1
shall be applied to reduce  the  number of shares of  Section  2.2(a)  Warrant
Stock and Section 2.2(b) Warrant Stock then issuable,  pro rata,  based on the
relative  number of shares in each such  category  then issuable (but not then
issued) upon  exercise of this  Warrant.  No  reduction in shares  pursuant to
Section 4.2 shall have any effect on any Section  2.2(a)  Warrant Stock and/or
Section 2.2(b) Warrant Stock issued prior to such reduction.

          4.3 NEW WARRANTS. Upon any reduction pursuant to this Article 4, the
Company (at its own expense and subject to Section 2.3) will deliver to Holder
a new Warrant  evidencing the rights of Holder to receive the number of shares
of Common  Stock upon  exercise of this  Warrant  less the number of shares to
which such reduction  relates,  which new Warrant shall in all respects (other
than number of shares) be identical to this Warrant.

          ARTICLE 5. ADJUSTMENTS

          The  Exercise  Price and the  number  of shares of Common  Stock for
which this Warrant is exercisable  shall be subject to adjustment from time to
time as set forth in this Article 5. The Company shall give each Holder notice
of any event  described  below which  requires an adjustment  pursuant to this
Article 5 at the time of such  event.  At any time and from time to time,  the
Company shall promptly,  without any action required of the Holders, cause the
appropriate  adjustment or adjustments (to the extent that more than one event
requiring an adjustment  has occurred  since the last  adjustment  made) to be
made pursuant to this Article 5 in respect of each Warrant outstanding.

          5.1 STOCK  SPLITS,  COMBINATIONS,  ETC..  In case the Company  shall
hereafter  (A) pay a dividend or make a  distribution  on its Common  Stock in
shares of its capital stock (whether  shares of Additional  Common Stock or of
capital stock of any other class),  (B)  subdivide its  outstanding  shares of
Common  Stock or (C) combine  its  outstanding  shares of Common  Stock into a
smaller number of shares,  the Exercise Price in effect  immediately  prior to
such action  shall be  adjusted  so that the Holder of any Warrant  thereafter
exercised  shall be entitled to receive the number of shares of Capital  Stock
of the Company which such Holder would have owned  immediately  following such
action  had  such  Warrant  been  exercised   immediately  prior  thereto.  An
adjustment made pursuant to this

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paragraph shall become effective immediately after the record date in the case
of a dividend and shall become effective  immediately after the effective date
in the case of a subdivision, combination or reclassification. If, as a result
of an adjustment  made pursuant to this  paragraph,  the Holder of any Warrant
thereafter  exercised  shall become  entitled to receive shares of two or more
classes of Capital Stock of the Company, the Board of Directors of the Company
shall in good faith  determine the  allocation of the adjusted  Exercise Price
between or among shares of such classes of Capital Stock.

          5.2 RECLASSIFICATION,  COMBINATIONS,  MERGERS,  ETC.. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise  of the  Warrants  (other  than as set forth in Section 5.1 above and
other than a change in par value,  or from par value to no par value,  or from
no par value to par value or as a result of a subdivision or combination),  or
in case of any  consolidation  or merger of the Company  with or into  another
corporation  (other  than a merger  in which  the  Company  is the  continuing
corporation and which does not result in any reclassification or change of the
then  outstanding  shares of Common Stock or other Capital Stock issuable upon
exercise of the Warrants  (other than a change in par value, or from par value
to no par  value,  or from no par  value  to par  value  or as a  result  of a
subdivision or  combination))  or in case of any sale or conveyance to another
corporation of all or substantially all of the assets of the Company, then, as
a condition of such reclassification,  change, consolidation,  merger, sale or
conveyance, the Company or such a successor or purchasing corporation,  as the
case may be, shall  forthwith make lawful and adequate  provision  whereby the
Holder of such Warrant then  outstanding  shall have the right  thereafter  to
receive on exercise of such Warrant the kind and amount of shares of stock and
other securities and property receivable upon such  reclassification,  change,
consolidation,  merger, sale or conveyance by a holder of the number of shares
of Common Stock  issuable upon exercise of such Warrant  immediately  prior to
such reclassification,  change, consolidation,  merger, sale or conveyance and
enter into a  supplemental  warrant  agreement so providing.  Such  provisions
shall include provision for adjustments which shall be as nearly equivalent as
may be practicable to the  adjustments  provided for in this Article 5. If the
issuer  of  securities   deliverable  upon  exercise  of  Warrants  under  the
supplemental  warrant  agreement is an  Affiliate of the formed,  surviving or
transferee  corporation,  that issuer shall join in the  supplemental  warrant
agreement.  The above  provisions of this Section 5.2 shall similarly apply to
successive  reclassifications  and  changes  of shares of Common  Stock and to
successive consolidations, mergers, sales or conveyances.

          In  case  of  any  such  reorganization,  reclassification,  merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other  than the  Company)  shall  expressly  assume  the due and  punctual
observance  and  performance  of each and every covenant and condition of this
Warrant  Agreement  to be  performed  and  observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed  appropriate  (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
for which this Warrant is exercisable  which shall be as nearly  equivalent as
practicable to the adjustments provided for in this Article 5. For purposes of
this  Section 5.2  "shares of stock and other  securities"  of a successor  or
acquiring  corporation  shall include stock of such  corporation  of any class
which is not preferred as to dividends or assets over any other class of stock
of such  corporation  and which is not  subject to  redemption  and shall also
include any  evidences of  indebtedness,  shares of stock or other  securities
which  are  convertible  into or  exchangeable  for  any  such  stock,  either
immediately  or upon the arrival of a  specified  date or the  happening  of a
specified  event and any warrants or other rights to subscribe for or purchase
any such stock.  The foregoing  provisions of this Section 5.2 shall similarly
apply   to    successive    reorganizations,    reclassifications,    mergers,
consolidations or disposition of assets.

          5.3 ISSUANCE OF OPTIONS OR  CONVERTIBLE  SECURITIES In the event the
Company shall, at any time or from time to time after the date hereof,  issue,
sell, distribute or otherwise grant in any

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manner (including by assumption) to all holders of the Common Stock any rights
to subscribe  for or to purchase,  or any warrants or options for the purchase
of, Common Stock or any stock or securities  convertible  into or exchangeable
for Common Stock (any such  rights,  warrants or options  being herein  called
"OPTIONS" and any such  convertible or exchangeable  stock or securities being
herein called "CONVERTIBLE  SECURITIES") or any Convertible  Securities (other
than upon  exercise of any Option),  whether or not such Options or the rights
to  convert  or  exchange  such   Convertible   Securities   are   immediately
exercisable,  and the price per share at which Common  Stock is issuable  upon
the  exercise  of such  Options or upon the  conversion  or  exchange  of such
Convertible  Securities  (determined by dividing (i) the aggregate  amount, if
any,  received or receivable by the Company as consideration for the issuance,
sale,  distribution  or  granting  of such  Options  or any  such  Convertible
Security,  plus the minimum aggregate amount of additional  consideration,  if
any,  payable to the Company  upon the  exercise  of all such  Options or upon
conversion or exchange of all such Convertible  Securities,  plus, in the case
of Options to acquire Convertible Securities,  the minimum aggregate amount of
additional  consideration,  if any, payable upon the conversion or exchange of
all such Convertible Securities, by (ii) the total maximum number of shares of
Common  Stock  issuable  upon the  exercise  of all such  Options  or upon the
conversion  or  exchange  of all  such  Convertible  Securities  or  upon  the
conversion  or  exchange  of all  Convertible  Securities  issuable  upon  the
exercise of all such Options) shall be less than the Market Price per share of
Common  Stock on the  record  date for the  issuance,  sale,  distribution  or
granting of such Options (any such event being herein called a "DISTRIBUTION")
then, effective upon such Distribution, the Exercise Price shall be reduced to
the price  (calculated  to the  nearest  1/1,000  of one cent)  determined  by
multiplying   the  Exercise  Price  in  effect   immediately   prior  to  such
Distribution by a fraction, the numerator of which shall be the sum of (i) the
number of  shares  of Common  Stock  outstanding  (exclusive  of any  treasury
shares) immediately prior to such Distribution  multiplied by the Market Price
per  share of  Common  Stock on the date of such  Distribution  plus  (ii) the
consideration, if any, received by the Company upon such Distribution, and the
denominator of which shall be the product of (A) the total number of shares of
Common Stock outstanding  (exclusive of any treasury shares) immediately after
such Distribution multiplied by (B) the Market Price per share of Common Stock
on the record date for such Distribution.  For purposes of the foregoing,  the
total maximum  number of shares of Common Stock  issuable upon exercise of all
such Options or upon conversion or exchange of all such Convertible Securities
or upon  the  conversion  or  exchange  of the  total  maximum  amount  of the
Convertible Securities issuable upon the exercise of all such Options shall be
deemed to have been issued as of the date of such  Distribution and thereafter
shall be  deemed to be  outstanding  and the  Company  shall be deemed to have
received  as  consideration  therefor  such  price per  share,  determined  as
provided  above.  Except  as  provided  in  Sections  5.9 and 5.10  below,  no
additional  adjustment  of the  Exercise  Price  shall be made upon the actual
exercise of such  Options or upon  conversion  or exchange of the  Convertible
Securities or upon the  conversion or exchange of the  Convertible  Securities
issuable upon the exercise of such Options.

          5.4 DIVIDENDS AND DISTRIBUTIONS.  In the event the Company shall, at
any time or from time to time  after the date  hereof,  distribute  to all the
holders of Common Stock any dividend or other distribution of cash,  evidences
of its  indebtedness,  other securities or other properties or assets (in each
case other than (i) dividends payable in Additional  Common Stock,  Options or
Convertible  Securities  and (ii) any cash  dividend  from current or retained
earnings),  or any  options,  warrants  or other  rights to  subscribe  for or
purchase any of the foregoing,  then (A) the Exercise Price shall be decreased
to a price  determined by  multiplying  the Exercise Price then in effect by a
fraction, the numerator of which shall be the Market Price per share of Common
Stock on the record  date for such  distribution  less the sum of (X) the cash
portion,  if any, of such  distribution per share of Common Stock  outstanding
(exclusive  of any treasury  shares) on the record date for such  distribution
plus (Y) the then fair market value (as  determined in good faith by the Board
of Directors of the Company) per share of Common Stock outstanding  (exclusive
of any  treasury  shares) on the  record  date for such  distribution  of that
portion, if any, of such distribution consisting of evidences of indebtedness,
other securities, properties,

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assets,  options,  warrants  or  subscription  or  purchase  rights,  and  the
denominator  of which shall be such Market Price per share of Common Stock and
(B) the number of shares of Common Stock purchasable upon the exercise of each
Warrant shall be increased to a number determined by multiplying the number of
shares of Common Stock so purchasable immediately prior to the record date for
such distribution by a fraction,  the numerator of which shall be the Exercise
Price in effect immediately prior to the adjustment  required by clause (A) of
this  sentence and the  denominator  of which shall be the  Exercise  Price in
effect  immediately  after such adjustment.  The adjustments  required by this
Section 5.4 shall be made whenever any such distribution occurs retroactive to
the record date for the determination of stockholders entitled to receive such
distribution.

          5.5  SELF-TENDERS.  In  case  of the  consummation  of a  tender  or
exchange offer (other than an odd-lot tender offer) made by the Company or any
subsidiary  of the Company  for all or any portion of the Common  Stock to the
extent  that the cash and value of any other  consideration  included  in such
payment per share of Common Stock exceeds the first  reported  sales price per
share of Common Stock on the trading day next succeeding the Expiration  Time,
the  Exercise  Price  shall be reduced so that the same shall  equal the price
determined by multiplying  the Exercise Price in effect  immediately  prior to
the  Expiration  Time by a fraction the numerator of which shall be the number
of shares of Common  Stock  outstanding  (including  any tendered or exchanged
shares) at the Expiration Time multiplied by the first reported sales price of
the Common Stock on the trading day next  succeeding the Expiration  Time, and
the denominator  shall be the sum of (A) the fair market value  (determined by
the Board of Directors of the Company, whose determination shall be conclusive
and  described in a resolution  of the Board of  Directors)  of the  aggregate
consideration  payable  to  stockholders  based on the  acceptance  (up to any
maximum  specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted,  up to any such maximum,  being  referred to as the
"PURCHASED  SHARES")  and (B) the  product  of the  number of shares of Common
Stock  outstanding  (less any Purchased Shares) on the Expiration Time and the
first  reported  sales  price  of the  Common  Stock on the  trading  day next
succeeding the Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Time.

          5.6 ISSUANCE OF ADDITIONAL  SHARES OF COMMON  STOCK.  If at any time
the  Company  shall  (except  as  hereinafter  provided)  issue  or  sell  any
Additional  Shares  of  Common  Stock  for  consideration  in  an  amount  per
Additional  Share of Common Stock less than the Market Price,  then the number
of shares of Common  Stock for which  this  Warrant  is  exercisable  shall be
adjusted to equal the product  obtained by multiplying the number of shares of
Common Stock for which this Warrant is exercisable  immediately  prior to such
issue or sale by a fraction (A) the  numerator of which shall be the number of
shares of Common Stock  outstanding  immediately after such issue or sale, and
(B) the  denominator  of which shall be the sum of (1) the number of shares of
Common Stock outstanding  immediately prior to such issue or sale, and (2) the
aggregate  consideration  received from the issuance or sale of the Additional
Shares of Common Stock divided by the Market  Price.  For the purposes of this
Section  5.6,  the date as of which the Market Price per share of Common Stock
shall be  computed  shall be the  earlier of (a) the date on which the Company
shall enter into a firm contract for the issuance of such Additional Shares of
Common Stock or (b) the date of actual issuance of such  Additional  Shares of
Common Stock. Notwithstanding the foregoing, no adjustment shall be made under
this  Section for  issuances  of  Additional  Shares of Common  Stock (i) with
respect to Permitted Issuances or (ii) upon exercise of the Warrants.

          5.7 CERTAIN  DISTRIBUTIONS.  If the Company  shall pay a dividend or
make any other  distribution  payable in Options  or  Convertible  Securities,
then,  for  purposes  of  Section  5.3  above,  such  Options  or  Convertible
Securities shall be deemed to have been issued or sold without consideration.

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          5.8 CONSIDERATION  RECEIVED.  If any shares of Common Stock, Options
or  Convertible  Securities  shall  be  issued,  sold  or  distributed  for  a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such  consideration  (as determined in good faith by the Board
of Directors of the  Company).  If any Options  shall be issued in  connection
with the  issuance  and  sale of other  securities  of the  Company,  together
comprising  one integral  transaction  in which no specific  consideration  is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without  consideration;  PROVIDED,  HOWEVER,  that if such
Options  have an exercise  price equal to or greater  than the Market Price of
the Common  Stock on the date of issuance of such  Options,  then such Options
shall be deemed to have been issued for  consideration  equal to such exercise
price.

          5.9 DEFERRAL OR EXCLUSION OF CERTAIN  ADJUSTMENTS.  No adjustment to
the Exercise Price  (including the related  adjustment to the number of shares
of Common  Stock  purchasable  upon the  exercise  of each  Warrant)  shall be
required  hereunder  unless such adjustment,  together with other  adjustments
carried forward as provided below,  would result in an increase or decrease of
at least one percent (1%) of the Exercise Price; PROVIDED that any adjustments
which by reason  of this  Section  5.9 are not  required  to be made  shall be
carried  forward  and taken into  account  in any  subsequent  adjustment.  No
adjustment need be made for a change in the par value of the Common Stock. All
calculations  under this Article  shall be made to the nearest  1/1,000 of one
cent or to the nearest  1/1000th of a share, as the case may be. No adjustment
to the Exercise Price shall be made at any time  hereunder in connection  with
the issuance by the Company of a warrant to purchase  35,000  shares of Common
Stock at an exercise price of $2.44 pursuant to the warrant  agreement,  dated
as of November 1, 1996, among Hanger Orthopedic Group, Inc., J.E. Hanger, Inc.
of Georgia and Wade L. Harghausen.

          5.10 CHANGES IN OPTIONS AND CONVERTIBLE SECURITIES.  If the exercise
price  provided  for in any  Options  referred  to in Section  5.3 above,  the
additional  consideration,  if any, payable upon the conversion or exchange of
any  Convertible  Securities  referred to in Section 5.3 above, or the rate at
which  any  Convertible  Securities  referred  to in  Section  5.3  above  are
convertible  into or  exchangeable  for Common  Stock shall change at any time
(other  than under or by reason of  provisions  designed  to  protect  against
dilution upon an event which results in a related adjustment  pursuant to this
Article  5),  the  Exercise  Price  then in effect and the number of shares of
Common Stock  purchasable upon the exercise of each Warrant shall forthwith be
readjusted  (effective  only with respect to any exercise of any Warrant after
such  readjustment) to the Exercise Price and number of shares of Common Stock
so purchasable  that would then be in effect had the adjustment  made upon the
issuance,  sale,  distribution  or  granting  of such  Options or  Convertible
Securities  been made  based  upon such  changed  purchase  price,  additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.

          5.11  EXPIRATION OF OPTIONS AND CONVERTIBLE  SECURITIES.  If, at any
time after any adjustment to the number of shares of Common Stock  purchasable
upon the  exercise of each Warrant  shall have been made  pursuant to Sections
5.3 or 5.10 above or this Section 5.11, any Options or Convertible  Securities
shall  have  expired  unexercised,  the number of such  shares so  purchasable
shall,  upon such  expiration,  be readjusted and shall  thereafter be such as
they would have been had they been  originally  adjusted  (or had the original
adjustment not been required, as the case may be) as if (i) the only shares of
Common  Stock  deemed to have been issued in  connection  with such Options or
Convertible  Securities  were the  shares of Common  Stock,  if any,  actually
issued or sold upon the exercise of such Options or Convertible Securities and
(ii)  such  shares  of  Common  Stock,  if any,  were  issued  or sold for the
consideration  actually  received by the Company upon such  exercise  plus the
aggregate  consideration,  if any,  actually  received  by the Company for the
issuance, sale, distribution or

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granting  of all  such  Options  or  Convertible  Securities,  whether  or not
exercised;  PROVIDED  that no such  readjustment  shall  have  the  effect  of
decreasing the number of such shares so  purchasable by an amount  (calculated
by adjusting such decrease to account for all other  adjustments made pursuant
to this Article 5 following  the date of the original  adjustment  referred to
above) in excess of the amount of the adjustment  initially made in respect of
the issuance,  sale,  distribution  or granting of such Options or Convertible
Securities.

          5.12 OTHER  ADJUSTMENTS.  In the event that at any time, as a result
of an  adjustment  made  pursuant to this Article 5, the Holders  shall become
entitled to receive any  securities of the Company other than shares of Common
Stock,  thereafter  the number of such other  securities  so  receivable  upon
exercise of the Warrants and the Exercise  Price  applicable  to such exercise
shall be subject to  adjustment  from time to time in a manner and on terms as
nearly  equivalent as practicable to the provisions with respect to the shares
of Common Stock contained in this Article 5.

          5.13 OTHER ACTION  AFFECTING  COMMON  STOCK.  In case at any time or
from time to time the  Company  shall take any action in respect of its Common
Stock,  other than any action  described in this Article 5, then the number of
shares of Common  Stock or other stock for which this  Warrant is  exercisable
shall be adjusted in such manner as may be equitable in the circumstances.  If
the  Company  shall at any time  and from  time to time  issue or sell (i) any
shares  of any  class of  common  stock  other  than  Common  Stock,  (ii) any
evidences of its  indebtedness,  shares of stock or other securities which are
convertible  into or  exchangeable  for such shares of common  stock,  with or
without the payment of additional  consideration  in cash or property or (iii)
any warrants or other  rights to subscribe  for or purchase any such shares of
common stock or any such evidences,  shares of stock or other securities, then
in each such case such  issuance  shall be deemed to be of, or in respect  of,
Common Stock for purposes of this Article 5; PROVIDED,  HOWEVER, that, without
limiting the generality of the  foregoing,  if the Company shall take a record
of the  holders  of its Common  Stock for the  purpose  of  entitling  them to
receive a dividend  payable in, or other  distribution  of, common stock other
than Common  Stock,  including  shares of non-voting  common  stock,  then the
number of  shares of Common  Stock  for  which  this  Warrant  is  exercisable
immediately  after the occurrence of any such event shall be adjusted to equal
the aggregate  number of shares of such common stock and of Common Stock which
a record  holder of the same  number of shares of Common  Stock for which this
Warrant is exercisable immediately prior to the occurrence of such event would
own or be entitled to receive after the happening of such event.

          ARTICLE 6. NOTICES TO WARRANT HOLDERS

          6.1 NOTICE OF  ADJUSTMENTS.  Whenever the number of shares of Common
Stock for which this Warrant is  exercisable,  and the Exercise  Price payable
therefor, shall be adjusted pursuant to Article 5, the Company shall forthwith
prepare a certificate  to be executed by a member of the Board of Directors or
one of its executive officers,  setting forth, in reasonable detail, the event
requiring  the  adjustment  and  the  method  by  which  such  adjustment  was
calculated  (including  a  description  of the  basis  on which  the  Board of
Directors of the Company  determined the fair market value of any evidences of
indebtedness.  other  securities,  properties,  assets,  options,  warrants or
subscription  or purchase  rights),  specifying the number of shares of Common
Stock for which this Warrant is exercisable  and (if such  adjustment was made
pursuant to Section 5.2, 5.12 or 5.13)  describing  the number and kind of any
other shares of stock or property for which this  Warrant is  exercisable.  In
the event that the Majority  Holders shall  challenge any of the  calculations
set forth in such certificate within 20 days after the Company's  notification
thereof,  the Company  shall  retain a firm of  independent  certified  public
accountants  of national  standing  selected  by the  Company  and  reasonably
acceptable  to the  Majority  Holders,  to prepare and  execute a  certificate
verifying the

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method by which the adjustment was calculated,  the number of shares of Common
Stock for which this Warrant is exercisable  and (if such  adjustment was made
pursuant to Section 5.2, 5.12 or 5.13)  describing  the number and kind of any
other shares of stock or property for which this Warrant is  exercisable.  The
Company  shall  promptly  cause  a  signed  copy of any  certificate  prepared
pursuant to this Section 6.1 to be delivered to each Holder in accordance with
Section  16.2.  The  Company  shall  keep at its  office or agency  designated
pursuant to Article 13 copies of all such  certificates  and cause the same to
be available for inspection at said office during normal business hours by any
Holder  or any  prospective  purchaser  of a  Warrant  designated  by a Holder
thereof.

          6.2 NOTICE OF CERTAIN  CORPORATE  ACTION.  The Holder of any Warrant
shall be entitled to the same rights to receive notice of corporate  action as
any holder of Common Stock.

          ARTICLE 7. NO IMPAIRMENT

          The Company shall not by any action including,  without  limitation,
amending  its  certificate  of  incorporation  or through any  reorganization,
transfer  of  assets,  consolidation,  merger,  dissolution,  issue or sale of
securities  or any  other  voluntary  action,  avoid  or  seek  to  avoid  the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith  assist in the  carrying  out of all such terms and in the
taking of all such actions as may be necessary or  appropriate  to protect the
rights of Holder against  impairment.  Without  limiting the generality of the
foregoing,  the Company  will (a) take all such action as may be  necessary or
appropriate in order that the Company may validly and legally issue fully paid
and  nonassessable  shares of Common Stock upon the exercise of this  Warrant,
and (b) use its best efforts to obtain all such authorizations,  exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.

          Upon the request of Holder,  the Company will at any time during the
period  this  Warrant  is  outstanding   acknowledge   in  writing,   in  form
satisfactory  to Holder,  the  continuing  validity  of this  Warrant  and the
obligations of the Company hereunder.

          ARTICLE  8.  COMMON  STOCK;   RESERVATION   AND   AUTHORIZATION   OF
                       REGISTRATION  WITH  OR  APPROVAL  OF  ANY  GOVERNMENTAL
                       AUTHORITY

          From and after the  Issuance  Date,  the Company  shall at all times
reserve and keep  available  for issuance  upon the exercise of Warrants  such
number of its  authorized  but  unissued  shares  of  Common  Stock as will be
sufficient  to permit the exercise in full of all  outstanding  Warrants.  All
shares of Common Stock which shall be so issuable,  when issued upon  exercise
of any Warrant in accordance with the terms of such Warrant,  shall be validly
issued,  fully paid and nonassessable and shall have been issued free from any
preemptive or similar right and shall be free and clear of any lien,  claim or
similar charge or restriction.

          Before  taking any action which would result in an adjustment in the
number of shares of Common  Stock for which this Warrant is  exercisable,  the
Company  shall  obtain  all such  authorizations  or  exemptions  thereof,  or
consents  thereto,  as may be  necessary  from any public  regulatory  body or
bodies having jurisdiction thereof.

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          If any shares of Common  Stock  required to be reserved for issuance
upon  exercise of Warrants  require  registration  or  qualification  with any
governmental  authority  under any  federal  or state law  (otherwise  than as
provided in Article 11) before such shares may be so issued,  the Company will
in good faith and as  expeditiously as possible and at its expense endeavor to
cause such shares to be duly registered.

          ARTICLE 9. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

          In the case of all dividends or other  distributions  by the Company
to the  holders of its Common  Stock with  respect to which any  provision  of
Article 5 refers to the taking of a record of such  holders,  the Company will
in each such case take such a record and will take such record as of the close
of business  on a Business  Day.  The  Company  will not at any time close its
stock transfer  books or Warrant  transfer books so as to result in preventing
or delaying the exercise or transfer of any Warrant.

          ARTICLE 10. RESTRICTIONS ON TRANSFERABILITY

          10.1 RESTRICTIVE  LEGEND.  (a) Except as otherwise  provided in this
Article  10, each  certificate  for Warrant  Stock  initially  issued upon the
exercise of this Warrant, and each certificate for Warrant Stock issued to any
transferee of any such  certificate,  shall be stamped or otherwise  imprinted
with a legend in substantially the following form:

          "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE  SECURITIES  ACT OF 1933, AS AMENDED,  OR ANY STATE  SECURITIES
     LAWS AND ARE SUBJECT TO CERTAIN PROVISIONS SPECIFIED IN A CERTAIN WARRANT
     DATED NOVEMBER 1, 1996,  ORIGINALLY  ISSUED BY HANGER  ORTHOPEDIC  GROUP,
     INC.  (THE  "WARRANT"),  AND  MAY  NOT BE  TRANSFERRED,  SOLD,  ASSIGNED,
     EXCHANGED,  MORTGAGED,  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR
     ENCUMBERED  WITHOUT  COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE
     RESTRICTED BY THE  PROVISIONS OF, THE SECURITIES ACT OF 1933, AS AMENDED,
     AND THE RULES AND REGULATIONS  THEREUNDER AND THE WARRANT.  A COPY OF THE
     FORM OF SAID WARRANT IS ON FILE WITH THE  SECRETARY OF HANGER  ORTHOPEDIC
     GROUP,  INC.  THE  HOLDER  OF THIS  CERTIFICATE,  BY  ACCEPTANCE  OF THIS
     CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF SUCH WARRANT."

          (b) Except as  otherwise  provided in this  Article 10, each Warrant
shall be stamped or otherwise  imprinted  with a legend in  substantially  the
following form:

          "NEITHER  THIS WARRANT NOR THE  SECURITIES  ISSUABLE  UPON  EXERCISE
     HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
     OR ANY STATE  SECURITIES  LAWS. THIS WARRANT AND THE SECURITIES  ISSUABLE
     UPON EXERCISE HEREOF MAY NOT BE TRANSFERRED,  SOLD, ASSIGNED,  EXCHANGED,
     MORTGAGED,  PLEDGED,  HYPOTHECATED OR OTHERWISE DISPOSED OF OR ENCUMBERED
     WITHOUT  COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE  RESTRICTED
     BY THE PROVISIONS  OF, THE SECURITIES ACT OF 1933, AS AMENDED,  THE RULES
     AND REGULATIONS THEREUNDER AND THIS WARRANT."

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          10.2 RESTRICTION ON TRANSFERS. (a) Subject to Section 10.2(b) below,
prior to any  Transfer of any  Warrants or any shares of Warrant  Stock (other
than a Transfer by a Holder to the  Company),  the Holder of such  Warrants or
Warrant Stock shall deliver  notice of such Transfer to the Company.  Upon the
Company's  receipt of such  notice,  such Holder shall be entitled to Transfer
such  Warrants or such Warrant Stock in compliance  with the  Securities  Act.
Each certificate,  if any, evidencing such shares of Warrant Stock issued upon
such Transfer shall bear the restrictive  legend set forth in Section 10.1(a),
and each Warrant issued upon such Transfer shall bear the  restrictive  legend
set forth in Section  10.1(b),  unless such legend is not required in order to
ensure compliance with the Securities Act.

          (b)  Notwithstanding  any  other  provision  of  this  Warrant,  the
restrictions  imposed by this Article 10 upon  transferability of the Warrants
and the  Warrant  Stock and the legend  requirements  of Section  10.1,  shall
terminate as to any  particular  Warrant or share of Warrant Stock when and so
long as such  security  shall  have  been  effectively  registered  under  the
Securities  Act and disposed of pursuant  thereto.  Whenever the  restrictions
imposed by this Article 10 shall terminate as to this Warrant,  as hereinabove
provided,  the Holder hereof shall be entitled to receive from the Company, at
the expense of the  Company,  a new Warrant  bearing the  following  legend in
place of the restrictive legend set forth hereon:

          "THE  RESTRICTIONS ON  TRANSFERABILITY  OF THIS WARRANT CONTAINED IN
     ARTICLE 10 HEREOF TERMINATED ON ____________, ____, AND ARE OF NO FURTHER
     FORCE AND EFFECT."

All Warrants issued upon registration of transfer, division or combination of,
or in substitution  for, any Warrant or Warrants  entitled to bear such legend
shall  have a similar  legend  endorsed  thereon.  Whenever  the  restrictions
imposed by this Article 10 shall  terminate as to any share of Warrant  Stock,
as hereinabove provided,  the Holder thereof shall be entitled to receive from
the Company,  at the Company's  expense,  a new certificate  representing such
Common Stock not bearing the restrictive legend set forth in Section 10.1(a).

          (c) Notwithstanding anything in this Warrant to the contrary, in the
event of a Tender  Offer,  the  restrictive  legends  referred  to in Sections
9.1(a) and 9.1(b) may be omitted from any Warrants or Warrant  Stock sold by a
Holder to the maker of the Tender Offer.

          10.3 LISTING ON SECURITIES  EXCHANGE OR NASDAQ. If the Company shall
list any shares of Common Stock on any  securities  exchange or on NASDAQ,  it
will, at its expense,  list thereon,  maintain and, when  necessary,  increase
such  listing  of,  all  shares  of Common  Stock  issued  or,  to the  extent
permissible under the applicable securities exchange or NASDAQ rules, issuable
upon the  exercise of this Warrant so long as any shares of Common Stock shall
be so listed during any such Exercise Period.

          10.4 COVENANT  REGARDING  CONSENTS.  The Company hereby covenants to
use its best  efforts  upon request of one or more Holders to seek any waivers
or consents,  or to take any other action required, to effectuate the exercise
of this Warrant by any Holder.

          ARTICLE 11. REGISTRATION RIGHTS

          11.1  INCIDENTAL  REGISTRATIONS.  (a) RIGHT TO  INCLUDE  REGISTRABLE
SECURITIES.  If the  Company at any time  after the date  hereof  proposes  to
register  its  Common  Stock (or any  security  which is  convertible  into or
exchangeable or exercisable for Common Stock) under the Securities Act

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(other than a registration on Form S-4 or S-8, or any successor or other forms
promulgated  for  similar  purposes),  whether  or not  for  sale  for its own
account, in a manner which would permit registration of Registrable Securities
for sale to the public under the  Securities  Act, it will, at each such time,
give prompt  written  notice to all Holders of  Registrable  Securities of its
intention to do so and of such Holders'  rights under this Section 11.1.  Upon
the  written  request of any such Holder made within 15 days after the receipt
of any such notice (which  request shall  specify the  Registrable  Securities
intended  to be  disposed of by such  Holder),  the Company  will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities  which the Company has been so requested to register by the Holders
thereof,  to the extent requisite to permit the disposition of the Registrable
Securities so to be registered; PROVIDED that (i) if, at any time after giving
written  notice of its intention to register any  securities  and prior to the
effective date of the  registration  statement  filed in connection  with such
registration,  the Company shall  determine for any reason not to proceed with
the proposed registration of the securities to be sold by it, the Company may,
at its election,  give written notice of such  determination to each Holder of
Registrable Securities and, thereupon,  shall be relieved of its obligation to
register any Registrable  Securities in connection with such registration (but
not  from  its  obligation  to pay the  Registration  Expenses  in  connection
therewith),  and (ii) if such registration involves an underwritten  offering,
all  Holders  of  Registrable  Securities  requesting  to be  included  in the
Company's   registration  must  sell  their  Registrable   Securities  to  the
underwriters selected by the Company on the same terms and conditions as apply
to  the  Company,  with  such  differences,  including  any  with  respect  to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings. If a registration requested pursuant
to this Section 11.1(a) involves an underwritten  public offering,  any Holder
of Registrable  Securities  requesting to be included in such registration may
elect,  in writing prior to the effective date of the  registration  statement
filed in connection with such registration, not to register such securities in
connection with such registration.  Nothing in this Section 11.1 shall operate
to limit the right of Holder to (i) request the  registration of Warrant Stock
issuable  upon exercise of Warrants  held by such Holder  notwithstanding  the
fact that at the time of  request,  such  Holder  holds only  Warrants or (ii)
request the registration at one time of both Warrants and Warrant Stock.

          (b)  EXPENSES.  The Company  will pay all  Registration  Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 11.1.

          (c) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration pursuant
to this  Section  11.1  involves an  underwritten  offering  and the  managing
underwriter advises the Company in writing that, in its opinion, the number of
securities  requested to be included in such  registration  exceeds the number
which can be sold in such  offering,  so as to be  likely  to have an  adverse
effect on the price,  timing or distribution of the Securities offered in such
offering  as   contemplated   by  the  Company  (other  than  the  Registrable
Securities),  then the Company  will include in such  registration  (i) first,
100% of the  securities the Company  proposes to sell and (ii) second,  to the
extent of the number of  Registrable  Securities  requested  to be included in
such registration which, in the opinion of such managing  underwriter,  can be
sold  without  having the  adverse  effect  referred  to above,  the number of
Registrable Securities which the Holders have requested to be included in such
registration,  such  amount to be  allocated  pro rata  among  all  requesting
Holders  on  the  basis  of the  relative  number  of  shares  of  Registrable
Securities  then held by each such Holder  (provided  that any shares  thereby
allocated  to any such  Holder  that  exceed  such  Holder's  request  will be
reallocated among the remaining requesting Holders in like manner).

          11.2  REGISTRATION  ON REQUEST.  (a) REQUEST BY THE DEMAND PARTY. At
any time,  upon the written  request of the Demand Party  requesting  that the
Company  effect the  registration  under the  Securities Act of all or part of
such Demand  Party's  Registrable  Securities  and  specifying  the amount and
intended method of disposition thereof, the Company will promptly give written
notice of such

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requested  registration to all other Holders of such  Registrable  Securities,
and thereupon  will,  as  expeditiously  as possible,  use its best efforts to
effect the registration under the Securities Act of:

          (i)  such  Registrable  Securities  which  the  Company  has been so
     requested to register by the Demand Party; and

          (ii) all other Registrable Securities as are to be registered at the
     request of a Demand  Party and which the  Company has been  requested  to
     register  by any other  Holder  thereof by written  request  given to the
     Company  within 15 days  after the giving of such  written  notice by the
     Company  (which  request shall specify the amount and intended  method of
     disposition of such Registrable Securities),

all to the extent  necessary to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the  Registrable  Securities so to be
registered;  PROVIDED,  that,  unless Holders of a majority of the Registrable
Securities held by Holders  consent thereto in writing,  the Company shall not
be obligated to file a  registration  statement  relating to any  registration
request  under this  Section  11.2(a) (x) within a period of nine months after
the  effective  date  of any  other  registration  statement  relating  to any
registration request under this Section 11.2(a) which was not effected on Form
S-3 (or  any  successor  or  similar  short-form  registration  statement)  or
relating to any  registration  effected  under  Section  11.1,  or (y) if with
respect thereto the managing underwriter,  the Commission,  the Securities Act
or the rules and regulations thereunder, or the form on which the registration
statement is to be filed, would require the conduct of an audit other than the
regular audit conducted by the Company at the end of its fiscal year, in which
case the filing may be delayed  until the  completion  of such  regular  audit
(unless the Holders of the  Registrable  Securities to be registered  agree to
pay the  expenses of the Company in  connection  with such an audit other than
the regular  audit).  Nothing in this Section 11.2 shall  operate to limit the
right of Holder to (i) request the registration of Warrant Stock issuable upon
exercise of Warrants held by such Holder  notwithstanding the fact that at the
time  of  request,  such  Holder  holds  only  Warrants  or (ii)  request  the
registration at one time of both Warrants and Warrant Stock.

          (b)  REGISTRATION  STATEMENT  FORM.  If any  registration  requested
pursuant to this  Section 11.2 which is proposed by the Company to be effected
by the filing of a  registration  statement  on Form S-3 (or any  successor or
similar  short-form  registration  statement)  shall be in connection  with an
underwritten public offering, and if the managing underwriter shall advise the
Company  in  writing  that,  in its  opinion,  the  use  of  another  form  of
registration  statement  is of  material  importance  to the  success  of such
proposed  offering,  then such  registration  shall be  effected on such other
form.

          (c)  EXPENSES.  The Company  will pay all  Registration  Expenses in
connection  with the first two (2)  registrations  of each  class or series of
Registrable  Securities pursuant to this Section 11.2 upon the written request
of any of the  Holders;  PROVIDED  that  the  Company  will  pay  Registration
Expenses in connection  with an additional two (2) such  registrations  if the
Company  shall have not repaid in full all  amounts  borrowed  pursuant to the
Note Purchase Agreement on or prior to May 1, 1998; PROVIDED, FURTHER that any
requested  registration  by Holder of both  Warrants and Warrant  Stock at one
time shall only count as one  registration.  All expenses  for any  subsequent
registrations of Registrable Securities pursuant to this Section 11.2 shall be
paid pro rata by the Company and all other  Persons  (including  the  Holders)
participating  in such  registration  on the basis of the  relative  number of
Warrants or shares of Warrant  Stock,  as the case may be, of each such person
whose Registrable Securities are included in such registration.

          (d)  EFFECTIVE  REGISTRATION  STATEMENT.  A  registration  requested
pursuant to this Section 11.2 will not be deemed to have been effected  unless
it has become effective and all of the Registrable

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Securities  registered thereunder have been sold; PROVIDED that if, within 180
days after it has become  effective,  the offering of  Registrable  Securities
pursuant to such registration is interfered with by any stop order, injunction
or other order or requirement of the Commission or other  governmental  agency
or court, such registration will be deemed not to have been effected.

          (e) SELECTION OF UNDERWRITERS.  If a requested registration pursuant
to this  Section  11.2  involves an  underwritten  offering,  the Holders of a
majority of the Registrable Securities which are held by Holders and which the
Company  has been  requested  to  register  shall have the right to select the
investment  banker  or  bankers  and  managers  to  administer  the  offering;
PROVIDED,  HOWEVER,  that such investment banker or bankers and managers shall
be reasonably satisfactory to the Company.

          (f) PRIORITY IN REQUESTED REGISTRATIONS. If a requested registration
pursuant to this  Section  11.2  involves  an  underwritten  offering  and the
managing  underwriter advises the Company in writing that, in its opinion, the
number of securities requested to be included in such registration  (including
securities of the Company which are not  Registrable  Securities)  exceeds the
number  which can be sold in such  offering,  the Company will include in such
registration only the Registrable  Securities requested to be included in such
registration. In the event that the number of Registrable Securities requested
to be included in such  registration  exceeds the number which, in the opinion
of such  managing  underwriter,  can be sold,  the number of such  Registrable
Securities  to be included in such  registration  shall be allocated  pro rata
among  all  requesting  Holders  on  the  basis  of  the  relative  number  of
Registrable Securities then held by each such Holder (provided that any shares
thereby  allocated to any such Holder that exceed such Holder's  request shall
be reallocated among the remaining  requesting Holders in like manner). In the
event that the number of  Registrable  Securities  requested to be included in
such  registration  is less  than the  number  which,  in the  opinion  of the
managing   underwriter,   can  be  sold,  the  Company  may  include  in  such
registration  the securities the Company  proposes to sell up to the number of
securities that, in the opinion of the underwriter, can be sold.

          (g)  ADDITIONAL  RIGHTS.  If the  Company at any time  grants to any
other holders of capital stock any rights to request the Company to effect the
registration  under the  Securities Act of any such shares of capital stock on
terms more  favorable to such holders than the terms set forth in this Section
11.2, the terms of this Section 11.2 shall be deemed  amended or  supplemented
to the extent  necessary to provide the Holders such more favorable rights and
benefits.

          11.3  REGISTRATION  PROCEDURES.  If  and  whenever  the  Company  is
required to use its best  efforts to effect or cause the  registration  of any
Registrable Securities under the Securities Act as provided in this Agreement,
the Company will, as expeditiously as possible:

          (i) prepare  and, in any event  within 120 days after the end of the
     period  within  which a  request  for  registration  may be  given to the
     Company,  file with the Commission a registration  statement with respect
     to such  Registrable  Securities  and use its best  efforts to cause such
     registration statement to become effective,  PROVIDED,  HOWEVER, that the
     Company may discontinue any registration of its securities which is being
     effected pursuant to Section 11.1 at any time prior to the effective date
     of the registration statement relating thereto;

          (ii)  prepare  and file  with the  Commission  such  amendments  and
     supplements to such  registration  statement and the  prospectus  used in
     connection  therewith  as may be  necessary  to  keep  such  registration
     statement  effective for a period not in excess of 270 days and to comply
     with the provisions of the Securities Act, the Exchange Act and the rules
     and  regulations  of  the  Commission  thereunder  with  respect  to  the
     disposition  of all  securities  covered by such  registration  statement
     during such period in accordance with the intended

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         methods of disposition by the seller or sellers  thereof set forth in
         such   registration   statement;   PROVIDED   that  before  filing  a
         registration   statement  or   prospectus,   or  any   amendments  or
         supplements  thereto,  the Company will  furnish to counsel  selected
         pursuant to Section  11.6  hereof by the  Holders of the  Registrable
         Securities  covered by such registration  statement to represent such
         Holders,  copies  of  all  documents  proposed  to  be  filed,  which
         documents will be subject to the review of such counsel;

          (iii)  furnish to each seller of such  Registrable  Securities  such
     number of copies of such registration statement and of each amendment and
     supplement  thereto (in each case including all exhibits filed therewith,
     including any documents incorporated by reference), such number of copies
     of the prospectus included in such registration statement (including each
     preliminary  prospectus and summary  prospectus),  in conformity with the
     requirements  of the  Securities  Act,  and such other  documents as such
     seller may reasonably  request in order to facilitate the  disposition of
     the Registrable Securities by such seller;

          (iv) use its best  efforts to register or qualify  such  Registrable
     Securities  covered by such  registration in such  jurisdictions  as each
     seller shall reasonably request, and do any and all other acts and things
     which may be  reasonably  necessary or advisable to enable such seller to
     consummate  the  disposition  in such  jurisdictions  of the  Registrable
     Securities  owned by such seller,  except that the Company  shall not for
     any such  purpose be  required to qualify  generally  to do business as a
     foreign  corporation in any jurisdiction  where, but for the requirements
     of this clause (iv),  it would not be obligated  to be so  qualified,  to
     subject  itself to  taxation  in any such  jurisdiction  or to consent to
     general service of process in any such jurisdiction;

          (v) use its  best  efforts  to  cause  such  Registrable  Securities
     covered by such registration  statement to be registered with or approved
     by such other governmental agencies or authorities as may be necessary to
     enable the seller or sellers  thereof to consummate  the  disposition  of
     such Registrable Securities;

          (vi) notify each seller of any such Registrable  Securities  covered
     by such registration  statement,  at any time when a prospectus  relating
     thereto is required to be delivered  under the  Securities Act within the
     appropriate  period mentioned in clause (ii) of this Section 11.3, of the
     Company's   becoming   aware  that  the   prospectus   included  in  such
     registration  statement,  as then in effect, includes an untrue statement
     of a  material  fact or omits to state a  material  fact  required  to be
     stated therein or necessary to make the statements therein not misleading
     in the light of the  circumstances  then existing,  and at the request of
     any such seller,  prepare and furnish to such seller a reasonable  number
     of copies of an amended or supplemental prospectus as may be necessary so
     that,  as  thereafter  delivered to the  purchasers  of such  Registrable
     Securities,  such prospectus  shall not include an untrue  statement of a
     material  fact or omit to state a  material  fact  required  to be stated
     therein or necessary to make the statements therein not misleading in the
     light of the circumstances then existing;

          (vii)  otherwise use its best efforts to comply with all  applicable
     rules  and  regulations  of the  Commission,  and make  available  to its
     security  holders,  as soon as reasonably  practicable (but not more than
     eighteen months) after the effective date of the registration  statement,
     an earnings statement which shall satisfy the provisions of Section 11(a)
     of  the  Securities  Act  and  the  rules  and  regulations   promulgated
     thereunder;

          (viii) (A) if such Registrable Securities are Warrant Stock, use its
     best  efforts  to list  such  Registrable  Securities  on any  securities
     exchange on which the Common Stock is then

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     listed if such  Registrable  Securities  are not already so listed and if
     such listing is then permitted  under the rules of such exchange;  (B) if
     such Registrable Securities are Warrants,  upon the reasonable request of
     sellers  of a  majority  of such  Registrable  Securities,  use its  best
     efforts  to list the  Warrants  and,  if  requested,  the  Warrant  Stock
     underlying the Warrants, notwithstanding that at the time of request such
     sellers hold only Warrants,  on any securities exchange so requested,  if
     such  Registrable  Securities  are not  already  so  listed,  and if such
     listing is then permitted  under the rules of such exchange;  (C) and use
     its best  efforts  to  provide a transfer  agent and  registrar  for such
     Registrable  Securities covered by such registration  statement not later
     than the effective date of such registration statement;

          (ix) enter into such customary agreements (including an underwriting
     agreement  in  customary   form),   which  may  include   indemnification
     provisions in favor of underwriters  and other persons in addition to, or
     in substitution for the provisions of Section 11.4 hereof,  and take such
     other actions as sellers of a majority of such Registrable  Securities or
     the underwriters,  if any,  reasonably  requested in order to expedite or
     facilitate the disposition of such Registrable Securities;

          (x) obtain a "cold  comfort"  letter or letters  from the  Company's
     independent public accounts in customary form and covering matters of the
     type  customarily  covered  by "cold  comfort"  letters  as the seller or
     sellers  of a majority  of shares of such  Registrable  Securities  shall
     reasonably  request (provided that Registrable  Securities  constitute at
     least 25% of the securities covered by such registration statement);

          (xi) make available for inspection by any seller of such Registrable
     Securities  covered by such  registration  statement,  by any underwriter
     participating  in  any  disposition  to  be  effected  pursuant  to  such
     registration  statement  and by any  attorney,  accountant or other agent
     retained  by any such  seller  or any  such  underwriter,  all  pertinent
     financial and other records, pertinent corporate documents and properties
     of the Company,  and cause all of the Company's  officers,  directors and
     employees  to supply all  information  reasonably  requested  by any such
     seller,  underwriter,  attorney,  accountant or agent in connection  with
     such registration statement;

          (xii) notify counsel (selected  pursuant to Section 11.6 hereof) for
     the  Holders of  Registrable  Securities  included  in such  registration
     statement and the managing underwriter or agent, immediately, and confirm
     the  notice  in  writing  (i) when  the  registration  statement,  or any
     post-effective amendment to the registration statement, shall have become
     effective,   or  any  supplement  to  the  prospectus  or  any  amendment
     prospectus  shall have been filed,  (ii) of the  receipt of any  comments
     from the Commission,  (iii) of any request of the Commission to amend the
     registration  statement  or amend or  supplement  the  prospectus  or for
     additional information, and (iv) of the issuance by the Commission of any
     stop order suspending the effectiveness of the registration  statement or
     of any  order  preventing  or  suspending  the  use  of  any  preliminary
     prospectus, or of the suspension of the qualification of the registration
     statement for offering or sale in any jurisdiction, or of the institution
     or threatening of any proceedings for any of such purposes;

          (xiii) make every  reasonable  effort to prevent the issuance of any
     stop order suspending the effectiveness of the registration  statement or
     of any  order  preventing  or  suspending  the  use  of  any  preliminary
     prospectus and, if any such order is issued,  to obtain the withdrawal of
     any such order at the earliest possible moment;

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          (xiv)  if  requested  by the  managing  underwriter  or agent or any
     Holder of Registrable  Securities covered by the registration  statement,
     promptly  incorporate  in  a  prospectus   supplement  or  post-effective
     amendment such  information as the managing  underwriter or agent or such
     Holder  reasonably  requests to be included therein,  including,  without
     limitation,  with respect to the number of Registrable  Securities  being
     sold by such Holder to such  underwriter  or agent,  the  purchase  price
     being paid therefor by such  underwriter or agent and with respect to any
     other terms of the underwritten offering of the Registrable Securities to
     be  sold  in  such  offering;  and  make  all  required  filings  of such
     prospectus supplement or post-effective  amendment as soon as practicable
     after  being  notified  of the matters  incorporated  in such  prospectus
     supplement or post-effective amendment;

          (xv) cooperate with the Holders of Registrable Securities covered by
     the registration statement and the managing underwriter or agent, if any,
     to facilitate the timely  preparation and delivery of  certificates  (not
     bearing any restrictive legends) representing securities to be sold under
     the  registration  statement,  and enable such  securities  to be in such
     denominations and registered in such names as the managing underwriter or
     agent, if any, or such Holders may request;

          (xvi) obtain for delivery to the Holders of  Registrable  Securities
     being  registered and to the  underwriter or agent an opinion or opinions
     from counsel for the Company in customary form and in form, substance and
     scope reasonably satisfactory to such Holders, underwriters or agents and
     their counsel; and

          (xvii) cooperate with each seller of Registrable Securities and each
     underwriter or agent participating in the disposition of such Registrable
     Securities and their  respective  counsel in connection  with any filings
     required to be made with the NASD.

          The Company may require each seller of Registrable  Securities as to
which any  registration  is being  effected to furnish  the Company  with such
information regarding such seller and pertinent to the disclosure requirements
relating to the  registration  and the  distribution of such securities as the
Company may from time to time reasonably request in writing.

          Each Holder of Registrable  Securities  agrees that, upon receipt of
any  notice  from  the  Company  of the  happening  of any  event  of the kind
described  in clause (vi) of this  Section  11.3,  such Holder will  forthwith
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable  Securities until such Holder's receipt of
the copies of the  supplemented or amended  prospectus  contemplated by clause
(vi) of this Section  11.3,  and, if so directed by the  Company,  such Holder
will deliver to the Company (at the Company's expense) all copies,  other than
permanent  file copies then in such  Holder's  possession,  of the  prospectus
covering such  Registrable  Securities  current at the time of receipt of such
notice.  In the event the  Company  shall  give any such  notice,  the  period
mentioned  in clause (ii) of this Section 11.3 shall be extended by the number
of days  during the period from and  including  the date of the giving of such
notice  pursuant to clause (vi) of this  Section 11.3 and  including  the date
when each  seller  of  Registrable  Securities  covered  by such  registration
statement  shall  have  received  the  copies of the  supplemented  or amended
prospectus contemplated by clause (vi) of this Section 11.3.

          11.4  INDEMNIFICATION.  (a)  INDEMNIFICATION BY THE COMPANY.  In the
event  of  any  registration  of  any  securities  of the  Company  under  the
Securities  Act pursuant to Section  11.1 or 10.2,  the Company  will,  and it
hereby does, indemnify and hold harmless,  to the extent permitted by law, the
seller of any Registrable  Securities covered by such registration  statement,
each affiliate of such seller and their  respective  directors and officers or
general and limited partners (including any

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director, officer, affiliate, employee, agent and controlling Person of any of
the  foregoing),  each other Person who  participates as an underwriter in the
offering  or sale of such  securities  and  each  other  Person,  if any,  who
controls  such  seller  or any such  underwriter  within  the  meaning  of the
Securities Act (collectively,  the "INDEMNIFIED PARTIES"), against any and all
losses,  claims,  damages  or  liabilities,  joint or  several,  and  expenses
(including   reasonable   attorney's   fees   and   reasonable   expenses   of
investigation)  to which such  Indemnified  Party may become subject under the
Securities  Act,  common law or  otherwise,  insofar as such  losses,  claims,
damages or liabilities (or actions or proceedings in respect thereof,  whether
or not such  Indemnified  Party is a party  thereto) arise out of or are based
upon (a) any untrue statement or alleged untrue statement of any material fact
contained  in any  registration  statement  under which such  securities  were
registered  under  the  Securities  Act,  any  preliminary,  final or  summary
prospectus  contained therein,  or any amendment or supplement thereto, or (b)
any omission or alleged  omission to state therein a material fact required to
be stated therein or necessary to make the statements  therein (in the case of
a prospectus,  in light of the  circumstances  under which they were made) not
misleading,  and the Company will  reimburse  such  Indemnified  Party for any
legal or any other  expenses  reasonably  incurred  by it in  connection  with
investigating or defending against any such loss, claim, liability,  action or
proceeding;  PROVIDED that the Company shall not be liable to any  Indemnified
Party in any such  case to the  extent  that any  such  loss,  claim,  damage,
liability (or action or proceeding in respect  thereof) or expense  arises out
of or is based  upon any  untrue  statement  or alleged  untrue  statement  or
omission or alleged omission made in such registration  statement or amendment
or supplement thereto or in any such preliminary,  final or summary prospectus
in reliance upon and in conformity with written  information  furnished to the
Company  through an  instrument  duly  executed  by such  seller  specifically
stating that it is for use in the  preparation  thereof.  Such indemnity shall
remain in full force and effect regardless of any investigation  made by or on
behalf of such seller or any Indemnified  Party and shall survive the transfer
of such securities by such seller.

          (b)  INDEMNIFICATION  BY THE SELLER.  The Company may require,  as a
condition  to  including  any  Registrable   Securities  in  any  registration
statement filed in accordance with Section 11.3 herein, that the Company shall
have  received  an  undertaking   reasonably   satisfactory  to  it  from  the
prospective  seller  of such  Registrable  Securities  or any  underwriter  to
indemnify  and hold harmless (in the same manner and to the same extent as set
forth in  subdivision  (a) of this  Section  11.4) the  Company  and all other
prospective  sellers  with respect to any untrue  statement or alleged  untrue
statement in or omission or alleged omission from such registration statement,
any  preliminary,  final  or  summary  prospectus  contained  therein,  or any
amendment or supplement,  if such untrue statement or alleged untrue statement
or omission or alleged  omission was made in reliance  upon and in  conformity
with written  information  furnished to the Company through an instrument duly
executed by such seller or underwriter specifically stating that it is for use
in the  preparation  of such  registration  statement,  preliminary,  final or
summary prospectus or amendment or supplement,  or a document  incorporated by
reference into any of the foregoing. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any of the  prospective  sellers,  or any of their  respective  affiliates,
directors,  officers or controlling  Persons and shall survive the transfer of
such securities by such seller. In no event shall the liability of any selling
Holder of  Registrable  Securities  hereunder  be greater  in amount  than the
dollar  amount of the  proceeds  received  by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.

          (c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an Indemnified
Party  hereunder  of  written  notice  of the  commencement  of any  action or
proceeding  with  respect  to which a claim  for  indemnification  may be made
pursuant to this Section  11.4,  such  Indemnified  Party will,  if a claim in
respect  thereof is to be made  against an  indemnifying  party,  give written
notice to the latter of the  commencement  of such action;  PROVIDED  that the
failure of the  Indemnified  Party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding

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subdivisions of this Section 11.4,  except to the extent that the indemnifying
party is actually  prejudiced by such failure to give notice. In case any such
action is brought  against an Indemnified  Party,  unless in such  Indemnified
Party's  reasonable  judgment a conflict of interest  between such Indemnified
Party  and  indemnifying  parties  may exist in  respect  of such  claim,  the
indemnifying  party  will be  entitled  to  participate  in and to assume  the
defense thereof,  jointly with any other indemnifying party similarly notified
to the extent that it may wish, with counsel  reasonably  satisfactory to such
Indemnified  Party,  and  after  notice  from the  indemnifying  party to such
Indemnified  Party of its  election  so to assume  the  defense  thereof,  the
indemnifying  party will not be liable to such Indemnified Party for any legal
or other expenses  subsequently  incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation.  No indemnifying
party will consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof,  the giving by the claimant
or plaintiff  to such  Indemnified  Party of a release  from all  liability in
respect to such claim or litigation.

          (d)  CONTRIBUTION.  If the  indemnification  provided  for  in  this
Section 11.4 from the  indemnifying  party is  unavailable  to an  Indemnified
Party  hereunder in respect of any losses,  claims,  damages,  liabilities  or
expenses  referred  to  herein,  then  the  indemnifying  party,  in  lieu  of
indemnifying  such Indemnified  Party,  shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages,
liabilities  or expenses in such  proportion as is  appropriate to reflect the
relative fault of the indemnifying party and Indemnified Parties in connection
with the actions which resulted in such losses, claims,  damages,  liabilities
or  expenses,  as well as any other  relevant  equitable  considerations.  The
relative fault of such  indemnifying  party and  Indemnified  Parties shall be
determined  by  reference  to,  among  other  things,  whether  any  action in
question,  including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been made by, or
relates to  information  supplied by, such  indemnifying  party or Indemnified
Parties,  and the parties' relative intent,  knowledge,  access to information
and opportunity to correct or prevent such action.  The amount paid or payable
by a party under this Section 11.4 as a result of the losses, claims, damages,
liabilities  and  expenses  referred  to above  shall be deemed to include any
legal  or  other  fees  or  expenses  reasonably  incurred  by such  party  in
connection with any investigation or proceeding.

          The parties  hereto agree that it would not be just and equitable if
contribution  pursuant  to this  Section  11.4  were  determined  by pro  rata
allocation or by any other method of allocation which does not take account of
the  equitable   considerations  referred  to  in  the  immediately  preceding
paragraph.  No  Person  guilty of  fraudulent  misrepresentation  (within  the
meaning  of  Section  11(f)  of the  Securities  Act)  shall  be  entitled  to
contribution   from  any  Person  who  was  not  guilty  of  such   fraudulent
misrepresentation.

          (e) OTHER INDEMNIFICATION. Indemnification similar to that specified
in  the  preceding   subdivisions  of  this  Section  11.4  (with  appropriate
modifications)  shall be given by the Company  and each seller of  Registrable
Securities with respect to any required registration or other qualification of
securities  under any  federal  or state  law or  regulation  or  governmental
authority other than the Securities Act.

          (f)  NON-EXCLUSIVITY.  The  obligations  of the  parties  under this
Section  11.4  shall be in  addition  to any  liability  which  any  party may
otherwise have to any other party.

          11.5 RULE 144. The Company  covenants  that it will file the reports
required to be filed by it under the  Securities  Act and the Exchange Act and
the rules and  regulations  adopted by the Commission  thereunder  (or, if the
Company is not required to file such reports, it will, upon the request of any
Holder of Registrable  Securities,  make publicly available such information),
and it will

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take  such  further  action  as  any  Holder  of  Registrable  Securities  may
reasonably  request,  all to the extent  required  from time to time to enable
such Holder to sell  Registrable  Securities  without  registration  under the
Securities Act within the  limitation of the  exemptions  provided by (i) Rule
144 under the  Securities  Act, as such Rule may be amended from time to time,
or (ii) any similar rule or regulation  hereafter  adopted by the  Commission.
Upon the request of any Holder of  Registrable  Securities,  the Company  will
deliver to such Holder a written  statement as to whether it has complied with
such  requirements.  Notwithstanding  anything contained in this Section 11.5,
the Company may, with the consent of the Majority  Holders,  deregister  under
Article 12 of the  Exchange  Act if it then is  permitted to do so pursuant to
the Exchange Act and the rules and regulations thereunder.

          11.6 SELECTION OF COUNSEL.  In connection  with any  registration of
Registrable  Securities pursuant to Sections 11.1 and 11.2 hereof, the Holders
of a majority of the Registrable  Securities  covered by any such registration
may select one  counsel to  represent  all Holders of  Registrable  Securities
covered by such registration;  PROVIDED,  HOWEVER,  that in the event that the
counsel selected as provided above is also acting as counsel to the Company in
connection with such registration,  the remaining Holders shall be entitled to
select one additional counsel to represent all such remaining Holders.

          11.7  HOLDBACK  AGREEMENT.  If any  such  registration  shall  be in
connection with an underwritten  public  offering,  each Holder of Registrable
Securities agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities  Act, of any equity  securities
of the  Company,  or of any  security  convertible  into  or  exchangeable  or
exercisable for any equity  security of the Company (in each case,  other than
as part of such underwritten  public offering),  within 7 days before, or such
period not to exceed 180 days as the  underwriting  agreement  may require (or
such  lesser  period as the  managing  underwriters  may  permit)  after,  the
effective date of such registration (except as part of such registration), and
the Company hereby also so agrees and agrees to cause each other holder of any
equity  security,  or of any  security  convertible  into or  exchangeable  or
exercisable for any equity security, of the Company purchased from the Company
(at any time other than in a public offering) to so agree.

          11.8 SPECIFIC PERFORMANCE.  The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Article 11 were not performed in accordance  with their specific terms or
were otherwise breached. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent  breaches of the provisions of this
Article 11 and to enforce specifically the terms and provisions thereof in any
court of competent  jurisdiction in the United States or any state thereof, in
addition  to any  other  remedy  to which  they may be  entitled  at law or in
equity.

          ARTICLE 12. LOSS OR MUTILATION

          Upon receipt by the Company  from any Holder of evidence  reasonably
satisfactory  to it of the ownership of and the loss,  theft,  destruction  or
mutilation of this Warrant and  indemnity  reasonably  satisfactory  to it (it
being understood that the written  agreement of the Holder shall be sufficient
indemnity) and in case of mutilation upon surrender and  cancellation  hereof,
the  Company  will  execute  and  deliver in lieu hereof a new Warrant of like
tenor to such Holder (without expense to the Holder); PROVIDED, in the case of
mutilation,  no indemnity  shall be required if this  Warrant in  identifiable
form is surrendered to the Company for cancellation.

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          ARTICLE 13. OFFICE OF THE COMPANY

          As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal  executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant.

          ARTICLE 14. FINANCIAL AND BUSINESS INFORMATION

          The  Company  will  deliver to CVCA and Paribas (so long as the CVCA
and  Paribas  hold any  Warrant)  and to each  subsequent  holder of a Warrant
representing at least 25% of the Warrant Shares:

          (a) so  long  as the  Note  Purchase  Agreement  is in  effect,  all
financial statements, projections, certificates and other information required
to be  delivered  to the  "Purchasers"  pursuant  to  Section  6.1 of the Note
Purchase  Agreement,  the terms of which are incorporated  herein by reference
and deemed to be a part hereof,  which statements,  projections,  certificates
and other  information will be delivered at such times as they are required to
be delivered to the "Purchasers" under the Note Purchase Agreement;

          (b) from and after such time as the Note  Purchase  Agreement  is no
longer in effect,  all financial  statements,  projections,  certificates  and
other information required to be delivered by the Company and its Subsidiaries
to their senior lenders; and

          (c)  within  ten days  after  transmission  thereof,  copies  of all
financial statements, proxy statements,  reports and any other general written
communications which the Company generally sends to its stockholders.

          Except as otherwise  required by law or judicial  order or decree or
by any  governmental  agency or  authority,  each  Person  entitled to receive
information  regarding the Company and its Subsidiaries  under this Article 14
will maintain the confidentiality of all nonpublic  information obtained by it
hereunder  which the Company  has  reasonably  designated  as  proprietary  or
confidential  in nature;  provided  that each such  Person may  disclose  such
information  in  connection  with the sale or  transfer  or  proposed  sale or
transfer  of any  Warrant  Shares if such  Person's  transferee  (or  proposed
transferee) agrees in writing to be bound by the provisions of this paragraph.

          ARTICLE 15. LIMITATION OF LIABILITY

          No provision  hereof,  in the absence of  affirmative  action by the
Holder hereof to receive shares of Common Stock, and no enumeration  herein of
the  rights  or  privileges  of the  Holder  hereof,  shall  give  rise to any
liability  of such  Holder for any value  subsequently  assigned to the Common
Stock or as a stockholder  of the Company,  whether such liability is asserted
by the  Company or by  creditors  of the  Company.  Notwithstanding  any other
provision of this Agreement, neither the general partners nor limited partners
of a Holder,  nor any future general partners or limited partners of a Holder,
shall have any personal  liability  for  performance  of any  obligation  of a
Holder under this Agreement in excess of the respective  capital  contribution
of such general partner and limited partners to such Holder.

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          ARTICLE 16. MISCELLANEOUS

          16.1  NONWAIVER AND  EXPENSES.  No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Holder hereof shall
operate as a waiver of such right or otherwise prejudice such Holder's rights,
powers or  remedies.  If the Company  fails to make,  when due,  any  payments
provided for  hereunder,  or fails to comply with any other  provision of this
Warrant,  the Company  shall pay to the Holder hereof such amounts as shall be
sufficient  to cover any costs and  expenses  including,  but not  limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by such Holder in collecting  any amounts due pursuant  hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.

          16.2  NOTICE  GENERALLY.  Any  notice,  demand,  request,   consent,
approval,  declaration,  delivery or other communication  hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail,  return receipt  requested,  postage prepaid,
addressed as follows:

          (a) If to any Holder,  at its last known  address  appearing  on the
     books of the Company maintained for such purpose.

          (b) If to the Company at:

              Hanger Orthopedic Group, Inc.
              7700 Old Georgetown Road
              Bethesda, Maryland 20814
              Attention:  Richard A. Stein

or at such  other  address  as may be  substituted  by notice  given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice,  demand,  request,
consent,  approval,  declaration,  delivery or other  communication  hereunder
shall  be  deemed  to have  been  duly  given or  served  on the date on which
personally delivered,  with receipt  acknowledged,  or three (3) Business Days
after the same shall have been deposited in the United States mail. Failure or
delay  in  delivering  copies  of  any  notice,  demand,  request,   approval,
declaration, delivery or other communication to the person designated above to
receive a copy  shall in no way  adversely  affect the  effectiveness  of such
notice,   demand,   request,   approval,   declaration,   delivery   or  other
communication.

          16.3  SUCCESSORS  AND ASSIGNS.  Subject to the provisions of Section
3.1 and Articles 10 and 12, this Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the  successors of the Company and
the  successors  and  assigns of the Holder  hereof.  The  provisions  of this
Warrant are intended to be for the benefit of all Holders from time to time of
this Warrant, and shall be enforceable by any such Holder.  Without limitation
to the  foregoing,  in  the  event  that a  Holder  distributes  or  otherwise
transfers  any shares of the  Registrable  Securities to any of its present or
future general or limited partners,  the Company hereby  acknowledges that the
registration  rights granted pursuant to Article 11 of this Agreement shall be
transferred  to such  partner or partners on a pro rata basis,  and that at or
after the time of any such distribution or transfer, any such partner or group
of  partners  may  designate a Person to act on its behalf in  delivering  any
notices or making any requests hereunder.

          16.4 AMENDMENT.  This Warrant and all other Warrants may be modified
or amended or the  provisions  hereof  waived with the written  consent of the
Company and holders of Warrants

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exercisable  for in excess of 50% of the aggregate  number of shares of Common
Stock  then  receivable  upon  exercise  of all  Warrants  whether or not then
exercisable,  provided  that no such  Warrant  may be modified or amended in a
manner  which is adverse to the CVCA or  Paribas or any of its  successors  or
assigns,  so long as such Person holds any Warrants or Warrant Stock,  without
the prior written consent of such Person.

          16.5 SEVERABILITY. Wherever possible, each provision of this Warrant
shall be  interpreted  in such  manner  as to be  effective  and  valid  under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under  applicable  law, such  provision  shall be  ineffective  to the
extent of such prohibition or invalidity,  without  invalidating the remainder
of such provision or the remaining provisions of this Warrant.

          16.6  HEADINGS.  The  headings  used  in  this  Warrant  are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

          16.7  GOVERNING  LAW;  CONSENT TO  JURISDICTION  AND  VENUE.  IN ALL
RESPECTS,  INCLUDING ALL MATTERS OF  CONSTRUCTION,  VALIDITY AND  PERFORMANCE,
THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK.
THE COMPANY  CONSENTS TO PERSONAL  JURISDICTION,  WAIVES ANY  OBJECTION  AS TO
JURISDICTION  OR VENUE,  AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION  OR VENUE,  IN THE  COUNTY OF NEW  YORK,  STATE OF NEW YORK.  THE
PARTIES  AGREE TO SUBMIT TO THE  EXCLUSIVE  JURISDICTION  OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR  PROCEEDING  ARISING  OUT OF OR RELATING TO
THIS WARRANT CERTIFICATE AND THE WARRANTS EVIDENCED HEREBY. SERVICE OF PROCESS
ON THE  COMPANY OR HOLDER IN ANY ACTION  ARISING  OUT OF OR  RELATING  TO THIS
AGREEMENT  SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY IN  ACCORDANCE  WITH THE
PROCEDURES AND REQUIREMENTS SET FORTH IN SECTION 16.2.

          16.8  MUTUAL  WAIVER OF JURY  TRIAL.  BECAUSE  DISPUTES  ARISING  IN
CONNECTION  WITH  COMPLEX   FINANCIAL   TRANSACTIONS   ARE  MOST  QUICKLY  AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE  STATE AND FEDERAL LAWS TO APPLY (RATHER THAN  ARBITRATION  RULES),
THE PARTIES  DESIRE THAT THEIR  DISPUTES BE RESOLVED BY A JUDGE  APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL  SYSTEM,  THE PARTIES  HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN
ANY  ACTION,  SUIT OR  PROCEEDING  BROUGHT  TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS AGREEMENT.

505298\0057\02050\96AXKNAK.WAR

          IN WITNESS  WHEREOF,  the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon.

Dated:  November 1, 1996

                                                 HANGER ORTHOPEDIC GROUP, INC.

                                                 By /s/RICHARD A. STEIN
                                                    --------------------------
                                                    Name: Richard A. Stein
                                                    Title: Vice President

505298\0057\02050\96AXKNAK.WAR

                                   EXHIBIT A

                               SUBSCRIPTION FORM

                [To be executed only upon exercise of Warrant]

          The  undersigned   registered  owner  of  the  accompanying  Warrant
exercises such Warrant for _______ shares of Section 2.2(__) Warrant  Stock(1)
of Hanger Orthopedic Group, Inc., all on the terms and conditions specified in
such Warrant and

[ ]       herewith tenders payment of either (x) the Aggregate  Exercise Price
          in cash or (y) pursuant to the surrender by Holder of Notes having a
          Fair Value equal to the Aggregate  Exercise  Price for the number of
          shares  of  Common  Stock  specified  above to the  order of  Hanger
          Orthopedic  Group,  Inc. in the amount of  $_________  in accordance
          with the terms hereof; or

[ ]       elects not to pay the Aggregate  Exercise  Price with respect to the
          shares of Common Stock specified above and, in lieu thereof,  elects
          to  surrender  this  Warrant (or the  relevant  portion  thereof) in
          exchange  for such  number  of  shares  of  Common  Stock  having an
          aggregate  value (based on the Market Price on the date hereof minus
          the Exercise  Price) equal to the Aggregate  Exercise  Price for the
          number of shares  requested for exercise  above.  ________ 1 Specify
          the number of shares of Section  2.2(a) Warrant Stock and/or Section
          2.2(b) Warrant Stock being exercised hereby.

 -------------------------------
 (1) Specify  the  number of shares of Section  2.2(a)  Warrent  Stock  and/or
     Section 2.2(b) Warrent Stock being exercised hereby.

505298\0057\02050\96AXKNAK.WAR

          The undersigned  requests that certificates for [all] [_________ of]
 the shares of Common Stock to be received  pursuant hereto (and any securities
 or other  property  issuable upon such  exercise) be issued in the name of and
 delivered to  _____________________________________________,  whose address is
 ________________________________________   [add  any   additional   names  and
 addresses  together  with the  number  of  shares  of  Common  Stock  (and any
 securities or other property issuable upon such exercise) to be issued to such
 person or entity)],  and, if such shares of Common Stock shall not include all
 of the shares of Common Stock issuable as provided in this Warrant, that a new
 Warrant of like tenor and date for the  balance of the shares of Common  Stock
 issuable hereunder be delivered to the undersigned.

 ------------------------------
  (Name of Registered Owner)

 ------------------------------
  (Signature of Registered Owner)

 ------------------------------
  (Street Address)

 ------------------------------
  (City) (State) (Zip Code)

505298\0057\02050\96AXKNAK.WAR

                                   EXHIBIT B

                                ASSIGNMENT FORM

          FOR VALUE RECEIVED the undersigned  registered owner of this Warrant
hereby sells,  assigns and transfers  unto the Assignee named below all of the
rights of the  undersigned  under this Warrant,  with respect to the number of
shares of Common Stock, adjusted as of the date of this assignment as provided
in the Warrant, set forth below:

                                              NO. OF SHARES OF
NAME AND ADDRESS OF ASSIGNEE                    COMMON STOCK

and does  hereby  irrevocably  constitute  and  appoint  _____________________
attorney-in-fact  to register such transfer on the books of Hanger  Orthopedic
Group, Inc. maintained for the purpose, with full power of substitution in the
premises.

Dated: _______________________________

Print
Name:  _______________________________

Signature:  __________________________

Witness:  ____________________________

NOTICE:   The signature on this  subscription must correspond with the name as
          written  upon the face of the within  Warrant  in every  particular,
          without alteration or enlargement or any change whatsoever.

505298\0057\02050\96AXKNAK.WAR

                                                                EXECUTION COPY

                                    WARRANT

                          TO PURCHASE COMMON STOCK OF

                         HANGER ORTHOPEDIC GROUP, INC.

                        Issuance Date: November 1, 1996

                       Number of Shares of Common Stock:

                        800,000 (subject to adjustment)

                               TABLE OF CONTENTS

                                                                          PAGE

ARTICLE 1.  DEFINITIONS....................................................  1

ARTICLE 2.  EXERCISE OF WARRANT............................................  5
         2.1  Manner of Exercise...........................................  5
         2.2  Exercise Price...............................................  6
         2.3  Payment of Taxes.............................................  7
         2.4  Fractional Shares............................................  7
         2.5  Continued Validity...........................................  7

ARTICLE 3.  TRANSFER, DIVISION AND COMBINATION, ADDITIONAL
            WARRANTS.......................................................  7
         3.1  Transfer ....................................................  7
         3.2  Division and Combination.....................................  7
         3.3  Expenses ....................................................  8
         3.4  Maintenance of Books.........................................  8

ARTICLE 4. REDUCTION IN NUMBER OF ISSUABLE SHARES OF WARRANT
         STOCK.............................................................  8
         4.1  Share Reduction..............................................  8
         4.2  Pro Rata Effect..............................................  8
         4.3  New Warrants.................................................  8

ARTICLE 5.  ADJUSTMENTS....................................................  8
         5.1  Stock Splits, Combinations, etc..............................  8
         5.2  Reclassification, Combinations, Mergers, etc.................  9
         5.3  Issuance of Options or Convertible Securities................ 10
         5.4  Dividends and Distributions.................................. 10
         5.5  Self-Tenders................................................. 11
         5.6  Issuance of Additional Shares of Common Stock................ 11
         5.7  Certain Distributions........................................ 12
         5.8  Consideration Received....................................... 12
         5.9  Deferral or Exclusion of Certain Adjustments................. 12
         5.10  Changes in Options and Convertible Securities............... 12
         5.11  Expiration of Options and Convertible Securities............ 12
         5.12  Other Adjustments........................................... 13
         5.13  Other Action Affecting Common Stock......................... 13

ARTICLE 6.  NOTICES TO WARRANT HOLDERS..................................... 13
         6.1  Notice of Adjustments........................................ 13
         6.2  Notice of Certain Corporate Action........................... 14

505298\0057\02050\96AXKLE3.WAR

                                                                          PAGE

ARTICLE 7.  NO IMPAIRMENT.................................................. 14

ARTICLE 8.    COMMON STOCK; RESERVATION AND AUTHORIZATION
              OF REGISTRATION WITH OR APPROVAL OF ANY
              GOVERNMENTAL AUTHORITY....................................... 14

ARTICLE 9.  TAKING OF RECORD; STOCK AND WARRANT
                                      TRANSFER BOOKS....................... 15

ARTICLE 10.  RESTRICTIONS ON TRANSFERABILITY............................... 15
         10.1  Restrictive Legend.......................................... 15
         10.2  Restriction on Transfers.................................... 16
         10.3  Listing on Securities Exchange or NASDAQ.................... 16

ARTICLE 11.  REGISTRATION RIGHTS........................................... 17
         11.1  Incidental Registrations.................................... 17
         11.2  Registration on Request..................................... 18
         11.3  Registration Procedures..................................... 19
         11.5  Rule 144.................................................... 25
         11.6  Selection of Counsel........................................ 25
         11.7  Holdback Agreement.......................................... 25

ARTICLE 12.  LOSS OR MUTILATION............................................ 25

ARTICLE 13.  OFFICE OF THE COMPANY......................................... 26

ARTICLE 14.  FINANCIAL AND BUSINESS INFORMATION............................ 26

ARTICLE 15.  LIMITATION OF LIABILITY....................................... 26

ARTICLE 16.  MISCELLANEOUS................................................. 27
         16.1  Nonwaiver and Expenses...................................... 27
         16.2  Notice Generally............................................ 27
         16.3  Successors and Assigns...................................... 27
         16.4  Amendment................................................... 28
         16.5  Severability................................................ 28
         16.6  Headings.................................................... 28
         16.7  GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE............ 28
         16.8  MUTUAL WAIVER OF JURY TRIAL................................. 28

EXHIBIT A         SUBSCRIPTION FORM
EXHIBIT B         ASSIGNMENT FORM

505298\0057\02050\96AXKLE3.WAR

NEITHER THIS WARRANT NOR THE  SECURITIES  ISSUABLE UPON  EXERCISE  HEREOF HAVE
BEEN  REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR ANY STATE
SECURITIES LAWS. THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
MAY  NOT  BE  TRANSFERRED,  SOLD,  ASSIGNED,  EXCHANGED,  MORTGAGED,  PLEDGED,
HYPOTHECATED OR OTHERWISE  DISPOSED OF OR ENCUMBERED  WITHOUT  COMPLIANCE WITH
THE  PROVISIONS  OF, AND ARE OTHERWISE  RESTRICTED BY THE  PROVISIONS  OF, THE
SECURITIES ACT OF 1933, AS AMENDED,  THE RULES AND REGULATIONS  THEREUNDER AND
THIS WARRANT.

                                    WARRANT

                         TO PURCHASE 800,000 SHARES OF
                    COMMON STOCK (SUBJECT TO ADJUSTMENT) OF

                         HANGER ORTHOPEDIC GROUP, INC.

          THIS IS TO CERTIFY THAT, for value  received,  CHASE VENTURE CAPITAL
ASSOCIATES,  L.P., a California limited partnership (the "INITIAL HOLDER"), or
its  registered  assigns,  is the owner of eight  hundred  thousand  (800,000)
Warrants (as  hereinafter  defined),  which entitle the Holder (as hereinafter
defined),  at any time prior to the Expiration Date (as hereinafter  defined),
to purchase from HANGER  ORTHOPEDIC GROUP,  INC., a Delaware  corporation (the
"COMPANY"),  eight  hundred  thousand  (800,000)  shares of  Common  Stock (as
hereinafter defined and such number subject to adjustment as provided herein),
in  whole  or in  part,  including  fractional  parts,  all on the  terms  and
conditions and pursuant to the provisions hereinafter set forth.

          ARTICLE 1. DEFINITIONS

          As used in this  Warrant,  the following  terms have the  respective
meanings set forth below:

          "ADDITIONAL  SHARES OF COMMON STOCK" shall mean all shares of Common
     Stock  issued by the  Company  after the  Issuance  Date,  other than the
     Warrant Stock.

          "AFFILIATE"  shall  mean,  as to any  Person,  (i) any other  Person
     directly  or  indirectly  controlling,  controlled  by,  or under  common
     control with such Person or (ii) any director, officer or partner of such
     Person or any Person specified in clause (i) above.

          "AGGREGATE  EXERCISE PRICE" shall mean, with respect to the exercise
     of all or a portion of the Warrant,  the Exercise Price multiplied by the
     number of shares of Warrant Stock purchased upon such exercise.

          "BUSINESS  DAY" shall mean any day that is not a Saturday  or Sunday
     or a day on which  banks are  required or  permitted  to be closed in the
     State of New York or the State of Maryland.

505298\0057\02050\96AXKLE3.WAR

          "COMMISSION"  shall mean the Securities  and Exchange  Commission or
     any other federal agency then  administering the Securities Act and other
     federal securities laws.

          "COMMON  STOCK"  shall mean the  collective  reference to the common
     stock of the Company,  par value $.01 per share,  as  constituted  on the
     Issuance  Date,  and any capital  stock into which such Common  Stock may
     thereafter  be changed,  and shall also include (i) capital  stock of the
     Company of any other class (regardless of how denominated)  issued to the
     holders of shares of Common  Stock upon any  reclassification  thereof in
     which  the  shares  of Common  Stock  are  converted  into a new class of
     capital  stock  and (ii)  shares  of  common  stock of any  successor  or
     acquiring  corporation  (as  defined  in  Section  5.2)  received  by  or
     distributed  to  the  holders  of  Common  Stock  of the  Company  in the
     circumstances contemplated by Section 5.2.

          "CONVERTIBLE SECURITIES" shall have the meaning set forth in Section
     5.3 hereof.

          "CVCA"  shall  mean  Chase  Venture  Capital  Associates,   L.P.,  a
     California limited partnership.

          "DEMAND  PARTY" shall mean any other Holder or Holders that,  either
     individually  or in  aggregate  with all  other  Holders  with whom it is
     acting together to demand registration,  own(s) at least 50% of the total
     number of  Registrable  Securities  (whether  in the form of  Warrants or
     Warrant Stock).

          "EXCHANGE  ACT" shall mean the  Securities  Exchange Act of 1934, as
     amended, or any similar federal statute, and the rules and regulations of
     the Commission  thereunder,  all as the same shall be in effect from time
     to time.

          "EXERCISE PERIOD" shall mean the period during which this Warrant is
     exercisable pursuant to Section 2.1.

          "EXERCISE  PRICE"  shall have the  meaning  set forth in Section 2.2
     hereof.

          "EXPIRATION   DATE"   shall  mean  the  date  which  is  the  eighth
     anniversary of the Issuance Date.

          "FAIR  VALUE"  shall  mean,  with  respect to the  valuation  of any
     evidences of indebtedness, other securities, properties, assets, options,
     warrants or  subscription  or  purchase  rights,  the fair  market  value
     thereof  as  determined  in good faith by the Board of  Directors  of the
     Company and, if required by the Majority Holders, supported by an opinion
     from an investment banking firm acceptable to the Majority Holders, which
     approval  shall  not  be   unreasonably   withheld,   of  such  Valuation
     Properties;  PROVIDED,  HOWEVER that the Fair Value of any Notes tendered
     in connection  with any exercise of this Warrant  pursuant to Section 2.1
     shall be equal to the principal  amount of such  tendered  Notes plus any
     accrued and unpaid interest or other obligations owed in respect thereof.

          "GAAP" shall mean generally  accepted  accounting  principles in the
     United States of America as from time to time in effect.

          "HOLDER"  shall  mean the  Person  in whose  name  this  Warrant  is
     registered on the books of the Company maintained for such purpose or the
     Person holding any Warrant Stock, including,  without limitation, in each
     case, transferees thereof.

505298\0057\02050\96AXKLE3.WAR

          "ISSUANCE DATE" shall mean November 1, 1996.

          "MAJORITY  HOLDERS"  shall mean the Holders of Warrants  exercisable
     for in excess of 50% of the  aggregate  number of shares of Common  Stock
     then receivable upon exercise of all Warrants.

          "MARKET PRICE" shall mean, as of any exercise date or other relevant
     date,  the average of the per share  closing  prices of a share of Common
     Stock for the 10 consecutive Trading Days immediately preceding such date
     on the  principal  national  securities  exchange in the United States on
     which the shares of Common Stock are listed or admitted to trading, or if
     not listed or admitted to trading on any national  securities exchange on
     such Trading  Day, on the  National  Association  of  Securities  Dealers
     Automated  Quotations  National Market System, or if the shares of Common
     Stock are not listed or  admitted to trading on any  national  securities
     exchange or quoted on such  National  Market  System on such Trading Day,
     the  average  of the  closing  bid and asked  prices of a share of Common
     Stock in the over-the-counter  market on such Trading Day as furnished by
     any New York Stock Exchange member firm selected from time to time by the
     Company.  If the  Common  Stock  is not  quoted  or  listed  by any  such
     organization, exchange or market, the Market Price of the Common Stock as
     of such exercise or other relevant date shall be determined in good faith
     by the Board of Directors of the Company.

          "NASD" shall mean the National  Association  of Securities  Dealers,
     Inc., or any successor entity thereto.

          "NASDAQ" shall mean the National  Association of Securities  Dealers
     Automatic Quotation System.

          "NOTES" the 8.00% Senior  Subordinated  Notes issued pursuant to the
     Note Purchase Agreement.

          "NOTE PURCHASE  AGREEMENT" shall mean the Senior  Subordinated  Note
     Purchase Agreement, dated as of November 1, 1996, among the Company, CVCA
     and Paribas.

          "OPTIONS" shall have the meaning set forth in Section 5.3 hereof.

          "OUTSTANDING"  shall mean, when used with reference to Common Stock,
     at any date as of which the number of shares thereof is to be determined,
     all issued shares of Common Stock, except shares then owned or held by or
     for the account of the Company or any  Subsidiary,  and shall include all
     shares  issuable  in respect  of  outstanding  scrip or any  certificates
     representing fractional interests in shares of Common Stock.

          "PARIBAS" shall mean Paribas Principal, Inc.

          "PERMITTED  ISSUANCES"  shall mean the  issuance of shares of Common
     Stock  upon  exercise  of  rights  to  acquire  shares  of  Common  Stock
     exercisable  pursuant to options held by  employees  or  directors  under
     stock  option plans which may from time to time be adopted by the Company
     after the Issuance Date.

          "PERSON"   shall   mean   any   individual,   sole   proprietorship,
     partnership,    joint   venture,   trust,   incorporated    organization,
     association, corporation, institution, public benefit corporation,

505298\0057\02050\96AXKLE3.WAR

     entity or government (whether federal,  state, county, city, municipal or
     otherwise, including, without limitation, any instrumentality,  division,
     agency, body or department thereof).

          "REGISTRABLE  SECURITIES"  shall mean (i) the  Warrants and (ii) the
     Warrant Stock. As to any particular Registrable Securities,  once issued,
     such  securities  shall  cease to be  Registrable  Securities  when (i) a
     registration  statement  with  respect  to the sale by the Holder of such
     securities  shall have become effective under the Securities Act and such
     securities   shall  have  been  disposed  of  in  accordance   with  such
     registration statement,  (ii) such securities shall have been distributed
     to the public pursuant to Rule 144 (or any successor provision) under the
     Securities  Act,  (iii)  such   securities   shall  have  been  otherwise
     transferred,  new  certificates  for such securities not bearing a legend
     restricting further transfer shall have been delivered by the Company and
     subsequent  disposition of such securities shall not require registration
     or qualification of such securities under the Securities Act or any state
     securities or blue sky law then in force, or (iv) such  securities  shall
     have ceased to be Outstanding.

          "REGISTRATION  EXPENSES" shall mean any and all expenses incident to
     performance  of  or  compliance   with  Article  11  of  this  Agreement,
     including,  without limitation,  (i) all Commission and stock exchange or
     NASD registration and filing fees (including, if applicable, the fees and
     expenses  of any  "qualified  independent  underwriter,"  as such term is
     defined in  Schedule E to the By-laws of the NASD,  and of its  counsel),
     (ii) all fees and expenses of complying with  securities or blue sky laws
     (including  fees and  disbursements  of counsel for the  underwriters  in
     connection with blue sky  qualifications of the Registrable  Securities),
     (iii) all printing,  messenger and delivery  expenses,  (iv) all fees and
     expenses  incurred  in  connection  with the  listing of the  Registrable
     Securities  on any  securities  exchange  pursuant  to  clause  (viii) of
     Section 11.3 and all rating agency fees,  (v) the fees and  disbursements
     of counsel  for the Company and of its  independent  public  accountants,
     including  the  expenses  of any special  audits  and/or  "cold  comfort"
     letters required by or incident to such performance and compliance,  (vi)
     the reasonable fees and  disbursements  of counsel  selected  pursuant to
     Section 11.6 hereof by the Holders of the  Registrable  Securities  being
     registered  to  represent  such  Holders  in  connection  with  each such
     registration,   (vii)  any  fees  and   disbursements   of   underwriters
     customarily  paid by the  issuers  or sellers  of  securities,  including
     liability  insurance if the Company so desires or if the  underwriters so
     require,  and the  reasonable  fees and  expenses of any special  experts
     retained in  connection  with the requested  registration,  but excluding
     underwriting  discounts and  commissions  and certain  transfer taxes, if
     any,  and  (viii)  other  reasonable  out-of-pocket  expenses  of Holders
     (PROVIDED that such expenses shall not include  expenses of counsel other
     than those provided for in clause (vi) above).

          "RESPONSIBLE  OFFICER" shall mean the chief executive officer of the
     Company,  the president of the Company or the chief financial  officer of
     the Company.

          "SECURITIES  ACT" shall mean the Securities Act of 1933, as amended,
     or any similar  federal  statute,  and the rules and  regulations  of the
     Commission thereunder, all as the same shall be in effect at the time.

          "SUBSIDIARY"  shall mean any  corporation  of which an  aggregate of
     more than 50% of the  outstanding  stock having  ordinary voting power to
     elect  a  majority  of  the  board  of  directors  of  such   corporation
     (irrespective  of  whether,  at the  time,  stock of any  other  class or
     classes of such  corporation  shall have or might  have  voting  power by
     reason of the happening of any  contingency) is at the time,  directly or
     indirectly,  owned of record or beneficially by the Company and/or one or
     more other Subsidiaries of the Company.

505298\0057\02050\96AXKLE3.WAR

          "TENDER  OFFER"  shall mean any public  offer to  substantially  all
     holders of Common  Stock to purchase at least 50% of the Common  Stock at
     the time outstanding.

          "TRADING  DAY" shall mean each  weekday  other than any day on which
     any Common Stock is not traded on any national  securities  exchange,  on
     NASDAQ or in the over-the-counter market.

          "TRANSFER"  shall  mean any  disposition  of any  Warrant or Warrant
     Stock or of any interest in either thereof, which would constitute a sale
     or transfer of a beneficial  interest  thereof  within the meaning of the
     Securities  Act  (excluding  any  transfer to an Affiliate of the Initial
     Holder).

          "WARRANT  STOCK"  shall  mean all shares of Common  Stock  issued or
     issuable  upon the exercise  hereof,  including any such shares of Common
     Stock transferred to any transferee of such Holder.

          "WARRANTS"  shall mean this  Warrant  and all  warrants  issued upon
     transfer,  division  or  combination  of, or in  substitution  for,  this
     Warrant.  All  Warrants  shall at all times be  identical as to terms and
     conditions  and date,  except as to the number of shares of Common  Stock
     for which they may be exercised.

          ARTICLE 2. EXERCISE OF WARRANT

          2.1 MANNER OF  EXERCISE.  At any time and from time to time from and
after the Issuance Date and until 5:00 P.M.,  New York time, on the Expiration
Date,  Holder may exercise this  Warrant,  on any Business Day, for all or any
part of the number of shares of the Common Stock issuable hereunder;  PROVIDED
that  Holder may not  exercise  this  Warrant if after  giving  effect to such
exercise  the total  number of shares of Common  Stock  issued  upon  exercise
hereof would exceed the product of:

          (i)  (a)  0.45, if such date of exercise is on or prior to November 1,
                    1997; or
               (b)  0.50, if such date of exercise is on or prior to May 1, 1998
                    but after November 1, 1997; or
               (c)  1.00, if such date is after May 1, 1998; times

          (ii) the  total  number of shares  of  Common  Stock  issuable  upon
               exercise  hereof  as of the  Issuance  Date (as such  number of
               shares  shall  have  been   adjusted   pursuant  to  Article  5
               immediately prior to such exercise).

          In order to exercise this Warrant, in whole or in part, Holder shall
deliver to the Company at its principal  office at 7700 Old  Georgetown  Road,
Bethesda,  Maryland 20814 or at the office or agency designated by the Company
pursuant to Article 13, (i) a written notice of Holder's  election to exercise
this Warrant,  which notice shall specify the number of shares of Common Stock
to which the exercise shall relate and (ii) this Warrant. Such notice shall be
substantially  in the form of the  subscription  form  appearing at the end of
this Warrant as Exhibit A (the "SUBSCRIPTION  FORM"),  duly executed by Holder
or its agent or attorney.

          Upon  receipt  by the  Company  of (a)  this  Warrant  and  (b)  the
Subscription  Form with the applicable box checked thereon,  the Company shall
issue the number of shares of Common Stock set forth in the next paragraph.

505298\0057\02050\96AXKLE3.WAR

          To the extent  Holder has checked the box on the  Subscription  Form
contemplating  payment of either (x) the Aggregate  Exercise  Price in cash or
(y) pursuant to the  surrender by Holder of Notes having a Fair Value equal to
the Aggregate Exercise Price in connection with an exercise hereof,  then upon
payment,  by  certified  or  official  bank check  payable to the order of the
Company  or by wire  transfer  of  immediately  available  funds to an account
designated by the Company,  of the Aggregate  Exercise Price for the shares of
Warrant  Stock to be purchased  pursuant to the  exercise of the Warrant,  the
Company  shall,  as promptly as  practicable,  and in any event within two (2)
Business Days thereafter, execute or cause to be executed and deliver or cause
to be delivered  to Holder a  certificate  or  certificates  representing  the
aggregate number of shares of Common Stock issuable upon such exercise. To the
extent  Holder has checked the box on the  Subscription  Form by which  Holder
elects not to pay the  Aggregate  Exercise  Price in cash and  instead to make
such payment by way of Warrant  surrender,  the Company shall,  as promptly as
practicable,  and in any event within two (2) Business  Days  thereafter,  (i)
execute or cause to be executed and deliver or cause to be delivered to Holder
a certificate or certificates  representing  the aggregate number of shares of
Common  Stock to be issued to Holder upon such  "cashless"  exercise  and (ii)
cancel the number of shares of Warrant  Stock  issuable  upon exercise of this
Warrant  having an  aggregate  value (based on the Market Price at the time of
exercise minus the Exercise  Price) equal to the Aggregate  Exercise Price for
the number of shares described in clause (i) above.

          In either case, the stock  certificate or  certificates so delivered
shall be in such denomination or denominations as such Holder shall request in
the  Subscription  Form and  shall be  registered  in the name of  Holder  or,
subject  to  Article  10,  such  other  name as  shall  be  designated  in the
Subscription Form.

          This  Warrant  shall  be  deemed  to have  been  exercised  and such
certificate or certificates shall be deemed to have been issued, and Holder or
any other Person so  designated  to be named  therein  shall be deemed to have
become a holder of record of such shares for all purposes,  as of the date the
notice is received by the Company.

          If this  Warrant  shall have been  exercised  in part,  the  Company
shall, at the time of delivery of the certificate or certificates representing
the Warrant Stock issued upon such  exercise,  deliver to Holder a new Warrant
evidencing the right of Holder to receive the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such exercise less
the number of shares issued  pursuant to such exercise of this Warrant and/or,
where applicable, less the number of shares surrendered in non-cash payment in
connection with such exercise,  which new Warrant shall in all respects (other
than number of shares) be identical to this Warrant.

          2.2 EXERCISE PRICE.  Subject to adjustment as hereinafter set forth,
the price payable upon exercise hereof (the "Exercise Price"), with respect to
each share of Common Stock, shall be:

          (a) with  respect to 335,150  shares of Common  Stock (the  "SECTION
     2.2(A) WARRANT STOCK") issuable upon exercise hereof, $6.375; and

          (b) with  respect to 464,850  shares of Common  Stock (the  "SECTION
     2.2(B) WARRANT STOCK") issuable upon exercise hereof, $4.00865.

          2.3 PAYMENT OF TAXES.  All shares of Common Stock  issuable upon the
exercise of this Warrant shall be validly issued, fully paid and nonassessable
and shall have been issued free from any preemptive or similar right and shall
be free and clear of any lien,  claim or similar  charge or  restriction.  The
Company shall pay all expenses in connection with, and all documentary,  stamp
or similar  issue or  transfer  taxes,  if any,  and all other taxes and other
governmental charges that may be

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imposed  with  respect  to, the issue and  delivery of this  Warrant,  and all
shares  of  capital  stock  and  other  securities  or  property  issuable  or
deliverable  upon the exercise of this Warrant,  and shall  indemnify and hold
any Holder, its directors, agents, general and limited partners and Affiliates
from any taxes, interest and penalties which may become payable by any of such
Persons as a result of the  failure or delay by the  Company to pay such taxes
or charges.  The Company  shall not be  required,  however,  to pay any tax or
other charge imposed in connection with any transfer  involved in the issue of
any  certificate  for shares of Common Stock  issuable  upon  exercise of this
Warrant in any name other than that of Holder and its Affiliates.

          2.4  FRACTIONAL  SHARES.  The Company shall not be required to issue
fractional shares of Common Stock on the exercise of Warrants. If any fraction
of a share of Common  Stock would be  issuable on the  exercise of any Warrant
(or  specified  portion  thereof),  the Company shall pay to the Holder of the
Warrant  an  amount  in  cash  equal  to  such  fraction   multiplied  by  the
then-current  Market Price per share of Common Stock. For the purposes of this
Section  2.3,  the date from which the Market  Price of Common  Stock shall be
computed shall be the date on which notice is received by the Company pursuant
to Section 2.1.

          2.5  CONTINUED  VALIDITY.  A Holder of shares of Warrant Stock shall
continue to be entitled  with respect to such shares to all rights and subject
to all  obligations  to which it would have been entitled or subject as Holder
of this Warrant under Articles 10, 11, 14 and 16 of this Warrant.

          ARTICLE 3. TRANSFER, DIVISION AND COMBINATION, ADDITIONAL WARRANTS

          3.1  TRANSFER.  Subject to compliance  with Article 10,  transfer of
this  Warrant  and all  rights  hereunder,  in  whole  or in  part,  shall  be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal  office of the Company  referred to
in Section 2.1 or the office or agency  designated by the Company  pursuant to
Article 13, together with a written  assignment of this Warrant  substantially
in the form of  Exhibit  B hereto  duly  executed  by  Holder  or its agent or
attorney and funds  sufficient to pay any transfer  taxes payable  pursuant to
Section  2.3 upon the making of such  transfer.  Upon such  surrender  and, if
required,  such payment, the Company shall, subject to Article 10, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees and
in the  denomination  specified in such  instrument of  assignment,  and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned,  and this Warrant  shall  promptly be  cancelled.  A Warrant,  if
properly  assigned in  compliance  with  Article 10, may be exercised by a new
Holder for the receipt of shares of Common Stock without  having a new Warrant
issued.  If  requested  by the  Company,  a new Holder  shall  acknowledge  in
writing,  in  form  reasonably  satisfactory  to the  Company,  such  Holder's
continuing obligations under Articles 10 and 16.

          3.2  DIVISION AND  COMBINATION.  Subject to Article 10, this Warrant
may be divided or combined with other Warrants upon presentation hereof at the
aforesaid  office or agency of the  Company,  together  with a written  notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney.  Subject to compliance with Section
3.1 and with  Article  10, as to any  transfer  which may be  involved in such
division or  combination,  the Company shall execute and deliver a new Warrant
or Warrants in exchange  for the Warrant or Warrants to be divided or combined
in accordance with such notice.

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          3.3 EXPENSES.  The Company shall  prepare,  issue and deliver at its
own expense (other than transfer taxes not payable by the Company  pursuant to
Section 2.3) the new Warrant or Warrants under this Article 3.

          3.4  MAINTENANCE OF BOOKS.  The Company  agrees to maintain,  at its
aforesaid  office or agency,  books for the  registration  or  transfer of the
Warrants.

          ARTICLE 4. REDUCTION IN NUMBER OF ISSUABLE SHARES OF WARRANT STOCK

          4.1 SHARE  REDUCTION.  If, prior to May 1, 1998,  the Company  shall
have  repaid  in full all  amounts  borrowed  pursuant  to the  Note  Purchase
Agreement  on or prior to the dates set forth in clause  (i)  below,  then the
number of shares of Common Stock  issuable upon exercise of this Warrant as of
the close of business on the date of such repayment  shall be reduced (but not
below  zero) by that  number of shares  which is equal to the  product of: (i)
0.55,  if such date of repayment is on or prior to November 1, 1997,  or 0.50,
if such date of repayment is on or prior to May 1, 1998 but after  November 1,
1997;  and (ii) the total  number of shares  of  Common  Stock  issuable  upon
exercise  hereof as of the Issuance  Date (as such number of shares shall have
been adjusted pursuant to Article 5 prior to such close of business).

          4.2 PRO RATA EFFECT. Any reduction in shares pursuant to Section 4.1
shall be applied to reduce  the  number of shares of  Section  2.2(a)  Warrant
Stock and Section 2.2(b) Warrant Stock then issuable,  pro rata,  based on the
relative  number of shares in each such  category  then issuable (but not then
issued) upon  exercise of this  Warrant.  No  reduction in shares  pursuant to
Section 4.2 shall have any effect on any Section  2.2(a)  Warrant Stock and/or
Section 2.2(b) Warrant Stock issued prior to such reduction.

          4.3 NEW WARRANTS. Upon any reduction pursuant to this Article 4, the
Company (at its own expense and subject to Section 2.3) will deliver to Holder
a new Warrant  evidencing the rights of Holder to receive the number of shares
of Common  Stock upon  exercise of this  Warrant  less the number of shares to
which such reduction  relates,  which new Warrant shall in all respects (other
than number of shares) be identical to this Warrant.

          ARTICLE 5. ADJUSTMENTS

          The  Exercise  Price and the  number  of shares of Common  Stock for
which this Warrant is exercisable  shall be subject to adjustment from time to
time as set forth in this Article 5. The Company shall give each Holder notice
of any event  described  below which  requires an adjustment  pursuant to this
Article 5 at the time of such  event.  At any time and from time to time,  the
Company shall promptly,  without any action required of the Holders, cause the
appropriate  adjustment or adjustments (to the extent that more than one event
requiring an adjustment  has occurred  since the last  adjustment  made) to be
made pursuant to this Article 5 in respect of each Warrant outstanding.

          5.1 STOCK  SPLITS,  COMBINATIONS,  ETC..  In case the Company  shall
hereafter  (A) pay a dividend or make a  distribution  on its Common  Stock in
shares of its capital stock (whether  shares of Additional  Common Stock or of
capital stock of any other class),  (B)  subdivide its  outstanding  shares of
Common  Stock or (C) combine  its  outstanding  shares of Common  Stock into a
smaller number of shares,  the Exercise Price in effect  immediately  prior to
such action  shall be  adjusted  so that the Holder of any Warrant  thereafter
exercised  shall be entitled to receive the number of shares of Capital  Stock
of the Company which such Holder would have owned  immediately  following such
action  had  such  Warrant  been  exercised   immediately  prior  thereto.  An
adjustment made pursuant to this

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paragraph shall become effective immediately after the record date in the case
of a dividend and shall become effective  immediately after the effective date
in the case of a subdivision, combination or reclassification. If, as a result
of an adjustment  made pursuant to this  paragraph,  the Holder of any Warrant
thereafter  exercised  shall become  entitled to receive shares of two or more
classes of Capital Stock of the Company, the Board of Directors of the Company
shall in good faith  determine the  allocation of the adjusted  Exercise Price
between or among shares of such classes of Capital Stock.

          5.2 RECLASSIFICATION,  COMBINATIONS,  MERGERS,  ETC.. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise  of the  Warrants  (other  than as set forth in Section 5.1 above and
other than a change in par value,  or from par value to no par value,  or from
no par value to par value or as a result of a subdivision or combination),  or
in case of any  consolidation  or merger of the Company  with or into  another
corporation  (other  than a merger  in which  the  Company  is the  continuing
corporation and which does not result in any reclassification or change of the
then  outstanding  shares of Common Stock or other Capital Stock issuable upon
exercise of the Warrants  (other than a change in par value, or from par value
to no par  value,  or from no par  value  to par  value  or as a  result  of a
subdivision or  combination))  or in case of any sale or conveyance to another
corporation of all or substantially all of the assets of the Company, then, as
a condition of such reclassification,  change, consolidation,  merger, sale or
conveyance, the Company or such a successor or purchasing corporation,  as the
case may be, shall  forthwith make lawful and adequate  provision  whereby the
Holder of such Warrant then  outstanding  shall have the right  thereafter  to
receive on exercise of such Warrant the kind and amount of shares of stock and
other securities and property receivable upon such  reclassification,  change,
consolidation,  merger, sale or conveyance by a holder of the number of shares
of Common Stock  issuable upon exercise of such Warrant  immediately  prior to
such reclassification,  change, consolidation,  merger, sale or conveyance and
enter into a  supplemental  warrant  agreement so providing.  Such  provisions
shall include provision for adjustments which shall be as nearly equivalent as
may be practicable to the  adjustments  provided for in this Article 5. If the
issuer  of  securities   deliverable  upon  exercise  of  Warrants  under  the
supplemental  warrant  agreement is an  Affiliate of the formed,  surviving or
transferee  corporation,  that issuer shall join in the  supplemental  warrant
agreement.  The above  provisions of this Section 5.2 shall similarly apply to
successive  reclassifications  and  changes  of shares of Common  Stock and to
successive consolidations, mergers, sales or conveyances.

          In  case  of  any  such  reorganization,  reclassification,  merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other  than the  Company)  shall  expressly  assume  the due and  punctual
observance  and  performance  of each and every covenant and condition of this
Warrant  Agreement  to be  performed  and  observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed  appropriate  (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
for which this Warrant is exercisable  which shall be as nearly  equivalent as
practicable to the adjustments provided for in this Article 5. For purposes of
this  Section 5.2  "shares of stock and other  securities"  of a successor  or
acquiring  corporation  shall include stock of such  corporation  of any class
which is not preferred as to dividends or assets over any other class of stock
of such  corporation  and which is not  subject to  redemption  and shall also
include any  evidences of  indebtedness,  shares of stock or other  securities
which  are  convertible  into or  exchangeable  for  any  such  stock,  either
immediately  or upon the arrival of a  specified  date or the  happening  of a
specified  event and any warrants or other rights to subscribe for or purchase
any such stock.  The foregoing  provisions of this Section 5.2 shall similarly
apply   to    successive    reorganizations,    reclassifications,    mergers,
consolidations or disposition of assets.

          5.3 ISSUANCE OF OPTIONS OR  CONVERTIBLE  SECURITIES In the event the
Company shall, at any time or from time to time after the date hereof,  issue,
sell, distribute or otherwise grant in any

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manner (including by assumption) to all holders of the Common Stock any rights
to subscribe  for or to purchase,  or any warrants or options for the purchase
of, Common Stock or any stock or securities  convertible  into or exchangeable
for Common Stock (any such  rights,  warrants or options  being herein  called
"OPTIONS" and any such  convertible or exchangeable  stock or securities being
herein called "CONVERTIBLE  SECURITIES") or any Convertible  Securities (other
than upon  exercise of any Option),  whether or not such Options or the rights
to  convert  or  exchange  such   Convertible   Securities   are   immediately
exercisable,  and the price per share at which Common  Stock is issuable  upon
the  exercise  of such  Options or upon the  conversion  or  exchange  of such
Convertible  Securities  (determined by dividing (i) the aggregate  amount, if
any,  received or receivable by the Company as consideration for the issuance,
sale,  distribution  or  granting  of such  Options  or any  such  Convertible
Security,  plus the minimum aggregate amount of additional  consideration,  if
any,  payable to the Company  upon the  exercise  of all such  Options or upon
conversion or exchange of all such Convertible  Securities,  plus, in the case
of Options to acquire Convertible Securities,  the minimum aggregate amount of
additional  consideration,  if any, payable upon the conversion or exchange of
all such Convertible Securities, by (ii) the total maximum number of shares of
Common  Stock  issuable  upon the  exercise  of all such  Options  or upon the
conversion  or  exchange  of all  such  Convertible  Securities  or  upon  the
conversion  or  exchange  of all  Convertible  Securities  issuable  upon  the
exercise of all such Options) shall be less than the Market Price per share of
Common  Stock on the  record  date for the  issuance,  sale,  distribution  or
granting of such Options (any such event being herein called a "DISTRIBUTION")
then, effective upon such Distribution, the Exercise Price shall be reduced to
the price  (calculated  to the  nearest  1/1,000  of one cent)  determined  by
multiplying   the  Exercise  Price  in  effect   immediately   prior  to  such
Distribution by a fraction, the numerator of which shall be the sum of (i) the
number of  shares  of Common  Stock  outstanding  (exclusive  of any  treasury
shares) immediately prior to such Distribution  multiplied by the Market Price
per  share of  Common  Stock on the date of such  Distribution  plus  (ii) the
consideration, if any, received by the Company upon such Distribution, and the
denominator of which shall be the product of (A) the total number of shares of
Common Stock outstanding  (exclusive of any treasury shares) immediately after
such Distribution multiplied by (B) the Market Price per share of Common Stock
on the record date for such Distribution.  For purposes of the foregoing,  the
total maximum  number of shares of Common Stock  issuable upon exercise of all
such Options or upon conversion or exchange of all such Convertible Securities
or upon  the  conversion  or  exchange  of the  total  maximum  amount  of the
Convertible Securities issuable upon the exercise of all such Options shall be
deemed to have been issued as of the date of such  Distribution and thereafter
shall be  deemed to be  outstanding  and the  Company  shall be deemed to have
received  as  consideration  therefor  such  price per  share,  determined  as
provided  above.  Except  as  provided  in  Sections  5.9 and 5.10  below,  no
additional  adjustment  of the  Exercise  Price  shall be made upon the actual
exercise of such  Options or upon  conversion  or exchange of the  Convertible
Securities or upon the  conversion or exchange of the  Convertible  Securities
issuable upon the exercise of such Options.

          5.4 DIVIDENDS AND DISTRIBUTIONS.  In the event the Company shall, at
any time or from time to time  after the date  hereof,  distribute  to all the
holders of Common Stock any dividend or other distribution of cash,  evidences
of its  indebtedness,  other securities or other properties or assets (in each
case other than (i) dividends payable in Additional  Common Stock,  Options or
Convertible  Securities  and (ii) any cash  dividend  from current or retained
earnings),  or any  options,  warrants  or other  rights to  subscribe  for or
purchase any of the foregoing,  then (A) the Exercise Price shall be decreased
to a price  determined by  multiplying  the Exercise Price then in effect by a
fraction, the numerator of which shall be the Market Price per share of Common
Stock on the record  date for such  distribution  less the sum of (X) the cash
portion,  if any, of such  distribution per share of Common Stock  outstanding
(exclusive  of any treasury  shares) on the record date for such  distribution
plus (Y) the then fair market value (as  determined in good faith by the Board
of Directors of the Company) per share of Common Stock outstanding  (exclusive
of any  treasury  shares) on the  record  date for such  distribution  of that
portion, if any, of such distribution consisting of evidences of indebtedness,
other securities, properties,

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assets,  options,  warrants  or  subscription  or  purchase  rights,  and  the
denominator  of which shall be such Market Price per share of Common Stock and
(B) the number of shares of Common Stock purchasable upon the exercise of each
Warrant shall be increased to a number determined by multiplying the number of
shares of Common Stock so purchasable immediately prior to the record date for
such distribution by a fraction,  the numerator of which shall be the Exercise
Price in effect immediately prior to the adjustment  required by clause (A) of
this  sentence and the  denominator  of which shall be the  Exercise  Price in
effect  immediately  after such adjustment.  The adjustments  required by this
Section 5.4 shall be made whenever any such distribution occurs retroactive to
the record date for the determination of stockholders entitled to receive such
distribution.

          5.5  SELF-TENDERS.  In  case  of the  consummation  of a  tender  or
exchange offer (other than an odd-lot tender offer) made by the Company or any
subsidiary  of the Company  for all or any portion of the Common  Stock to the
extent  that the cash and value of any other  consideration  included  in such
payment per share of Common Stock exceeds the first  reported  sales price per
share of Common Stock on the trading day next succeeding the Expiration  Time,
the  Exercise  Price  shall be reduced so that the same shall  equal the price
determined by multiplying  the Exercise Price in effect  immediately  prior to
the  Expiration  Time by a fraction the numerator of which shall be the number
of shares of Common  Stock  outstanding  (including  any tendered or exchanged
shares) at the Expiration Time multiplied by the first reported sales price of
the Common Stock on the trading day next  succeeding the Expiration  Time, and
the denominator  shall be the sum of (A) the fair market value  (determined by
the Board of Directors of the Company, whose determination shall be conclusive
and  described in a resolution  of the Board of  Directors)  of the  aggregate
consideration  payable  to  stockholders  based on the  acceptance  (up to any
maximum  specified in the terms of the tender or exchange offer) of all shares
validly tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted,  up to any such maximum,  being  referred to as the
"PURCHASED  SHARES")  and (B) the  product  of the  number of shares of Common
Stock  outstanding  (less any Purchased Shares) on the Expiration Time and the
first  reported  sales  price  of the  Common  Stock on the  trading  day next
succeeding the Expiration Time, such reduction to become effective immediately
prior to the opening of business on the day following the Expiration Time.

          5.6 ISSUANCE OF ADDITIONAL  SHARES OF COMMON  STOCK.  If at any time
the  Company  shall  (except  as  hereinafter  provided)  issue  or  sell  any
Additional  Shares  of  Common  Stock  for  consideration  in  an  amount  per
Additional  Share of Common Stock less than the Market Price,  then the number
of shares of Common  Stock for which  this  Warrant  is  exercisable  shall be
adjusted to equal the product  obtained by multiplying the number of shares of
Common Stock for which this Warrant is exercisable  immediately  prior to such
issue or sale by a fraction (A) the  numerator of which shall be the number of
shares of Common Stock  outstanding  immediately after such issue or sale, and
(B) the  denominator  of which shall be the sum of (1) the number of shares of
Common Stock outstanding  immediately prior to such issue or sale, and (2) the
aggregate  consideration  received from the issuance or sale of the Additional
Shares of Common Stock divided by the Market  Price.  For the purposes of this
Section  5.6,  the date as of which the Market Price per share of Common Stock
shall be  computed  shall be the  earlier of (a) the date on which the Company
shall enter into a firm contract for the issuance of such Additional Shares of
Common Stock or (b) the date of actual issuance of such  Additional  Shares of
Common Stock. Notwithstanding the foregoing, no adjustment shall be made under
this  Section for  issuances  of  Additional  Shares of Common  Stock (i) with
respect to Permitted Issuances or (ii) upon exercise of the Warrants.

          5.7 CERTAIN  DISTRIBUTIONS.  If the Company  shall pay a dividend or
make any other  distribution  payable in Options  or  Convertible  Securities,
then,  for  purposes  of  Section  5.3  above,  such  Options  or  Convertible
Securities shall be deemed to have been issued or sold without consideration.

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          5.8 CONSIDERATION  RECEIVED.  If any shares of Common Stock, Options
or  Convertible  Securities  shall  be  issued,  sold  or  distributed  for  a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such  consideration  (as determined in good faith by the Board
of Directors of the  Company).  If any Options  shall be issued in  connection
with the  issuance  and  sale of other  securities  of the  Company,  together
comprising  one integral  transaction  in which no specific  consideration  is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without  consideration;  PROVIDED,  HOWEVER,  that if such
Options  have an exercise  price equal to or greater  than the Market Price of
the Common  Stock on the date of issuance of such  Options,  then such Options
shall be deemed to have been issued for  consideration  equal to such exercise
price.

          5.9 DEFERRAL OR EXCLUSION OF CERTAIN  ADJUSTMENTS.  No adjustment to
the Exercise Price  (including the related  adjustment to the number of shares
of Common  Stock  purchasable  upon the  exercise  of each  Warrant)  shall be
required  hereunder  unless such adjustment,  together with other  adjustments
carried forward as provided below,  would result in an increase or decrease of
at least one percent (1%) of the Exercise Price; PROVIDED that any adjustments
which by reason  of this  Section  5.9 are not  required  to be made  shall be
carried  forward  and taken into  account  in any  subsequent  adjustment.  No
adjustment need be made for a change in the par value of the Common Stock. All
calculations  under this Article  shall be made to the nearest  1/1,000 of one
cent or to the nearest  1/1000th of a share, as the case may be. No adjustment
to the Exercise Price shall be made at any time  hereunder in connection  with
the issuance by the Company of a warrant to purchase  35,000  shares of Common
Stock at an exercise price of $2.44 pursuant to the warrant  agreement,  dated
as of November 1, 1996, among Hanger Orthopedic Group, Inc., J.E. Hanger, Inc.
of Georgia and Wade L. Harghausen.

          5.10 CHANGES IN OPTIONS AND CONVERTIBLE SECURITIES.  If the exercise
price  provided  for in any  Options  referred  to in Section  5.3 above,  the
additional  consideration,  if any, payable upon the conversion or exchange of
any  Convertible  Securities  referred to in Section 5.3 above, or the rate at
which  any  Convertible  Securities  referred  to in  Section  5.3  above  are
convertible  into or  exchangeable  for Common  Stock shall change at any time
(other  than under or by reason of  provisions  designed  to  protect  against
dilution upon an event which results in a related adjustment  pursuant to this
Article  5),  the  Exercise  Price  then in effect and the number of shares of
Common Stock  purchasable upon the exercise of each Warrant shall forthwith be
readjusted  (effective  only with respect to any exercise of any Warrant after
such  readjustment) to the Exercise Price and number of shares of Common Stock
so purchasable  that would then be in effect had the adjustment  made upon the
issuance,  sale,  distribution  or  granting  of such  Options or  Convertible
Securities  been made  based  upon such  changed  purchase  price,  additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.

          5.11  EXPIRATION OF OPTIONS AND CONVERTIBLE  SECURITIES.  If, at any
time after any adjustment to the number of shares of Common Stock  purchasable
upon the  exercise of each Warrant  shall have been made  pursuant to Sections
5.3 or 5.10 above or this Section 5.11, any Options or Convertible  Securities
shall  have  expired  unexercised,  the number of such  shares so  purchasable
shall,  upon such  expiration,  be readjusted and shall  thereafter be such as
they would have been had they been  originally  adjusted  (or had the original
adjustment not been required, as the case may be) as if (i) the only shares of
Common  Stock  deemed to have been issued in  connection  with such Options or
Convertible  Securities  were the  shares of Common  Stock,  if any,  actually
issued or sold upon the exercise of such Options or Convertible Securities and
(ii)  such  shares  of  Common  Stock,  if any,  were  issued  or sold for the
consideration  actually  received by the Company upon such  exercise  plus the
aggregate  consideration,  if any,  actually  received  by the Company for the
issuance, sale, distribution or

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granting  of all  such  Options  or  Convertible  Securities,  whether  or not
exercised;  PROVIDED  that no such  readjustment  shall  have  the  effect  of
decreasing the number of such shares so  purchasable by an amount  (calculated
by adjusting such decrease to account for all other  adjustments made pursuant
to this Article 5 following  the date of the original  adjustment  referred to
above) in excess of the amount of the adjustment  initially made in respect of
the issuance,  sale,  distribution  or granting of such Options or Convertible
Securities.

          5.12 OTHER  ADJUSTMENTS.  In the event that at any time, as a result
of an  adjustment  made  pursuant to this Article 5, the Holders  shall become
entitled to receive any  securities of the Company other than shares of Common
Stock,  thereafter  the number of such other  securities  so  receivable  upon
exercise of the Warrants and the Exercise  Price  applicable  to such exercise
shall be subject to  adjustment  from time to time in a manner and on terms as
nearly  equivalent as practicable to the provisions with respect to the shares
of Common Stock contained in this Article 5.

          5.13 OTHER ACTION  AFFECTING  COMMON  STOCK.  In case at any time or
from time to time the  Company  shall take any action in respect of its Common
Stock,  other than any action  described in this Article 5, then the number of
shares of Common  Stock or other stock for which this  Warrant is  exercisable
shall be adjusted in such manner as may be equitable in the circumstances.  If
the  Company  shall at any time  and from  time to time  issue or sell (i) any
shares  of any  class of  common  stock  other  than  Common  Stock,  (ii) any
evidences of its  indebtedness,  shares of stock or other securities which are
convertible  into or  exchangeable  for such shares of common  stock,  with or
without the payment of additional  consideration  in cash or property or (iii)
any warrants or other  rights to subscribe  for or purchase any such shares of
common stock or any such evidences,  shares of stock or other securities, then
in each such case such  issuance  shall be deemed to be of, or in respect  of,
Common Stock for purposes of this Article 5; PROVIDED,  HOWEVER, that, without
limiting the generality of the  foregoing,  if the Company shall take a record
of the  holders  of its Common  Stock for the  purpose  of  entitling  them to
receive a dividend  payable in, or other  distribution  of, common stock other
than Common  Stock,  including  shares of non-voting  common  stock,  then the
number of  shares of Common  Stock  for  which  this  Warrant  is  exercisable
immediately  after the occurrence of any such event shall be adjusted to equal
the aggregate  number of shares of such common stock and of Common Stock which
a record  holder of the same  number of shares of Common  Stock for which this
Warrant is exercisable immediately prior to the occurrence of such event would
own or be entitled to receive after the happening of such event.

          ARTICLE 6. NOTICES TO WARRANT HOLDERS

          6.1 NOTICE OF  ADJUSTMENTS.  Whenever the number of shares of Common
Stock for which this Warrant is  exercisable,  and the Exercise  Price payable
therefor, shall be adjusted pursuant to Article 5, the Company shall forthwith
prepare a certificate  to be executed by a member of the Board of Directors or
one of its executive officers,  setting forth, in reasonable detail, the event
requiring  the  adjustment  and  the  method  by  which  such  adjustment  was
calculated  (including  a  description  of the  basis  on which  the  Board of
Directors of the Company  determined the fair market value of any evidences of
indebtedness.  other  securities,  properties,  assets,  options,  warrants or
subscription  or purchase  rights),  specifying the number of shares of Common
Stock for which this Warrant is exercisable  and (if such  adjustment was made
pursuant to Section 5.2, 5.12 or 5.13)  describing  the number and kind of any
other shares of stock or property for which this  Warrant is  exercisable.  In
the event that the Majority  Holders shall  challenge any of the  calculations
set forth in such certificate within 20 days after the Company's  notification
thereof,  the Company  shall  retain a firm of  independent  certified  public
accountants  of national  standing  selected  by the  Company  and  reasonably
acceptable  to the  Majority  Holders,  to prepare and  execute a  certificate
verifying the

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method by which the adjustment was calculated,  the number of shares of Common
Stock for which this Warrant is exercisable  and (if such  adjustment was made
pursuant to Section 5.2, 5.12 or 5.13)  describing  the number and kind of any
other shares of stock or property for which this Warrant is  exercisable.  The
Company  shall  promptly  cause  a  signed  copy of any  certificate  prepared
pursuant to this Section 6.1 to be delivered to each Holder in accordance with
Section  16.2.  The  Company  shall  keep at its  office or agency  designated
pursuant to Article 13 copies of all such  certificates  and cause the same to
be available for inspection at said office during normal business hours by any
Holder  or any  prospective  purchaser  of a  Warrant  designated  by a Holder
thereof.

          6.2 NOTICE OF CERTAIN  CORPORATE  ACTION.  The Holder of any Warrant
shall be entitled to the same rights to receive notice of corporate  action as
any holder of Common Stock.

          ARTICLE 7. NO IMPAIRMENT

          The Company shall not by any action including,  without  limitation,
amending  its  certificate  of  incorporation  or through any  reorganization,
transfer  of  assets,  consolidation,  merger,  dissolution,  issue or sale of
securities  or any  other  voluntary  action,  avoid  or  seek  to  avoid  the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith  assist in the  carrying  out of all such terms and in the
taking of all such actions as may be necessary or  appropriate  to protect the
rights of Holder against  impairment.  Without  limiting the generality of the
foregoing,  the Company  will (a) take all such action as may be  necessary or
appropriate in order that the Company may validly and legally issue fully paid
and  nonassessable  shares of Common Stock upon the exercise of this  Warrant,
and (b) use its best efforts to obtain all such authorizations,  exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.

          Upon the request of Holder,  the Company will at any time during the
period  this  Warrant  is  outstanding   acknowledge   in  writing,   in  form
satisfactory  to Holder,  the  continuing  validity  of this  Warrant  and the
obligations of the Company hereunder.

          ARTICLE  8.  COMMON  STOCK;   RESERVATION   AND   AUTHORIZATION   OF
                       REGISTRATION  WITH  OR  APPROVAL  OF  ANY  GOVERNMENTAL
                       AUTHORITY

          From and after the  Issuance  Date,  the Company  shall at all times
reserve and keep  available  for issuance  upon the exercise of Warrants  such
number of its  authorized  but  unissued  shares  of  Common  Stock as will be
sufficient  to permit the exercise in full of all  outstanding  Warrants.  All
shares of Common Stock which shall be so issuable,  when issued upon  exercise
of any Warrant in accordance with the terms of such Warrant,  shall be validly
issued,  fully paid and nonassessable and shall have been issued free from any
preemptive or similar right and shall be free and clear of any lien,  claim or
similar charge or restriction.

          Before  taking any action which would result in an adjustment in the
number of shares of Common  Stock for which this Warrant is  exercisable,  the
Company  shall  obtain  all such  authorizations  or  exemptions  thereof,  or
consents  thereto,  as may be  necessary  from any public  regulatory  body or
bodies having jurisdiction thereof.

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          If any shares of Common  Stock  required to be reserved for issuance
upon  exercise of Warrants  require  registration  or  qualification  with any
governmental  authority  under any  federal  or state law  (otherwise  than as
provided in Article 11) before such shares may be so issued,  the Company will
in good faith and as  expeditiously as possible and at its expense endeavor to
cause such shares to be duly registered.

          ARTICLE 9. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

          In the case of all dividends or other  distributions  by the Company
to the  holders of its Common  Stock with  respect to which any  provision  of
Article 5 refers to the taking of a record of such  holders,  the Company will
in each such case take such a record and will take such record as of the close
of business  on a Business  Day.  The  Company  will not at any time close its
stock transfer  books or Warrant  transfer books so as to result in preventing
or delaying the exercise or transfer of any Warrant.

          ARTICLE 10. RESTRICTIONS ON TRANSFERABILITY

          10.1 RESTRICTIVE  LEGEND.  (a) Except as otherwise  provided in this
Article  10, each  certificate  for Warrant  Stock  initially  issued upon the
exercise of this Warrant, and each certificate for Warrant Stock issued to any
transferee of any such  certificate,  shall be stamped or otherwise  imprinted
with a legend in substantially the following form:

          "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE  SECURITIES  ACT OF 1933, AS AMENDED,  OR ANY STATE  SECURITIES
     LAWS AND ARE SUBJECT TO CERTAIN PROVISIONS SPECIFIED IN A CERTAIN WARRANT
     DATED NOVEMBER 1, 1996,  ORIGINALLY  ISSUED BY HANGER  ORTHOPEDIC  GROUP,
     INC.  (THE  "WARRANT"),  AND  MAY  NOT BE  TRANSFERRED,  SOLD,  ASSIGNED,
     EXCHANGED,  MORTGAGED,  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR
     ENCUMBERED  WITHOUT  COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE
     RESTRICTED BY THE  PROVISIONS OF, THE SECURITIES ACT OF 1933, AS AMENDED,
     AND THE RULES AND REGULATIONS  THEREUNDER AND THE WARRANT.  A COPY OF THE
     FORM OF SAID WARRANT IS ON FILE WITH THE  SECRETARY OF HANGER  ORTHOPEDIC
     GROUP,  INC.  THE  HOLDER  OF THIS  CERTIFICATE,  BY  ACCEPTANCE  OF THIS
     CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF SUCH WARRANT."

          (b) Except as  otherwise  provided in this  Article 10, each Warrant
shall be stamped or otherwise  imprinted  with a legend in  substantially  the
following form:

          "NEITHER  THIS WARRANT NOR THE  SECURITIES  ISSUABLE  UPON  EXERCISE
     HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
     OR ANY STATE  SECURITIES  LAWS. THIS WARRANT AND THE SECURITIES  ISSUABLE
     UPON EXERCISE HEREOF MAY NOT BE TRANSFERRED,  SOLD, ASSIGNED,  EXCHANGED,
     MORTGAGED,  PLEDGED,  HYPOTHECATED OR OTHERWISE DISPOSED OF OR ENCUMBERED
     WITHOUT  COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE  RESTRICTED
     BY THE PROVISIONS  OF, THE SECURITIES ACT OF 1933, AS AMENDED,  THE RULES
     AND REGULATIONS THEREUNDER AND THIS WARRANT."

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          10.2 RESTRICTION ON TRANSFERS. (a) Subject to Section 10.2(b) below,
prior to any  Transfer of any  Warrants or any shares of Warrant  Stock (other
than a Transfer by a Holder to the  Company),  the Holder of such  Warrants or
Warrant Stock shall deliver  notice of such Transfer to the Company.  Upon the
Company's  receipt of such  notice,  such Holder shall be entitled to Transfer
such  Warrants or such Warrant Stock in compliance  with the  Securities  Act.
Each certificate,  if any, evidencing such shares of Warrant Stock issued upon
such Transfer shall bear the restrictive  legend set forth in Section 10.1(a),
and each Warrant issued upon such Transfer shall bear the  restrictive  legend
set forth in Section  10.1(b),  unless such legend is not required in order to
ensure compliance with the Securities Act.

          (b)  Notwithstanding  any  other  provision  of  this  Warrant,  the
restrictions  imposed by this Article 10 upon  transferability of the Warrants
and the  Warrant  Stock and the legend  requirements  of Section  10.1,  shall
terminate as to any  particular  Warrant or share of Warrant Stock when and so
long as such  security  shall  have  been  effectively  registered  under  the
Securities  Act and disposed of pursuant  thereto.  Whenever the  restrictions
imposed by this Article 10 shall terminate as to this Warrant,  as hereinabove
provided,  the Holder hereof shall be entitled to receive from the Company, at
the expense of the  Company,  a new Warrant  bearing the  following  legend in
place of the restrictive legend set forth hereon:

          "THE  RESTRICTIONS ON  TRANSFERABILITY  OF THIS WARRANT CONTAINED IN
     ARTICLE 10 HEREOF TERMINATED ON ____________, ____, AND ARE OF NO FURTHER
     FORCE AND EFFECT."

All Warrants issued upon registration of transfer, division or combination of,
or in substitution  for, any Warrant or Warrants  entitled to bear such legend
shall  have a similar  legend  endorsed  thereon.  Whenever  the  restrictions
imposed by this Article 10 shall  terminate as to any share of Warrant  Stock,
as hereinabove provided,  the Holder thereof shall be entitled to receive from
the Company,  at the Company's  expense,  a new certificate  representing such
Common Stock not bearing the restrictive legend set forth in Section 10.1(a).

          (c) Notwithstanding anything in this Warrant to the contrary, in the
event of a Tender  Offer,  the  restrictive  legends  referred  to in Sections
9.1(a) and 9.1(b) may be omitted from any Warrants or Warrant  Stock sold by a
Holder to the maker of the Tender Offer.

          10.3 LISTING ON SECURITIES  EXCHANGE OR NASDAQ. If the Company shall
list any shares of Common Stock on any  securities  exchange or on NASDAQ,  it
will, at its expense,  list thereon,  maintain and, when  necessary,  increase
such  listing  of,  all  shares  of Common  Stock  issued  or,  to the  extent
permissible under the applicable securities exchange or NASDAQ rules, issuable
upon the  exercise of this Warrant so long as any shares of Common Stock shall
be so listed during any such Exercise Period.

          10.4 COVENANT  REGARDING  CONSENTS.  The Company hereby covenants to
use its best  efforts  upon request of one or more Holders to seek any waivers
or consents,  or to take any other action required, to effectuate the exercise
of this Warrant by any Holder.

          ARTICLE 11. REGISTRATION RIGHTS

          11.1  INCIDENTAL  REGISTRATIONS.  (a) RIGHT TO  INCLUDE  REGISTRABLE
SECURITIES.  If the  Company at any time  after the date  hereof  proposes  to
register  its  Common  Stock (or any  security  which is  convertible  into or
exchangeable or exercisable for Common Stock) under the Securities Act

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(other than a registration on Form S-4 or S-8, or any successor or other forms
promulgated  for  similar  purposes),  whether  or not  for  sale  for its own
account, in a manner which would permit registration of Registrable Securities
for sale to the public under the  Securities  Act, it will, at each such time,
give prompt  written  notice to all Holders of  Registrable  Securities of its
intention to do so and of such Holders'  rights under this Section 11.1.  Upon
the  written  request of any such Holder made within 15 days after the receipt
of any such notice (which  request shall  specify the  Registrable  Securities
intended  to be  disposed of by such  Holder),  the Company  will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities  which the Company has been so requested to register by the Holders
thereof,  to the extent requisite to permit the disposition of the Registrable
Securities so to be registered; PROVIDED that (i) if, at any time after giving
written  notice of its intention to register any  securities  and prior to the
effective date of the  registration  statement  filed in connection  with such
registration,  the Company shall  determine for any reason not to proceed with
the proposed registration of the securities to be sold by it, the Company may,
at its election,  give written notice of such  determination to each Holder of
Registrable Securities and, thereupon,  shall be relieved of its obligation to
register any Registrable  Securities in connection with such registration (but
not  from  its  obligation  to pay the  Registration  Expenses  in  connection
therewith),  and (ii) if such registration involves an underwritten  offering,
all  Holders  of  Registrable  Securities  requesting  to be  included  in the
Company's   registration  must  sell  their  Registrable   Securities  to  the
underwriters selected by the Company on the same terms and conditions as apply
to  the  Company,  with  such  differences,  including  any  with  respect  to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings. If a registration requested pursuant
to this Section 11.1(a) involves an underwritten  public offering,  any Holder
of Registrable  Securities  requesting to be included in such registration may
elect,  in writing prior to the effective date of the  registration  statement
filed in connection with such registration, not to register such securities in
connection with such registration.  Nothing in this Section 11.1 shall operate
to limit the right of Holder to (i) request the  registration of Warrant Stock
issuable  upon exercise of Warrants  held by such Holder  notwithstanding  the
fact that at the time of  request,  such  Holder  holds only  Warrants or (ii)
request the registration at one time of both Warrants and Warrant Stock.

          (b)  EXPENSES.  The Company  will pay all  Registration  Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 11.1.

          (c) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration pursuant
to this  Section  11.1  involves an  underwritten  offering  and the  managing
underwriter advises the Company in writing that, in its opinion, the number of
securities  requested to be included in such  registration  exceeds the number
which can be sold in such  offering,  so as to be  likely  to have an  adverse
effect on the price,  timing or distribution of the Securities offered in such
offering  as   contemplated   by  the  Company  (other  than  the  Registrable
Securities),  then the Company  will include in such  registration  (i) first,
100% of the  securities the Company  proposes to sell and (ii) second,  to the
extent of the number of  Registrable  Securities  requested  to be included in
such registration which, in the opinion of such managing  underwriter,  can be
sold  without  having the  adverse  effect  referred  to above,  the number of
Registrable Securities which the Holders have requested to be included in such
registration,  such  amount to be  allocated  pro rata  among  all  requesting
Holders  on  the  basis  of the  relative  number  of  shares  of  Registrable
Securities  then held by each such Holder  (provided  that any shares  thereby
allocated  to any such  Holder  that  exceed  such  Holder's  request  will be
reallocated among the remaining requesting Holders in like manner).

          11.2  REGISTRATION  ON REQUEST.  (a) REQUEST BY THE DEMAND PARTY. At
any time,  upon the written  request of the Demand Party  requesting  that the
Company  effect the  registration  under the  Securities Act of all or part of
such Demand  Party's  Registrable  Securities  and  specifying  the amount and
intended method of disposition thereof, the Company will promptly give written
notice of such

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requested  registration to all other Holders of such  Registrable  Securities,
and thereupon  will,  as  expeditiously  as possible,  use its best efforts to
effect the registration under the Securities Act of:

          (i)  such  Registrable  Securities  which  the  Company  has been so
     requested to register by the Demand Party; and

          (ii) all other Registrable Securities as are to be registered at the
     request of a Demand  Party and which the  Company has been  requested  to
     register  by any other  Holder  thereof by written  request  given to the
     Company  within 15 days  after the giving of such  written  notice by the
     Company  (which  request shall specify the amount and intended  method of
     disposition of such Registrable Securities),

all to the extent  necessary to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the  Registrable  Securities so to be
registered;  PROVIDED,  that,  unless Holders of a majority of the Registrable
Securities held by Holders  consent thereto in writing,  the Company shall not
be obligated to file a  registration  statement  relating to any  registration
request  under this  Section  11.2(a) (x) within a period of nine months after
the  effective  date  of any  other  registration  statement  relating  to any
registration request under this Section 11.2(a) which was not effected on Form
S-3 (or  any  successor  or  similar  short-form  registration  statement)  or
relating to any  registration  effected  under  Section  11.1,  or (y) if with
respect thereto the managing underwriter,  the Commission,  the Securities Act
or the rules and regulations thereunder, or the form on which the registration
statement is to be filed, would require the conduct of an audit other than the
regular audit conducted by the Company at the end of its fiscal year, in which
case the filing may be delayed  until the  completion  of such  regular  audit
(unless the Holders of the  Registrable  Securities to be registered  agree to
pay the  expenses of the Company in  connection  with such an audit other than
the regular  audit).  Nothing in this Section 11.2 shall  operate to limit the
right of Holder to (i) request the registration of Warrant Stock issuable upon
exercise of Warrants held by such Holder  notwithstanding the fact that at the
time  of  request,  such  Holder  holds  only  Warrants  or (ii)  request  the
registration at one time of both Warrants and Warrant Stock.

          (b)  REGISTRATION  STATEMENT  FORM.  If any  registration  requested
pursuant to this  Section 11.2 which is proposed by the Company to be effected
by the filing of a  registration  statement  on Form S-3 (or any  successor or
similar  short-form  registration  statement)  shall be in connection  with an
underwritten public offering, and if the managing underwriter shall advise the
Company  in  writing  that,  in its  opinion,  the  use  of  another  form  of
registration  statement  is of  material  importance  to the  success  of such
proposed  offering,  then such  registration  shall be  effected on such other
form.

          (c)  EXPENSES.  The Company  will pay all  Registration  Expenses in
connection  with the first two (2)  registrations  of each  class or series of
Registrable  Securities pursuant to this Section 11.2 upon the written request
of any of the  Holders;  PROVIDED  that  the  Company  will  pay  Registration
Expenses in connection  with an additional two (2) such  registrations  if the
Company  shall have not repaid in full all  amounts  borrowed  pursuant to the
Note Purchase Agreement on or prior to May 1, 1998; PROVIDED, FURTHER that any
requested  registration  by Holder of both  Warrants and Warrant  Stock at one
time shall only count as one  registration.  All expenses  for any  subsequent
registrations of Registrable Securities pursuant to this Section 11.2 shall be
paid pro rata by the Company and all other  Persons  (including  the  Holders)
participating  in such  registration  on the basis of the  relative  number of
Warrants or shares of Warrant  Stock,  as the case may be, of each such person
whose Registrable Securities are included in such registration.

          (d)  EFFECTIVE  REGISTRATION  STATEMENT.  A  registration  requested
pursuant to this Section 11.2 will not be deemed to have been effected  unless
it has become effective and all of the Registrable

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Securities  registered thereunder have been sold; PROVIDED that if, within 180
days after it has become  effective,  the offering of  Registrable  Securities
pursuant to such registration is interfered with by any stop order, injunction
or other order or requirement of the Commission or other  governmental  agency
or court, such registration will be deemed not to have been effected.

          (e) SELECTION OF UNDERWRITERS.  If a requested registration pursuant
to this  Section  11.2  involves an  underwritten  offering,  the Holders of a
majority of the Registrable Securities which are held by Holders and which the
Company  has been  requested  to  register  shall have the right to select the
investment  banker  or  bankers  and  managers  to  administer  the  offering;
PROVIDED,  HOWEVER,  that such investment banker or bankers and managers shall
be reasonably satisfactory to the Company.

          (f) PRIORITY IN REQUESTED REGISTRATIONS. If a requested registration
pursuant to this  Section  11.2  involves  an  underwritten  offering  and the
managing  underwriter advises the Company in writing that, in its opinion, the
number of securities requested to be included in such registration  (including
securities of the Company which are not  Registrable  Securities)  exceeds the
number  which can be sold in such  offering,  the Company will include in such
registration only the Registrable  Securities requested to be included in such
registration. In the event that the number of Registrable Securities requested
to be included in such  registration  exceeds the number which, in the opinion
of such  managing  underwriter,  can be sold,  the number of such  Registrable
Securities  to be included in such  registration  shall be allocated  pro rata
among  all  requesting  Holders  on  the  basis  of  the  relative  number  of
Registrable Securities then held by each such Holder (provided that any shares
thereby  allocated to any such Holder that exceed such Holder's  request shall
be reallocated among the remaining  requesting Holders in like manner). In the
event that the number of  Registrable  Securities  requested to be included in
such  registration  is less  than the  number  which,  in the  opinion  of the
managing   underwriter,   can  be  sold,  the  Company  may  include  in  such
registration  the securities the Company  proposes to sell up to the number of
securities that, in the opinion of the underwriter, can be sold.

          (g)  ADDITIONAL  RIGHTS.  If the  Company at any time  grants to any
other holders of capital stock any rights to request the Company to effect the
registration  under the  Securities Act of any such shares of capital stock on
terms more  favorable to such holders than the terms set forth in this Section
11.2, the terms of this Section 11.2 shall be deemed  amended or  supplemented
to the extent  necessary to provide the Holders such more favorable rights and
benefits.

          11.3  REGISTRATION  PROCEDURES.  If  and  whenever  the  Company  is
required to use its best  efforts to effect or cause the  registration  of any
Registrable Securities under the Securities Act as provided in this Agreement,
the Company will, as expeditiously as possible:

          (i) prepare  and, in any event  within 120 days after the end of the
     period  within  which a  request  for  registration  may be  given to the
     Company,  file with the Commission a registration  statement with respect
     to such  Registrable  Securities  and use its best  efforts to cause such
     registration statement to become effective,  PROVIDED,  HOWEVER, that the
     Company may discontinue any registration of its securities which is being
     effected pursuant to Section 11.1 at any time prior to the effective date
     of the registration statement relating thereto;

          (ii)  prepare  and file  with the  Commission  such  amendments  and
     supplements to such  registration  statement and the  prospectus  used in
     connection  therewith  as may be  necessary  to  keep  such  registration
     statement  effective for a period not in excess of 270 days and to comply
     with the provisions of the Securities Act, the Exchange Act and the rules
     and  regulations  of  the  Commission  thereunder  with  respect  to  the
     disposition  of all  securities  covered by such  registration  statement
     during such period in accordance with the intended

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     methods of disposition by the seller or sellers thereof set forth in such
     registration  statement;  PROVIDED  that  before  filing  a  registration
     statement or prospectus,  or any amendments or supplements  thereto,  the
     Company will furnish to counsel selected  pursuant to Section 11.6 hereof
     by the Holders of the Registrable Securities covered by such registration
     statement to represent such Holders,  copies of all documents proposed to
     be filed, which documents will be subject to the review of such counsel;

          (iii)  furnish to each seller of such  Registrable  Securities  such
     number of copies of such registration statement and of each amendment and
     supplement  thereto (in each case including all exhibits filed therewith,
     including any documents incorporated by reference), such number of copies
     of the prospectus included in such registration statement (including each
     preliminary  prospectus and summary  prospectus),  in conformity with the
     requirements  of the  Securities  Act,  and such other  documents as such
     seller may reasonably  request in order to facilitate the  disposition of
     the Registrable Securities by such seller;

          (iv) use its best  efforts to register or qualify  such  Registrable
     Securities  covered by such  registration in such  jurisdictions  as each
     seller shall reasonably request, and do any and all other acts and things
     which may be  reasonably  necessary or advisable to enable such seller to
     consummate  the  disposition  in such  jurisdictions  of the  Registrable
     Securities  owned by such seller,  except that the Company  shall not for
     any such  purpose be  required to qualify  generally  to do business as a
     foreign  corporation in any jurisdiction  where, but for the requirements
     of this clause (iv),  it would not be obligated  to be so  qualified,  to
     subject  itself to  taxation  in any such  jurisdiction  or to consent to
     general service of process in any such jurisdiction;

          (v) use its  best  efforts  to  cause  such  Registrable  Securities
     covered by such registration  statement to be registered with or approved
     by such other governmental agencies or authorities as may be necessary to
     enable the seller or sellers  thereof to consummate  the  disposition  of
     such Registrable Securities;

          (vi) notify each seller of any such Registrable  Securities  covered
     by such registration  statement,  at any time when a prospectus  relating
     thereto is required to be delivered  under the  Securities Act within the
     appropriate  period mentioned in clause (ii) of this Section 11.3, of the
     Company's   becoming   aware  that  the   prospectus   included  in  such
     registration  statement,  as then in effect, includes an untrue statement
     of a  material  fact or omits to state a  material  fact  required  to be
     stated therein or necessary to make the statements therein not misleading
     in the light of the  circumstances  then existing,  and at the request of
     any such seller,  prepare and furnish to such seller a reasonable  number
     of copies of an amended or supplemental prospectus as may be necessary so
     that,  as  thereafter  delivered to the  purchasers  of such  Registrable
     Securities,  such prospectus  shall not include an untrue  statement of a
     material  fact or omit to state a  material  fact  required  to be stated
     therein or necessary to make the statements therein not misleading in the
     light of the circumstances then existing;

          (vii)  otherwise use its best efforts to comply with all  applicable
     rules  and  regulations  of the  Commission,  and make  available  to its
     security  holders,  as soon as reasonably  practicable (but not more than
     eighteen months) after the effective date of the registration  statement,
     an earnings statement which shall satisfy the provisions of Section 11(a)
     of  the  Securities  Act  and  the  rules  and  regulations   promulgated
     thereunder;

          (viii) (A) if such Registrable Securities are Warrant Stock, use its
     best  efforts  to list  such  Registrable  Securities  on any  securities
     exchange on which the Common Stock is then

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     listed if such  Registrable  Securities  are not already so listed and if
     such listing is then permitted  under the rules of such exchange;  (B) if
     such Registrable Securities are Warrants,  upon the reasonable request of
     sellers  of a  majority  of such  Registrable  Securities,  use its  best
     efforts  to list the  Warrants  and,  if  requested,  the  Warrant  Stock
     underlying the Warrants, notwithstanding that at the time of request such
     sellers hold only Warrants,  on any securities exchange so requested,  if
     such  Registrable  Securities  are not  already  so  listed,  and if such
     listing is then permitted  under the rules of such exchange;  (C) and use
     its best  efforts  to  provide a transfer  agent and  registrar  for such
     Registrable  Securities covered by such registration  statement not later
     than the effective date of such registration statement;

          (ix) enter into such customary agreements (including an underwriting
     agreement  in  customary   form),   which  may  include   indemnification
     provisions in favor of underwriters  and other persons in addition to, or
     in substitution for the provisions of Section 11.4 hereof,  and take such
     other actions as sellers of a majority of such Registrable  Securities or
     the underwriters,  if any,  reasonably  requested in order to expedite or
     facilitate the disposition of such Registrable Securities;

          (x) obtain a "cold  comfort"  letter or letters  from the  Company's
     independent public accounts in customary form and covering matters of the
     type  customarily  covered  by "cold  comfort"  letters  as the seller or
     sellers  of a majority  of shares of such  Registrable  Securities  shall
     reasonably  request (provided that Registrable  Securities  constitute at
     least 25% of the securities covered by such registration statement);

          (xi) make available for inspection by any seller of such Registrable
     Securities  covered by such  registration  statement,  by any underwriter
     participating  in  any  disposition  to  be  effected  pursuant  to  such
     registration  statement  and by any  attorney,  accountant or other agent
     retained  by any such  seller  or any  such  underwriter,  all  pertinent
     financial and other records, pertinent corporate documents and properties
     of the Company,  and cause all of the Company's  officers,  directors and
     employees  to supply all  information  reasonably  requested  by any such
     seller,  underwriter,  attorney,  accountant or agent in connection  with
     such registration statement;

          (xii) notify counsel (selected  pursuant to Section 11.6 hereof) for
     the  Holders of  Registrable  Securities  included  in such  registration
     statement and the managing underwriter or agent, immediately, and confirm
     the  notice  in  writing  (i) when  the  registration  statement,  or any
     post-effective amendment to the registration statement, shall have become
     effective,   or  any  supplement  to  the  prospectus  or  any  amendment
     prospectus  shall have been filed,  (ii) of the  receipt of any  comments
     from the Commission,  (iii) of any request of the Commission to amend the
     registration  statement  or amend or  supplement  the  prospectus  or for
     additional information, and (iv) of the issuance by the Commission of any
     stop order suspending the effectiveness of the registration  statement or
     of any  order  preventing  or  suspending  the  use  of  any  preliminary
     prospectus, or of the suspension of the qualification of the registration
     statement for offering or sale in any jurisdiction, or of the institution
     or threatening of any proceedings for any of such purposes;

          (xiii) make every  reasonable  effort to prevent the issuance of any
     stop order suspending the effectiveness of the registration  statement or
     of any  order  preventing  or  suspending  the  use  of  any  preliminary
     prospectus and, if any such order is issued,  to obtain the withdrawal of
     any such order at the earliest possible moment;

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          (xiv)  if  requested  by the  managing  underwriter  or agent or any
     Holder of Registrable  Securities covered by the registration  statement,
     promptly  incorporate  in  a  prospectus   supplement  or  post-effective
     amendment such  information as the managing  underwriter or agent or such
     Holder  reasonably  requests to be included therein,  including,  without
     limitation,  with respect to the number of Registrable  Securities  being
     sold by such Holder to such  underwriter  or agent,  the  purchase  price
     being paid therefor by such  underwriter or agent and with respect to any
     other terms of the underwritten offering of the Registrable Securities to
     be  sold  in  such  offering;  and  make  all  required  filings  of such
     prospectus supplement or post-effective  amendment as soon as practicable
     after  being  notified  of the matters  incorporated  in such  prospectus
     supplement or post-effective amendment;

          (xv) cooperate with the Holders of Registrable Securities covered by
     the registration statement and the managing underwriter or agent, if any,
     to facilitate the timely  preparation and delivery of  certificates  (not
     bearing any restrictive legends) representing securities to be sold under
     the  registration  statement,  and enable such  securities  to be in such
     denominations and registered in such names as the managing underwriter or
     agent, if any, or such Holders may request;

          (xvi) obtain for delivery to the Holders of  Registrable  Securities
     being  registered and to the  underwriter or agent an opinion or opinions
     from counsel for the Company in customary form and in form, substance and
     scope reasonably satisfactory to such Holders, underwriters or agents and
     their counsel; and

          (xvii) cooperate with each seller of Registrable Securities and each
     underwriter or agent participating in the disposition of such Registrable
     Securities and their  respective  counsel in connection  with any filings
     required to be made with the NASD.

          The Company may require each seller of Registrable  Securities as to
which any  registration  is being  effected to furnish  the Company  with such
information regarding such seller and pertinent to the disclosure requirements
relating to the  registration  and the  distribution of such securities as the
Company may from time to time reasonably request in writing.

          Each Holder of Registrable  Securities  agrees that, upon receipt of
any  notice  from  the  Company  of the  happening  of any  event  of the kind
described  in clause (vi) of this  Section  11.3,  such Holder will  forthwith
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable  Securities until such Holder's receipt of
the copies of the  supplemented or amended  prospectus  contemplated by clause
(vi) of this Section  11.3,  and, if so directed by the  Company,  such Holder
will deliver to the Company (at the Company's expense) all copies,  other than
permanent  file copies then in such  Holder's  possession,  of the  prospectus
covering such  Registrable  Securities  current at the time of receipt of such
notice.  In the event the  Company  shall  give any such  notice,  the  period
mentioned  in clause (ii) of this Section 11.3 shall be extended by the number
of days  during the period from and  including  the date of the giving of such
notice  pursuant to clause (vi) of this  Section 11.3 and  including  the date
when each  seller  of  Registrable  Securities  covered  by such  registration
statement  shall  have  received  the  copies of the  supplemented  or amended
prospectus contemplated by clause (vi) of this Section 11.3.

          11.4  INDEMNIFICATION.  (a)  INDEMNIFICATION BY THE COMPANY.  In the
event  of  any  registration  of  any  securities  of the  Company  under  the
Securities  Act pursuant to Section  11.1 or 10.2,  the Company  will,  and it
hereby does, indemnify and hold harmless,  to the extent permitted by law, the
seller of any Registrable  Securities covered by such registration  statement,
each affiliate of such seller and their  respective  directors and officers or
general and limited partners (including any

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director, officer, affiliate, employee, agent and controlling Person of any of
the  foregoing),  each other Person who  participates as an underwriter in the
offering  or sale of such  securities  and  each  other  Person,  if any,  who
controls  such  seller  or any such  underwriter  within  the  meaning  of the
Securities Act (collectively,  the "INDEMNIFIED PARTIES"), against any and all
losses,  claims,  damages  or  liabilities,  joint or  several,  and  expenses
(including   reasonable   attorney's   fees   and   reasonable   expenses   of
investigation)  to which such  Indemnified  Party may become subject under the
Securities  Act,  common law or  otherwise,  insofar as such  losses,  claims,
damages or liabilities (or actions or proceedings in respect thereof,  whether
or not such  Indemnified  Party is a party  thereto) arise out of or are based
upon (a) any untrue statement or alleged untrue statement of any material fact
contained  in any  registration  statement  under which such  securities  were
registered  under  the  Securities  Act,  any  preliminary,  final or  summary
prospectus  contained therein,  or any amendment or supplement thereto, or (b)
any omission or alleged  omission to state therein a material fact required to
be stated therein or necessary to make the statements  therein (in the case of
a prospectus,  in light of the  circumstances  under which they were made) not
misleading,  and the Company will  reimburse  such  Indemnified  Party for any
legal or any other  expenses  reasonably  incurred  by it in  connection  with
investigating or defending against any such loss, claim, liability,  action or
proceeding;  PROVIDED that the Company shall not be liable to any  Indemnified
Party in any such  case to the  extent  that any  such  loss,  claim,  damage,
liability (or action or proceeding in respect  thereof) or expense  arises out
of or is based  upon any  untrue  statement  or alleged  untrue  statement  or
omission or alleged omission made in such registration  statement or amendment
or supplement thereto or in any such preliminary,  final or summary prospectus
in reliance upon and in conformity with written  information  furnished to the
Company  through an  instrument  duly  executed  by such  seller  specifically
stating that it is for use in the  preparation  thereof.  Such indemnity shall
remain in full force and effect regardless of any investigation  made by or on
behalf of such seller or any Indemnified  Party and shall survive the transfer
of such securities by such seller.

          (b)  INDEMNIFICATION  BY THE SELLER.  The Company may require,  as a
condition  to  including  any  Registrable   Securities  in  any  registration
statement filed in accordance with Section 11.3 herein, that the Company shall
have  received  an  undertaking   reasonably   satisfactory  to  it  from  the
prospective  seller  of such  Registrable  Securities  or any  underwriter  to
indemnify  and hold harmless (in the same manner and to the same extent as set
forth in  subdivision  (a) of this  Section  11.4) the  Company  and all other
prospective  sellers  with respect to any untrue  statement or alleged  untrue
statement in or omission or alleged omission from such registration statement,
any  preliminary,  final  or  summary  prospectus  contained  therein,  or any
amendment or supplement,  if such untrue statement or alleged untrue statement
or omission or alleged  omission was made in reliance  upon and in  conformity
with written  information  furnished to the Company through an instrument duly
executed by such seller or underwriter specifically stating that it is for use
in the  preparation  of such  registration  statement,  preliminary,  final or
summary prospectus or amendment or supplement,  or a document  incorporated by
reference into any of the foregoing. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the Company
or any of the  prospective  sellers,  or any of their  respective  affiliates,
directors,  officers or controlling  Persons and shall survive the transfer of
such securities by such seller. In no event shall the liability of any selling
Holder of  Registrable  Securities  hereunder  be greater  in amount  than the
dollar  amount of the  proceeds  received  by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.

          (c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an Indemnified
Party  hereunder  of  written  notice  of the  commencement  of any  action or
proceeding  with  respect  to which a claim  for  indemnification  may be made
pursuant to this Section  11.4,  such  Indemnified  Party will,  if a claim in
respect  thereof is to be made  against an  indemnifying  party,  give written
notice to the latter of the  commencement  of such action;  PROVIDED  that the
failure of the  Indemnified  Party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding

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subdivisions of this Section 11.4,  except to the extent that the indemnifying
party is actually  prejudiced by such failure to give notice. In case any such
action is brought  against an Indemnified  Party,  unless in such  Indemnified
Party's  reasonable  judgment a conflict of interest  between such Indemnified
Party  and  indemnifying  parties  may exist in  respect  of such  claim,  the
indemnifying  party  will be  entitled  to  participate  in and to assume  the
defense thereof,  jointly with any other indemnifying party similarly notified
to the extent that it may wish, with counsel  reasonably  satisfactory to such
Indemnified  Party,  and  after  notice  from the  indemnifying  party to such
Indemnified  Party of its  election  so to assume  the  defense  thereof,  the
indemnifying  party will not be liable to such Indemnified Party for any legal
or other expenses  subsequently  incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation.  No indemnifying
party will consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof,  the giving by the claimant
or plaintiff  to such  Indemnified  Party of a release  from all  liability in
respect to such claim or litigation.

          (d)  CONTRIBUTION.  If the  indemnification  provided  for  in  this
Section 11.4 from the  indemnifying  party is  unavailable  to an  Indemnified
Party  hereunder in respect of any losses,  claims,  damages,  liabilities  or
expenses  referred  to  herein,  then  the  indemnifying  party,  in  lieu  of
indemnifying  such Indemnified  Party,  shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages,
liabilities  or expenses in such  proportion as is  appropriate to reflect the
relative fault of the indemnifying party and Indemnified Parties in connection
with the actions which resulted in such losses, claims,  damages,  liabilities
or  expenses,  as well as any other  relevant  equitable  considerations.  The
relative fault of such  indemnifying  party and  Indemnified  Parties shall be
determined  by  reference  to,  among  other  things,  whether  any  action in
question,  including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been made by, or
relates to  information  supplied by, such  indemnifying  party or Indemnified
Parties,  and the parties' relative intent,  knowledge,  access to information
and opportunity to correct or prevent such action.  The amount paid or payable
by a party under this Section 11.4 as a result of the losses, claims, damages,
liabilities  and  expenses  referred  to above  shall be deemed to include any
legal  or  other  fees  or  expenses  reasonably  incurred  by such  party  in
connection with any investigation or proceeding.

          The parties  hereto agree that it would not be just and equitable if
contribution  pursuant  to this  Section  11.4  were  determined  by pro  rata
allocation or by any other method of allocation which does not take account of
the  equitable   considerations  referred  to  in  the  immediately  preceding
paragraph.  No  Person  guilty of  fraudulent  misrepresentation  (within  the
meaning  of  Section  11(f)  of the  Securities  Act)  shall  be  entitled  to
contribution   from  any  Person  who  was  not  guilty  of  such   fraudulent
misrepresentation.

          (e) OTHER INDEMNIFICATION. Indemnification similar to that specified
in  the  preceding   subdivisions  of  this  Section  11.4  (with  appropriate
modifications)  shall be given by the Company  and each seller of  Registrable
Securities with respect to any required registration or other qualification of
securities  under any  federal  or state  law or  regulation  or  governmental
authority other than the Securities Act.

          (f)  NON-EXCLUSIVITY.  The  obligations  of the  parties  under this
Section  11.4  shall be in  addition  to any  liability  which  any  party may
otherwise have to any other party.

          11.5 RULE 144. The Company  covenants  that it will file the reports
required to be filed by it under the  Securities  Act and the Exchange Act and
the rules and  regulations  adopted by the Commission  thereunder  (or, if the
Company is not required to file such reports, it will, upon the request of any
Holder of Registrable  Securities,  make publicly available such information),
and it will

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take  such  further  action  as  any  Holder  of  Registrable  Securities  may
reasonably  request,  all to the extent  required  from time to time to enable
such Holder to sell  Registrable  Securities  without  registration  under the
Securities Act within the  limitation of the  exemptions  provided by (i) Rule
144 under the  Securities  Act, as such Rule may be amended from time to time,
or (ii) any similar rule or regulation  hereafter  adopted by the  Commission.
Upon the request of any Holder of  Registrable  Securities,  the Company  will
deliver to such Holder a written  statement as to whether it has complied with
such  requirements.  Notwithstanding  anything contained in this Section 11.5,
the Company may, with the consent of the Majority  Holders,  deregister  under
Article 12 of the  Exchange  Act if it then is  permitted to do so pursuant to
the Exchange Act and the rules and regulations thereunder.

          11.6 SELECTION OF COUNSEL.  In connection  with any  registration of
Registrable  Securities pursuant to Sections 11.1 and 11.2 hereof, the Holders
of a majority of the Registrable  Securities  covered by any such registration
may select one  counsel to  represent  all Holders of  Registrable  Securities
covered by such registration;  PROVIDED,  HOWEVER,  that in the event that the
counsel selected as provided above is also acting as counsel to the Company in
connection with such registration,  the remaining Holders shall be entitled to
select one additional counsel to represent all such remaining Holders.

          11.7  HOLDBACK  AGREEMENT.  If any  such  registration  shall  be in
connection with an underwritten  public  offering,  each Holder of Registrable
Securities agrees not to effect any public sale or distribution, including any
sale pursuant to Rule 144 under the Securities  Act, of any equity  securities
of the  Company,  or of any  security  convertible  into  or  exchangeable  or
exercisable for any equity  security of the Company (in each case,  other than
as part of such underwritten  public offering),  within 7 days before, or such
period not to exceed 180 days as the  underwriting  agreement  may require (or
such  lesser  period as the  managing  underwriters  may  permit)  after,  the
effective date of such registration (except as part of such registration), and
the Company hereby also so agrees and agrees to cause each other holder of any
equity  security,  or of any  security  convertible  into or  exchangeable  or
exercisable for any equity security, of the Company purchased from the Company
(at any time other than in a public offering) to so agree.

          11.8 SPECIFIC PERFORMANCE.  The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Article 11 were not performed in accordance  with their specific terms or
were otherwise breached. Accordingly, it is agreed that they shall be entitled
to an injunction or injunctions to prevent  breaches of the provisions of this
Article 11 and to enforce specifically the terms and provisions thereof in any
court of competent  jurisdiction in the United States or any state thereof, in
addition  to any  other  remedy  to which  they may be  entitled  at law or in
equity.

          ARTICLE 12. LOSS OR MUTILATION

          Upon receipt by the Company  from any Holder of evidence  reasonably
satisfactory  to it of the ownership of and the loss,  theft,  destruction  or
mutilation of this Warrant and  indemnity  reasonably  satisfactory  to it (it
being understood that the written  agreement of the Holder shall be sufficient
indemnity) and in case of mutilation upon surrender and  cancellation  hereof,
the  Company  will  execute  and  deliver in lieu hereof a new Warrant of like
tenor to such Holder (without expense to the Holder); PROVIDED, in the case of
mutilation,  no indemnity  shall be required if this  Warrant in  identifiable
form is surrendered to the Company for cancellation.

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          ARTICLE 13. OFFICE OF THE COMPANY

          As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal  executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant.

          ARTICLE 14. FINANCIAL AND BUSINESS INFORMATION

          The  Company  will  deliver to CVCA and Paribas (so long as the CVCA
and  Paribas  hold any  Warrant)  and to each  subsequent  holder of a Warrant
representing at least 25% of the Warrant Shares:

          (a) so  long  as the  Note  Purchase  Agreement  is in  effect,  all
financial statements, projections, certificates and other information required
to be  delivered  to the  "Purchasers"  pursuant  to  Section  6.1 of the Note
Purchase  Agreement,  the terms of which are incorporated  herein by reference
and deemed to be a part hereof,  which statements,  projections,  certificates
and other  information will be delivered at such times as they are required to
be delivered to the "Purchasers" under the Note Purchase Agreement;

          (b) from and after such time as the Note  Purchase  Agreement  is no
longer in effect,  all financial  statements,  projections,  certificates  and
other information required to be delivered by the Company and its Subsidiaries
to their senior lenders; and

          (c)  within  ten days  after  transmission  thereof,  copies  of all
financial statements, proxy statements,  reports and any other general written
communications which the Company generally sends to its stockholders.

          Except as otherwise  required by law or judicial  order or decree or
by any  governmental  agency or  authority,  each  Person  entitled to receive
information  regarding the Company and its Subsidiaries  under this Article 14
will maintain the confidentiality of all nonpublic  information obtained by it
hereunder  which the Company  has  reasonably  designated  as  proprietary  or
confidential  in nature;  provided  that each such  Person may  disclose  such
information  in  connection  with the sale or  transfer  or  proposed  sale or
transfer  of any  Warrant  Shares if such  Person's  transferee  (or  proposed
transferee) agrees in writing to be bound by the provisions of this paragraph.

          ARTICLE 15. LIMITATION OF LIABILITY

          No provision  hereof,  in the absence of  affirmative  action by the
Holder hereof to receive shares of Common Stock, and no enumeration  herein of
the  rights  or  privileges  of the  Holder  hereof,  shall  give  rise to any
liability  of such  Holder for any value  subsequently  assigned to the Common
Stock or as a stockholder  of the Company,  whether such liability is asserted
by the  Company or by  creditors  of the  Company.  Notwithstanding  any other
provision of this Agreement, neither the general partners nor limited partners
of a Holder,  nor any future general partners or limited partners of a Holder,
shall have any personal  liability  for  performance  of any  obligation  of a
Holder under this Agreement in excess of the respective  capital  contribution
of such general partner and limited partners to such Holder.

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          ARTICLE 16. MISCELLANEOUS

          16.1  NONWAIVER AND  EXPENSES.  No course of dealing or any delay or
failure to exercise any right hereunder on the part of the Holder hereof shall
operate as a waiver of such right or otherwise prejudice such Holder's rights,
powers or  remedies.  If the Company  fails to make,  when due,  any  payments
provided for  hereunder,  or fails to comply with any other  provision of this
Warrant,  the Company  shall pay to the Holder hereof such amounts as shall be
sufficient  to cover any costs and  expenses  including,  but not  limited to,
reasonable attorneys' fees, including those of appellate proceedings, incurred
by such Holder in collecting  any amounts due pursuant  hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.

          16.2  NOTICE  GENERALLY.  Any  notice,  demand,  request,   consent,
approval,  declaration,  delivery or other communication  hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail,  return receipt  requested,  postage prepaid,
addressed as follows:

          (a) If to any Holder,  at its last known  address  appearing  on the
     books of the Company maintained for such purpose.

          (b) If to the Company at:

              Hanger Orthopedic Group, Inc.
              7700 Old Georgetown Road
              Bethesda, Maryland 20814
              Attention:  Richard A. Stein

or at such  other  address  as may be  substituted  by notice  given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice,  demand,  request,
consent,  approval,  declaration,  delivery or other  communication  hereunder
shall  be  deemed  to have  been  duly  given or  served  on the date on which
personally delivered,  with receipt  acknowledged,  or three (3) Business Days
after the same shall have been deposited in the United States mail. Failure or
delay  in  delivering  copies  of  any  notice,  demand,  request,   approval,
declaration, delivery or other communication to the person designated above to
receive a copy  shall in no way  adversely  affect the  effectiveness  of such
notice,   demand,   request,   approval,   declaration,   delivery   or  other
communication.

          16.3  SUCCESSORS  AND ASSIGNS.  Subject to the provisions of Section
3.1 and Articles 10 and 12, this Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the  successors of the Company and
the  successors  and  assigns of the Holder  hereof.  The  provisions  of this
Warrant are intended to be for the benefit of all Holders from time to time of
this Warrant, and shall be enforceable by any such Holder.  Without limitation
to the  foregoing,  in  the  event  that a  Holder  distributes  or  otherwise
transfers  any shares of the  Registrable  Securities to any of its present or
future general or limited partners,  the Company hereby  acknowledges that the
registration  rights granted pursuant to Article 11 of this Agreement shall be
transferred  to such  partner or partners on a pro rata basis,  and that at or
after the time of any such distribution or transfer, any such partner or group
of  partners  may  designate a Person to act on its behalf in  delivering  any
notices or making any requests hereunder.

          16.4 AMENDMENT.  This Warrant and all other Warrants may be modified
or amended or the  provisions  hereof  waived with the written  consent of the
Company and holders of Warrants

505298\0057\02050\96AXKLE3.WAR

exercisable  for in excess of 50% of the aggregate  number of shares of Common
Stock  then  receivable  upon  exercise  of all  Warrants  whether or not then
exercisable,  provided  that no such  Warrant  may be modified or amended in a
manner  which is adverse to the CVCA or  Paribas or any of its  successors  or
assigns,  so long as such Person holds any Warrants or Warrant Stock,  without
the prior written consent of such Person.

          16.5 SEVERABILITY. Wherever possible, each provision of this Warrant
shall be  interpreted  in such  manner  as to be  effective  and  valid  under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under  applicable  law, such  provision  shall be  ineffective  to the
extent of such prohibition or invalidity,  without  invalidating the remainder
of such provision or the remaining provisions of this Warrant.

          16.6  HEADINGS.  The  headings  used  in  this  Warrant  are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

          16.7  GOVERNING  LAW;  CONSENT TO  JURISDICTION  AND  VENUE.  IN ALL
RESPECTS,  INCLUDING ALL MATTERS OF  CONSTRUCTION,  VALIDITY AND  PERFORMANCE,
THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE  WITH, THE LAWS OF THE STATE OF NEW YORK.
THE COMPANY  CONSENTS TO PERSONAL  JURISDICTION,  WAIVES ANY  OBJECTION  AS TO
JURISDICTION  OR VENUE,  AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION  OR VENUE,  IN THE  COUNTY OF NEW  YORK,  STATE OF NEW YORK.  THE
PARTIES  AGREE TO SUBMIT TO THE  EXCLUSIVE  JURISDICTION  OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR  PROCEEDING  ARISING  OUT OF OR RELATING TO
THIS WARRANT CERTIFICATE AND THE WARRANTS EVIDENCED HEREBY. SERVICE OF PROCESS
ON THE  COMPANY OR HOLDER IN ANY ACTION  ARISING  OUT OF OR  RELATING  TO THIS
AGREEMENT  SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY IN  ACCORDANCE  WITH THE
PROCEDURES AND REQUIREMENTS SET FORTH IN SECTION 16.2.

          16.8  MUTUAL  WAIVER OF JURY  TRIAL.  BECAUSE  DISPUTES  ARISING  IN
CONNECTION  WITH  COMPLEX   FINANCIAL   TRANSACTIONS   ARE  MOST  QUICKLY  AND
ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH
APPLICABLE  STATE AND FEDERAL LAWS TO APPLY (RATHER THAN  ARBITRATION  RULES),
THE PARTIES  DESIRE THAT THEIR  DISPUTES BE RESOLVED BY A JUDGE  APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL  SYSTEM,  THE PARTIES  HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN
ANY  ACTION,  SUIT OR  PROCEEDING  BROUGHT  TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS AGREEMENT.

505298\0057\02050\96AXKLE3.WAR

          IN WITNESS  WHEREOF,  the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon.

Dated:  November 1, 1996

                                                 HANGER ORTHOPEDIC GROUP, INC.

                                                 By /s/RICHARD A. STEIN
                                                    ----------------------
                                                    Name: Richard A. Stein
                                                    Title: Vice President

505298\0057\02050\96AXKLE3.WAR

                                   EXHIBIT A

                               SUBSCRIPTION FORM

                [To be executed only upon exercise of Warrant]

           The  undersigned   registered  owner  of  the  accompanying  Warrant
 exercises such Warrant for _______ shares of Section 2.2(__) Warrant  Stock(1)
 of Hanger Orthopedic Group, Inc., all on the terms and conditions specified in
 such Warrant and

 [ ]      herewith  tenders payment of either (x) the Aggregate  Exercise Price
          in cash or (y) pursuant to the  surrender by Holder of Notes having a
          Fair Value equal to the  Aggregate  Exercise  Price for the number of
          shares  of  Common  Stock  specified  above to the  order  of  Hanger
          Orthopedic Group, Inc. in the amount of $_________ in accordance with
          the terms hereof; or

 [ ]       elects not to pay the Aggregate  Exercise  Price with respect to the
           shares of Common Stock specified above and, in lieu thereof,  elects
           to  surrender  this  Warrant (or the  relevant  portion  thereof) in
           exchange  for such  number  of  shares  of  Common  Stock  having an
           aggregate  value (based on the Market Price on the date hereof minus
           the Exercise  Price) equal to the Aggregate  Exercise  Price for the
           number of shares  requested for exercise  above.  -------- 1 Specify
           the number of shares of Section  2.2(a) Warrant Stock and/or Section
           2.2(b) Warrant Stock being exercised hereby.

 -------------------------------
 (1) Specify  the  number of shares of Section  2.2(a)  Warrent  Stock  and/or
     Section 2.2(b) Warrent Stock being exercised hereby.

 505298\0057\02050\96AXKLE3.WAR

           The undersigned  requests that certificates for [all] [_________ of]
 the shares of Common Stock to be received  pursuant hereto (and any securities
 or other  property  issuable upon such  exercise) be issued in the name of and
 delivered to  _____________________________________________,  whose address is
 ________________________________________   [add  any   additional   names  and
 addresses  together  with the  number  of  shares  of  Common  Stock  (and any
 securities or other property issuable upon such exercise) to be issued to such
 person or entity)],  and, if such shares of Common Stock shall not include all
 of the shares of Common Stock issuable as provided in this Warrant, that a new
 Warrant of like tenor and date for the  balance of the shares of Common  Stock
 issuable hereunder be delivered to the undersigned.

 ---------------------------------
  (Name of Registered Owner)

 ---------------------------------
  (Signature of Registered Owner)

 ---------------------------------
  (Street Address)

 ---------------------------------
  (City) (State) (Zip Code)

 505298\0057\02050\96AXKLE3.WAR

                                   EXHIBIT B

                                ASSIGNMENT FORM

          FOR VALUE RECEIVED the undersigned  registered owner of this Warrant
hereby sells,  assigns and transfers  unto the Assignee named below all of the
rights of the  undersigned  under this Warrant,  with respect to the number of
shares of Common Stock, adjusted as of the date of this assignment as provided
in the Warrant, set forth below:

                                              NO. OF SHARES OF
NAME AND ADDRESS OF ASSIGNEE                    COMMON STOCK

and does  hereby  irrevocably  constitute  and  appoint  _____________________
attorney-in-fact  to register such transfer on the books of Hanger  Orthopedic
Group, Inc. maintained for the purpose, with full power of substitution in the
premises.

Dated: _______________________________

Print
Name:  _______________________________

Signature:  __________________________

Witness:  ____________________________

NOTICE:   The signature on this  subscription must correspond with the name as
          written  upon the face of the within  Warrant  in every  particular,
          without alteration or enlargement or any change whatsoever.

505298\0057\02050\96AXKLE3.WAR 

Basic Info X:

Name: WARRANT
Type: Warrant
Date: Nov. 12, 1996
Company: HANGER, INC.
State: Delaware

Other info:

Date:

  • Saturday
  • Sunday
  • November 1 , 1997
  • May 1 , 1998
  • November 1 , 1996

Organization:

  • PARIBAS PRINCIPAL INC.
  • Issuance of Additional Shares of Common
  • 5.13 Other Action Affecting Common
  • 6.2 Notice of Certain Corporate
  • Exercise Price multiplied
  • State of Maryland
  • Securities and Exchange Commission
  • Chase Venture Capital Associates
  • National Association of Securities Dealers Automated Quotations National Market System
  • New York Stock Exchange
  • National Association of Securities Dealers , Inc.
  • National Association of Securities Dealers Automatic Quotation System
  • Paribas Principal , Inc.
  • Market Price of Common Stock
  • Expiration Time multiplied
  • Additional Share of Common Stock
  • Additional Shares of Common Stock
  • Board of Directors of the Company
  • Market Price of the Common Stock
  • Hanger , Inc.
  • Warrants and Warrant Stock
  • Registrable Securities are Warrant Stock
  • Holder of Registrable Securities
  • Holders of Registrable Securities
  • Holder of Notes
  • Aggregate Exercise Price
  • Hanger Orthopedic Group , Inc.

Location:

  • Pro Rata
  • Delaware
  • State of New York
  • L.P.
  • California
  • United States of America
  • P.M.
  • Georgia
  • Bethesda
  • Maryland

Money:

  • $ .01
  • $ 6.375
  • $ 4.00865
  • one cent
  • $ 2.44

Person:

  • Wade L. Harghausen
  • sRICHARD A. STEIN

Percent:

  • 8.00 %
  • one percent 1 %
  • 100 %
  • 25 %
  • 50 %