LEAP GROUP INC, S-1/A, 1996-09-04

LEAP GROUP INC
S-1/A, 1996-09-04
ADVERTISING AGENCIES

Previous: LEAP GROUP INC, 8-A12G, 1996-09-04

Next: PARK NEWSPAPERS INC, S-4/A, 1996-09-04

<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 1996

REGISTRATION NO. 333-05051

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

AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

THE LEAP GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 7311 36-4079500
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)

22 WEST HUBBARD STREET, CHICAGO, ILLINOIS 60610, (312) 494-0300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

R. STEVEN LUTTERBACH
CHIEF EXECUTIVE OFFICER
THE LEAP GROUP, INC.
22 WEST HUBBARD STREET, CHICAGO, ILLINOIS 60610, (312) 494-0300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

MATTHEW S. BROWN, ESQ. PHILIP E. RUBEN, ESQ. LINDA DERENZO, ESQ.
KATTEN MUCHIN & ZAVIS KWIATT, SILVERMAN & RUBEN, LTD. TESTA, HURWITZ &
525 WEST MONROE STREET 500 CENTRAL AVENUE THIBEAULT, LLP
CHICAGO, ILLINOIS NORTHFIELD, ILLINOIS 60093 125 HIGH STREET BOSTON,
60661 (847) 441-7676 MASSACHUSETTS 02110
(312) 902-5200 (617) 248-7000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

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

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value................. 4,600,000 $11.00 $50,600,000 $21,612.08(3)
- -----------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------

(1) Includes 600,000 shares which the Underwriters have the option to purchase
from certain of the Company's stockholders to cover over-allotments, if
any.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933.

(3) Includes $19,431.04 paid upon the initial filing of this Registration
Statement and $2,181.04 paid upon the filing of Amendment No. 3.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

THE LEAP GROUP, INC.

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

CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K

<TABLE>
<CAPTION>
ITEM NUMBER AND HEADING IN FORM S-1 LOCATION IN PROSPECTUS
----------------------------------- ----------------------
<S> <C>
1. Forepart of the Registration Forepart; Outside Front Cover Page;
Statement and Outside Front Inside Cover Page; Cross Reference Sheet
Cover Page of Prospectus........
2. Inside Front and Outside Back Inside Front Cover Page; Additional
Cover Pages of Prospectus....... Information; Outside Back Cover Page
3. Summary Information, Risk Outside Front Cover Page; Prospectus
Factors and Ratio of Earnings to Summary; Risk Factors
Fixed Charges...................
4. Use of Proceeds................. Prospectus Summary; Use of Proceeds
5. Determination of Offering Outside Front Cover Page; Underwriting
Price...........................
6. Dilution........................ Risk Factors; Dilution
7. Selling Security Holders........ Principal and Selling Stockholders
8. Plan of Distribution............ Outside Front Cover Page; Underwriting
9. Description of Securities to be Description of Capital Stock
Registered......................
10. Interests of Named Experts and Not Applicable
Counsel.........................
11. Information with Respect to the Outside Front Cover Page; Prospectus
Registrant...................... Summary; The Company; Risk Factors;
Dividend Policy; Dilution; Capitalization;
Selected Consolidated Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Certain
Transactions; Principal and Selling
Stockholders; Description of Capital
Stock; Shares Eligible for Future Sale;
Consolidated Financial Statements
12. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities...... Not Applicable
</TABLE>
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION

Dated September 4, 1996

LOGO
4,000,000 SHARES

THE LEAP GROUP, INC.

COMMON STOCK

-----------

All of the 4,000,000 shares being offered hereby are being sold by The Leap
Group, Inc. (the "Company"). Up to 600,000 additional shares may be sold by
certain of the Company's stockholders (the "Selling Stockholders") in
the event that the Underwriters exercise their over-allotment option.
The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholders. See "Principal and Selling
Stockholders."

-----------

Prior to this offering, there has been no public market for the Common
Stock. It is currently anticipated that the initial public offering
price will be between $9.00 and $11.00 per share. See
"Underwriting" for information relating to the factors to be
considered in determining the initial public offering
price.

-----------

The Common Stock has been approved for quotation on the Nasdaq National Market
under the symbol "LEAP."

-----------

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE $ $ $
TOTAL(3) $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."

(2) Before deduction of expenses payable by the Company, estimated at $800,000.

(3) The Selling Stockholders have granted the several Underwriters a 30-day
option to purchase up to an additional 600,000 shares of Common Stock
solely to cover over-allotments, if any. If such option is exercised in
full, the total price to public, underwriting discounts and commissions and
proceeds to Selling Stockholders will be $ , $ and $ , respectively.
The proceeds to the Company will not change from the amount set forth. See
"Underwriting."

-----------

The Common Stock is being offered by the Underwriters named herein when, as
and if received and accepted by them, subject to their right to reject orders
in whole or in part and subject to certain other conditions. It is expected
that delivery of the shares will be made in New York on or about , 1996.

-----------

DEAN WITTER REYNOLDS INC. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

, 1996
<PAGE>

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information, including "Risk Factors," and
consolidated financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes that the Underwriters' over-allotment option described
in "Underwriting" is not exercised. Financial data pertaining to periods prior
to March 11, 1996 reflect the consolidated financial data of The Leap
Partnership, Inc. ("Leap Partnership"), Lilypad Services, Inc. ("Lilypad") and
Tadpole Productions, Inc. ("Tadpole"), which became wholly-owned subsidiaries
of The Leap Group, Inc. on such date. Unless the context otherwise requires,
"Company" or "Leap" shall mean The Leap Group, Inc. and its subsidiaries.
References herein to "fiscal 1996," "fiscal 1995" and "fiscal 1994" refer,
respectively, to the twelve months ended January 31, 1996, the twelve months
ended January 31, 1995 and the period from inception (September 20, 1993) to
January 31, 1994.

THE COMPANY

Leap is a strategic and creative communications company that develops and
implements integrated brand marketing campaigns using traditional and new media
primarily for market leading clients. Traditional marketing services provided
by Leap include television, print, radio and outdoor advertising, promotions,
direct mail and package and logo design; and its new media services include
digital interactive applications such as World Wide Web sites, CD-ROMs and
interactive presentations. The Company's marketing and communications services
combine comprehensive strategic brand marketing skills, award-winning creative
talent, and the production capabilities of world class full service advertising
agencies with the technological expertise to exploit new interactive and other
digital media. Leap's mission is to build brand equity for its clients. Leap
focuses on establishing long-term marketing partnerships with marquee clients
of national and international scope that position the Company as the steward
for major brands with correspondingly significant advertising budgets.

The Company believes that certain core strengths have been, and will continue
to be, integral to Leap's strategy. These strengths include superior creative
talent, a focus on and an expertise in strategic brand positioning, a "flat"
organizational structure built around cross-functional work teams that maximize
accessibility and responsiveness to clients, and expertise in the application
of new marketing communications technology integrated with a wide range of
traditional services. Leap believes that these strengths enable the Company to
create integrated marketing communications campaigns that fulfill its clients'
marketing goals on a timely and cost-effective basis.

The Company targets Fortune 500 clients who are national and global industry
leaders. Since its founding in late 1993, Leap has successfully competed for
and managed large national accounts for prestigious clients such as Nike, Inc.
("Nike") and Miller Brewing Company ("Miller"). The Company's past and current
projects include (i) serving as agency of record for Niketown and Nike Factory
Stores, Tommy Armour Golf Company ("Tommy Armour"), U.S. Robotics, Inc., ("U.S.
Robotics"), and Ameritech Corporation, (ii) World Wide Web site development for
Nike, Tommy Armour and the Chicago Tribune Company, (iii) strategic brand
positioning for Niketown, R.J. Reynolds Tobacco Co. ("R.J. Reynolds"), Pizza
Hut, Inc., and YES! Entertainment and (iv) the January 1995 Super Bowl campaign
for Miller. In December 1995, Leap voluntarily resigned the Miller account in
order to pursue other assignments. See "--Summary Consolidated Financial and
Other Data."

3
<PAGE>

Leap's present and prospective clients currently advertise primarily on
national mass circulation media such as network television, network radio and
nationally circulating newspapers and magazines. According to McCann-Erickson
Worldwide, a leading advertising agency that regularly publishes such
information, total U.S. spending on such media amounted to approximately $40
billion in 1995. Leap believes that large advertisers increasingly are looking
for ways to improve the effectiveness of their advertising without increasing
advertising expenditures, and to better measure results from advertising. As a
result, advertisers are beginning to shift away from relying primarily on
traditional one-way "broad cast" media, such as broadcast television, to media
that enable advertisers to "narrow cast" or customize marketing messages to a
well-defined audience. Recent developments in digital technology have led to
the emergence of new media communications vehicles such as the World Wide Web,
the Internet, CD-ROMs and interactive presentations. Now, such new media not
only permit real time one-to-one communications links with consumers, but allow
consumers, as a consequence of the interactive process, to shape the
advertising messages that they receive and become more engaged by the messages.
A Forrester Research report dated May 1996 estimated that the market for online
advertising spending will reach $80 million in 1996 and $4.8 billion by the
year 2000.

The Company was incorporated in Delaware in March 1996 as a holding company
for Leap Partnership, Lilypad and Tadpole. Leap Partnership was incorporated in
Illinois in September 1993. Lilypad and Tadpole were incorporated in Illinois
in September 1995.

The Company's principal executive offices are located at 22 West Hubbard
Street, Chicago, Illinois 60610, and its telephone number is (312) 494-0300.
The Company's World Wide Web site address is: http://www.leapnet.com.
Information contained in the Company's Web site shall not be deemed to be a
part of this Prospectus.

THE OFFERING

Common Stock Offered by the Company..... 4,000,000 shares

Common Stock to be Outstanding after
the Offering............................ 13,600,000 shares(1)
Use of Proceeds......................... For working capital and other general
corporate purposes and for repayment
of indebtedness. See "Use of
Proceeds."
Proposed Nasdaq National Market
symbol.................................. LEAP
- --------

(1) Excludes (i) 2,339,000 shares of Common Stock issuable upon exercise of
options outstanding as of August 31, 1996 (options to purchase 1,601,333 of
such shares are currently exercisable), (ii) 60,000 shares of Common Stock
issuable upon exercise of options to be granted on the effective date of
the Registration Statement of which this Prospectus is a part, all of which
will become exercisable on the date of grant, and (iii) 2,605,000 shares of
Common Stock reserved for issuance upon exercise of options that may be
granted in the future under the Company's stock option and stock purchase
plans. See "Capitalization," "Management--Stock Option Plans" and Note 5 of
Notes to the Company's Consolidated Financial Statements.

4
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

The summary consolidated financial and other data should be read in
conjunction with the audited financial statements, including the notes thereto,
appearing elsewhere in this Prospectus and with "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Results for interim
periods are not necessarily indicative of results to be expected during the
remainder of the fiscal year or for any future period. The following data are
presented in thousands, except per share amounts and the number of Creative
Partners.

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED JULY
JANUARY 31, 31,
----------------------- -------------
1994(1) 1995 1996 1995 1996
------- ------ ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................. $ 373 $4,679 $8,210 $5,577 $7,290
Operating income/(loss)................... (123) (1,390) 1,356 1,240 355
Net income/(loss)......................... (76) (1,065) 700 675 257
Net income/(loss) per share(2)............ $(0.01) $(0.11) $ 0.07 $ 0.07 $ 0.03
Shares used in per share computation(2)... 10,109 10,109 10,109 10,109 10,109
</TABLE>

<TABLE>
<CAPTION>
AS OF JULY 31, 1996
-----------------------
ACTUAL AS ADJUSTED(3)
------- --------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 82 $33,643
Working capital........................................ (1,425) 34,426
Total assets........................................... 6,101 39,662
Long-term debt......................................... 648 99
Total stockholders' equity/(deficit)................... (182) 36,218
</TABLE>

(3) As adjusted to give effect to the offering (at an assumed initial public
offering price of $10.00 per share, after deduction of underwriting
discounts, commissions and estimated offering expenses payable by the
Company) and the application by the Company of the net proceeds therefrom.
See "Use of Proceeds" and "Capitalization."
(4) In December 1995, the Company voluntarily resigned the Miller account in
order to pursue other assignments. The information provided presents
revenues as if Miller had been excluded throughout each of the periods
presented. See "Business--Leap's Clients."
(5) Retainer and fee revenues represent revenues derived from fixed fee
arrangements with clients, not specific to particular projects, which
typically contemplate monthly payments over specified service periods. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview."
(6) All of Leap's employees share the same title--"Creative Partner." See
"Business--Leap's Core Strengths--Talent and Creative Distinction."

5
<PAGE>

RISK FACTORS

Prospective investors should consider carefully the following factors, in
addition to the other information contained in this Prospectus, in evaluating
an investment in the shares of Common Stock offered hereby. This Prospectus
contains forward-looking statements which involve risks and uncertainties. The
Company's actual results could differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including
those set forth in the following risk factors and elsewhere in this
Prospectus.

LIMITED OPERATING HISTORY; HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT

The Company has a limited operating history. The Company began operations in
November 1993 and experienced operating losses during fiscal 1994 and fiscal
1995. Although the Company had operating income of approximately $1,356,000 in
fiscal 1996 and approximately $355,000 for the six months ended July 31, 1996,
the Company had an accumulated deficit of approximately $183,000 as of July
31, 1996. There can be no assurance that the Company will sustain
profitability in the future. Future operating results will depend on many
factors, including demand for the Company's services, the Company's ability to
maintain its client relationships and obtain assignments from new clients, the
Company's success in attracting and retaining qualified personnel, the level
of competition and the Company's ability to respond to competitive
developments. There can be no assurance that the Company will be successful in
addressing the risks presented by such factors. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business."

DEPENDENCE ON KEY CLIENTS AND PROJECTS

An important part of the Company's strategy is to develop in-depth, long-
term relationships with a select group of clients in a variety of industries.
Consistent with such strategy, a large portion of the Company's revenues has
been and is expected to continue to be concentrated among a relatively small
number of major clients. For the fiscal year ended January 31, 1996, Miller
accounted for approximately 66% of the Company's revenues and the Company's
three largest clients (including Miller) accounted for approximately 85% of
such revenues. In December 1995, the Company voluntarily resigned the Miller
account in order to pursue other assignments. For the six months ended July
31, 1996, Nike, Tommy Armour, U.S. Robotics and Cincinnati Bell accounted for
approximately 29.5%, 20.8%, 20.5% and 14.3%, respectively, of the Company's
revenues. Since Leap is often retained by its clients on a project-by-project
basis, there can be no assurance that any significant client in any prior
period will be a source of significant revenues in any future period.

While the Company typically enters into written agreements with its clients,
it at times performs services prior to the execution of such agreements, and
written contracts are typically terminable by either party on short notice,
often 90 days and in certain instances less. The Company considers its
relationships with existing clients to be good. However, the loss of any one
or more of the Company's significant clients, the deterioration of the
Company's relationship with any of these clients or a decline in the clients'
businesses could have a material adverse effect on the Company's business,
financial condition or results of operations. Due to the nature of the
advertising business, any of the Company's clients could at any time in the
future, and for any reason, reduce its marketing budget, engage another entity
or take in-house all or part of the business performed by the Company. There
can be no assurance that the Company will perform any future work for any of
its existing clients. See "Business--Leap's Clients" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

POTENTIAL ADVERSE EFFECT OF FLUCTUATIONS IN OPERATING RESULTS; SEASONALITY OF
BUSINESS

The Company's operating results are subject to variations in any given year,
and from quarter to quarter, as the Company's business reflects, to a large
degree, the advertising expenditures of its clients. Factors that may cause
operating results to fluctuate include the timing of the completion or
cancellation of a major project, an increase or reduction in the scope of
services to be performed for a client, the addition or loss of a major client,
the relative mix of higher and lower margin projects, changes in pricing
strategies, capital expenditures and other costs relating to the expansion of
operations, the hiring or loss of personnel, the opening or closing of
offices, and other factors that may be outside the Company's control. As a
result of the foregoing and other factors, the Company anticipates that it may
experience material fluctuations in operating results on a quarterly basis,
which may contribute to volatility in the price of the Common Stock. Depending

6
<PAGE>

upon its client mix at any time, the Company could experience seasonality in
its business. Such seasonality could arise from the timing of product
introductions and business cycles of the Company's clients and could be
material to the Company's results of operations. Such cycles vary from client
to client, and the overall impact on the Company's results of operations
cannot be predicted. In addition, the advertising industry as a whole exhibits
seasonality. Typically, advertising expenditures are highest in the fourth
calendar quarter and lowest in the first calendar quarter, particularly in
January. Although the Company has too limited an operating history to exhibit
any discernible seasonal trend, as the Company matures, its business and
results of operations could be affected by the overall seasonality of the
industry. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a significant extent upon the efforts and
abilities of its senior management, including R. Steven Lutterbach, Frederick
Smith, Joseph A. Sciarrotta, George Gier and Thomas R. Sharbaugh, and other
key creative, technical, financial and strategic marketing personnel. Although
the Company has entered into three-year employment agreements with Messrs.
Lutterbach, Smith, Gier, Sciarrotta and Sharbaugh, there can be no assurance
that any of such persons will not voluntarily terminate his employment with
the Company. See "Management--Employment Agreements." Competition for highly
qualified personnel is intense, and the loss of any executive officer, senior
manager or other key employee could have a material adverse effect upon the
Company's business, operating results and financial condition. Although the
Company maintains key man life insurance policies in the amount of $1,250,000
on each of Messrs. Lutterbach, Smith, Sciarrotta and Gier, there can be no
assurance that such policies would adequately compensate for the loss of such
individuals.

If one or more of the Company's key employees resigns from the Company to
join a competitor or to form a competing company, the loss of such personnel
and any resulting loss of existing or potential clients to any such competitor
could have a material adverse effect on the Company's business, financial
condition and operating results. Each member of Leap's management and its
other significant employees have executed confidentiality and non-solicitation
agreements that restrict such persons from misappropriating confidential
information during such person's term of employment and thereafter and from
soliciting the Company's clients, prospects or employees for two years
following termination of employment. Notwithstanding such agreements, in the
event of the loss of any such personnel there can be no assurance that the
Company would be able to prevent the unauthorized disclosure or use of its
technical knowledge, practices, procedures or client lists.

The Company also believes that its future success will depend in large part
upon its ability to attract and retain additional highly skilled creative,
technical and marketing personnel. Competition for such personnel, especially
creative and technical talent, is intense, and there can be no assurance that
the Company will be successful in attracting and retaining such personnel.
Failure to attract and retain key personnel could have a material adverse
effect upon the Company's business, operating results and financial condition.
See "Business--Leap's Core Strengths--Talent and Creative Distinction."

POTENTIAL ADVERSE EFFECT OF INABILITY TO MANAGE GROWTH; RISKS ASSOCIATED WITH
ACQUISITIONS

The Company has experienced since its inception and may continue to
experience significant growth of its business which places demands on the
Company's management, employees, operations and physical resources. The
Company's senior management has limited experience in managing a public
company. The Company's strategy contemplates further growth of its business.
To manage such growth, the Company will be required to continue to improve its
operating systems, attract and retain superior advertising and new media
talent, and expand the Company's facilities. If the Company is unable to
effectively manage growth, the Company's business, operating results or
financial condition could be adversely affected. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business."

In addition, a principal component of Leap's growth strategy involves the
strategic hiring of talent or the acquisition of businesses in fields related
to or complementary to those of Leap. The success of this strategy depends not
only upon the Company's ability to identify and hire people or acquire
businesses on a cost-

7
<PAGE>

effective basis, but also upon its ability to integrate acquisitions
effectively, to retain and motivate key personnel, and to retain the clients
of acquired firms. There can be no assurance that the Company will be able to
identify, acquire or integrate new operations. In general, there can be no
assurance that the Company will be able to manage acquisitions successfully,
and any inability to do so would have a material adverse effect on the
Company's business, financial condition and operating results. There also can
be no assurance that the Company will be able to sustain the rates of growth
in revenues or personnel that it has experienced in the past. See "Business--
Leap's Strategy--Pursue Acquisitions and Alliances."

UNPROVEN MARKET ACCEPTANCE OF THE COMPANY'S APPROACH

Using an unusual organizational structure built around cross-functional work
teams, the Company provides integrated brand marketing campaigns for its
clients using traditional and new media. The Company believes that both its
structure and its expertise in new media distinguish it from the traditional
agency approach. There can be no assurance that potential clients of the
Company, many of whom have long-standing relationships with traditional
advertising agencies, will be willing to embrace the Company's approach.
Moreover, to compete successfully against specialized service providers in new
media and other areas, the Company believes that its products and services in
each discipline will need to be competitive with the services offered by the
firms that specialize in each discipline. There can be no assurance that the
Company will be successful in providing competitive solutions to its clients.
Failure to do so could result in the loss of existing clients or the inability
to attract and retain new clients, either of which developments could have a
material adverse effect on the Company's business, financial condition and
operating results.

UNCERTAINTIES RELATING TO DEVELOPING MARKET FOR NEW MEDIA; NEW ENTRANTS;
UNPROVEN ACCEPTANCE OF THE COMPANY'S NEW MEDIA SOLUTIONS AND STRATEGY TO
DEVELOP PROPRIETARY MATERIAL

The Company's future growth depends in part upon its ability to increase the
amount of revenue it derives from providing marketing and advertising
solutions to its customers through new media, which the Company defines as
media that deliver content to end users in digital form, including the World
Wide Web, the Internet, proprietary online services, CD-ROMs and interactive
presentations. The new media advertising market has only recently begun to
develop, is rapidly evolving and is characterized by an increasing number of
market entrants who have introduced or developed products and services for
communication and commerce through new media. Demand and market acceptance for
recently introduced products and services are subject to a high level of
uncertainty. There can be no assurance that commerce and communication through
new media will continue to grow or that targeted demographic groups will be
reachable through new media. The use of new media in marketing and
advertising, particularly by those individuals and enterprises that have
historically relied upon traditional means of marketing and advertising,
generally requires the acceptance of a new way of conducting business and
exchanging information. In particular, enterprises that have already invested
substantial resources in other means of conducting commerce and exchanging
information may be particularly reluctant or slow to adopt a new strategy that
may make their existing resources and infrastructure less useful. See
"Business--Industry Background."

The Company has a strategy to develop, own and maintain proprietary program
material that can be licensed by the Company with the goal of providing, over
time, a recurring revenue stream. The Company has not generated any revenues
from this strategy and no assurance can be given that the Company will be able
to negotiate such arrangements with clients or that any such arrangements will
generate revenues sufficient to offset the costs incurred by the Company in
developing such proprietary materials. See "Business--Leap's Strategy--Develop
Proprietary Program Material."

HIGHLY COMPETITIVE ENVIRONMENT; LOW BARRIERS TO ENTRY

The markets for the Company's services are highly competitive and the
Company faces competition from a number of sources. These sources include
national and regional advertising agencies as well as specialized and
integrated marketing communications firms. In addition, with respect to new
media, many advertising agencies have started to either internally develop or
acquire new media capabilities. New boutiques that provide either integrated
or specialized services (e.g., corporate identity and packaging, advertising
services or World Wide Web site design) and are technologically proficient,
especially in the new media arena, have

8
<PAGE>

emerged and are competing with the Company. Many of the Company's competitors
or potential competitors have longer operating histories, longer client
relationships and significantly greater financial, management, technological,
development, sales, marketing and other resources than the Company. In
addition, the Company's ability to maintain its existing clients and obtain
assignments from new clients depends to a significant degree on the quality of
its services and its reputation among its clients and potential clients, as
compared with the quality of services provided by and the reputations of the
Company's competitors. To the extent the Company loses clients to the
Company's competitors because of dissatisfaction with the Company's services
or the Company's reputation is adversely impacted for any other reason, the
Company's business, financial condition and operating results could be
materially adversely affected.

There are relatively low barriers to entry into the Company's business, and
the Company expects that it will face additional competition from new entrants
into the market in the future. The Company has no significant proprietary
technology that would preclude or inhibit competitors from entering the
Company's markets. There can be no assurance that existing or future
competitors will not develop or offer services and products that provide
significant performance, price, creative or other advantages over those
offered by the Company, which could have a material adverse effect on the
Company's business, financial condition and operating results. See "Business--
Competition."

UNCERTAIN ADOPTION OF THE INTERNET AS A MEDIUM OF COMMERCE AND COMMUNICATIONS;
DEPENDENCE ON THE INTERNET; UNCERTAINTIES REGARDING THE INTERNET

The Company's ability to derive revenues from new media solutions will
depend in part upon a robust industry and the infrastructure for providing
Internet access and carrying Internet traffic. The Internet may not prove to
be a viable commercial marketplace because of inadequate development of the
necessary infrastructure, such as a reliable network backbone or timely
development of complementary products, such as high-speed modems. Because
global commerce and online exchange of information on the Internet and other
similar open wide area networks are new and evolving, it is difficult to
predict with any assurance whether the Internet will prove to be and remain a
viable commercial marketplace. Moreover, critical issues concerning the
commercial use of the Internet (including security, reliability, cost, ease of
use and access, and quality of service) remain unresolved and may impact the
growth of Internet use. In addition, the applicability to the Internet of
existing laws governing issues such as property ownership, libel and personal
privacy is uncertain. The Federal Trade Commission and Congress have expressed
interest in regulating advertising on the Internet, and although no material
regulation has yet occurred, it may in the future, and could have an adverse
impact on the Company's business. There can be no assurance that the Internet
will become a viable commercial marketplace or that targeted demographic
groups will be reachable through the Internet. If the necessary infrastructure
or complementary products are not developed, or if the Internet does not
become a viable commercial marketplace, the Company's business, operating
results and financial condition could be materially adversely affected. See
"Business--Industry Background."

SUSCEPTIBILITY TO GENERAL ECONOMIC CONDITIONS

The Company's revenues and results of operations will be subject to
fluctuations based upon the general economic conditions in the United States.
If there were to be a general economic downturn or a recession in the United
States, then the Company expects that business enterprises, including its
clients and potential clients, would substantially and immediately reduce
their advertising and marketing budgets. In the event of such an economic
downturn, there can be no assurance that the Company's business, operating
results and financial condition would not be materially and adversely
affected.

POTENTIAL ADVERSE EFFECT OF CONFLICTS OF INTEREST

Conflicts of interest are inherent in certain segments of the marketing
communications industry, particularly in advertising. The Company has in the
past and will in the future be unable to pursue potential advertising and
other opportunities because such opportunities would require the Company to
provide services to direct competitors of existing Company clients. In
addition, the Company risks alienating or straining relationships with
existing clients each time the Company agrees to provide services to even
indirect competitors of existing Company clients.

9
<PAGE>

UNCERTAINTIES REGARDING INTELLECTUAL PROPERTY RIGHTS

A majority of the Company's current agreements with its clients contain
provisions that grant to the client intellectual property rights to the
Company's work product created during the course of the Company's assignment
(except to the extent that such work product is not accepted by the client),
and agreements with future clients may contain similar provisions. Other
existing agreements are, and future agreements may be, silent as to the
ownership of such rights. To the extent that the ownership of such
intellectual property rights is expressly granted to the client or is
ambiguous, the Company's ability to reuse or resell such rights will or may be
limited.

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

The marketing communications industry is subject to extensive government
regulation, both domestic and foreign, with respect to the truth and fairness
of advertising. The Company must comply with Federal Trade Commission
regulations with respect to the marketing of products and services and similar
state regulations. In addition, there has been an increasing tendency in the
United States on the part of businesses to resort to the judicial system to
challenge comparative advertising of their competitors on the grounds that the
advertising is false and deceptive. Although the Company maintains
communication liability insurance coverage, there can be no assurance that
such coverage would adequately protect the Company in the event any such
claims are made against the Company or its clients by other companies or
governmental agencies. Some of the contracts that the Company enters into with
its clients require that the Company indemnify clients with respect to any
claims or actions brought by third parties which result from the use by the
clients of materials furnished by the Company.

POTENTIAL ADVERSE EFFECT OF LITIGATION

The Company is a defendant in pending litigation involving claims by the
Spin Doctors (a recording and performing group) arising from a television
commercial created by the Company. The plaintiff is seeking substantial
damages and, if successful, the damages could be material and in excess of any
available insurance coverage. See "Business--Legal Proceedings" and Note 6 of
Notes to the Company's Consolidated Financial Statements.

CONTROL BY CERTAIN STOCKHOLDERS; POTENTIAL ADVERSE EFFECT OF ANTI-TAKEOVER
PROVISIONS

Upon completion of the offering, and assuming the exercise of currently
exercisable options, the Company's officers and directors and their respective
affiliates will beneficially own approximately 72.4 percent (approximately
68.4 percent if the over-allotment option is exercised in full) of the
Company's outstanding Common Stock. Although no voting agreements or similar
arrangements among such stockholders will exist upon completion of the
offering, if such stockholders were to act in concert in the future, they
would effectively be able to elect all of the directors of the Company,
approve or disapprove certain matters requiring stockholder approval and
otherwise control the management and affairs of the Company, including the
sale of all or substantially all of the Company's assets. Such concentration
of control of the Company may also have the effect of delaying, deferring or
preventing a third-party from acquiring a majority of the outstanding voting
stock of the Company, may discourage bids for the Company's Common Stock at a
premium over the market price and may adversely affect the market price of and
other rights of the holders of Common Stock. The Company's Amended and
Restated Certificate of Incorporation (the "Restated Certificate") and Amended
and Restated Bylaws (the "Bylaws") contain provisions that (i) limit a
stockholder's ability to nominate directors or act by written consent, (ii)
provide for a staggered board of directors and (iii) allow the Company's Board
of Directors, without obtaining stockholder approval, to issue shares of
preferred stock having rights that could adversely affect the voting power and
economic rights of holders of the Common Stock. Also, Section 203 of the
Delaware General Corporation Law restricts certain business combinations with
any "interested stockholder" as defined by such statute. Any of the foregoing
factors may delay, defer or prevent a change in control of the Company. See
"Management," "Principal and Selling Stockholders" and "Description of Capital
Stock."

10
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

The sale of a substantial number of shares of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing
market prices for the Common Stock. In addition, any such sale or perception
could make it more difficult for the Company to sell equity securities or
equity related securities in the future at a time and price that the Company
deems appropriate. Upon consummation of the offering, the Company will have a
total of 13,600,000 shares of Common Stock outstanding, of which the 4,000,000
shares offered hereby will be eligible for immediate sale in the public market
without restriction, unless they are held by "affiliates" of the Company
within the meaning of Rule 144 under the Securities Act of 1933, as amended
(the "Securities Act"). The remaining 9,600,000 shares will be "restricted"
securities within the meaning of Rule 144 under the Securities Act. The
Company, its officers and directors and its stockholders (who in the aggregate
will hold all of the restricted securities upon completion of the offering)
have agreed with the Underwriters that they will not directly or indirectly
offer, sell, contract to sell, grant any option to purchase or otherwise
dispose of, without the prior written consent of Dean Witter Reynolds Inc.
("Dean Witter"), any shares of Common Stock or any other equity security of
the Company, or any securities convertible into or exercisable or exchangeable
for, or warrants, options or rights to purchase or acquire, Common Stock or
any other equity security of the Company, or enter into any agreements to do
any of the foregoing, for a period of 180 days from the effective date of the
Registration Statement of which this Prospectus forms a part. Upon expiration
of such 180 day period (or earlier upon the consent of Dean Witter), all of
the currently outstanding restricted shares will be eligible for sale under
Rule 144, subject to volume and other limitations of the Rule. Dean Witter
may, in its sole discretion, and at any time without notice, release all or
any portion of the shares subject to the lock-up agreements.

In addition, the Company intends to file a registration statement under the
Securities Act no earlier than 90 days after the offering, covering an
aggregate of 5,004,000 shares of Common Stock reserved for issuance under the
Company's stock option and stock purchase plans. As of August 31, 1996, there
are stock options for 2,339,000 shares outstanding, of which 1,601,333 are
currently exercisable. Options to purchase 60,000 shares of Common Stock will
be granted on the effective date of the Registration Statement of which this
Prospectus is a part and will become exercisable on the date of grant. The
holders of 1,478,333 of the options exercisable upon consummation of the
offering will be subject to the lock-up agreements described above. No
prediction can be made as to the effect, if any, that future sales of shares,
or the availability of shares for future sales, will have on the market price
of the Common Stock from time to time or the Company's ability to raise
capital through an offering of its equity securities. See "Management--Stock
Option Plans," "Description of Capital Stock," "Shares Eligible for Future
Sale" and "Underwriting."

NO PRIOR MARKET FOR THE SHARES; POSSIBLE VOLATILITY OF SHARE PRICE

Prior to the offering, there has been no public market for the Common Stock.
There can be no assurance that an active trading market will develop upon
completion of the offering or, if it does develop, that such market will be
sustained. The initial public offering price of the Common Stock will be
determined by negotiation among the Company and the representatives of the
Underwriters and may not be indicative of the market price of the Common Stock
after the offering. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price.

The market price for the Common Stock may be significantly affected by
factors such as the announcement of new products or services by the Company or
its competitors, technological innovation by the Company or its competitors,
quarterly variations in the Company's operating results or the operating
results of the Company's competitors, changes in earnings estimates by
analysts or reported results that may vary from such estimates. In addition,
the stock market has experienced significant price fluctuations that have
particularly affected the market prices of equity securities of many high
technology and emerging growth companies and that often have been unrelated to
the operating performance of such companies. These broad market fluctuations
may materially and adversely affect the market price of the Company's Common
Stock. Following periods of volatility in the market price of a company's
securities, securities class action litigation has

11
<PAGE>

often been instituted against such a company and its officers and directors.
Any such litigation against the Company could result in substantial costs and
a diversion of management's attention and resources, which would have a
material adverse effect on the Company's business, operating results and
financial condition.

IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS

The initial public offering price of the Common Stock offered hereby is
substantially higher than the net tangible book value per share of the
currently outstanding Common Stock. Therefore, purchasers of Common Stock in
the offering will incur immediate and substantial dilution of approximately
$7.34 in the net tangible book value per share of Common Stock at an assumed
initial public offering price of $10.00 per share. See "Dilution."

BROAD DISCRETION AS TO USE OF PROCEEDS

The Company has not designated any specific uses for the net proceeds from
the sale by the Company of the Common Stock offered hereby, other than the use
of approximately $2.8 million for the payment of certain outstanding debt. The
Company intends to use the net proceeds primarily for working capital and
other general corporate purposes, including possible acquisitions.
Accordingly, management will have significant flexibility in applying the net
proceeds of this offering. See "Use of Proceeds."

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the
4,000,000 shares of Common Stock offered by the Company hereby (at an assumed
initial public offering price of $10.00 per share, after deducting
underwriting discounts and commissions and estimated offering expenses) are
estimated to be $36.4 million.

The Company intends to use approximately $1,849,000 of the net proceeds to
retire all indebtedness outstanding under the Company's existing bank loan
facilities, approximately $590,000 to repay a loan secured by a mortgage on
the Company's office building, and approximately $400,000 to repay a loan to
the Company from Mr. Lutterbach. Borrowings under the bank loan facilities
bear interest at 1% above the lender's prime rate (9.25% at August 31, 1996),
and the loan from Mr. Lutterbach bears interest at the rate of prime plus 1
1/2% per annum (9.75% at August 31, 1996). Borrowings under the lines of
credit and the loans from Mr. Lutterbach were utilized by the Company to
finance the Company's working capital needs. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

The Company intends to use the remaining net proceeds of the offering,
approximately $33.6 million, for working capital or other general corporate
purposes, including possible acquisitions. The Company actively seeks out and
evaluates potential acquisitions of businesses, talent, products or
technologies that are complementary to the Company's business; however, it
currently has no understandings, commitments or agreements with respect to any
such transactions. In addition, the Company may use a portion of the proceeds
to expand or acquire new facilities for its business.

Management will have significant flexibility in applying the net proceeds of
the offering. Pending use of the net proceeds for the foregoing purposes, the
Company intends to invest the net proceeds in short-term, investment grade
interest-bearing securities.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future, but
intends to retain future earnings, if any, for reinvestment in the future
operation and expansion of the Company's business and related development
activities. Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements and such
other factors as the Board of Directors deems relevant, as well as the terms
of any financing arrangements.

12
<PAGE>

DILUTION

As of July 31, 1996, the Company had a net tangible book value deficit of
$182,345 or $(0.02) per share of Common Stock. Net tangible book value per
share is determined by dividing the net tangible worth of the Company
(tangible assets less total liabilities) by the total number of shares of
Common Stock outstanding. After giving effect to the sale by the Company of
the shares of Common Stock offered hereby at an assumed initial offering price
of $10.00 per share (after deducting underwriting discounts, commissions and
estimated offering expenses payable by the Company in connection therewith)
and the application of the net proceeds therefrom, the net tangible book value
of the Company as of July 31, 1996, as adjusted, would have been $36.2 million
or $2.66 per share. This represents an immediate increase in net tangible book
value of $2.68 per share to the existing stockholders and an immediate
dilution of $7.34 per share to new investors purchasing shares at the assumed
initial public offering price. The following table illustrates the per share
dilution to new investors:

<TABLE>
<S> <C> <C>
Assumed initial public offering price......................... $10.00
Net tangible book value (deficit) per share before the of-
fering..................................................... (.02)
Increase per share attributable to new investors............ 2.68
----
Net tangible book value per share as adjusted for this offer-
ing.......................................................... 2.66
------
Dilution per share to new investors........................... $ 7.34
======
</TABLE>

The following table summarizes as of July 31, 1996, after giving effect to
this offering, the number of shares of Common Stock purchased from the
Company, the total consideration paid therefor and the average price per share
paid by the existing stockholders and by the new investors purchasing shares
of Common Stock in this offering (assuming an initial public offering price of
$10.00 per share) before deduction of the underwriting discounts and
commissions and estimated offering expenses payable by the Company:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ ------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders.......... 9,600,000 70.6% $ 1,000 0.0% $.0001
New investors.................. 4,000,000 29.4 40,000,000 100.0 10.00
---------- ----- ----------- -----
Total(1)..................... 13,600,000 100.0% $40,001,000 100.0%
========== ===== =========== =====
</TABLE>
- --------

(1) Following the sale of Common Stock by the Selling Stockholders in the
offering if the Underwriters' over-allotment option is exercised in full,
the number of shares held by all existing stockholders will be reduced by
600,000 shares to 9,000,000, or 66.2% of the total shares of Common Stock
outstanding after the offering. New investors will hold 4,600,000 shares,
or 33.8% of the total shares of Common Stock outstanding after the
offering, if the Underwriters' over-allotment option is exercised in full.
See "Principal and Selling Stockholders."

Each of the foregoing tables assumes that outstanding employee stock options
will not be exercised. At August 31, 1996, an aggregate of 2,339,000 shares of
Common Stock were subject to outstanding options under the Company's stock
option plans at exercise prices ranging from $3.00 to $12.00 per share, with a
weighted average exercise price of $6.39 per share. Of these options,
1,601,333 are currently exercisable. Options to purchase 60,000 shares of
Common Stock will be granted on the effective date of the Registration
Statement of which this Prospectus is part, with an exercise price equal to
the initial public offering price, and will become exercisable on the date of
grant. To the extent that such stock options are exercised, there may be
further dilution to new investors. See "Management--Stock Option Plans" and
Note 5 of Notes to Consolidated Financial Statements.

13
<PAGE>

CAPITALIZATION

The table below sets forth the current portion of long-term debt and
capitalization of the Company as of July 31, 1996 and as adjusted to give
effect to the sale of the 4,000,000 shares of Common Stock offered by the
Company hereby (at an assumed initial public offering price of $10.00 per
share, after deducting underwriting discounts, commissions and estimated
offering expenses) and the application of the estimated net proceeds therefrom
as described in "Use of Proceeds." This table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the consolidated financial statements and notes thereto
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF JULY 31, 1996
---------------------
ACTUAL AS ADJUSTED
-------- -----------
<S> <C> <C>
Current portion of long-term debt....................... $ 89,795 $ 49,136
======== ===========
Long-term debt, excluding current portion............... $647,867 $ 98,790
Stockholders' equity (deficit):
Preferred Stock, $0.01 par value; 20,000,000 shares
authorized; no shares issued and outstanding actual
and as adjusted...................................... -- --
Common Stock, $0.01 par value; 100,000,000 shares
authorized; 9,600,000 shares issued and outstanding
actual, 13,600,000 shares issued and outstanding as
adjusted(1).......................................... 96,000 136,000
Additional paid-in-capital............................ (95,000) 36,265,000
Accumulated deficit................................... (183,345) (183,345)
-------- -----------
Total stockholders' equity (deficit)................ (182,345) 36,217,655
-------- -----------
Total capitalization.............................. $465,522 $36,316,445
======== ===========
</TABLE>
- --------

(1) Excludes (i) 2,339,000 shares of Common Stock issuable upon exercise of
options outstanding as of August 31, 1996 (options to purchase 1,601,333
of such shares are currently exercisable), (ii) 60,000 shares of Common
Stock issuable upon exercise of options to be granted on the effective
date of the Registration Statement of which this Prospectus is part, all
of which will become exercisable on the date of grant, and (iii) 2,605,000
shares of Common Stock reserved for issuance upon exercise of options that
may be granted in the future under the Company's stock option and stock
purchase plans. See "Management--Stock Option Plans" and Note 5 of Notes
to Consolidated Financial Statements.

14
<PAGE>

SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following selected consolidated financial data as of January 31, 1995
and 1996 and for the period from inception (September 20, 1993) to January 31,
1994 and each of the two fiscal years in the periods ended January 31, 1995
and 1996 have been derived from the Company's Consolidated Financial
Statements, which have been audited by Arthur Andersen LLP, independent public
accountants. The selected consolidated financial data as of July 31, 1996 and
for the six months ended July 31, 1995 and 1996 have been derived from the
unaudited consolidated financial statements of the Company. The unaudited
consolidated financial statements have been prepared on the same basis as the
audited financial statements and, in the opinion of management, include all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly the Company's consolidated financial position and results of operations
for the periods presented. The results of operations for the six months ended
July 31, 1996 are not necessarily indicative of future operating results. The
data set forth below are qualified by reference to, and should be read in
conjunction with, "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Consolidated Financial Statements and the
related Notes thereto and other financial information appearing elsewhere in
this Prospectus. The following data are presented in thousands, except per
share amounts and the number of Creative Partners.
<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED
JANUARY 31, JULY 31,
------------------------- ----------------
1994(1) 1995 1996 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.......................... $ 373 $ 4,679 $ 8,210 $ 5,577 $ 7,290
Operating expenses:
Direct costs and related
expenses......................... 244 3,749 3,622 2,930 4,494
Salaries and related expenses..... 133 1,598 2,247 943 1,691
General and administrative........ 119 722 985 464 750
------- ------- ------- ------- -------
Total operating expenses......... 496 6,069 6,854 4,337 6,935
------- ------- ------- ------- -------
Operating income/(loss)........... (123) (1,390) 1,356 1,240 355
Interest expense.................. 3 103 162 88 98
------- ------- ------- ------- -------
Income/(loss) before income
taxes............................ (126) (1,493) 1,194 1,152 257
Income tax benefit/(expense)...... 50 427 (494) (477) 0
------- ------- ------- ------- -------
Net income/(loss)................. $ (76) $(1,065) $ 700 $ 675 $ 257
======= ======= ======= ======= =======
PER SHARE DATA:
Net income/(loss) per share(2).... $ (0.01) $ (0.11) $ 0.07 $ 0.07 $ 0.03
Shares used in per share
computation(2)................... 10,109 10,109 10,109 10,109 10,109
</TABLE>

<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
--------------- -----------
1995 1996 1996
------- ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 7 $ 48 $ 82
Working capital................................... (1,515) (973) (1,425)
Total assets...................................... 2,538 2,053 6,101
Long-term debt.................................... 420 448 648
Total stockholders' deficit....................... (1,140) (440) (182)
</TABLE>

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEAR ENDED ENDED JULY
JANUARY 31, 31,
------------------------ --------------
1994(1) 1995 1996 1995 1996
------- ------- ------ ------ ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OTHER DATA (UNAUDITED):
Revenues, excluding Miller(3)........ $ 373 $ 1,700 $2,758 $ 813 $7,290
Retainer and fee revenues(4)......... $ 0 $ 560 $1,642 $ 163 $1,946
Retainer and fee revenues as a
percentage of total revenues(4)..... 0.0% 12.0% 20.0% 2.9% 26.7%
Number of Creative Partners at end of
period.............................. 15 27 38 30 65
</TABLE>
- --------
(1) The Company's initial operating business, Leap Partnership, was formed
September 20, 1993, and had no operations prior to November 1993.
(2) Calculated on the basis described in Note 2 of Notes to the Company's
Consolidated Financial Statements.
(3) In December 1995, the Company voluntarily resigned the Miller account in
order to pursue other assignments. The information provided presents
revenues as if Miller had been excluded throughout each of the periods
presented. See "Business--Leap's Clients."
(4) Retainer and fee revenues represent revenues derived from fixed fee
arrangements with clients, not specific to particular projects, which
typically contemplate monthly payments over specified service periods. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations--Overview."

15
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following presentation of management's discussion and analysis of the
Company's financial condition and results of operations should be read in
conjunction with the Company's consolidated financial statements, accompanying
notes thereto and other financial information appearing elsewhere in this
Prospectus. The following presentation contains forward-looking statements
which involve risks and uncertainties. The Company's actual results could
differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including those set forth under "Risk Factors"
and elsewhere in this Prospectus.

OVERVIEW

The Company generates its revenues from a variety of sources: fees and
retainers for strategic marketing and creative services, which may include
fees based upon the airing or publication of Company-created material on
various media; production revenues for creative executions, including the
communication of messages through a variety of new media; and fixed fees for
specific project assignments.

Fees and retainers are established by the Company taking into consideration
the Company's resources and skills which will be applied to generate relevant
strategic solutions for the client's marketing and communication concerns, the
value of Leap's strategic thinking and Leap's ability to produce memorable,
entertaining and effective advertising. The Company prefers to structure its
compensation arrangements with clients to provide for retainers or fees that
integrate such an added value approach, rather than fees based on a percentage
of media charges or other fixed methodologies. However, certain assignments
covered by fees and retainers have been based upon traditional methodologies
which have included either an estimate of the amount and level of professional
expertise provided by the Company and other committed resources needed to
execute a particular client's engagement or based upon an estimate of the
client's advertising expenditures over certain periods.

The term of written agreements between the Company and its clients generally
is a minimum of one year. However, written agreements typically are terminable
by either the client or the Company on short notice, often 90 days, and in
certain instances less. The Company at times performs services prior to the
execution of written agreements. Revenues, even if predominantly retainer- or
project-based, can vary materially from period to period. The Company's
strategy is to focus on providing expanding ranges and amounts of services to
a relatively limited number of major clients. The Company's results of
operations will, therefore, by design, be dependent upon the Company's ability
to maintain its relationships with its key clients or to replace clients
quickly should the Company or the client desire to reduce or terminate a
relationship. There can be no assurance that period-to-period fluctuations in
operating results will not occur.

The Company has experienced fluctuations in its revenues since inception,
which are to a significant degree a function of establishing or terminating
client relationships and to a lesser degree reflect its mix of fees and
production revenues. The Company has a limited operating history upon which an
evaluation of the Company and its prospects may be based, and the Company has
not identified any particular trends with respect to its historic revenues.

Revenues from fixed fee arrangements, typically in the form of monthly
retainers, are recognized over the period in which services are rendered.
Revenues from production services are recognized at the completion of such
services. Leap's production projects are usually commenced and completed in a
short time period, often less than 60 days. Outside production costs are
initially recorded as costs in excess of billings and are expensed as direct
costs and related expenses at the completion of such services. Revenues earned
from fees based upon third-party media placements are recognized when the
Company-created materials appear on various media in accordance with industry
practice. Salaries and other related general and administrative costs are
expensed as incurred.

16
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, as a percentage of revenues, operating
expenses and certain other items which are included in the Company's
statements of operations for the fiscal years and six-month periods indicated.
The information for each of the six-month periods reflected is unaudited, but
has been prepared on the same basis as the audited consolidated financial
statements and, in the opinion of the Company's management, reflects all
adjustments in conjunction with the Company's audited consolidated financial
statements and notes thereto appearing elsewhere in this Prospectus. Operating
results for any period are not necessarily indicative of results for any
future periods.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS
JANUARY 31, ENDED JULY 31,
------------------- ----------------
1995 1996 1995 1996
-------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues................................. 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Direct costs and related expenses...... 80.1 44.1 52.6 61.6
Salaries and related expenses.......... 34.2 27.4 16.9 23.2
General and administrative............. 15.4 12.0 8.3 10.3
-------- -------- ------- -------
Total operating expenses............. 129.7 83.5 77.8 95.1
Operating income/(loss).................. (29.7) 16.5 22.2 4.9
Interest expense......................... 2.2 2.0 1.6 1.4
-------- -------- ------- -------
Income/(loss) before income taxes........ (31.9) 14.5 20.6 3.5
Income tax benefit/(expense)............. 9.1 (6.0) (8.5) 0.0
-------- -------- ------- -------
Net income/(loss)........................ (22.8)% 8.5% 12.1 3.5
======== ======== ======= =======
</TABLE>

Six Months Ended July 31, 1996 Compared to Six Months Ended July 31, 1995

Revenues increased to $7.3 million for the six months ended July 31, 1996
from $5.6 million for the six months ended July 31, 1995, an increase of $1.7
million or 30.7%. The net increase of $1.7 million is primarily attributable
to a significant increase in new business which was offset in part by the loss
of Miller revenues. Excluding Miller, revenues increased approximately $6.5
million, or 797%, to $7.3 million for the six months ended July 31, 1996 from
$813,000 for the six months ended July 31, 1995. Miller revenues represented
approximately $4.8 million or 85% of the Company's revenues in the six months
ended July 31, 1995. In the second half of fiscal 1996, Miller began to reduce
its advertising expenditures on campaigns in which the Company was involved,
which resulted in a significant decline in Leap's revenues during such period.
The Company's management viewed an expansion of Miller's advertising budget
for such campaigns as unlikely and determined that Leap's resources could be
better utilized for other opportunities. The Company therefore resigned the
Miller account in December 1995 in order to pursue other assignments. The
decrease in Miller revenues was offset in full by an increase in new and
existing business. Clients from which the Company received revenues for the
first time during the six months ended July 31, 1996 included U.S. Robotics,
R.J. Reynolds, Pizza Hut, Chicago Tribune and Ameritech. Of the $7.3 million
in revenues for the six months ended July 31, 1996, approximately $2.5 million
is attributable to these new clients and $4.8 million is due to increased
services to pre-existing clients including Nike and Tommy Armour.

Direct costs and related expenses generally consist of production costs
which include services such as filming, animation, editing, special effects,
photography and illustrations, artwork, computer design and various related
production services which are generally outsourced, along with contract labor,
talent and other costs related to creative executions which may include
traditional media as well as new technologies and multimedia. Direct costs and
related expenses increased to $4.5 million for the six months ended July 31,
1996 from $2.9 million for the six months ended July 31, 1995, an increase of
$1.6 million or 53.4%. The increase was primarily attributable to an increase
in production activities. As a percentage of revenues, direct costs increased
9% as a result of lower margins on certain production revenues during the
period.

17
<PAGE>

Salaries and related expenses consist primarily of salaries and wages for
employees, related payroll tax expenses, group medical and dental insurance
coverages and recruiting expenses. Salaries and related expenses increased to
$1.7 million for the six months ended July 31, 1996 from $943,000 for the six
months ended July 31, 1995, an increase of $748,000 or 79.4%. The increased
expenses reflect the addition,

since July 31, 1995, of 35 new Creative Partners who are primarily engaged in
creative activities, including programmers and multimedia designers, to
support new clients and to strengthen the Company's management team.

General and administrative expenses include space and facilities expenses,
corporate expenses, depreciation, insurance, legal and accounting fees and
management information system expenses. General and administrative expenses
increased to $750,000 for the six months ended July 31, 1996 from $464,000 for
the six months ended July 31, 1995, an increase of $286,000 or 61.7%. The
increase is primarily due to additional legal and accounting fees and
depreciation.

Interest expense increased to $98,000 for the six months ended July 31, 1996
from $88,000 for the six months ended July 31, 1995, an increase of $10,000 or
11.2%. The increase is primarily attributable to increased borrowings from
available bank lines of credit.

Combined federal and state income tax rates were 40% for the six months
ended July 31, 1996 and 1995. Income tax expense of $477,000 is reflected for
the six months ended July 31, 1995 as a result of the Company's taxable income
during the period. For the six months ended July 31, 1996, income tax expense
of $103,000 was offset by the net operating loss carryforward, which had been
fully reserved at January 31, 1996. As a result, no income tax expense was
recorded for the period.

Fiscal Year Ended January 31, 1996 Compared to Fiscal Year Ended January 31,
1995

Revenues increased to $8.2 million for fiscal 1996 from $4.7 million for
fiscal 1995, an increase of $3.5 million, or 74.5%. The increase is primarily
attributable to a significant increase in fees earned from Miller during
fiscal 1996, and the remainder is attributable to services provided to new
clients and increased demand for services by existing clients. Miller
represented approximately 66% and 64% of the Company's total revenues for
fiscal 1996 and 1995, respectively. Excluding Miller, revenues increased from
$1.7 million in fiscal 1995 to $2.8 million in fiscal 1996, an increase of
$1.1 million or 64.7%.

Direct costs and related expenses decreased to $3.6 million for fiscal 1996
from $3.7 million for fiscal 1995, a decrease of $100,000 or 2.7%.
Approximately $375,000, or 10%, of the direct costs in fiscal 1995 were
incurred in connection with business development activities for which no
corresponding revenues were generated by the Company. Exclusive of these
costs, direct costs increased by approximately $300,000, or 9%, from fiscal
1995 to fiscal 1996. This increase was attributable to an increase in
production activities. Revenues specific to production activities increased
approximately 24% in fiscal 1996. As a percentage of production revenues,
direct costs decreased by approximately 11%, as a result of increased
efficiencies and improved margins.

Salaries and related expenses increased to $2.2 million for fiscal 1996 from
$1.6 million for fiscal 1995, an increase of $600,000, but declined as a
percentage of revenues from 34.2% to 27.4%. The increased expenses reflected
the addition, in fiscal 1996, of 11 new Creative Partners.

General and administrative expenses increased to $985,000 for fiscal 1996
from $722,000 for fiscal 1995, an increase of $263,000. The increase is
primarily due to additional expenses associated with increased occupancy costs
and increased staffing in administrative functions. As a percentage of
revenues, general and administrative expenses declined from 15.4% in fiscal
1995 to 12.0% in fiscal 1996.

Interest expense increased to $161,000 for fiscal 1996 from $103,000 for
fiscal 1995, an increase of $58,000 or 56.3%. The increase is primarily
attributable to increased borrowings from available bank lines of

18
<PAGE>

credit in order to fund the Company's growth and operations. Interest rates
remained relatively constant for both fiscal 1996 and 1995.

Combined federal and state income tax rates were 40% for fiscal 1996 and
1995, respectively. An income tax expense of $494,000 is reflected for fiscal
1996, as a result of the Company's taxable income during the year. An income
tax benefit of $427,300 is reflected for fiscal 1995, as a result of the
Company's net operating loss during the period. The Company generated a net
operating loss from its inception, September 20, 1993, through January 31,
1995 of approximately $1.6 million. The net operating loss offsets the taxable
income generated in fiscal 1996. The balance of the net operating loss of
approximately $260,000 has been fully reserved, primarily due to the Company's
history of operating losses.

Fiscal Year Ended January 31, 1995 Compared to Fiscal Year Ended January 31,
1994

The Company's inception was September 20, 1993, and operations commenced
during November 1993. Since less than three months of operations are included
in fiscal 1994, comparisons to fiscal 1995 are not meaningful.

During fiscal 1994, the Company's revenues were $373,000 and operating
expenses were $496,000, resulting in a net loss of $123,000. The loss was
primarily attributable to start-up costs incurred in connection with
commencing operations.

19
<PAGE>

QUARTERLY RESULTS AND SEASONALITY

The following table presents the Company's operating results and other data
for each of the eight quarters preceding July 31, 1996, including such
operating results expressed as a percentage of revenues for the respective
periods. The information for each of these quarters is unaudited, but has been
prepared on the same basis as the audited consolidated financial statements
and, in the opinion of the Company's management, reflects all adjustments in
conjunction with the Company's audited consolidated financial statements and
notes thereto appearing elsewhere in this Prospectus. Operating results for
any quarter are not necessarily indicative of results for any future periods.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------------------
OCTOBER 31, JANUARY 31, APRIL 30, JULY 31, OCTOBER 31, JANUARY 31, APRIL 30, JULY 31,
1994 1995 1995 1995 1995 1996 1996 1996
----------- ----------- --------- -------- ----------- ----------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGE INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................ $1,212 $2,299 $3,150 $2,427 $1,419 $1,214 $2,037 $5,253
Operating expenses:
Direct costs and
related expenses..... 1,076 1,873 1,885 1,046 537 154 1,178 3,315
Salaries and related
expenses............. 476 530 466 477 561 743 755 936
General and
administrative....... 177 236 234 229 249 273 255 497
------ ------ ------ ------ ------ ------ ------ ------
Total operating
expenses............ 1,729 2,639 2,585 1,752 1,347 1,170 2,188 4,748
Operating
income/(loss).......... (517) (340) 565 675 72 44 (151) 505
Interest expense........ 30 38 42 46 32 41 33 64
------ ------ ------ ------ ------ ------ ------ ------
Income/(loss) before
income taxes........... (547) (378) 523 629 40 3 (184) 441
Income tax
benefit/(expense)...... 156 109 (217) (260) (16) (1) 0 0
------ ------ ------ ------ ------ ------ ------ ------
Net income/(loss)....... $ (391) $ (269) $ 306 $ 369 $ 24 $ 2 $ (184) $ 441
====== ====== ====== ====== ====== ====== ====== ======
PER SHARE DATA:
Net income/(loss) per
share(1)............. $(0.04) $(0.03) $ 0.03 $ 0.04 $ 0.00 $ 0.00 $(0.02) $ 0.04
Shares used in per
share
computation(1)....... 10,109 10,109 10,109 10,109 10,109 10,109 10,109 10,109
OTHER DATA:
Revenues, excluding
Miller(2)............ $ 529 $ 143 $ 52 $ 761 $ 882 $1,063 $2,037 $5,253
<CAPTION>
AS A PERCENTAGE OF REVENUES
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Direct costs and
related expenses..... 88.8 81.4 59.9 43.1 37.9 12.7 57.8 63.1
Salaries and related
expenses............. 39.3 23.1 14.8 19.7 39.6 61.2 37.1 17.8
General and
administrative....... 14.6 10.3 7.4 9.4 17.5 22.5 12.5 9.5
------ ------ ------ ------ ------ ------ ------ ------
Total operating
expenses............ 142.7 114.8 82.1 72.2 95.0 96.4 107.4 90.4
Operating
income/(loss).......... (42.7) (14.8) 17.9 27.8 5.0 3.6 (7.4) 9.6
Interest expense........ 2.5 1.6 1.3 1.9 2.2 3.4 1.7 1.2
------ ------ ------ ------ ------ ------ ------ ------
Income/(loss) before
income taxes........... (45.2) (16.4) 16.6 25.9 2.8 0.2 (9.1) 8.4
Income taxes
benefit/(expense)...... 12.9 4.7 (6.9) (10.7) (1.1) (0.1) 0.0 0.0
------ ------ ------ ------ ------ ------ ------ ------
Net income/(loss)....... (32.3)% (11.7)% 9.7% 15.2% 1.7% 0.1% (9.1)% 8.4%
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
- -------
(1) Calculated on the basis described in Note 2 of Notes to the Company's
Consolidated Financial Statements.
(2) The Company voluntarily resigned the Miller account in December 1995 in
order to pursue other assignments. See "Business--Leap's Clients."

20
<PAGE>

Depending upon its client mix at any time, the Company could experience
seasonality in its business. Such seasonality arises from the timing of
product introductions and business cycles of the Company's clients and could
be material to the Company's interim results. Such cycles vary from client to
client, and the overall impact on the Company's results of operations cannot
be predicted. In addition, the advertising industry as a whole exhibits
seasonality. Typically, advertising expenditures are highest in the fourth
calendar quarter and lowest in the first calendar quarter, particularly in
January. Although the Company has too limited an operating history to exhibit
any discernible seasonal trend, as the Company matures, its business and
results of operations could be affected by the overall seasonality of the
industry.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has primarily financed its operations and
investments in property and equipment through cash generated from bank
borrowings, loans from a Company officer and equipment leases. At July 31,
1996, the Company had no material capital commitments.

The Company had an accumulated deficit of $183,000 at July 31, 1996. The
Company's operations are subject to certain risks and uncertainties including,
among others, a limited operating history, net operating losses, management's
plan for growth and expansion, changing technologies, and current and
potential competitors with greater financial, technical and marketing
resources.

The Company's net working capital deficit increased $452,000 to $1.4 million
at July 31, 1996 from $973,000 at January 31, 1996. The increase is primarily
attributable to increased short-term bank borrowings to fund the growth of the
Company's business and working capital requirements. The Company's net working
capital deficit decreased $542,000 to $973,000 at January 31, 1996, from $1.5
million at January 31, 1995. The decrease is primarily attributable to the
Company's net income of $700,460 during fiscal 1996 which resulted in a net
reduction of $117,000 of short-term borrowings and net changes in various
working capital accounts.

The Company's cash and cash equivalents increased $34,167 and $80,975 for
the six months ended July 31, 1996 and 1995, respectively. The increases are
the result of net increases in cash flows from financing activities of $1.6
million and $269,000, for the six months ended July 31, 1996 and 1995,
respectively. For the six months ended July 31, 1996, the increased cash flows
from financing activities resulted primarily from increased borrowings of $1.4
million on the Company's lines of credit. During the six months ended July 31,
1995, the increased cash flows from financing activities were primarily due to
borrowings of $450,000 from an officer of the Company. The cash provided from
financing activities was used in part to fund decreases in cash flows from
operating and investing activities of $1.2 million and $152,000 for the six
months ended July 31, 1996 and 1995, respectively. The decrease in cash flows
from operating activities for the six months ended July 31, 1996 arose
primarily from increases in accounts receivable of $2.9 million, which were
offset in part by an increase in payables of $2.1 million. For the six months
ended July 31, 1995, the decrease in cash flows from operating activities
resulted from an increase in accounts receivable of $577,000 and a $1.2
million paydown of payables, partially offset by net income of approximately
$675,000 and a decrease in costs in excess of billings of approximately
$484,000. Decreases in cash flows from investing activities of $299,000 and
$36,000 for the six months ended July 31, 1996 and 1995, respectively, were
due to increased purchases of computer and office equipment.

The Company's cash and cash equivalents increased $41,000 and decreased
$111,000 for fiscal years 1996 and 1995, respectively. The increase in fiscal
1996 is the result of a net increase of $400,000 in cash flows from operating
activities which primarily consist of the Company's net income of $700,000,
after the effects of depreciation and other non-cash items of $648,000, a
decrease of $286,000 in accounts receivable offset by a decrease of $1.1
million in accounts payable; a decrease of $242,000 in cash flows from
investing activities for purchases of computer and office equipment; and a net
decrease of $117,000 in cash flows from financing activities resulting from
net increased borrowings of $400,000 from an officer of the Company and
$517,000 of principal reductions on the Company's bank borrowings. The
decrease in fiscal 1995 is the result of a net decrease of $564,000 in cash
flows from operating activities which primarily consist of the Company's net
loss of $1.1 million, after the effects of depreciation and other non-cash
items of $320,000, an increase of $555,000 in accounts receivable and an
increase of $591,000 in costs in excess of billings, offset by an increase of
$2.0

21
<PAGE>

million in accounts payable and accrued expenses; a decrease of $282,000 in
cash flows from investing activities for purchases of computer and office
equipment; and an increase of $735,000 in cash flows from financing activities
resulting from increased borrowings on the Company's existing lines of credit.

The Company has a $1.5 million credit facility available under a revolving
line of credit. The Company also has a separate $500,000 line of credit
available to purchase computer and office equipment. The credit facilities are
collateralized by all Company chattel paper, billed and unbilled accounts,
equipment and general intangibles. Furthermore, the obligations are guaranteed
by certain stockholders of the Company. The credit facilities bear interest at
the bank's index rate plus 1%. At July 31, 1996, the outstanding balances were
$1,359,500 for the revolving line of credit and approximately $490,000 for the
line of credit. The Company intends to repay this indebtedness in full from
the proceeds of the offering. See "Use of Proceeds." The credit agreements
expire on October 31, 1996. In connection with the offering, the Company
expects to negotiate amendments to the existing credit facilities that will,
among other things, extend their maturity dates.

In February 1995, the Company secured financing from an officer of the
Company to fund additional working capital needs. The $450,000 installment
note bears interest at prime plus 1.5% through October 31, 1996 and is
collateralized by a second mortgage on the Company's principal office
building. $50,000 has been repaid on the loan and the remainder will be repaid
from the proceeds of the offering. See "Use of Proceeds" and "Certain
Transactions."

On May 30, 1996, the Company obtained a $596,000 loan secured by a mortgage
on the building in which the Company's offices are located. The loan bears
interest at the lender's index rate and is payable in monthly principal and
interest installments of $7,794 through May 2001, with a balloon payment of
approximately $360,000 in June 2001. The Company intends to repay this
indebtedness in full from the proceeds of the offering. See "Use of Proceeds."

The Company is a defendant in pending litigation involving claims by the
Spin Doctors (a recording and performance group) arising from a television
commercial created by the Company. Although such litigation is in an early
stage, and it is therefore difficult to predict its ultimate outcome, an
adverse determination and award not covered by insurance could have a material
adverse effect on the Company's results of operations and, if the offering
contemplated by this Prospectus is not consummated, on the Company's liquidity
and consolidated financial position. See "Business--Legal Proceedings" and
Note 6 of Notes to the Company's Consolidated Financial Statements.

The Company believes that the net proceeds of the offering, together with
existing credit facilities and any funds from operations, will be sufficient
to meet the Company's cash requirements for at least the next twelve months.
The Company's long-term capital requirements will depend on numerous factors,
including the rates at which the Company grows, expands its personnel and
infrastructure to accommodate growth and invests in new technologies. The
Company has various ongoing needs for capital, including working capital for
operations, project development costs and capital expenditures to maintain and
expand its operations. In addition, as part of its strategy, the Company
evaluates potential acquisitions of, or alliances with, businesses that extend
or complement the Company's business. While the Company has no present plans,
commitments or agreements with respect to any material acquisition or
alliance, the Company may in the future consummate acquisitions or alliances
which may require the Company to make additional capital expenditures, and
such expenditures may be significant. Future acquisitions and alliances may be
funded with available cash from the net proceeds of the offering, seller
financing, institutional financing and/or additional equity or debt offerings.

22
<PAGE>

BUSINESS

The following presentation contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth under "Risk Factors" and elsewhere
in this Prospectus.

OVERVIEW

Leap is a strategic and creative communications company that develops and
implements integrated brand marketing campaigns using traditional and new
media primarily for market leading clients. The Company's marketing and
communications services combine comprehensive strategic brand marketing
skills, award-winning creative talent, and the production capabilities of
world class full service advertising agencies with the technological expertise
to exploit new interactive and other digital media. Leap's mission is to build
brand equity for its clients. Leap focuses on establishing long-term marketing
partnerships with marquee clients of national and international scope that
position the Company as the steward for major brands with correspondingly
significant advertising budgets.

INDUSTRY BACKGROUND

A number of significant factors and trends are driving changes and creating
opportunities in the marketing communications business, including the
following:

Advertising Market. Approximately $161 billion was spent on advertising in
the United States in 1995, according to McCann-Erickson Worldwide, a leading
advertising agency that regularly publishes such information. A significant
portion of such market is accounted for by large national-to-global
advertisers with correspondingly large advertising budgets. Leap's present and
prospective clients currently advertise primarily on national mass circulation
media such as network television, network radio and nationally circulating
newspapers and magazines. According to McCann-Erickson, total U.S. spending on
such media amounted to approximately $40 billion in 1995.

Advertising Migrating to Accountable Media. Leap believes that large
advertisers increasingly are looking for ways to improve the effectiveness of
their advertising without increasing advertising expenditures, and to better
measure results from advertising. Historically, large advertisers, through
their advertising agencies, have had a strong bias towards using "broad cast"
media, such as television and newspapers. According to McCann-Erickson
research, 22.5% of total advertising spending in 1995 went to television,
22.6% to newspapers, 20.4% to direct-response mail advertising, 7.0% to radio
and 6.4% to yellow page publishers. The remaining 21% was allocated to
magazines, outdoor signage, and other media. Management believes that less
than $50 million was spent in 1995 on digital interactive media, classified
within the "other" segment, such as the Internet, CD-ROMs and interactive
presentations.

The Company believes that advertisers are beginning to shift away from
relying primarily on traditional one-way "broad cast" media, such as broadcast
television, to media that enable advertisers to "narrow cast" or customize
marketing messages to a well-defined audience. For example, according to
McCann-Erickson, direct mail advertising in the total U.S. advertising market
increased 41% between 1990 and 1995 compared to a 26% increase for all
advertising expenditures during the same period. Similarly, the Company
believes that the emergence of telemarketing is indicative of this trend. Leap
believes that these trends are primarily due to the fact that by using
interactive media, advertisers can target a particular segment of consumers
with a precision not found in print and broadcast television advertising. In
addition, interactive media can provide an almost instantaneous gauge of the
advertisement's effectiveness. This feedback allows an advertiser to increase
use of a particular message to take advantage of a favorable response, or
continuously to freshen and modify the message to improve its effectiveness.

23
<PAGE>

Emergence of New Media. Advances in technology over the past ten years have
impacted the distribution of brand messages to an extent not seen since the
advent of television, and the Company believes that, as a result, marketers
must make equally sweeping changes in the way they think about communicating
with their customers. For years, companies have sought to create marketing
programs that would communicate with consumers on a personal, one-to-one
basis. Techniques such as direct mail and telemarketing were used to reach
consumers more directly than traditional media including television,
magazines, newspapers or billboards. Recent developments in digital technology
have led to the emergence of new media communications vehicles such as the
World Wide Web, the Internet, CD-ROMs and interactive presentations. Now, such
new media not only permit real time one-to-one communications links with
consumers, but allow consumers, as a consequence of the interactive process,
to shape the advertising messages that they receive and become more engaged by
the messages.

Leap believes that the Internet, and particularly the World Wide Web, by
enabling advertisers to reach well-defined audiences without paying the
significant costs required to buy print space and broadcast media time, is
fast becoming the most cost-effective medium by which marketers can establish
a personalized two-way relationship with consumers. According to the 1995
CommerceNet/Nielsen Internet Demographics Survey, there are over 18 million
users of the World Wide Web. InterNet Info reports that as of April 12, 1996,
approximately 276,400 commercial Web sites were registered as domain names, an
increase of more than 60% in the first quarter of 1996 over the fourth quarter
of 1995. Industry observers expect this trend to continue and accelerate. The
Internet offers the ability to target and track consumers with specific brand
messages plus the opportunity to capture consumer preferences, opinions, needs
and wants. Advertising and marketing management could have instant access to
consumer feedback and continuously sharpen marketing plans to address the
current marketplace. Leap believes that a marketer's Web site, if used
correctly, can significantly augment traditional consumer research efforts
while providing useful information to customers and prospects.

Early adopters of Internet advertising have generally established Web sites
as a relatively inexpensive way to signal a technologically sophisticated
image to consumers without spending a significant portion of their overall
advertising budget. The Company believes, however, that as advertisers become
more familiar with interactive advertising techniques and opportunities, the
amounts spent to utilize new media will increase rapidly. A Forrester Research
report dated May 1996 estimated that online advertising spending will reach
$80 million in 1996 and $4.8 billion by the year 2000. Management believes
that over the next few years the rate of growth of advertising expenditures on
new media will greatly exceed that of expenditures for traditional media such
as television or print as more consumers, households and businesses connect to
the World Wide Web and marketers feel compelled to communicate through that
channel.

Increasing Importance of Brand Identity. The Company believes that branding
of products and services, always important in the consumer markets, will
become even more important in coming years. In some markets, consumers are
presented with an increasing proliferation of products that are difficult to
distinguish. Even when a product or service is demonstrably better, the
Company believes that competitors can rapidly adapt their products to
neutralize such advantages. As a result, most sophisticated marketers rely on
the image or brand identity of their companies, products or services to
differentiate themselves from competitors. A well defined brand identity can
build long term equity with consumers and can be the basis for a sustainable
competitive advantage.

Importance of Speed to Market. As competitive pressures have increased and
the importance of being first to market has increased, companies are
shortening the cycle times required to bring products to market. In turn,
their marketing partners must reduce their own cycle times for creating and
producing communications elements. In addition, in recent years an increasing
number of marketers have downsized and streamlined their organizations. Their
advertising agencies, which are traditionally heavily departmentalized, are
expected to respond to such measures by themselves becoming more efficient.
Leap believes that advertising agencies that have responsive and nimble
organizations and embrace developing technologies will be best positioned to
respond to client demands for speed and increased efficiency.

In summary, as brand identity and speed to market become more important to
advertisers, and as more advertisers add new media to the portfolio of
marketing communications channels they use, Leap expects that

24
<PAGE>

there will be increased demand for the services of marketing communications
companies able to develop powerful, strategically sound brand identities
across a broad spectrum of media. Leap believes that more and more advertisers
are looking to their marketing partners for more complete marketing solutions;
they are seeking both traditional marketing expertise in research,
segmentation, strategy development, creative development, production, and
message distribution, and the ability to extend that work into new areas. This
ability requires forward thinking media strategies that are free from the
historical advertising agency biases that favor traditional media, as well as
the technological expertise necessary to operate in new media areas. The
Company believes that firms that offer such integrated skills have the
greatest opportunity to be entrusted with developing brand identity for
forward thinking clients and should enjoy access to the significant
advertising budgets that accompany such assignments.

LEAP'S CORE STRENGTHS

Leap's central mission is to build brand equity for its clients by designing
and implementing strategic brand marketing plans and comprehensive advertising
campaigns that are driven by premier talent and creative content and employ
both traditional and new media. Management believes that certain core
strengths have been, and will continue to be, integral to Leap's success in
achieving this goal.

Roster of Marquee Clients. Leap has successfully competed for and serviced
major accounts. For example, Leap was selected after a nationwide review as
agency of record for Nike's Niketown and Nike Factory Stores. In addition to
Nike, Leap's present clients include U.S. Robotics, Tommy Armour, the Chicago
Tribune Company, Ameritech Corporation, R.J. Reynolds, Pizza Hut, Inc. and The
University of Notre Dame. Leap's projects for national advertisers have
included the 1995 Super Bowl campaign for Miller, based on fictional
quarterback "Elmer Bruker," for which Leap won a "Clio" award. Leap attributes
its success in attracting such clients to the reputations of Leap and its
senior management, as well as its other core strengths, and believes that
these factors, coupled with the client roster itself, will enhance Leap's
ability to attract additional significant clients of national and
international scope.

Strategic Orientation. Leap specializes in the strategic positioning of
brands. Beginning with a thorough appraisal of the needs, wants, impressions
and opinions of the client's customers and the position of the client's brand
in its marketplace in relationship to customers, competitors and retailers,
Leap develops a distinct identity for the brand. Fusing the brand strategy
with client goals, objectives and information, Leap then develops a strategic
platform that serves as the grounding for all brand messages across all media.
For example, when Nike first engaged Leap, Niketown had been positioned simply
from a retail orientation as "the most Nike stuff anywhere." Leap, however,
envisioned Niketown not merely as a retail concept but as a structure that
embodies and serves as a standard bearer for the Nike philosophy and adds to
the overall brand values.

Talent and Creative Distinction. Leap maintains a multidisciplinary talent
strategy as one of its core principles. Recognizing that the best strategic
platform is useless without creative executions that inform, engage and
entertain consumers, Leap's management places heavy emphasis on creativity in
the selection and training of personnel. The Company believes that its success
in attracting such creatives is in part attributable to the reputations of
Frederick Smith, George Gier, Joseph A. Sciarrotta and Thomas R. Sharbaugh,
who in the aggregate have over 70 years of advertising experience. Among
numerous accolades received by these men for their work, Messrs. Gier and
Sciarrotta were each named a National Creative All-Star for 1994 by Adweek
magazine. While employed by DDB Needham, Messrs. Smith, Gier and Sciarrotta
were best known for their campaigns for Anheuser-Busch, Inc.'s Bud Light
brand. The team created and produced the memorable "Yes I am!" and "Ladies
Night" commercials for Bud Light. Mr. Sharbaugh has a wealth of experience in
brand stewardship acquired during 18 years in marketing at Anheuser-Busch,
Inc. ("Anheuser-Busch") and Sears Roebuck and Co. ("Sears"). Mr. Sharbaugh
oversaw the "Softer Side of Sears" campaign, which was an important part of
the fundamental repositioning of Sears' retail operations. In addition, during
his tenure at Anheuser-Busch, Mr. Sharbaugh oversaw noteworthy campaigns, such
as "This Bud's For You," "Gimme a

25
<PAGE>

Light," "Spuds McKenzie" and "the Bud Bowl," that contributed to Budweiser's
stronghold on the top position in the beer market and Bud Light's emergence as
the leading light beer. See "Management--Executive Officers, Directors and
Significant Employees."

Leap's employees include experienced writers, art directors, graphic
designers, Web designers, producers and strategic thinkers. Leap's talent
strategy targets skilled individuals who, in addition to being creative, are
adept marketers attuned to the brand strategy and business objectives of
clients. The Company believes that it has to date, despite intense competition
for talent, been successful in attracting and retaining superior creative and
strategic thinkers as well as highly skilled programmers and interactive media
developers. All employees share the same title, "Creative Partner," and are
called upon to contribute beyond their primary areas of expertise.

The depth of Leap's talent extends well beyond its senior management. Leap's
strategy is to recruit the very best talent available, and the work of Leap's
Creative Partners has received numerous accolades and awards. Despite its
short history, Leap has achieved international recognition for creative
advertising. The Company received a "Clio" award for Special Effects for its
1995 Super Bowl Campaign for Miller, was a finalist in two categories at the
1995 London International Advertising Awards and has received more than a
dozen awards from the Chicago Show.

Organizational Model and Creative Process. Leap operates with an
organizational structure that differs significantly from the traditional
agency model. Instead of functional departments organized in a vertical
hierarchy, Leap is a flat organization built around cross-functional work
teams. Employees with varied skill sets (such as writers, art directors,
graphic designers, Web designers, programmers, account planners, producers or
media planners) are brought together as needed to service each client's
specific needs. Unlike the traditional agency model, Leap's structure enables
the client to deal directly with the creative and other team members and also
does not grant any one person proprietary control over a creative concept.
Management believes that this flat open structure yields better
communications, shorter cycle times, more responsive services, more efficient
use of resources, and a richer flow of creative ideas. Management also
believes that this unusual structure has enabled Leap to create a culture and
working environment that is attractive to creative talent. Leap has used this
to its advantage, bringing together top level marketing practitioners,
creative minds and technical talent selected for their balance of strategic
understanding and creative capabilities. In addition, Leap has used advanced
technology to link its people, assets and ideas into a flexible, fast-acting
organization.

Integrated Services Approach. Leap provides a full range of strategic,
creative, interactive and production services for both traditional and new
media projects. Leap's strategies are designed to integrate the most effective
and beneficial aspects of a wide array of media. Creative executions may
include television, print, outdoor and radio advertisements, as well as
promotions, direct mail, package design and logo design. Leap will also
develop and execute digital interactive solutions including World Wide Web
sites, CD-ROMs and interactive presentations. While Leap does not provide
traditional media buying services, it does coordinate placements of
advertisements on interactive media for its clients.

Technological Sophistication and Expertise. Management believes that the
Company is in the forefront in the application of new marketing communications
technology. The Company provides creative services for itself and its clients
by developing and maintaining sites on the Internet's World Wide Web. In
addition, Leap creates and implements interactive marketing solutions in a
variety of digital media including CD-ROMs. The Company's Creative Partners
include skilled programmers and interactive media developers. Management
believes that Leap's investment in technology serves as a competitive
advantage in recruiting and retaining talented employees.

As an example of the Company's technological sophistication, Leap recently
obtained a U.S. patent for an interactive video display system. The system
utilizes cable, wireless and digital satellite technologies to

26
<PAGE>

enable a large screen display system to receive digital audio/video signals
and to transmit the signals to a consumer or viewer at an adjacent or remote
location. The Company believes that the system described in the patent could
over time be used in multiple applications ranging from enhancement of an
advertiser's message on a billboard to interactive entertainment programming
at sporting and concert venues. The Company has not yet used the system
described in the patent in its business and there can be no assurance that it
will do so in the future.

Leap is networked to the Internet through a 1.5 Mbps T1 line. The Company
has developed an intranet Web site to allow easy distribution of information
internally in a secured environment, and its clients can view and proof both
print and graphics remotely through password protected Web pages. Proofing and
annotation of audio and video work is accomplished with Emotion's Creative
Partner content distribution system. Leap's programmers are versed in Basic,
Pascal, C/C++, Java, Perl, Lingo and Hypertalk. Leap develops Internet
projects on a number of platforms including Macintosh and Windows NT servers.
Leap also utilizes two Sun Microsystems Sparc Servers, one in-house and one
offsite. The in-house Sparc Server is used for development of Web projects and
beta testing new technologies for companies, including Netscape and
Macromedia, before they are released to the public for general sale. Completed
work is transferred to a Sun Sparc 20, which is housed at a location that
contains Chicago's Network Access Point, one of the hubs at which the world's
telecommunications providers (such as Sprint and MCI) share information
between networks. This Sparc 20 is monitored 24 hours a day, 7 days a week to
ensure optimal connectivity and functionality.

LEAP'S STRATEGY

Leap's strategy embodies the following key elements to build its business
and succeed in its mission:

Focus on Brand Stewardship. Leap's objective is to develop and nurture long-
term relationships with existing and new clients who have entrusted the
Company with the stewardship of their brands and the responsibility for
designing, creating and delivering key consumer messages over traditional and
new media. Leap has thus far been successful in winning additional assignments
from several clients who initially retained Leap to undertake a single project
in Web design or a specific brand advertising assignment. As such clients
worked with Leap and experienced its integrated, value-added approach, other
assignments and additional responsibilities followed. For example, Leap
received an initial assignment to do the strategic positioning and creative
development for Tommy Armour's 855s irons. Leap's scope of work for Tommy
Armour grew to include assignments for a World Wide Web site, new club design,
logo design, package design and material used at the point-of-purchase.
Similarly, Leap was initially engaged by U.S. Robotics to develop advertising
for its modem division. Leap has since received assignments to redesign and
develop a number of U.S. Robotics' Web sites. Leap is also working on adapting
U.S. Robotics' installation software CD-ROM to an advertising/marketing new
media tool. In addition, the Company has been engaged to do advertising for
U.S. Robotics' telephony division. Management believes that its focus on long-
term partnerships should provide a recurring revenue stream not associated
with single project assignments.

Maintain Superiority in Talent, Technology, and Service. Leap intends to
continue to attract, hire and retain top level strategic, creative and
technical talent and to be a leader in developing better ways of communicating
with consumers through leading-edge technology. With its flexible work team
approach and flat organizational structure, Leap is dedicated to providing
faster and more cost effective solutions to its clients' needs. Leap believes
that it can provide a competitive advantage to itself and its clients by
creating leading multimedia marketing programs that use interactive
technologies and MIS tools for optimizing the effectiveness of marketing
initiatives.

Target Market Leaders as Clients. Leap intends to focus on a limited number
of marquee clients, with businesses of national or global scope, that seek to
develop long-term marketing partnerships for significant national or
international brands and are interested in using traditional and new media for
their marketing communications. Many of Leap's current clients are, and future
targets are expected to be, market leaders with aggressive plans for growth
and multi-faceted communications needs.

27
<PAGE>

Develop Proprietary Program Material. Leap believes there is a significant
opportunity to create, develop and own proprietary program material for its
clients or itself. For example, Leap could create fictional characters, events
(a fictional sports league, for example) or locations (a fictional shopping
mall) that could be used in clients' marketing campaigns. This is similar in
concept to the early days of television when third parties, often advertising
agencies, developed entertainment programs sponsored by agency clients. Leap's
strategy, in contrast to the earlier concept, is to retain ownership of
programs it creates and to use such fictional creations primarily on the World
Wide Web, rather than television. If these fictional characters, events or
locations are developed and prove popular, the Company could license them to
sponsors. Moreover, the Company could create collateral merchandise, such as
clothing, games, and toys, based on these fictional creations. Leap's
management believes that this strategy, over time, could result in the
creation of intellectual property which, if properly utilized, could generate
a recurring revenue stream for the Company.

Pursue Acquisitions and Alliances. The Company expects to pursue
acquisitions of, or alliances with, businesses that extend or complement the
Company's business. The Company may explore acquisitions to obtain additional
top level talent, to supplement its scope of services and technology or to add
to its client roster. To assist the Company in attracting and servicing
international clients, the Company intends to seek out and establish strategic
alliances with international partners who share or expand Leap's core
strengths and services.

Broaden Operations Geographically to Service Clients. In keeping with the
Company's strategy of developing long-term relationships with national-to-
global clients, management intends to expand localized client account
management and support services through cost effective computerized local
offices. Primary creative marketing and advertising support will be provided
by personnel at the Company's corporate headquarters as management believes
that centralized operations can best preserve Leap's culture, assist
creativity and maximize the operational efficiencies of Leap's structure. The
Company presently operates a remote facility to ensure responsiveness to a
particular client's needs, and management will continue to evaluate the need
for localized account management and support on a client by client basis. It
is currently anticipated that larger national accounts will require small
local offices to supplement the primary operations at headquarters.

Create the Marketing Multiplier. In its work for clients, Leap applies a
concept it calls the "marketing multiplier." This concept involves the mixing
of advertising, entertainment and technology to increase the opportunities for
delivering brand messages in a fresh way. Ideally, this generates publicity
and public relations opportunities, creates product recognition and makes the
selling message more memorable. Leap seeks to create the "big idea," a
marketing theme which has greater impact as it is translated across multiple
communications channels into advertising, promotions, programming,
entertainment and Internet content. For example, in 1994 Leap created a series
of humorous spots for Miller that followed fictional quarterback Elmer Bruker,
a member of every winning Super Bowl team who never saw any playing time. Leap
wrote a Bruker biography, created Bruker trading cards and orchestrated
promotions and public relations efforts. The Bruker idea generated "free"
publicity and product recognition that went far beyond the spots themselves.
At Super Bowl 1995, network sportscasters interviewed Bruker and fans
displayed Bruker banners. The Company believes that major national-to-global
advertisers are embracing the "marketing multiplier" or "big idea" marketing
strategy as a way to build brand equity on a cost effective basis and that
Leap, with its expertise in developing communications across all platforms and
its relationships with clients and members of the media and entertainment
industries, is well positioned to leverage the multiplier effectively for the
brands it promotes.

LEAP'S SERVICES

Leap focuses on providing integrated marketing and communications services
designed to build brand equity through both traditional and new media.
Creative marketing solutions are generated with the goal of increasing the
client's sales while maximizing return on investment. The Company's solutions
are formulated through an ongoing process of building brand strategy and
creating and producing traditional and new media content.

28
<PAGE>

Strategic Brand Management. Leap focuses on developing a unique selling
proposition for a client or a client's product that builds brand equity and
differentiates the client or product from its competition. The Company creates
integrated marketing communications campaigns using a combination of
traditional and new media techniques designed to leverage marketing multiplier
principles. Leap has an account planning philosophy that places the consumer
at the center of the process, enhancing understanding of consumer needs,
motives and perceptions.

Creative Content Development. Leap develops creative ideas and executions
for delivery through a variety of distribution channels. Leap creates
television, print, radio and outdoor ads; develops logos, packaging, product
and collateral designs; creates promotions; generates design, programming and
content for World Wide Web sites, interactive kiosks and laptop presentations;
and develops entertainment programming.

New Media Production and Services. As part of Leap's integrated marketing
strategy, it generates and provides new media products and services including
designing and programming World Wide Web sites, interactive kiosks, CD-ROMs
and laptop presentations.

Innovative Production. Once strategy and creative content are approved by
clients, Leap produces the work in a manner designed to maintain high
standards of quality and deliver an attractive return on investment. Leap
seeks to deliver innovative solutions that can lower production costs, or
provide new media or new distribution channels for Leap's clients.

LEAP'S CLIENTS

Leap serves a variety of clients ranging from large companies such as Nike
and R.J. Reynolds to small companies such as Luminair Multimedia One, LLC and
The One Show. Leap's current clients include Nike, Ameritech Corporation, R.J.
Reynolds, the Chicago Tribune Company, U.S. Robotics, Tommy Armour and The
University of Notre Dame. Leap also believes in providing pro-bono services to
worthy organizations and has to date provided services to the Brain Injury
Association and the Partnership for a Drug Free America.

The Company's clients to date have included the following:

<TABLE>
<CAPTION>
CLIENT SERVICES PROVIDED BY LEAP
------ -------------------------
<C> <S>
Nike, Inc..................... Agency of record for Niketown and Nike Factory
Stores, developing strategic brand
positioning, producing print, radio, digital
design, packaging, multi-media, World Wide Web
strategy and design and strategic database
design.
U.S. Robotics, Inc............ Agency of record producing television, print,
radio, World Wide Web design, CD-ROM and
strategic database design.
Tommy Armour Golf Co.......... Agency of record developing strategic brand
positioning, producing television, print,
World Wide Web strategy and design, golf club
design, and logo design.
Ameritech Corporation......... Agency of record assigned to Ameritech Internet
services.
R.J. Reynolds Tobacco Co...... Providing strategic brand repositioning and
creative campaigns for selected brands.
Pizza Hut, Inc................ Strategic planning.
Chicago Tribune Company....... Development of World Wide Web programming and
content for delivery via the Internet.
The University of Notre Dame.. Television, CD-ROM, and multi-media design on a
project basis.
Cincinnati Bell Telephone..... Television, print, Internet access marketing,
radio, name generation, logo design, and
package design for various services on a
project basis.
</TABLE>

29
<PAGE>

<TABLE>
<CAPTION>
CLIENT SERVICES PROVIDED BY LEAP
------ -------------------------
<C> <S>
Anheuser-Busch, Inc................... Television on a project basis.
YES! Entertainment.................... Strategic positioning and television on
a project basis.
Brain Injury Association.............. Television and print on a pro bono
basis.
Partnership for a Drug Free America... Television on a pro bono basis.
The One Show.......................... Production of the CD-ROM for an award
show.
Boston Chicken, Inc................... Television, outdoor, menu design, and
promotions on a project basis.
United States Satellite Broadcasting.. Television and print on a project
basis.
Papa John's International, Inc. ...... Positioning, television, and menu
design on a project basis for this
regional pizza delivery company.
Luminair Multimedia One, LLC.......... Development of "History of Notre Dame
Football" CD-ROM.
Miller Brewing Company................ Previous agency of record for Miller
Lite Ice producing television, radio,
and print; television and promotional
work for Miller Lite on a project
basis producing a Super Bowl
commercial and campaign; new product
development and World Wide Web site
development for Plank Road Brewery and
America Specialty & Craft Beers
divisions on a project basis.
</TABLE>

Leap was added to Miller's roster of agencies in May 1994 to do project work
for Miller Brewing Company and Plank Road Brewery. During the course of an 18-
month relationship, Leap developed a Super Bowl campaign for Miller Lite, was
assigned agency of record for Miller Lite Ice, and worked on a number of new
product development assignments for Plank Road. In December 1995, the Company
voluntarily resigned the Miller account in order to pursue other assignments.

Leap's three largest clients accounted for approximately 85% of Leap's
revenues for the fiscal year ended January 31, 1996, with fluctuations in the
amount of revenue contribution from each such client from quarter to quarter.
Miller, Leap's largest client during fiscal 1996, accounted for approximately
66% of Leap's revenues during such period. Nike, Tommy Armour, U.S. Robotics
and Cincinnati Bell accounted for approximately 29.5%, 20.8%, 20.5% and 14.3%,
respectively, of the Company's revenues for the six months ended July 31,
1996. Since Leap is retained by a number of its clients on a project-by-
project basis, a client from whom Leap generates substantial revenue in one
period may not be a substantial source of revenue in a subsequent period.

CLIENT CASES

The following cases further illustrate the range of services that the
Company offers its clients and the value that such services can provide.

Niketown

Nike's global marketing director embarked on a national search for a second
agency to augment its longtime agency of record, Wieden & Kennedy. After a
nationwide review, Leap was selected as Nike's second agency of record. Leap's
first assignment was to reposition the Niketown brand of retail stores from a
basic retail strategy to an extension of Nike's "Just Do It" philosophy. Nike
management approved Leap's positioning strategy for Niketown and Leap then
created and executed elements including television, radio, print, outdoor
advertising, in-store strategies, multimedia strategy and design, Web site
development and packaging. In addition to ongoing advertising for existing
Niketown locations, Leap is also heavily involved in launching new locations
domestically and internationally.

30
<PAGE>

Chicago Tribune Company -- Online Arts and Entertainment Service Guide

Leap has been engaged as the strategic developer of the architecture and
look and feel of a leisure and entertainment segment of the Chicago Tribune
Company's Web site which the Company expects to be the most comprehensive
entertainment guide for the Chicago area. The site is intended to provide
consumers with up-to-date high-quality content, and eventually transactional
abilities, for nightclubs, bars, restaurants, live music, calendars, movie
guides, libraries, museums, parks and special events. The Company's plans also
envision versions of the site which will be "intelligent" and through usage
will track a user's preferences and provide personalized information.

Miller Brewing Company -- Super Bowl Campaign

As a member of Miller's agency roster, Leap recognized an opportunity for
Miller to reinforce its position as the NFL official beer sponsor as well as
compete directly with the Anheuser-Busch promotion "Bud Bowl." Facing a fast
turnaround schedule (six weeks), Leap created and produced television
commercials complete with celebrity talent and estate negotiation, a live
action shoot, a blue screen shoot, selection of NFL footage, editing and
compositing. The result was "Elmer Bruker," the story of the quarterback who
was a member of every winning Super Bowl team but never played. The spot
employed visual effects technology, such as that used in the movie "Forest
Gump," to incorporate football legends including Vince Lombardi and Hank
Stramm, and live action shots with Jimmy Johnson. The spots launched during
the college Bowl games on December 31, 1994. Leap orchestrated promotions and
public relations, wrote a Bruker biography, and created Bruker trading cards.

Tommy Armour Golf Company

Leap was retained as agency of record for Tommy Armour in May 1995. The
initial assignment was to create an advertising campaign that would relaunch
Tommy Armour's 855s Oversized Irons and begin to reposition the company as
forward thinking and technology focused. The 855s irons had been launched in
1994 with little advertising support and Tommy Armour felt it had missed an
opportunity to convey product innovation to consumers.

Leap developed a campaign based on game improvements and a themeline for the
advertising, "Take your game to the next level." The elements of the
communication plan included national television advertising, featuring
professional golfer Jim Gallagher, Jr., that ran on Saturday and Sunday golf
tournament telecasts and the CNN Airport Network. National trade and consumer
print advertising was also placed in golf publications. Leap created
integrated point of purchase materials, developed an updated Tommy Armour
logo, assisted in promotions and developed a Web site.

At the time Leap suggested the development of a Web site to Tommy Armour,
the Company was not aware of any other golf companies on the World Wide Web.
Leap convinced Tommy Armour that the Web site should be an integrated part of
its marketing plan and would offer benefits to consumers, trade partners and
the company. Leap crafted a deal with Golf Web, an online golf magazine, for
Tommy Armour to be the sole sponsor of Golf Web's coverage of all four major
tournaments in 1996, with a hyperlink to the Tommy Armour Web site. Leap
designed and developed the Tommy Armour Web site which includes product
information, a pro shop locator to help consumers find Tommy Armour products,
pro biographies, Tommy Armour news, and a golf trivia quiz. The Tommy Armour
Web site now serves consumers by providing relevant information and games,
trade partners by funneling customers to their retail outlets and Tommy Armour
by providing information about its customers.

COMPETITION

The markets for the Company's services are highly competitive. Clients may
change their marketing and communications advisors with relative ease or
perform these functions themselves. Clients may also reduce or eliminate their
expenditures on advertising and marketing at any time for any reason. The
Company faces

31
<PAGE>

competition from a number of sources, all striving to attract new clients or
additional assignments or accounts from existing clients. These sources
include national and regional full-service and specialty advertising agencies
as well as specialized and integrated marketing communications firms. The
Company could also be viewed as competing with large
entertainment/technology/marketing companies. While management believes that
Leap has a technological head start over most traditional agencies, many
agencies have begun to internally develop or acquire new media capabilities
(e.g., corporate identity and packaging, advertising services or World Wide
Web site design), have emerged technically proficient in the new media arena
and are competing with the Company in the interactive advertising market. Many
of the Company's competitors or potential competitors have longer operating
histories, longer client relationships and significantly greater financial,
management, technology, development, sales, marketing and other resources than
the Company.

There are relatively low barriers to entry into the Company's business. For
example, the Company has no significant proprietary technology that would
preclude or inhibit competitors from entering the integrated marketing
communication solutions market. The Company expects that it will face
additional competition from new entrants into the market in the future. There
can be no assurance that existing or future competitors will not develop or
offer services and products that provide significant performance, price,
creative or other advantages over those offered by the Company, which could
have a material adverse effect on the Company's business, financial condition
and operating results.

The Company believes that the principal competitive factors in its markets
are the abilities to understand the client's business and develop
strategically sound interactive solutions, present unique creative concepts,
demonstrate breadth and depth of technical and new media expertise, develop
strong customer relationships and produce high quality products with speed and
efficiency, and at a competitive price. The Company believes that it competes
favorably with respect to each of these factors, due in large part to a
structure that combines the creative talent and other skills of a traditional
advertising agency, as well as access to significant client advertising
budgets, with the technological vision required to convert client budgets into
effective digital, interactive marketing communications. However, there can be
no assurance that the Company will continue to compete successfully. To the
extent that the Company's competitors are perceived as providing superior
products, services or terms, or to the extent that the Company's clients are
dissatisfied with the Company's products, services or terms, the Company's
business, operating results and financial condition could be materially
adversely affected.

CREATIVE PARTNERS

As of August 31, 1996, Leap employed a total of 72 Creative Partners, 65 of
whom were full-time and 7 part-time. Of these, 62 were engaged in servicing
clients and 10 were involved in finance and administration. The Company
expects to hire a significant number of Creative Partners in fiscal 1997 to
accommodate anticipated growth and expansion. None of the Company's Creative
Partners are represented by a labor union, and the Company believes that its
relations with its Creative Partners are good.

FACILITIES

The Company owns its main office in Chicago which is a 12,400 square foot
two-story facility. The Company also leases a 2,200 square foot facility in
Portland, Oregon to service a local client. The Company is currently seeking
additional office space in Chicago, and believes that the space required to
serve the Company's present needs and anticipated growth will be available for
purchase or lease on commercially reasonable terms on an as-needed basis.

32
<PAGE>

LEGAL PROCEEDINGS

In September 1995, the Spin Doctors (also known as Modigliani, Inc.), a
recording and performing group, and Mow B'Jow Music, Inc., their music
publisher, filed a lawsuit against Leap, Miller and Trivers/Myers Music in the
United States District Court, Central District of California. The complaint
alleges copyright and persona infringement, statutory and common law unfair
competition and unjust enrichment stemming from the airing of a television
commercial created by Leap for a client. The suit has been referred to the
Company's insurance carrier and legal counsel. The complaint seeks substantial
monetary damages. In an unsolicited demand, the plaintiffs have offered to
compromise the case in the amount of $5,750,000. The defendants rejected such
offer to settle because of their belief that the plaintiffs' claims have no
merit, and the Company intends to vigorously defend its position. Although the
suit is in an early stage and it is therefore difficult to predict its
ultimate outcome, an adverse determination and award not covered by insurance
could have a material adverse effect on the Company's results of operations
and, if the offering contemplated by this Prospectus is not consummated, on
the Company's liquidity and consolidated financial position.

The Company is not a party to any other material litigation.

33
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND SIGNIFICANT EMPLOYEES

The executive officers, directors and significant employees of the Company
are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
R. Steven Lutterbach(1).......... 46 Chairman and Chief Executive Officer
Frederick Smith.................. 42 Vice Chairman and Chief Operating Officer
Thomas R. Sharbaugh.............. 52 President and Director
George Gier...................... 36 Executive Vice President, Chief Marketing
and Information Officer and Director
Joseph A. Sciarrotta............. 34 Executive Vice President, Chief Creative
Officer and Director
Peter Vezmar..................... 39 Chief Financial Officer and Treasurer
Robert C. Bramlette.............. 46 Chief Legal and Strategic Officer and
Secretary
Guy Day(1)(2)(4)................. 66 Director
John Keane(1)(2)(3)(4)........... 66 Director
Thomas McElligott(2)(3).......... 53 Director
</TABLE>
- --------
(1) Member of Compensation Committee.
(2) Messrs. Day, Keane and McElligott will become directors of the Company on
the effective date of the Registration Statement filed in connection with
the offering.
(3) Member of Audit Committee.
(4) Member of Stock Committee.

R. Steven Lutterbach co-founded Leap, has served as a director and officer
of the Company since its inception and became Chairman of the Board and Chief
Executive Officer in March 1996. From 1990 to the present, Mr. Lutterbach has
served as President of Forest Beach Development, Inc. and Long Beach
Development, Inc., both real estate development companies, which require
minimal amounts of his time. Mr. Lutterbach also co-founded the Alliance
Banking and Financial Service Companies, a full service bank in Michigan. Mr.
Lutterbach's previous experience includes positions as Chairman and Chief
Executive Officer of Control Resources Industries, Inc., a publicly held
company specializing in environmental products and service. Mr. Lutterbach
currently serves on the Board of Directors of several privately-held
businesses, foundations and social organizations, including Alliance Banking
Company.

Frederick Smith, a co-founder of Leap, was appointed Vice Chairman and Chief
Operating Officer of the Company in May 1996 and has served as a director and
officer since the Company's inception. From January 1991 until the formation
of Leap in September 1993, Mr. Smith was employed by DDB Needham Chicago,
where he was a Vice President, Executive Producer. While there, his principal
accounts were Bud Light, Michelob (for which he produced a commercial
featuring Phil Collins), Discover Card Services, General Mills and Audi. Mr.
Smith's previous experience included one year at Young and Rubicam Chicago,
where he was responsible for the Old Style "Heart of the Heartland" campaign,
and five years at Leo Burnett in Chicago where his client list included
McDonald's, Kelloggs and United Airlines.

Thomas R. Sharbaugh joined the Company in April 1996, became a director at
that time and was appointed President in May 1996. Prior to joining Leap, Mr.
Sharbaugh was employed by Sears from March 1994 until February 1996 as Vice
President, Strategic Marketing and Advertising. While at Sears, Mr. Sharbaugh
oversaw the "Softer Side of Sears" campaign, which was named as one of the top
10 print campaigns and top 25 television campaigns of 1995 (for the first time
ever for a retail advertiser). Prior to joining Sears, Mr. Sharbaugh held
various senior level executive marketing positions during his 16-year tenure
at Anheuser-Busch. As Vice President of Brand Management and, prior to that,
as Vice President of

34
<PAGE>

Budweiser Brands, he was responsible for managing brand marketing activities
and new product marketing. Mr. Sharbaugh's responsibilities at Anheuser-Busch
included the development and market launch of Bud Light; management of the
"This Bud's For You" campaign for Budweiser; the "Gimme a Light", "Spuds
McKenzie" and "Make it a Bud Light" campaigns for Bud Light; and the "Bud
Bowl" promotional campaign. Mr. Sharbaugh has received many awards for his
marketing accomplishments, including the Food and Beverage Marketing's
"Brammy" award for best sports marketing promotion in 1990, and was named to
Advertising Age's "Marketing 100" in 1992.

George Gier co-founded Leap, has served as a director and officer of Leap
since its inception and was appointed Executive Vice President, Chief
Marketing and Information Officer in May 1996. From January 1991 until joining
the Company, he was employed by DDB Needham Chicago, where he was a Vice
President, Creative Director. Mr. Gier's previous experience included Hal
Riney & Partners in San Francisco, where his principal assignment was the
introduction of Saturn automobiles. Prior to joining Hal Riney & Partners, Mr.
Gier spent four years at Fallon McElligott in Minneapolis, where his client
list included Lee Jeans, Porsche, Federal Express, Gilbey's Gin and Time/Life
Books. Mr. Gier's accolades include three "Clios" and 14 awards from The One
Show, and he has twice been a finalist for the Stephen E. Kelly Awards. In
1993, Mr. Gier was named Midwest Copywriter of the year by Adweek magazine,
and in 1994, he was named a National Creative All-Star by Adweek magazine.

Joseph A. Sciarrotta co-founded Leap, has served as a director and officer
of Leap since its inception and was appointed Executive Vice President, Chief
Creative Officer in May 1996. From January 1991 to August 1993, he was
employed by DDB Needham Chicago, where he was a Senior Vice President, Group
Creative Director. While at DDB Needham, Mr. Sciarrotta was responsible for
the Bud Light, Frito Lay, and Busch Garden Theme Parks accounts, among others.
Prior to his move to DDB Needham, Mr. Sciarrotta spent six years at J. Walter
Thompson Chicago where he was a Senior Vice President, Creative Director. His
work, while at J. Walter Thompson, on 7-11, Lowenbrau, Oscar Mayer, Kraft
Miracle Whip, Quaker Oats and Godfather's Pizza earned him various creative
awards as well as Effie awards for effective advertising. In 1990, Mr.
Sciarrotta was named to the Adweek Creative All-Star Team as TV Art Director
of the Year for the Midwest, and in 1994, he was named a National Creative
All-Star by Adweek magazine.

Peter Vezmar joined the Company in June 1994 as the Director of Finance and
has served as Chief Financial Officer and Treasurer of Leap since March 1996.
From February 1989 until November 1994, Mr. Vezmar was employed by Pavichevich
Brewing Co., a public company, as its Chief Financial Officer. Mr. Vezmar is a
Certified Public Accountant and a former partner in a regional CPA firm.

Robert C. Bramlette has served as Chief Legal and Strategic Officer and as
Secretary of the Company since May 1996. Prior to joining Leap, Mr. Bramlette
was Of Counsel to the law firm Krupa & Braun, which he joined in February
1996. Prior to joining Krupa & Braun, Mr. Bramlette was employed by Sears for
sixteen years, most recently as its Assistant General Counsel, Real Estate,
and prior to that time, in a number of positions including Director of
Corporate Communications.

Guy Day will become a member of the Company's Board of Directors on the
effective date of the Registration Statement filed in connection with the
offering. Mr. Day is the sole owner and employee of G. Bidet Co. Inc., a
California-based advertising consulting company, which he founded in 1987.
From 1989 to 1990, Mr. Day held the position of Vice Chairman at the
advertising agency Keye/Donna/Pearlstine where he assisted in the
reorganization of this midsize agency. Mr. Day joined McElligott Wright
Morrison White as its Vice Chairman for a four-month period in 1991 during
which he assisted in the firm's campaign to obtain an automobile manufacturer
as a client. In 1966 Mr. Day co-founded Faust/Day, Inc. which by way of merger
became Chiat/Day, Inc. From 1968 to 1976, Mr. Day served this agency as
Creative Director and Chief Operating Officer. In 1982, Mr. Day returned to
Chiat/Day, Inc. from a sabbatical and served as its President in charge of
western operations until 1987. During his employment at Chiat/Day the agency
was twice selected as Advertising Age's "National Agency of the Year."

John Keane will become a member of the Company's Board of Directors on the
effective date of the Registration Statement filed in connection with the
offering. Mr. Keane is the Gillen Dean and Korth Professor of Strategic
Management at The University of Notre Dame's College of Business
Administration.

35
<PAGE>

He joined The University of Notre Dame in January 1989 in his current
position. Prior to such time, Mr. Keane held various management and consulting
positions in the advertising industry. From 1972 to 1984 he was the founding
President of Managing Change, Inc., a marketing consulting firm, and from 1961
to 1972 he was employed by Needham, Harper & Steers, Inc., Wade Advertising,
Inc., North Advertising, Inc. and J. Walter Thompson Company, where his
clients included Seven-Up, Kraft Foods, Oscar Mayer, Quaker Oats, S.C. Johnson
and Campbell Taggart. Mr. Keane is a director of Excel Industries, Inc., a
publicly held manufacturer of automotive parts.

Thomas McElligott will become a member of the Company's Board of Directors
on the effective date of the Registration Statement filed in connection with
the offering. In 1981, Mr. McElligott co-founded the Fallon McElligott Rice
agency, which in 1984 was named Advertising Age's "National Agency of the
Year." After seven years at Fallon McElligott Rice, he moved in 1989 to
Chiat/Day/Mojo, serving as its Executive Creative Director. In 1990, Mr.
McElligott founded the advertising agency McElligott Wright Morrison White
where he served as Chief Executive Officer and Creative Director until he
retired in 1992. Mr. McElligott is a member of the Advertising Hall of Fame.

BOARD OF DIRECTORS

Upon the completion of the offering, the Board of Directors will be divided
into three classes. The Board will be composed of three Class I directors
(Messrs. Smith, Sciarrotta and Keane), two Class II directors (Messrs.
Sharbaugh and Gier) and three Class III directors (Messrs. Lutterbach, Day and
McElligott). The terms of the Class I, Class II and Class III directors expire
on the date of the 1997, 1998 and 1999 annual meetings, respectively. At each
annual meeting, successors to the class of directors whose term expires at
that annual meeting will be elected for a three-year term. Directors elected
by the stockholders may be removed only for cause.

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee

The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews with the independent public
accountants the plans and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of the Company's internal
accounting controls.

Compensation Committee

The Compensation Committee determines the compensation of the Company's
executive officers and makes recommendations concerning the grant of options
to purchase shares of the Company's stock under the Company's 1996 Stock
Option Plan, Employee Incentive Compensation Plan and Employee Stock Purchase
Plan.

Stock Committee

The Stock Committee will administer the Company's 1996 Stock Option Plan,
Employee Incentive Compensation Plan and Employee Stock Purchase Plan.

Other Committees

The Board of Directors may establish such other committees as deemed
necessary and appropriate from time to time.

36
<PAGE>

COMPENSATION OF THE BOARD OF DIRECTORS

The Company intends to pay a fee of $2,000 per Board meeting attended and
$500 per committee meeting attended to its directors who are not employees of
the Company. The Company will reimburse such directors for travel and lodging
expenses incurred in connection with their activities on behalf of the
Company. In addition, non-employee directors are eligible to participate in
the Company's Non-Employee Directors' Stock Option Plan. On the effective date
of the Registration Statement filed in connection with the offering, each of
Messrs. Day, Keane and McElligott will be granted options to purchase 20,000
shares of Common Stock pursuant to the plan. See "--Stock Option Plans--Non-
Employee Directors' Stock Option Plan."

EXECUTIVE COMPENSATION

The following table sets forth information with respect to the cash
compensation paid by the Company for services rendered during the fiscal year
ended January 31, 1996 to its chief executive officer and the other executive
officers of the Company whose total annual salary and bonus exceeded $100,000
during such period (each, a "Named Executive Officer").

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------- ALL OTHER
NAME SALARY ($) BONUS ($) COMPENSATION ($)
- ---- ---------- --------- ----------------
<S> <C> <C> <C>
R. Steven Lutterbach
Chief Executive Officer................. $201,000 -- --
Frederick Smith
Chief Operating Officer................. 201,000 -- --
George Gier
Executive Vice President, Chief
Marketing and Information Officer...... 201,000 -- --
Joseph A. Sciarrotta
Executive Vice President and Chief Crea-
tive Officer........................... 221,226 -- --
</TABLE>

No stock options or stock appreciation rights have been granted to the Named
Executive Officers since the Company's inception.

STOCK OPTION AND STOCK PURCHASE PLANS

1996 Stock Option Plan

Effective January 3, 1996, the Company adopted the 1996 Stock Option Plan
(the "1996 Stock Option Plan") which permits the grant of incentive stock
options and non-qualified stock options. The 1996 Stock Option Plan was
amended and restated, effective March 12, 1996, upon the Company's
reorganization. The 1996 Stock Option Plan is administered by the Stock
Committee, which has broad authority, subject to the terms of the 1996 Stock
Option Plan, to determine the material terms and provisions under which the
options are granted, including the individuals to whom such options may be
granted, exercise prices and numbers of shares subject to options, the time or
times during which options may be exercised and certain other terms and
conditions of the options granted. Officers, directors, and other key
employees of the Company, its subsidiaries and affiliates are eligible to
receive grants.

The exercise price of the incentive stock options under the 1996 Stock
Option Plan shall be equal to the fair market value of the Common Stock on the
date of grant; provided, however, that in the case of incentive stock options
granted to holders of more than 10% of the voting stock of the Company or any
subsidiary, the exercise price shall be not less than 110% of the fair market
value of the Common Stock on the date of grant. The exercise price of non-
qualified options shall be equal to the fair market value of the Common Stock
on the grant date as determined by the Stock Committee. The exercise price may
be paid in cash, by delivery of Common Stock or a combination thereof. The
Plan will terminate March 10, 2006 unless previously terminated by the Board
of Directors.

37
<PAGE>

As of August 31, 1996, options for 2,304,000 shares of Common Stock had been
granted under the 1996 Stock Option Plan and no additional shares of Common
Stock remained available for issuance thereunder. Of the options granted,
504,000 were granted on January 3, 1996 to employees of the Company at an
exercise price of $3.00 per share, and 1,800,000 were granted to a newly hired
executive officer on March 12, 1996 at an exercise price of $7.25 per share.
In estimating the fair market value of the Common Stock as of the respective
dates of grant, the Company's Board of Directors took into account a number of
factors including the Company's business and business prospects, its limited
operating history, the lack of an established market for the Common Stock and
developments in the public markets.

At the time of the January grants, no independent valuation of the Company
was available, and in determining the appropriate exercise price for the
options, the Board of Directors considered the Company's historical results of
operations, the then-current state of its business and management's business
plan. The Board of Directors also took into account uncertainties in the
business, in particular the reduction in revenues resulting from the Company's
resignation of the Miller account. An additional factor considered important
by the Board of Directors was the lack of an established trading market for
the Common Stock. Based upon these considerations, the Board of Directors
established an exercise price of $3.00 per share.

Between the January 3 and March 12 grant dates, a number of events occurred
which in the view of the Board of Directors indicated that the fair market
value of the Common Stock had increased significantly. Most importantly, based
on assignments from existing and new clients, management believed that the
Company was making progress in replacing the Miller revenues. In addition, the
Company succeeded in hiring an experienced and prominent marketing executive.
While the Company did not determine to proceed with an initial public offering
until late April, prior to March 12 the Company had engaged in preliminary
discussions with investment bankers concerning a variety of financing
opportunities including a public offering. The Board of Directors considered
it appropriate to take into account developments in the public markets for
comparable companies, the initial public offering prices for such companies
and appropriate discounts to reflect the fact that the Company was still
privately held and the significant uncertainty existing as of the grant date
as to whether a public offering would in fact occur. Based upon all of these
considerations, the Board of Directors established an exercise price of $7.25
per share.

The option exercise prices were equal to the fair market value of the Common
Stock as of the respective dates of grant as determined by the Board of
Directors, and accordingly, no compensation expense was recorded.

Non-employee Directors' Stock Option Plan

Effective May 1996, the Company adopted the 1996 Non-employee Directors'
Stock Option Plan (the "Directors' Plan"), pursuant to which options to
acquire a maximum of 200,000 shares of Common Stock may be granted to non-
employee directors. Options granted under the Directors' Plan do not qualify
as incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended. The Directors' Plan provides that on the
effective date of the Registration Statement filed in connection with the
offering, each of Messrs. Day, Keane and McElligott will be granted options to
purchase 20,000 shares of Common Stock at an exercise price equal to the
initial public offering price. Such options will become fully exercisable on
the date of grant. Pursuant to the Directors' Plan, each non-employee director
appointed or elected after the offering will be granted options to purchase
5,000 shares of Common Stock on the date of such director's initial election
or appointment to the Board of Directors and on each anniversary of the
initial grant date. Such options shall become exercisable one year after the
date of grant at an exercise price equal to the fair market value of the
Common Stock on the date of grant. All options granted under the Directors'
Plan will have a five-year term. The options may be exercised by payment in
cash, check or shares of Common Stock.

Employee Incentive Compensation Plan

Effective May 1996, the Company adopted the Employee Incentive Compensation
Plan (the "Incentive Plan"), which permits grants of incentive stock options,
non-qualified stock options, stock appreciation rights

38
<PAGE>

("SARs"), performance shares, restricted stock, deferred stock and other
stock-based awards. The Incentive Plan authorizes the issuance of up to
2,000,000 shares of Common Stock in connection with such awards. As of August
31, 1996, options to purchase 35,000 shares of Common Stock had been granted
under the Incentive Plan. The Incentive Plan is administered by the Stock
Committee, which has broad authority, subject to the terms of the Incentive
Plan, to grant stock options and make other awards under the Incentive Plan.
Directors, officers, employees and consultants of the Company are eligible to
receive grants.

The exercise price of stock options may not be less than the fair market
value of the Common Stock on the grant date. The Stock Committee will
determine when options may be exercised. The exercise price may be paid in
cash, by delivery of Common Stock or both.

SARs may be granted in conjunction with any stock option under the Incentive
Plan, in which case the exercise of the SAR shall require the cancellation of
a corresponding stock option, and the exercise of the stock option shall
require the cancellation of a corresponding portion of the SAR. In the case of
non-qualified stock options, such SARs may be granted at or after the time of
grant of such stock option. In the case of incentive stock options, such SARs
may be granted only at the time of grant of such option. An SAR may also be
granted on a standalone basis. Upon exercise of an SAR, the holder is entitled
to receive in cash, stock or both, as determined by the Stock Committee, the
difference between the fair market value of one share of Common Stock and (i)
the grant price of the SAR if the SAR was granted on a stand alone basis or
(ii) the option price if the SAR was granted in conjunction with a stock
option. An SAR granted in tandem with an incentive stock option is not
exercisable unless the fair market value of the Common Stock on the date of
exercise exceeds the option price.

The Incentive Plan also authorizes the granting of restricted and deferred
stock. The Stock Committee may condition the grant of restricted and deferred
stock upon the attainment of specified performance goals by the grantee or the
Company or other factors or criteria as the Stock Committee shall determine.

The Incentive Plan also authorizes other awards that are payable in, valued
in whole or in part by reference to, or otherwise based on or related to
shares of Common Stock, as deemed by the Stock Committee to be consistent with
the purposes of the Incentive Plan. Such stock-based awards may include,
without limitation, shares of Common Stock awarded as bonus, not subject to
any restrictions or conditions, convertible or exchangeable debt securities,
other rights convertible or exchangeable into the shares of Common Stock,
awards with value and payment contingent upon performance of the Company or
any other factors, and awards valued by reference to the book value of shares
of stock or the value of securities of or the performance of the Company.

Employee Stock Purchase Plan

Effective May 1996, the Company adopted the Employee Stock Purchase Plan
(the "Stock Purchase Plan"). A total of 500,000 shares of Common Stock have
been reserved for issuance under the Purchase Plan. The Purchase Plan, which
is intended to qualify under Section 423 of the Code, permits eligible
employees of the Company to purchase Common Stock through payroll deductions
with all such deductions credited to an account under the Purchase Plan.
Payroll deductions may not exceed $25,000 for all purchase periods ending
within any Plan Year (as hereinafter defined).

The Purchase Plan operates on a calendar year basis (the "Plan Year"). To be
eligible to participate during a Plan Year, an employee must file all
requisite forms prior to a specified due date known as the "Grant Date."
Generally the first day of each Plan Year will be the Grant Date and the last
day of each Plan Year will be an Exercise Date (the "Exercise Date"). The
determination of the Grant Date and the Exercise Dates are completely within
the discretion of the Plan Committee. On each Exercise Date, participants'
payroll deductions credited to their accounts will be automatically applied to
the purchase price of Common Stock at a price per share which is the lesser of
eighty-five percent (85%) of the fair market value of the Common

39
<PAGE>

Stock on the Grant Date or on the Exercise Date. Employees may end their
participation in the Purchase Plan at any time during an offering period, and
their payroll deductions to date will be refunded. Participation ends
automatically upon termination of employment with the Company.

Employees are eligible to participate in the Stock Purchase Plan if they are
customarily employed by the Company or a designated subsidiary for at least 20
hours per week and for more than five months in any calendar year. No person
will be able to purchase Common Stock under the Stock Purchase Plan if such
person, immediately after the purchase, would own stock possessing 5% or more
of the total combined voting power or value of all outstanding shares of all
classes of stock of the Company.

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with each of Messrs.
Lutterbach, Smith, Gier, Sciarrotta and Sharbaugh. The employment agreement
with Mr. Lutterbach provides for an annual base salary of $300,000. The
agreements between the Company and each of Messrs. Smith, Gier and Sciarrotta
provide for an annual base salary of $200,000. Each of such agreements expires
on March 11, 1999 and is terminable by the Company only in the event of death
or disability or for "Cause" (as defined).

The employment agreement between Leap and Mr. Sharbaugh provides for an
annual base salary of $300,000. In addition, pursuant to such agreement, Mr.
Sharbaugh received options to purchase 1,800,000 shares of Common Stock
pursuant to the 1996 Stock Option Plan. The options granted to Mr. Sharbaugh
have an exercise price of $7.25 per share and a 10-year term. Of such options,
1,400,000 vested and became exercisable on March 12, 1996 upon execution of
the employment agreement and 100,000 shares will vest and become exercisable
on each anniversary thereof for the next four years. Mr. Sharbaugh's
employment agreement expires on March 30, 1999 and is terminable by the
Company only in the event of death or disability or for "Cause" (as defined).

Each of the employment agreements contains provisions that restrict the
employee from misappropriating confidential information during the term of
employment and thereafter and from soliciting Leap's clients, prospects or
employees for two years following termination of employment.

LIMITATION OF LIABILITY AND INDEMNIFICATION

Pursuant to the provisions of the Delaware General Corporation Law ("DGCL"),
the Company has adopted provisions in the Restated Certificate which eliminate
the personal liability of its directors to the Company or its stockholders for
monetary damages for breach of their fiduciary duty as a director to the
fullest extent permitted by the DGCL except for liability (i) for any breach
of their duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (unlawful
payments of dividends or unlawful stock repurchases or redemptions), or (iv)
for any transaction from which the director derived an improper personal
benefit.

The Restated Certificate also contains provisions which require the Company
to indemnify its directors and officers and permit the Company to indemnify
its employees to the fullest extent permitted by Delaware law, including those
circumstances in which indemnification would otherwise be discretionary,
except that the Company shall not be obligated to indemnify any such person
(i) with respect to proceedings, claims or actions initiated or brought
voluntarily by any such person and not by way of defense or (ii) for any
amounts paid in settlement of an action indemnified against by the Company
without the prior written consent of the Company. The Company has entered into
indemnity agreements with each of its directors, Mr. Vezmar and Mr. Bramlette
providing for such indemnification and for certain additional indemnification
rights.

40
<PAGE>

CERTAIN TRANSACTIONS

In February 1995, Mr. Lutterbach made a loan to the Company which totalled
approximately $400,000 at August 31, 1996. Such loan bears interest at the
prime rate plus 1 1/2% per annum. The loan is secured by a second mortgage on
the property located at 22 West Hubbard Street, Chicago, Illinois 60610, the
Company's principal executive offices. The Company intends to repay this
indebtedness in full from the proceeds of the offering. See "Use of Proceeds."

The Company currently has outstanding approximately $2.0 million of
indebtedness to Manufacturers Bank of Chicago ("Manufacturers") under two loan
facilities and recently obtained a loan in the principal amount of $596,000
from Manufacturers, secured by a mortgage on the Company's office building.
The full amount of such indebtedness is personally guaranteed by Mr.
Lutterbach and his spouse, Mr. Gier and his spouse, Mr. Sciarrotta and Mr.
Smith. The Company intends to repay this indebtedness in full from the
proceeds of the offering. See "Use of Proceeds."

From November 1, 1994 until October 26, 1995, the Company was a party to a
revolving credit agreement with Alliance Banking Company ("Alliance") of New
Buffalo, Michigan, under which amounts up to approximately $1,000,000 were
outstanding from time to time. On October 26, 1995, all outstanding debt under
the revolving credit agreement was paid in full and the agreement was
terminated. In addition, the Company had outstanding a mortgage loan,
initially in the amount of $480,000 from Alliance. Such loan was paid in full
on May 31, 1996. The full amount of such indebtedness was personally
guaranteed by Messrs. Gier, Lutterbach, Sciarrotta and Smith. Mr. Lutterbach
is a member of the Board of Directors of and a significant stockholder in
Alliance.

The Company has adopted a policy that all future transactions with
affiliated entities or persons will be on terms no less favorable than could
be obtained from unrelated parties and all future transactions between the
Company and its officers, directors, principal stockholders and affiliates
will be approved by a majority of the Company's independent directors.

41
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of August 31, 1996 and as adjusted
to give effect to the sale of shares of Common Stock in the offering, by (a)
each director and executive officer of the Company, (b) each person known by
the Company to own beneficially five percent or more of the Common Stock, (c)
each Selling Stockholder and (d) all current executive officers and directors
as a group.

<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY
BENEFICIALLY OWNED AFTER
SHARES OWNED AFTER OFFERING IF OVER-
BENEFICIALLY OFFERING IF OVER- NUMBER ALLOTMENT OPTION
OWNED PRIOR TO ALLOTMENT OPTION OF EXERCISED IN
OFFERING(1) NOT EXERCISED(1) SHARES FULL(1)
------------------ --------------------- BEING ---------------------
NAME NUMBER PERCENT NUMBER PERCENT OFFERED NUMBER PERCENT
---- ---------- ------- ---------- ------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
R. Steven
Lutterbach(2).......... 2,400,000 25.0% 2,400,000 17.6% 150,000 2,250,000 16.5%
Frederick Smith(3)...... 2,400,000 25.0 2,400,000 17.6 150,000 2,250,000 16.5
Joseph A.
Sciarrotta(4).......... 2,340,000 24.4 2,340,000 17.2 150,000 2,190,000 16.1
George Gier(5).......... 2,300,000 24.0 2,300,000 16.9 150,000 2,150,000 15.8
Thomas R. Sharbaugh(6).. 1,400,000 12.7 1,400,000 9.3 -- 1,400,000 9.3
All executive officers
and directors as a group
(7 persons prior to the
offering, 10 persons
after the offering)(7).. 10,858,333 98.5% 10,918,333(8) 72.4% 600,000 10,318,333(8) 68.4%
</TABLE>
- --------
(1) Unless otherwise indicated below, the persons in the above table have sole
voting and investment power with respect to all shares shown as
beneficially owned by them.
(2) The shares shown include 150,000 shares held by trusts for Mr.
Lutterbach's children, as to which Mr. Lutterbach disclaims beneficial
ownership.
(3) The shares shown include 150,000 shares held by trusts for Mr. Smith's
children, for which Mr. Smith, as co-trustee, shares voting and investment
power.
(4) The shares shown include 50,000 shares held by a trust for Mr.
Sciarrotta's family, for which Mr. Sciarrotta, as co-trustee, shares
voting and investment power.
(5) The shares shown include 100,000 shares held by trusts for Mr. Gier's
children, for which Mr. Gier, as co-trustee, shares voting and investment
power.
(6) The shares shown are issuable to Mr. Sharbaugh pursuant to currently
exercisable options.
(7) The shares shown include 1,418,333 shares issuable to officers pursuant to
currently exercisable options.
(8) Includes 60,000 shares issuable to non-employee directors pursuant to
options that will become exercisable on the effective date of the
Registration Statement filed in connection with the offering.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.01 per share, and 20,000,000 shares of Preferred
Stock, par value $.01 per share.

The following summary of certain provisions of the Common Stock and the
Preferred Stock does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Company's Restated
Certificate and Bylaws that are included as exhibits to the Registration
Statement of which this Prospectus is a part, and by the provisions of
applicable law.

COMMON STOCK

As of August 31, 1996, there were 9,600,000 shares of Common Stock
outstanding that were held of record by 18 stockholders. There will be
13,600,000 shares of Common Stock outstanding after giving effect to the sale
of the shares of Common Stock offered hereby and excluding shares of Common
Stock reserved for issuance upon exercise of options granted under the
Company's stock option plans. The Common Stock

42
<PAGE>

has been approved for quotation on the Nasdaq National Market under the symbol
"LEAP." To date, there exists no market for the Common Stock and there can be
no assurance that a market will develop.

Subject to preferences that may be applicable to any outstanding Preferred
Stock, holders of Common Stock are entitled to receive ratably such dividends
as may be declared by the Board of Directors out of funds legally available
therefor. See "Dividend Policy." Holders of Common Stock are entitled to one
vote per share in all matters to be voted upon by stockholders. In the event
of a liquidation, dissolution or winding up of the Company, holders of Common
Stock are entitled to share ratably in all assets remaining after payment of
the Company's liabilities and the liquidation preferences of any outstanding
Preferred Stock. Holders of Common Stock have no preemptive rights and no
rights to convert their Common Stock into any other securities, and there are
no redemption provisions with respect to such shares. All of the outstanding
shares of Common Stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of Preferred Stock which the
Company may issue in the future.

PREFERRED STOCK

The authorized class of Preferred Stock may be issued in series from time to
time with such designations, relative rights, priorities, preferences,
qualifications, limitations and restrictions thereof as the Board of Directors
determines. The rights, priorities, preferences, qualifications, limitations
and restrictions of different series of Preferred Stock may differ with
respect to dividend rates, amounts payable on liquidation, voting rights,
conversion rights, redemption provisions, sinking fund provisions and other
matters. The Board of Directors may authorize the issuance of Preferred Stock
which ranks senior to the Common Stock with respect to the payment of
dividends and the distribution of assets on liquidation. In addition, the
Board of Directors is authorized to fix the limitations and restrictions, if
any, upon the payment of dividends on Common Stock to be effective while any
shares of Preferred Stock are outstanding. The Board of Directors, without
stockholder approval, can issue Preferred Stock with voting and conversion
rights which could adversely affect the voting power of the holders of Common
Stock. The issuance of Preferred Stock may have the effect of delaying,
deferring or preventing a change of control of the Company. The Company has no
present intention to issue shares of Preferred Stock.

CERTAIN CORPORATE PROVISIONS

The Company's Restated Certificate and Bylaws contain a number of provisions
relating to corporate governance and to the rights of stockholders. Certain of
these provisions may be deemed to have a potential "anti-takeover" effect in
that such provisions may delay, defer or prevent a change of control of the
Company. These provisions include (a) the classification of the Board of
Directors into three classes, each serving for staggered three year terms, (b)
the authority of the Board to issue series of Preferred Stock with such voting
rights and other powers as the Board of Directors may determine, (c) notice
requirements in the Bylaws relating to nominations to the Board of Directors
and to the raising of business matters at stockholders meetings, (d) a
requirement that a vote of the holders of at least 80% of the shares entitled
to vote generally for the election of directors is required to amend
provisions of the Restated Certificate relating to the classification of the
Board and removal of directors, and (e) a prohibition of stockholder action by
written consent.

The Company is subject to the provisions of the DGCL. Section 203 of the
DGCL prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the business combinations is approved in a
prescribed manner. A "business combination" includes mergers, asset sales, and
other transactions resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, an "interested stockholder" is a
person who, together with affiliates owns, or within three years did own, 15
percent or more of the corporation's voting stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is First
Chicago Trust Company of New York.

43
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the offering, there has been no public market for the Company's
Common Stock. Future sales of substantial amounts of Common Stock in the
public market could adversely affect the prevailing market prices.

Upon completion of the offering, there will be 13,600,000 shares of Common
Stock of the Company outstanding. Of these shares, the 4,000,000 shares sold
in the offering will be immediately eligible for resale in the public market
without restriction under the Securities Act, unless they are held by
"affiliates" of the Company within the meaning of Rule 144 under the
Securities Act. The remaining 9,600,000 shares will be "restricted" securities
within the meaning of Rule 144.

The Company, its officers and directors and stockholders (who in the
aggregate will hold all of the restricted securities upon completion of the
offering) have agreed that they will not directly or indirectly, offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of,
without the prior written consent of Dean Witter, any shares of Common Stock
or any other equity security of the Company, or any securities convertible
into or exercisable or exchangeable for, or warrants, options or rights to
purchase or acquire, Common Stock or any other equity security of the Company,
or enter into any agreement to do any of the foregoing, for a period of 180
days from the effective date of the Registration Statement of which this
Prospectus forms a part. Beginning 181 days after the effective date, all of
the currently outstanding restricted shares will become eligible for resale in
the public market subject to compliance with applicable provisions of Rule 144
adopted under the Securities Act. Dean Witter may, in its sole discretion and
at any time without notice, release any portion of the shares subject to lock-
up agreements.

In general, under Rule 144 as currently in effect, beginning 90 days after
the effective date of the Registration Statement of which this Prospectus is a
part, a stockholder, including an "affiliate" of the Company, as that term is
defined in Rule 144 (an "Affiliate"), who has beneficially owned his or her
restricted securities (as that term is defined in Rule 144) for at least two
years from the later of the date such securities were acquired from the
Company or (if applicable) the date they were acquired from an Affiliate is
entitled to sell, within any three-month period, a number of such shares that
does not exceed the greater of one percent of the then outstanding shares of
Common Stock (approximately 136,000 shares immediately after the offering) or
the average weekly trading volume in the Common Stock during the four calendar
weeks preceding the date on which notice of such sale was filed under Rule
144, provided certain requirements concerning availability of public
information, manner of sale and notice of sale are satisfied. In addition,
under Rule 144(k), if a period of at least three years has elapsed between the
later of the date restricted securities were acquired from the Company and the
date they were acquired from an Affiliate of the Company, a stockholder who is
not an Affiliate of the Company at the time of sale and has not been an
Affiliate for at least three months prior to the sale would be entitled to
sell the shares immediately without compliance with the foregoing requirements
under Rule 144.

The Company intends to file a registration statement under the Securities
Act no earlier than 90 days after the offering, covering an aggregate of
5,004,000 shares of Common Stock reserved for issuance under the stock option
and stock purchase plans. Upon the effectiveness of that registration
statement, 1,661,333 of the shares of Common Stock issuable under the stock
option and stock purchase plans, other than shares held by Affiliates, will be
immediately eligible for resale in the public market without restriction,
subject to the terms of the lock-up agreements which will be applicable to
options to purchase 1,478,333 shares.

44
<PAGE>

UNDERWRITING

The Underwriters named below, for whom Dean Witter Reynolds Inc. and
Donaldson, Lufkin & Jenrette Securities Corporation are acting as
representatives (the "Representatives"), have severally agreed, subject to the
terms and conditions of the Underwriting Agreement (a copy of which has been
filed as an exhibit to the Registration Statement), to purchase from the
Company the number of shares of Common Stock set forth opposite their
respective names in the table below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Dean Witter Reynolds Inc...........................................
Donaldson, Lufkin & Jenrette Securities Corporation................
---------
Total............................................................ 4,000,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligation is such that they must purchase all of the shares (other than those
subject to the over-allotment option) if any are purchased. The Underwriters
have advised the Company that they propose to offer the shares of Common Stock
to the public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers (who may include the Underwriters) at such
price less a concession not to exceed $ per share. The Underwriters may
allow, and such dealers may reallow, a discount not to exceed $ per share
on sales to certain other dealers. After the initial offering to the public,
the public offering price and such concessions may be changed.

The Selling Stockholders have granted to the Underwriters an option
exercisable for 30 days from the date of this Prospectus to purchase up to
600,000 additional shares of Common Stock at the initial public offering price
less the underwriting discounts and commissions, solely to cover over-
allotments. To the extent such option is exercised, each Underwriter will be
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares of Common Stock as the number of shares
of Common Stock set forth opposite each Underwriter's name in the preceding
table bears to the total number of shares of Common Stock listed in such
table.

The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, or contribute to payments the Underwriters may be required
to make in respect thereof.

The Company, subject to certain exceptions, its directors and officers and
the Selling Stockholders have agreed with the Underwriters that they will not
offer, sell or contract to sell, or otherwise dispose of, or enter into any
agreement to sell, directly or indirectly, any shares of the Company's Common
Stock or any securities convertible into, or exchangeable or exercisable for,
shares of the Company's Common Stock for a period of 180 days after the
effective date of the Registration Statement of which this Prospectus forms a
part without the prior written consent of Dean Witter. See "Shares Eligible
for Future Sale."

The Underwriters do not intend to confirm sales of shares of Common Stock
offered hereby to any accounts over which they exercise discretionary
authority.

Prior to this offering, there has been no established trading market for the
Common Stock. The initial price to public of the Common Stock offered hereby
will be determined by negotiation between the Company and the Representatives.
The factors to be considered in determining the initial price to public
include the history of and the prospects for the industry in which the Company
competes, the ability of the Company's management, the past and present
operations of the Company, the historical results of operations of the
Company, the prospects for future earnings of the Company, the general
condition of the securities market at the time of this offering, the recent
market prices of securities of generally comparable companies and other
factors deemed relevant.

45
<PAGE>

LEGAL MATTERS

The legality of the issuance of the shares of Common Stock being offered
hereby will be passed upon for the Company and the Selling Stockholders by
Katten Muchin & Zavis, a partnership including professional corporations,
Chicago, Illinois. Certain legal matters will be passed upon for the
Underwriters by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts.

EXPERTS

The consolidated financial statements of the Company for the period from
inception (September 20, 1993) to January 31, 1994 and the fiscal years ended
January 31, 1995 and 1996, appearing in this Prospectus and Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as set forth in their report thereon appearing elsewhere in the
Registration Statement, and are included in reliance upon the report given
upon the authority of such firm as experts in giving said reports.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. For further information, reference is made to
the Registration Statement and exhibits thereto. The information so omitted,
including exhibits, may be obtained from the Commission at its principal
office in Washington, D.C. upon the payment of the prescribed fees, or may be
examined without charge at the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549-1004. Such materials also may be
accessed electronically by means of the Commission's home page on the Internet
at http://www.sec.gov.

The Company intends to furnish its shareholders with annual reports contain-
ing consolidated financial statements audited by independent public accoun-
tants.

46
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Arthur Andersen LLP, Independent Public Accountants............. F-2
Consolidated Balance Sheets as of January 31, 1995 and 1996 and (Unau-
dited) July 31, 1996..................................................... F-3
Consolidated Statements of Operations for the Period from Inception (Sep-
tember 20, 1993) to January 31, 1994 and for the Fiscal Years Ended Janu-
ary 31, 1995 and 1996 and for the (Unaudited) Six-Month Periods Ended
July 31, 1995 and 1996................................................... F-4
Consolidated Statements of Stockholders' Deficit for the Period from In-
ception (September 20, 1993) to January 31, 1994 and for the Fiscal Years
Ended January 31, 1995 and 1996 and for the (Unaudited) Six-Month Period
Ended July 31, 1996...................................................... F-5
Consolidated Statements of Cash Flows for the Period from Inception (Sep-
tember 20, 1993) to January 31, 1994 and for the Fiscal Years Ended Janu-
ary 31, 1995 and 1996 and for the (Unaudited) Six-Month Periods Ended
July 31, 1995 and 1996................................................... F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of The Leap Group, Inc.:

We have audited the accompanying consolidated balance sheets of The Leap
Group, Inc. (a Delaware corporation) and subsidiaries as of January 31, 1995
and 1996, and the related consolidated statements of operations, stockholders'
deficit and cash flows for the period from inception (September 20, 1993) to
January 31, 1994 and for each of the years in the two-year period ended
January 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Leap
Group, Inc. and subsidiaries as of January 31, 1995 and 1996, and the results
of its operations and its cash flows for the period from inception (September
20, 1993) to January 31, 1994 and for each of the years in the two-year period
ended January 31, 1996, in conformity with generally accepted accounting
principles.

Arthur Andersen LLP

Chicago, Illinois,
June 7, 1996

F-2
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JANUARY 31,
---------------------- JULY 31,
1995 1996 1996
ASSETS ---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents................ $ 6,715 $ 47,981 $ 82,148
Accounts receivable...................... 648,757 362,388 3,303,104
Costs in excess of billings.............. 591,263 619,660 798,733
Deferred income tax asset................ 477,793 0 0
Prepaid expenses......................... 18,285 42,201 27,175
---------- ---------- ----------
Total current assets................... 1,742,813 1,072,230 4,211,160
---------- ---------- ----------
Property and Equipment
Land..................................... 158,921 158,921 158,921
Building and improvements................ 432,093 442,923 469,791
Furniture and equipment.................. 233,162 549,983 883,977
---------- ---------- ----------
824,176 1,151,827 1,512,689
Less accumulated depreciation............ (103,598) (254,454) (397,301)
---------- ---------- ----------
Net property and equipment............. 720,578 897,373 1,115,388
---------- ---------- ----------
Other Assets............................... 74,137 83,190 774,886
---------- ---------- ----------
Total Assets............................... $2,537,528 $2,052,793 $6,101,434
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable......................... $2,000,559 $ 898,133 $2,965,566
Accrued expenses......................... 282,140 230,952 331,286
Notes payable to bank.................... 940,873 459,378 1,849,265
Current portion of mortgage payable...... 34,160 37,117 40,659
Current portion of capital lease
obligations............................. 0 19,178 49,136
Notes payable to officer................. 0 400,000 400,000
---------- ---------- ----------
Total current liabilities.............. 3,257,732 2,044,758 5,635,912
Long-Term Debt
Mortgage payable......................... 419,844 381,097 549,077
Capital lease obligations................ 0 66,526 98,790
---------- ---------- ----------
Total Liabilities.......................... 3,677,576 2,492,381 6,283,779
---------- ---------- ----------
Commitments and Contingencies (Note 6)
Stockholders' Deficit
Preferred Stock, $.01 par value,
20,000,000 shares authorized; no shares
issued or outstanding................... 0 0 0
Common Stock, $.01 par value; 100,000,000
shares authorized, 9,600,000 shares
issued and outstanding.................. 96,000 96,000 96,000
Additional paid in capital............... (95,000) (95,000) (95,000)
Accumulated deficit...................... (1,141,048) (440,588) (183,345)
---------- ---------- ----------
Total Stockholders' Deficit............ (1,140,048) (439,588) (182,345)
---------- ---------- ----------
Total Liabilities and Stockholders'
Deficit................................... $2,537,528 $2,052,793 $6,101,434
========== ========== ==========
</TABLE>

The accompanying notes to the financial statements are an integral part of
these statements.

F-3
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED JANUARY 31, ENDED JULY 31,
------------------------------------ ------------------------
1994(1) 1995 1996 1995 1996
---------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................ $ 372,500 $ 4,679,248 $ 8,209,622 $ 5,577,173 $ 7,290,103
Operating expenses:
Direct costs and
related expenses..... 243,717 3,749,019 3,622,016 2,930,261 4,493,580
Salaries and related
expenses............. 132,867 1,598,047 2,246,963 942,958 1,691,252
General and
administrative
expenses............. 118,541 722,092 984,966 463,690 749,904
---------- ----------- ----------- ----------- -----------
Total operating
expenses........... 495,125 6,069,158 6,853,945 4,336,909 6,934,736
---------- ----------- ----------- ----------- -----------
Operating
income/(loss).......... (122,625) (1,389,910) 1,355,677 1,240,264 355,367
Interest expense........ 3,607 102,699 161,194 88,237 98,124
---------- ----------- ----------- ----------- -----------
Income/(loss) before
income taxes....... (126,232) (1,492,609) 1,194,483 1,152,027 257,243
Income tax
benefit/(expense)...... 50,493 427,300 (494,023) (477,011) 0
---------- ----------- ----------- ----------- -----------
Net income/(loss)....... $ (75,739) $(1,065,309) $ 700,460 $ 675,016 $ 257,243
========== =========== =========== =========== ===========
Per share data:
Net income/(loss) per
share................ $ (0.01) $ (0.11) $ 0.07 $ 0.07 $ 0.03
========== =========== =========== =========== ===========
Shares used in per
share computation.... 10,108,680 10,108,680 10,108,680 10,108,680 10,108,680
========== =========== =========== =========== ===========
</TABLE>
- --------
(1) For short period from business inception, September 20, 1993, through
January 31, 1994.

The accompanying notes to the financial statements are an integral part of
these statements.

F-4
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
----------------- PAID IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNTS CAPITAL DEFICIT DEFICIT
--------- ------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance as of September
20, 1993 (Inception)... -- $ -- $ -- $ -- $ --
Issuance of common
stock, at $.01 par
value.................. 9,600,000 96,000 (95,000) -- 1,000
Net loss............... -- -- -- (75,739) (75,739)
--------- ------- -------- ----------- -----------
Balance as of January
31, 1994............... 9,600,000 96,000 (95,000) (75,739) (74,739)
Net loss............... -- -- -- (1,065,309) (1,065,309)
--------- ------- -------- ----------- -----------
Balance as of January
31, 1995............... 9,600,000 96,000 (95,000) (1,141,048) (1,140,048)
Net income............. -- -- -- 700,460 700,460
--------- ------- -------- ----------- -----------
Balance as of January
31, 1996............... 9,600,000 96,000 (95,000) (440,588) (439,588)
Net income--unaudited.. -- -- -- 257,243 257,243
--------- ------- -------- ----------- -----------
Balance as of July 31,
1996--unaudited........ 9,600,000 $96,000 $(95,000) $ (183,345) $ (182,345)
========= ======= ======== =========== ===========
</TABLE>

The accompanying notes to the financial statements are an integral part of
these statements.

F-5
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED JANUARY 31, ENDED JULY 31,
--------------------------------- ----------------------
1994(1) 1995 1996 1995 1996
-------- ----------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income/(loss)....... $(75,739) $(1,065,309) $ 700,460 $ 675,016 $ 257,243
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization......... 5,957 106,930 169,598 53,850 155,579
Deferred income
taxes................ (50,493) (427,300) 477,793 477,041 0
Changes in operating
assets and
liabilities:
Accounts receivable.. (93,500) (555,257) 286,369 (576,862) (2,940,716)
Costs in excess of
billings............ 0 (591,263) (28,397) 483,820 (179,073)
Prepaid expenses..... (22,387) 4,103 (23,916) 8,024 15,025
Other assets......... (13,711) (69,716) (27,795) (12,576) (704,428)
Accounts payable..... 191,159 1,809,400 (1,102,426) (1,213,688) 2,067,433
Accrued expenses..... 57,886 224,254 (51,188) (47,017) 100,335
-------- ----------- ---------- ---------- ----------
Net cash (used
in)/provided by
operating activities... (828) (564,158) 400,498 (152,392) (1,228,602)
-------- ----------- ---------- ---------- ----------
Cash flows from investing
activities:
Capital expenditures.... (62,605) (281,571) (241,947) (35,899) (298,640)
-------- ----------- ---------- ---------- ----------
Cash flows from financing
activities:
Proceeds from issuance
of common stock........ 1,000 0 0 0 0
Net
borrowings/(repayments)
on line of credit...... 180,220 760,653 (722,517) (161,373) 1,389,887
Borrowings on term
note................... 0 0 241,022 0 0
Mortgage payable........ 0 (25,996) (35,790) (19,361) 171,522
Note payable to
officer................ 0 0 400,000 450,000 0
-------- ----------- ---------- ---------- ----------
Net cash provided
by/(used in) financing
activities............. 181,220 734,657 (117,285) 269,266 1,561,409
-------- ----------- ---------- ---------- ----------
Net increase/(decrease)
in cash and cash
equivalents............. 117,787 (111,072) 41,266 80,975 34,167
Cash and cash
equivalents, at
beginning of period..... 0 117,787 6,715 6,715 47,981
-------- ----------- ---------- ---------- ----------
Cash and cash
equivalents, at end of
period.................. $117,787 $ 6,715 $ 47,981 $ 87,690 $ 82,148
======== =========== ========== ========== ==========
Supplementary disclosure
of cash paid during the
period:
Interest paid........... $ 2,564 $ 88,091 $ 166,898 $ 93,614 $ 79,181
======== =========== ========== ========== ==========
Schedule of noncash
investing and financing
activities:
Property purchased under
mortgage payable....... $ 0 $ 480,000 $ 0 $ 0 $ 0
======== =========== ========== ========== ==========
Equipment purchased
under capital lease
obligations............ $ 0 $ 0 $ 85,704 $ 24,884 $ 62,222
======== =========== ========== ========== ==========
</TABLE>
- --------
(1) For short period from business inception, September 20, 1993, through
January 31, 1994.

The accompanying notes to the financial statements are an integral part of
these statements.

F-6
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

(INFORMATION AS OF JULY 31, 1996 AND INFORMATION RELATING TO THE SIX MONTHS
ENDED JULY 31, 1995 AND 1996 IS UNAUDITED.)

NOTE 1 -- DESCRIPTION OF BUSINESS

The Leap Group, Inc. (the "Company") is a Delaware corporation incorporated
in March, 1996, to act as the parent company for three wholly-owned
subsidiaries--The Leap Partnership, Inc. ("Leap Partnership"), an Illinois
corporation established in September, 1993; Lilypad Services, Inc.
("Lilypad"), an Illinois corporation established in September, 1995; and
Tadpole Productions, Inc. ("Tadpole"), an Illinois corporation established in
September, 1995.

The Company is a strategic and creative communications company that develops
and implements integrated brand marketing campaigns using traditional and new
media primarily for market leading clients.

The Company has a limited operating history. The Company began operations in
November, 1993 and experienced operating losses during fiscal 1994 and 1995.
Although the Company had operating income in fiscal 1996, it resigned the
account of its most significant client near the end of fiscal 1996. Although
the Company had operating income of $355,367 for the six months ended July 31,
1996, it had an accumulated deficit of $183,345 at July 31, 1996.

The Company's operations are subject to certain risks and uncertainties
including, among others, a limited operating history, substantial operating
losses, management's plan for growth and expansion, and current and potential
competitors with greater financial, technical and marketing resources. These
and other risks and uncertainties are discussed elsewhere in this Prospectus.

Should the initial public offering contemplated by this Prospectus (the
"Offering") not be completed and management desire to continue to implement
its strategic growth plans through fiscal 1997, the Company could, in the
future, be required to consider other financing alternatives. However, such
financing may not be available on terms acceptable to the Company, or at all.
Alternatively, the Company could modify its strategic plans to adjust to
available working capital resources.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying Consolidated Financial Statements have been prepared on the
basis that the entities that now comprise the Company were combined at their
inception for financial reporting purposes. All significant intercompany
accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an
original maturity of ninety days or less to be cash equivalents.

Disclosures About Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value
of each class of financial instrument held by the Company:

Cash, trade receivables and trade payables: the carrying amounts approximate
fair value because of the short maturity of these items.

Notes payable to a bank and mortgage payable: due to the floating interest
rate on these obligations, the carrying amounts approximate fair value.

F-7
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and
amortization. Company policy provides for capitalization of all major
expenditures for renewal and improvements and for current charges to income
for repairs and maintenance. The provision for depreciation and amortization
has been calculated using straight-line and accelerated methods over the
estimated economic lives of the related assets as follows:

<TABLE>
<S> <C>
Building...................................................... 39 years
Building improvements......................................... 7 years
Furniture and fixtures........................................ 7 years
Equipment..................................................... 3-5 years
</TABLE>

Revenue Recognition

Retainers from fixed fee arrangements, typically in the form of monthly
retainers, are recognized over the period in which services are rendered.
Revenues from production services are recognized at the completion of such
services. The Company's production projects are usually commenced and
completed in a short time period, often less than 60 days. Outside production
costs are initially recorded as costs in excess of billings and are expensed
as direct costs and related expenses at completion. Revenue earned from fees
based upon third-party media placements are recognized when the Company-
created materials appear on various media in accordance with industry
practice. Salary and other related general and administrative costs are
expensed as incurred.

Concentration of Credit and Other Risk

SFAS No. 105, Disclosure of Information about Financial Instruments with
Off-Balance Sheet Risk and Financial Instruments with Concentration of Credit
Risk, requires disclosure of any significant off-balance sheet and credit risk
concentrations. The Company has no significant off-balance sheet items. The
Company attempts to limit its concentration of credit risk by securing clients
which are well-known advertisers of consumer and industrial goods and
services. The Company does not have an allowance for doubtful accounts
recorded at January 31, 1995, January 31, 1996 or July 31, 1996.

While the Company typically enters into written agreements with its clients,
it at times performs services prior to the execution of such agreements, and
written contracts are typically terminable by either party on short notice,
often 90 days and in certain instances less. Management considers the
relationships with existing clients to be good, however, the loss of any one
or more of the Company's significant clients could have a material adverse
effect on the Company's business, financial condition and results of
operations. For the six months ended July 31, 1996, four clients accounted for
29.5%, 20.8%, 20.5% and 14.3%, respectively, of consolidated revenues. During
fiscal 1996, one client accounted for approximately 66% of consolidated
revenues. In fiscal 1995, two clients accounted for approximately 64% and 28%,
respectively, of consolidated revenues.

Income Taxes

The Company accounts for income taxes under SFAS No. 109, which requires
recognition of deferred tax assets for the expected future effects of all
deductible temporary differences, loss carryforwards, and tax credit
carryforwards. Deferred tax assets are then reduced, if deemed necessary, by a
valuation allowance for the amount of any tax benefits which, more likely than
not based on current circumstances, are not expected to be realized.

Post-retirement Benefits

The Company has no obligations for post-retirement benefits.

F-8
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Per Share Data

Net income (loss) per common share is computed by dividing net income (loss)
by the weighted average number of common shares and dilutive common stock
equivalent shares outstanding during the year.

Common and equivalent shares include "cheap stock," whether dilutive or
anti-dilutive. Cheap stock consists of any common stock, options, and warrants
issued within one year prior to the effective date of the Offering, with a
price below the initial public offering price. The initial public offering
price, for purposes of this computation, is assumed to be $10.00 per share.
These have been included as common stock equivalents for all years presented,
reduced by the number of shares of common stock which could be purchased with
the proceeds from the assumed exercise of the options and warrants, including
tax benefits assumed to be realized. Supplementary earnings per common share,
giving effect to the intended repayment of debt with a portion of the proceeds
anticipated with the Offering, is not materially different from net
income/(loss) per common share as shown on the statement of operations.

Deferred Issuance Cost

Costs that were incurred in connection with the Offering prior to the
Offering have been deferred and recorded as an asset. These costs are to be
deducted from the related proceeds when received.

Management's Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
period. Actual results could differ from those estimates.

Unaudited Interim Financial Statements

In the opinion of management, the unaudited interim balance sheet and
related statement of stockholders' deficit as of July 31, 1996, and the
related statements of operations and cash flows for the six months ended July
31, 1995 and 1996, have been prepared on the same basis as the audited
financial statements contained herein and include all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
financial information set forth therein. The results of operations for the six
months ended July 31, 1996, are not necessarily indicative of the results that
may be expected for the fiscal year ending January 31, 1997.

Recently Issued Accounting Standards

In October, 1995, the Financial Accounting Standards Board issued SFAS No.
123, Accounting for Stock-Based Compensation. SFAS No. 123 establishes
financial accounting and reporting standards for stock-based compensation. The
Statement defines a fair value-based method of accounting for an employee
stock option or similar equity instrument. However, it also allows a company
to continue to measure compensation cost for those plans using the intrinsic
value based method of accounting prescribed by APB Opinion No. 25, Accounting
for Stock Issued to Employees. Companies electing to remain with the
accounting in Opinion No. 25 must make pro forma disclosures of net income and
earnings per share, as if the fair value-based method of accounting defined in
the Statement had been applied. The Company will be required to adopt SFAS No.
123 during fiscal 1997. Management believes that the Company will elect to
make pro forma disclosure as allowed by SFAS No. 123.

F-9
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, which the Company adopted in fiscal 1996. SFAS No. 121 requires
that long-lived assets and certain identifiable intangibles to be held and
used by the Company be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. To date, no such events or circumstances have occurred. However,
the Company intends to continue to perform a periodic review of assets for
impairment.

NOTE 3 -- NOTES PAYABLE TO BANKS

Lines of Credit

On November 1, 1994, the Company entered into a revolving credit agreement
with a bank for a line of credit of up to $1 million. The interest rate on
January 31, 1995 (1.5% above the bank's prime lending rate) was 10.5%. The
line was collateralized by all business assets, including a second mortgage on
the Company's commercial real estate, and was guaranteed by certain
stockholders of the Company. At January 31, 1995, $941,000 was outstanding
under such line and was classified as short-term debt. On October 26, 1995,
all outstanding debt under the line was paid in full, the agreement was
terminated and the mortgage was discharged.

On October 4, 1995, the Company obtained a line of credit with a bank for up
to $1,500,000. On July 5, 1996, the agreement expired and was subsequently
extended through October 31, 1996. The interest rate on January 31, 1996 (1%
above the bank's prime lending rate) was 9.5%. The line is collateralized by
most of the Company's general business assets and by the guarantees of certain
stockholders of the Company. At January 31, 1996, $218,000, and at July 31,
1996, $1,359,500, was outstanding under such line and classified as current.
There are no material covenants associated with this line.

Revolving Line and Term Note

On October 4, 1995, the Company obtained an additional line of credit for up
to $500,000 to purchase computer and office equipment. The interest rate on
January 31, 1996, (1% above the bank's prime lending rate) was 9.5%. The note
is secured by all the computer equipment of the Company and is guaranteed by
certain stockholders of the Company. At January 31, 1996, the outstanding
balance was approximately $241,000 which was classified as current. On April
4, 1996, the agreement expired and was subsequently extended through October
31, 1996. At July 31, 1996, the outstanding balance was approximately
$490,000, which was classified as current. The agreement contains various non-
financial covenants with which the Company is in compliance through July 31,
1996.

Mortgage

On March 9, 1994, the Company secured a loan for $480,000 to purchase the
building in which the Company's current offices are located. The three-year
balloon note bore interest at the rate of 8.5%, payable in monthly principal
and interest installments of $5,995 through March 9, 1997, and was
collateralized by a mortgage on the Company's offices. This loan was
refinanced on May 30, 1996.

The new loan is in the amount of $596,000, bears interest at prime plus 1%,
and is payable in monthly principal and interest installments of $7,794
through May 2001, with a balloon payment of approximately $360,000 in June
2001. The loan is secured by a mortgage on the building in which the Company's
current offices are located.

F-10
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 4 -- RELATED PARTY TRANSACTIONS

Guarantees of Notes Payable to Banks

As discussed in Note 3, substantially all of the Company's debt has been
guaranteed by certain shareholders of the Company.

Note Payable to Officer

In February 1995, the Company secured additional financing from an officer
of the Company to fund additional working capital needs of the Company. The
$450,000 installment note bears interest at prime plus 1.5% through October
31, 1996 and is collateralized by a second mortgage on the Company's principal
office building. $50,000 has been repaid on the loan and the remainder will be
repaid within the next year.

NOTE 5 -- CAPITAL STOCK

Incorporation

On September 20, 1993, Leap Partnership was incorporated in Illinois.
Subsequently, on March 11, 1996, the Company was formed and became the parent
to the wholly-owned subsidiaries, Leap Partnership, Lilypad, and Tadpole. In
connection with the formation of the Company, each of the four shareholders of
Leap Partnership exchanged their 25 shares of Leap Partnership common stock
for 2,400,000 shares of the Company's common stock. Common stock and per share
amounts have been retroactively restated in the accompanying financial
statements to reflect the effect of the reorganization. The combined entities
have been under common control since inception and have been included in the
consolidated financial statements at historical cost since their respective
dates of inception in a manner similar to a pooling of interests.

The certificate of incorporation of the Company authorizes 40,000,000 shares
of common stock with $.01 par value and 10,000,000 shares of preferred stock
with a $.01 par value per share. On May 29, 1996, the Board of Directors and
Stockholders of the Company approved an amendment to the certificate of
incorporation which increased the total number of authorized shares of common
stock to 100,000,000 and preferred shares to 20,000,000.

1996 Stock Option Plan

On January 3, 1996, the Board of Directors and Shareholders at Leap
Partnership adopted the 1996 Stock Option Plan (the "1996 Stock Option Plan"),
which was assumed and Amended and Restated on March 12, 1996, by the Board of
Directors and Stockholders of the Company, whereby certain eligible employees
may be granted options. The 1996 Stock Option Plan allows issuance of
incentive stock options and nonqualified options. The 1996 Stock Option Plan
is administered by the Board of Directors, as a whole, or the 1996 Stock
Option Committee of the Board of Directors (the "Stock Committee"). The
exercise price of incentive stock options shall not be less than the stock's
fair market value on the date of grant.

On January 3, 1996, the Stock Committee granted options to purchase 504,000
shares of Common Stock at an exercise price of $3.00 per share under the 1996
Stock Option Plan. Of such options, 181,333 were exercisable on the date of
grant, 161,333 will vest on January 1, 1997, and 161,334 will vest on January
1, 1998.

On March 12, 1996, the Committee granted to an officer of the Company
options to purchase 1,800,000 shares of Common Stock at an exercise price of
$7.25 per share. On the date of grant, 1,400,000 of these options became
exercisable; the remaining 400,000 options will become exercisable in four
equal annual installments beginning one year after the date of grant. No
shares of Common Stock remain available for issuance under the 1996 Stock
Option Plan.

F-11
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Employee Incentive Compensation Plan

Effective May 29, 1996, the Company adopted the Employee Incentive
Compensation Plan (the "Incentive Plan"), which permits grants of incentive
stock options, nonqualified stock options, stock appreciation rights,
performance shares, restricted stock, deferred stock and other stock-based
awards. The Incentive Plan authorizes the issuance of up to 2,000,000 shares
of Common Stock in connection with such awards. On June 7, 1996, pursuant to
the Incentive Plan, an officer of the Company was granted options to purchase
15,000 shares of Common Stock at an exercise price of $12.00 per share. Such
options vest in equal installments on each of the first three anniversaries of
the grant date. On July 16, 1996, options to purchase an aggregate of 20,000
shares of Common Stock were granted to employees of the Company pursuant to
the Incentive Plan at an exercise price of $12.00 per share. Such options
vested in full upon grant. Directors, officers, employees and consultants of
the Company are eligible to receive grants under the Incentive Plan.

Employee Stock Purchase Plan

Effective May 29, 1996, the Company's Board of Directors adopted the
Employee Stock Purchase Plan (the "Stock Purchase Plan"), which provides for
the issuance of a maximum of 500,000 shares of Common Stock. Under Section 423
of the Internal Revenue Code (the "Code"), eligible employees can have
earnings withheld to be used to purchase shares of the common stock on
specified dates determined by the Board of Directors up to a maximum of
$25,000 per year. The price of the common stock purchased under the Stock
Purchase Plan will be equal to 85% of the lower of the fair market value of
the common stock on the commencement date of each offering period or the
specified purchase date.

Non-Employee Director's Stock Option Plan

On May 29, 1996, the Board of Directors adopted the 1996 Non-Employee
Director's Stock Option Plan (the "Directors' Plan"). The Directors' Plan
provides for the issuance of up to 200,000 nonstatutory stock options to non-
employee directors of the Company. On the effective date of the Offering, each
of three non-employee directors will be granted immediately exercisable
options to purchase 20,000 shares of Common Stock at an exercise price equal
to the initial public offering price. Each person who becomes a non-employee
director of the Company after the date of the Offering will automatically be
granted nonstatutory options to purchase 5,000 shares of Common Stock on the
date of such director's initial election or appointment to the Board of
Directors and on each anniversary of the initial grant date. Such options
shall become exercisable one year after the date of grant at an exercise price
equal to the fair market value of the Common Stock on the date of grant. All
options granted under the Directors' Plan will have a five-year term.

NOTE 6-- COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases telephones, copiers, and other equipment under operating
leases which expire in 1998. Minimum future lease payments under these leases
are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
JANUARY 31,
-----------
<S> <C>
1997.......................................................... $27,828
1998.......................................................... 27,828
-------
Total minimum lease payments required......................... $55,656
=======
</TABLE>

F-12
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Capital Leases

The Company leases computer equipment under capital leases. Future minimum
lease payments under the capital leases as of January 31, 1996, are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING
JANUARY
31,
-----------
<S> <C>
1997........................................................ $ 32,525
1998........................................................ 32,525
1999........................................................ 32,525
2000........................................................ 18,206
--------
Total minimum lease payments required....................... $115,781
less amount representing interest.......................... (30,077)
--------
Obligation under capital leases............................. $ 85,704
less current portion of capital lease obligation........... (19,178)
--------
Non-current portion of capital lease obligation............. $ 66,526
--------
</TABLE>

Litigation

In September, 1995, the Spin Doctors (also known as Modigliani, Inc.), a
recording and performing group, and Mow B'Jow Music, Inc., their music
publisher, filed a lawsuit against Leap, Miller and Trivers/Myers Music in the
United States District Court, Central District of California. The complaint
alleges copyright and persona infringement, statutory and common law unfair
competition and unjust enrichment stemming from the airing of a television
commercial created by the Company for a client. The suit has been referred to
the Company's insurance carrier and legal counsel. The complaint seeks
substantial monetary damages. In an unsolicited demand, the plaintiffs have
offered to compromise the case in the amount of $5,750,000. The defendants
rejected such offer to settle because of their belief that the plaintiffs'
claims have no merit, and the Company intends to vigorously defend its
position. Although the suit is in an early stage and it is therefore difficult
to predict its ultimate outcome, an adverse determination and award of damages
not covered by insurance could have a material adverse effect on the Company's
results of operations and, if the offering contemplated by this Prospectus is
not consummated, on the Company's liquidity and consolidated financial
position.

Employment Agreements

The Company has entered into three-year employment agreements with five
employees, all expiring in March, 1999. Three of the agreements provide for
annual base salaries of $200,000 and the other two agreements provide for
annual base salaries of $300,000.

NOTE 7 -- INCOME TAXES

Income taxes are provided based upon income reported for financial reporting
purposes using the provisions of Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes, which requires the liability
method as described in Note 2.

The income tax provisions (benefits) charged to net income are summarized as
follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY
31,
-----------------------------
1994 1995 1996
-------- --------- --------
<S> <C> <C> <C>
Federal:
Current..................................... $ -- $ -- $ 16,230
Deferred.................................... (42,920) (363,205) 406,125
-------- --------- --------
$(42,920) $(363,205) $422,355
State:
Current..................................... $ -- $ -- $ --
Deferred.................................... (7,573) (64,095) 71,668
-------- --------- --------
Total Tax Provision (Benefit)............. $(50,493) $(427,300) $494,023
======== ========= ========
</TABLE>

F-13
<PAGE>

THE LEAP GROUP, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The statutory federal income tax rate is reconciled to the Company's
effective income tax rate below:

<TABLE>
<CAPTION>
FISCAL YEAR
ENDED JANUARY
31,
--------------------
1994 1995 1996
----- ----- ----
<S> <C> <C> <C>
Statutory rate......................................... (34.0)% (34.0)% 34.0%
State, net of Federal.................................. (4.9) (4.9) 4.9
Change in valuation allowance.......................... -- 11.4 1.3
Other.................................................. (1.1) (1.1) 1.2
----- ----- ----
Effective rate......................................... (40.0)% (28.6)% 41.4%
===== ===== ====
</TABLE>

Deferred income taxes arise from temporary differences between the tax basis
of assets and liabilities and their reported amounts in the financial
statements. The components of the net deferred income tax asset are as
follows:

<TABLE>
<CAPTION>
JANUARY 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Net operating loss carryforward........................ $ 582,296 $ 103,600
Alternative minimum tax credit......................... -- 16,230
Compensation accruals.................................. 57,868 55,598
Other.................................................. -- 3,173
Less--Valuation allowance.............................. (162,371) (178,601)
--------- ---------
Net deferred income tax asset...................... $ 477,793 $ --
========= =========
</TABLE>

Although the Company achieved net income during 1996, it resigned the
account of its most significant client in December, 1995, as discussed in Note
8. For this reason, and the Company's history of operating losses before
fiscal 1996, management has recorded a valuation allowance to fully reserve
for its net deferred tax asset at January 31, 1996.

At January 31, 1996, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $260,000. The net operating loss
carryforwards expire in 2009 and 2010.

NOTE 8 -- RESIGNATION FROM SIGNIFICANT CLIENT

Revenues from a major client represented approximately 66% and 64% of the
Company's total revenues in fiscal 1995 and 1996, respectively. In December
1995, the Company resigned the account of this client in order to pursue other
assignments.

NOTE 9 -- SUBSEQUENT EVENTS

Initial Public Offering

The Company plans to complete an underwritten Offering of 4,000,000 shares
of its common stock.

F-14
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UN-
DERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICI-
TATION OF ANY OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 12
Dividend Policy.......................................................... 12
Dilution................................................................. 13
Capitalization........................................................... 14
Selected Consolidated Financial and Other Data........................... 15
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 16
Business................................................................. 23
Management............................................................... 34
Certain Transactions..................................................... 41
Principal and Selling Stockholders....................................... 42
Description of Capital Stock............................................. 42
Shares Eligible For Future Sale.......................................... 44
Underwriting............................................................. 45
Legal Matters............................................................ 46
Experts.................................................................. 46
Additional Information................................................... 46
Index to Consolidated Financial Statements............................... F-1
</TABLE>

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

UNTIL , 1996 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

THE LEAP GROUP, INC.

LOGO

4,000,000 SHARES
COMMON STOCK

P R O S P E C T U S

DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

, 1996

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below is an estimate of the approximate amount of fees and
expenses (other than underwriting commissions and discounts) payable by the
Registrant in connection with the issuance and distribution of the Common
Stock pursuant to the Prospectus contained in this Registration Statement. The
Registrant will pay all of these expenses.

<TABLE>
<CAPTION>
APPROXIMATE
AMOUNT
-----------
<S> <C>
Securities and Exchange Commission registration fee.............. $ 21,612
NASD filing fee.................................................. 6,135
Nasdaq listing fee............................................... 50,000
Accountants' fees and expenses................................... 160,000
Blue Sky fees and expenses....................................... 15,000
Legal fees and expenses.......................................... 325,000
Transfer Agent and Registrar fees and expenses................... 10,000
Printing and engraving expenses.................................. 150,000
Miscellaneous expenses........................................... 62,253
--------
Total.......................................................... $800,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article VIII of the Registrant's Amended and Restated Certificate of
Incorporation (the "Certificate") provides that the Registrant shall indemnify
its directors to the full extent permitted by the General Corporation Law of
the State of Delaware (the "DGCL") and may indemnify its officers and
employees to such extent, except that the Registrant shall not be obligated to
indemnify any such person (i) with respect to proceedings, claims or actions
initiated or brought voluntarily by any such person and not by way of defense,
or (ii) for any amounts paid in settlement of an action indemnified against by
the Registrant without the prior written consent of the Registrant. The
Registrant intends to enter into indemnity agreements with each of its
directors. These agreements may require the Registrant, among other things, to
indemnify such directors against certain liabilities that may arise by reason
of their status or service as directors, to advance expenses to them as they
are incurred, provided that they undertake to repay the amount advanced if it
is ultimately determined by a court that they are not entitled to
indemnification, and to obtain directors' liability insurance if available on
reasonable terms.

In addition, Article IX of the Certificate provides that a director of the
Registrant shall not be personally liable to the Registrant or its
stockholders for monetary damages for breach of his or her fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) for willful or negligent conduct in paying dividends or
repurchasing stock out of other than lawfully available funds or (iv) for any
transaction from which the director derives an improper personal benefit.

Reference is made to Section 145 of the DGCL which provides for
indemnification of directors and officers in certain circumstances.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In September 1993, the Registrant's predecessor entity issued an aggregate
of 100 shares of Common Stock to four individuals in exchange for cash in the
aggregate amount of $1,000. In March 1996, the Registrant issued an aggregate
of 9,600,000 shares of Common Stock to the same four individuals in exchange
for their stock in the predecessor business. Such transactions were effected
in reliance upon the exemption

II-1
<PAGE>

from the registration requirements of the Securities Act contained in Section
4(2) of the Securities Act and the rules and regulations promulgated
thereunder on the basis that such transactions did not involve any public
offering. No underwriters were engaged with respect to any of these
transactions and no underwriting discounts or commissions were paid in
connection with the sale of any such securities.

ITEM 16. EXHIBITS

(a)Exhibits.

<TABLE>
<C> <S> <C>
*1. Form of Underwriting Agreement.
*3.1 Certificate of Incorporation of the Registrant.
*3.2 Bylaws of the Registrant.
4.1 Specimen stock certificate representing Common Stock.
*5. Opinion of Katten Muchin & Zavis as to the legality of
securities to be registered.
*10.1 Revolving Credit Agreement, dated October 4, 1995, by and
between the Company and Manufacturers Bank for a line of
credit up to $1,500,000, and related documentation.
*10.2 Revolving Credit Agreement, dated April 4, 1996 by and
between the Company and Manufacturers Bank, for a line of
credit up to $500,000, and related documentation.
*10.3 Mortgage, Assignment of Leases & Security Agreement and
Mortgage Note, dated May 7, 1996, in the principal amount of
$596,000 by and between the Company and Manufacturers Bank.
*10.4 Installment Note and Trust Deed dated February 1, 1995 in the
principal amount of $500,000 by and between the Company and
R. Steven Lutterbach.
10.5 Form of the Leap Group, Inc. Employee Incentive Compensation
Plan.
10.6 Form of the Leap Group, Inc. Non-employee Directors' Stock
Option Plan.
10.7 Form of the Leap Group, Inc. Employee Stock Purchase Plan.
*10.8 The Leap Group, Inc. Amended and Restated 1996 Stock Option
Plan
*10.9 Employment Agreement dated March 12, 1996 by and between the
Company and
R. Steven Lutterbach.
*10.10 Employment Agreement dated March 12, 1996 by and between the
Company and
Thomas Sharbaugh.
*10.11 Employment Agreement dated March 12, 1996 by and between the
Company and Frederick Smith.
*10.12 Employment Agreement dated March 12, 1996 by and between the
Company and
George Gier.
*10.13 Employment Agreement dated March 12, 1996 by and between the
Company and
Joseph A. Sciarrotta.
*10.14 Form of Indemnification Agreement.
11. Statement regarding computation of per share earnings.
*21. Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Katten Muchin & Zavis (contained in Exhibit 5).
*23.3 Consent of Guy Day.
*23.4 Consent of John Keane.
*23.5 Consent of Thomas McElligott.
*24. Power of Attorney.
*27. Financial Data Schedule.
</TABLE>
- --------
* Previously filed.

II-2
<PAGE>

(b)Financial Statement Schedule

Independent Auditors' Report

ITEM 17. UNDERTAKINGS

The Registrant hereby undertakes:

(1) To provide to the Underwriters at the closing specified in the
underwriting agreement, certificates in such denominations and registered
in such names as required by the Underwriters to permit prompt delivery to
each purchaser.

(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this Registration Statement as of the time it was declared effective.

(3) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the applicable provisions of the DGCL, or otherwise,
the Registrant has been advised that in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

II-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
CHICAGO, STATE OF ILLINOIS, ON THE 4TH DAY OF SEPTEMBER, 1996.

The Leap Group, Inc.

/s/ R. Steven Lutterbach
By: _________________________________
R. STEVEN LUTTERBACH Chairman and
Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON SEPTEMBER 4, 1996.

SIGNATURE TITLE

/s/ R. Steven Lutterbach Chief Executive Officer and Director
- ------------------------------------- (principal executive officer)
R. STEVEN LUTTERBACH

/s/ Peter Vezmar Chief Financial Officer (principal
- ------------------------------------- financial and accounting officer)
PETER VEZMAR

* Chief Operating Officer and Director
- -------------------------------------
FREDERICK SMITH

* President and Director
- -------------------------------------
THOMAS R. SHARBAUGH

* Executive Vice President, Chief
- ------------------------------------- Marketing and Information Officer
GEORGE GIER and Director

* Executive Vice President, Chief
- ------------------------------------- Creative Officer and Director
JOSEPH SCIARROTTA

/s/ Peter Vezmar
*By: ________________________________
PETER VEZMAR
as Attorney-in-Fact

II-4
<PAGE>

SIGNATURES

The Leap Group, Inc.

By: _________________________________
R. STEVEN LUTTERBACH Chairman and
Chief Executive Officer

SIGNATURE TITLE

Chief Executive Officer and Director
- ------------------------------------- (principal executive officer)
R. STEVEN LUTTERBACH

Chief Financial Officer (principal
- ------------------------------------- financial and accounting officer)
PETER VEZMAR

* Chief Operating Officer and Director
- -------------------------------------
FREDERICK SMITH

* President and Director
- -------------------------------------
THOMAS R. SHARBAUGH

* Executive Vice President, Chief
- ------------------------------------- Marketing and Information Officer
GEORGE GIER and Director

* Executive Vice President, Chief
- ------------------------------------- Creative Officer and Director
JOSEPH SCIARROTTA

*By: ________________________________
PETER VEZMAR
as Attorney-in-Fact

II-5
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBITS PAGE
-------- ----
<C> <S> <C>
*1. Form of Underwriting Agreement.
*3.1 Certificate of Incorporation of the Registrant.
*3.2 Bylaws of the Registrant.
4.1 Specimen stock certificate representing Common Stock.
*5. Opinion of Katten Muchin & Zavis as to the legality of
securities to be registered.
*10.1 Revolving Credit Agreement dated October 4, 1995 for a line of
credit up to $1,500,000 by and between the Company and
Manufacturers Bank and related documentation.
*10.2 Revolving Credit Agreement dated April 4, 1996 for a line of
credit up to $500,000 by and between the Company and
Manufacturers Bank and related documentation.
*10.3 Mortgage, Assignment of Leases & Security Agreement and
Mortgage Note dated May 7, 1996 in the principal amount of
$596,000 by and between the Company and Manufacturers Bank.
*10.4 Installment Note and Trust Deed dated February 1, 1995 in the
principal amount of $500,000 by and between the Company and R.
Steven Lutterbach.
10.5 Form of the Leap Group, Inc. Employee Incentive Compensation
Plan.
10.6 Form of the Leap Group, Inc. Non-employee Directors' Stock
Option Plan.
10.7 Form of the Leap Group, Inc. Employee Stock Purchase Plan.
*10.8 The Leap Group, Inc. Amended and Restated 1996 Stock Option
Plan.
*10.9 Employment Agreement dated March 12, 1996 by and between the
Company and
R. Steven Lutterbach.
*10.10 Employment Agreement dated March 12, 1996 by and between the
Company and
Thomas Sharbaugh.
*10.11 Employment Agreement dated March 12, 1996 by and between the
Company and Frederick Smith.
*10.12 Employment Agreement dated March 12, 1996 by and between the
Company and
George Gier.
*10.13 Employment Agreement dated March 12, 1996 by and between the
Company and
Joseph A. Sciarrotta.
*10.14 Form of Indemnification Agreement.
11. Statement regarding computation of per share earnings.
*21. Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Katten Muchin & Zavis (contained in Exhibit 5).
*23.3 Consent of Guy Day.
*23.4 Consent of John Keane.
*23.5 Consent of Thomas McElligott.
*24. Power of Attorney.
*27. Financial Data Schedule
</TABLE>
- --------
* Previously filed.

(b)Financial Statement Schedule

Independent Auditors' Report

II-6
<PAGE>

Description of Artwork
Contained in the Registration Statement

Background
- ----------

An oval shaped "lilypad", covering 3/4 of the page, appears as a background
on each page of the artwork and alternates extending from the top and bottom
of each page. The lilypad is a bright green color offset against a blue
background to give the impression of a lilypad floating on water. The words
"Graphic Design. Digital Media. Advertising" are listed in a repeating pattern
in small print along the edge of the lilypad.

Text On Each Page
- -----------------

At the bottom of each page, the following text appears in addition to any
other text on that page:

The images displayed on these pages are a sample of some of the services
provided by the Company to certain of its current and former clients. Of the
clients referenced on these pages, only Nike, Tommy Armour, Cincinnati Bell and
U.S. Robotics accounted for a material portion of Leap's revenues in the
six months ended July 31, 1996. Since the Company is often retained by its
clients on a project-by-project basis, there can be no assurance that any
significant client in any prior period will be a source of revenues in any
future period. The sizes and placement of the images are not intended to
indicate the relative revenue generated from the services provided to the
clients displayed.

Front Inside Cover
- ------------------

Image 1: An image of a small frog jumping appears at the top of this
page.

Image 2: Image of Troy Aikman and Nate Newton of the Dallas Cowboys, as
they appear in a Tommy Armour Golf television commercial.

[Caption] ADVERTISING
Television, Print,
Radio, Outdoor

Image 3: A screen image from a Niketown Global Expansion Interactive
Presentation. The copy reads "Air Max. Lightweight mesh upper. Modified
gussetted tongue for ease of entry. Molded skeletal support frame and uni
directional nylon webbing eye stay straps enhance fit. Semi curve lasted
training shoe engineered for runner seeking the ultimate in full length Nike-Air
cushioning."

[Caption] NEW MEDIA
The Internet, The World Wide Web,
CD-ROMs, Proprietary Online Services,
Interactive Presentations

Image 4: An image of various beer bottles, showing beer label designs,
including the final label for Northstone Amber Ale, the Plank Road Brewery,
Milwaukee, Wisconsin.

[Caption] GRAPHIC DESIGN
Corporate Identity, Packaging,
New Product Development

The Company is not currently performing services for Miller.
[Text Across Bottom of Page]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>

Front Inside Left Spread Page
- -----------------------------

Image 1: A screen from the Tommy Armour Golf World Wide Web page. The
index reads "Catalog, Pro Shop Locator, News, Q-A Department, Guestbook, The
Golf Doctor, and Pro Biographies." The banner reads "Buy a set of 855s irons
and get the driver Jim Gallagher Jr. uses free. (Jim's swing not included)."

[Caption] Tommy Armour
World Wide Web Site

Image 2: A screen image from the One Show CD-Rom. The text reads "Please
select a Category: print, radio, tv, other."

[Caption] The One Show
CD ROM

Image 3: The image depicts a dorm room desk at the University of Notre
Dame. The toolbar reads: tour, alumni, faculty, students, interview.

[Caption] Notre Dame Interactive Recruiting Program
project in development.

Image 4: A World Wide Web screen features the name Metromix, and the index
lists events, dining and nightclubs.

[Caption] Chicago Tribune Interactive Leisure & Entertainment Guide
project in development.

[Text Across Bottom of Page]

Vision. Leap is a strategic and creative communications company that develops
and implements brand-driven integrated marketing campaigns for large clients and
for its own proprietary use, utilizing both traditional and new technologies and
media.

Front Inside Spread Right Page:
- ------------------------------
<PAGE>

Images 1-3: Three images from the Niketown Global Expansion Interactive
Presentation. Image 1 is a screen from the Nike Timeline. It reads "1992. The
first Niketown opens its doors in Chicago, and quickly becomes the #1 tourist
attraction in the city. Filled with everything that embodies the Nike brand and
spirit, it is a dedication to all athletes and the dreams they chase." The
toolbar reads "Corporate, Niketown, Products, employees, facts & figs, expansion
map, Niketown tour". The same toolbar appears on images 1-3. Image 2 shows a
computer generated Nike shoebox. Image 3 shows a screen featuring a virtual
reality tour of Niketown Chicago.

[Caption] Niketown Global Expansion Interactive Presentation

Images 4 & 5: Two screen images from the History of Notre Dame Football
CD-Rom. Image 4 is a screen from the Legends section showing a picture of a
1923 Notre Dame football team listing the team members, and featuring the
legendary Four Horsemen. Image 5 is the main screen, with the roll-over pop up
menu showing "The Legends."

[Caption] History of Notre Dame Football
CD-ROM

Back Inside Cover:
- -----------------

Image 1: A Cincinnati Bell Fuse Internet Access print ad. The headline
reads "When choosing an internet service provider, remember two things: 1) The
internet depends completely on phone lines, 2) We know a lot about phone lines.
Cincinnati Bell Telephone. Fuse. The simple, reliable access to the net."

[Caption] Cincinnati Bell Telephone
Fuse Internet Access Service
Print Ad

The Company is not currently performing services for
Cincinnati Bell.

Image 2: Image depicts various postcard books prepared for Nike's Niketown.

[Caption] Niketown
Direct Mail.

Back Inside Spread Left Page:
- ----------------------------

Image 1: A television frame from a Partnership For a Drug Free America
commercial featuring actor Carroll O'Connor.
<PAGE>

[Caption] Partnership for a Drug Free America
Carroll O'Connor TV Commercial "My Son Hugh"

The Company provides services for this client
on a pro-bono basis.

Image 2: A television frame from a Boston Chicken commercial in a recent
campaign depicting a car driving down the street.

[Caption] Boston Chicken
TV Campaign

The Company is not currently performing services for Boston
Chicken.

Image 3: A television frame from a Tommy Armour Golf commercial featuring
golf pro Jim Gallagher, Jr.

[Caption] Tommy Armour "Scotland"
TV Commercial

Images 4-6: Three television frames from the Elmer Bruker Miller Lite Super
Bowl commercial. Image 4 shows Bruker on the sidelines eating a hot dog
alongside Chief's coach Hank Stram. Image 5 shows Bruker during the coin toss
of a Pittsburgh Steelers Super Bowl Game. Image 6 shows Bruker watching the
Super Bowl on television alongside former Cowboy's coach Jimmy Johnson.

[Caption] Miller Lite "Elmer Bruker"
Super Bowl TV Commercial

The Company is not currently performing services for Miller.

Back Inside Spread Right Page:
- -----------------------------

Image 1: A print ad for a U.S. Robotics product. The headline
reads "Waiting is necessary evil. We want to make it a lost art."

[Caption] US Robotics
Print Ad

Image 2: A Niketown print ad featuring Michael Jordan, with headline
reading "We have liftoff. Niketown, Opening August 17/Wilshire and Rodeo/
1 800 352 NIKE"

[Caption] Niketown
Print Ad

Image 3: A Miller Lite Ice print ad depicting a fishbowl with a fish
floating inside. The headline reads "This fish is in. He's always in. If he
goes out, he'll die. You, however, have no excuse. Ice brewed for the taste
that goes all out when you're out. The night is young."

[Caption] Miller Lite Ice
Print Ad

The Company is not currently performing services for Miller.

<PAGE>

Exhibit 4.1
================================================================================

NUMBER NUMBER
[LOGO]
The Leap Group, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE SIDE
FOR CERTAIN
DEFINITIONS

This is to Certify that
CUSIP 521862 10 2

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF PAR VALUE $.01 PER SHARE

The Leap Group, Inc.

Transferable on the books of the Corporation in person or by an attorney duly
authorized in writing upon surrender of this certificate properly endorsed. A
statement of the rights, preferences, privileges and restrictions granted to or
imposed upon each class or series of stock and the holders thereof is available
upon the request and without charge from the principal executive office of the
Corporation. This Certificate is not valid until countersigned by the Transfer
Agent and registered by the Registrar. Witness the facsimile of the duly
authorized officers of the Corporation.

Dated

/s/ R. STEVEN LUTTERBACH
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER

/s/ ROBERT C. BRAMLETTE /s/ FRED SMITH
SECRETARY VICE-CHAIRMAN AND CHIEF OPERATING OFFICER

COUNTERSIGNED AND REGISTERED
FIRST CHICAGO TRUST COMPANY OF NEW YORK
TRANSFER AGENT AND REGISTRAR

BY
AUTHORIZED OFFICER

================================================================================
<PAGE>

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM--as tenants in common
TEN ENT--as tenants by the entireties
JT TEN --as joint tenants with right of survivorship
and not as tenants in common

UNIF GIFT MIN ACT--_____________Custodian____________
(Cust) (Minor)
under Uniform Gifts to Minors
Act __________________
(State)

UNIF TRF MIN ACT--____________ Custodian (until age__)
(cust)

____________ under Uniform
(minor)

Transfers to Minors Act __________
(State)
Additional abbreviations may also be used though not in the above list.

For value received, ___________ hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------

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

- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE)

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

- --------------------------------------------------------------------------------
Shares of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

- --------------------------------------------------------------------------------
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.

Dated
---------------------------

X
----------------------------------------

NOTICE: The Signature(s) to this
Assignment must correspond with the
name(s) as written upon the face of the
Certificate in every particular, without
alteration or enlargement or any change
whatever.
By
------------------------------

The Signature(s) should be Guaranteed by an eligible guarantor institution
(Banks, Stockbrokers, Savings and Loan Associations and Credit Unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17 Ad-15.

<PAGE>

Exhibit 10.5

THE LEAP GROUP, INC.
EMPLOYEE INCENTIVE COMPENSATION PLAN

ARTICLE I
---------

ESTABLISHMENT
-------------

1.1 Purpose.
-------

The Leap Group, Inc. Employee Incentive Compensation Plan ("Plan") is
hereby established by The Leap Group, Inc. ("Company"), effective May 29, 1996.
The purpose of the Plan is to promote the overall financial objectives of the
Company and its stockholders by motivating those persons selected to participate
in the Plan to achieve long-term growth in stockholder equity in the Company and
by retaining the association of those individuals who are instrumental in
achieving this growth. The Plan and the grant of awards thereunder are expressly
conditioned upon the Plan's approval by the stockholders of the Company. If such
approval is not obtained, then this Plan and all Awards (as defined herein)
shall be null and void ab initio.

ARTICLE II
----------

DEFINITIONS
-----------

For purposes of the Plan, the following terms are defined as set forth
below:

2.1 "Affiliate" means any individual, corporation, partnership,
association, limited liability company, joint-stock company, trust,
unincorporated association or other entity (other than the Company) that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company including, without
limitation, any member of an affiliated group of which the Company is a common
parent corporation as provided in Section 1504 of the Code.

2.2 "Agreement" or "Award Agreement" means, individually or
collectively, any agreement entered into pursuant to the Plan pursuant to which
an Award is granted to a Participant.

2.3 "Award" means any Option, SAR, Restricted Stock, Deferred Stock,
Stock, Dividend Equivalent, Other Stock-Based Award, Performance Award or Cash
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
<PAGE>

2.4 "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death or to which Awards or other rights are
transferred if and to the extent permitted hereunder. If, upon a Participant's
death, there is no designated Beneficiary or surviving designated Beneficiary,
then the term Beneficiary means the person, persons, trust or trusts entitled by
will or the laws of descent and distribution to receive such benefits.

2.5 "Board of Directors" or "Board" means the Board of Directors of the
Company.

2.6 "Cash Incentive Award" means a conditional right granted to a
Participant under Section 10.4(c) hereof to receive a cash payment, unless
otherwise determined by the Committee, after the end of a specified period.

2.7 "Cause" shall mean, for purposes of whether and when a Participant
has incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate the written agreement or arrangement between
the Participant and the Company or an Affiliate for "cause" as defined in such
agreement or arrangement, or in the event there is no such agreement or
arrangement or the agreement or arrangement does not define the term "cause" or
a substantially equivalent term, then Cause shall consist of the following:
Participant's conviction on a felony charge or Participant's commission of any
crime involving moral turpitude; Participant's dishonesty or fraud resulting in
damage to the business of the Company or an Affiliate; Participant's
embezzlement or theft of assets from the Company or an Affiliate; in the sole
discretion of the Company, Participant's grossly negligent conduct,
Participant's course of personal conduct of an illegal or unethical nature which
tends to place the Company or an Affiliate in disrepute, or otherwise negatively
affects the ability of the Company or an Affiliate to conduct its business;
Participant's competition with the Company or aid to a competitor of the Company
to the detriment of the Company; or a breach of this Agreement by Participant,
including failure to perform duties and services to the Company or an Affiliate.
In the event Participant is arrested for any of the types of matters above, the
Company may place Participant on suspension without pay until such matter is
dismissed or Participant is convicted.

2.8 "Change in Control" and "Change in Control Price" have the meanings
set forth in Sections 12.2 and 12.3, respectively.

2.9 "Code" or "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.

2.10 "Commission" means the Securities and Exchange Commission or any
successor agency.

2.11 "Committee" means the person or persons appointed to administer this
Plan, as further described herein.

2
<PAGE>

2.12 "Common Stock" means the shares of the regular voting Common Stock,
$.01 par value, whether presently or hereafter issued, and any other stock or
security resulting from adjustment thereof as described hereinafter or the
common stock of any successor to the Company which is designated for the purpose
of the Plan.

2.13 "Company" means The Leap Group, Inc., a Delaware corporation, and
includes any successor or assignee corporation or corporations into which the
Company may be merged, changed or consolidated; any corporation for whose
securities all or substantially all of the securities of the Company shall be
exchanged; and any assignee of or successor to substantially all of the assets
of the Company.

2.14 "Covered Employee" means a Participant who is a "covered employee"
within the meaning of Section 162(m) of the Code.

2.15 "Deferred Stock" means a right, granted to a Participant under
Section 9.1 hereof, to receive Common Stock, cash or a combination thereof at
the end of a specified deferral period.

2.16 "Disability" means a mental or physical illness that entitles the
Participant to receive benefits under the long-term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan or
the Participant is not an employee of the Company or an Affiliate or a long-term
disability plan has not been adopted by the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and permanently incapable of
performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify under this Plan if
it is the result of (i) a willfully self-inflicted injury or willfully self-
induced sickness; or (ii) an injury or disease contracted, suffered, or incurred
while participating in a criminal offense. The determination of Disability shall
be made by the Committee. The determination of Disability for purposes of this
Plan shall not be construed to be an admission of disability for any other
purpose.

2.17 "Disinterested Person" shall have the meaning set forth in Rule 16b-
3, or any successor definition adopted by the Commission, and shall mean a
person who is also an "outside director" under Section 162(m) of the Code.

2.18 "Dividend Equivalent" means a right, granted to a Participant under
Section 10.2, to receive cash, Common Stock, other Awards or other property
equal in value to dividends paid with respect to a specified number of shares of
Common Stock.

2.19 "Effective Date" means May 29, 1996.

2.20 "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

3
<PAGE>

2.21 "Fair Market Value" means the fair market value of Common Stock,
Awards, or other property as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value per share of Common Stock as of any given date shall be the
closing sale price per share reported on a consolidated basis for stock listed
on the principal stock exchange or market on which Common Stock is traded on the
date as of which such value is being determined or, if there is no sale on that
date, then on the last previous day on which a sale was reported.

2.22 "Grant Date" means the date as of which an Award is granted pursuant
to the Plan.

2.23 "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

2.24 "NASDAQ" means The Nasdaq Stock Market, including the Nasdaq National
Market.

2.25 "Non-Qualified Stock Option" means an Option to purchase Common Stock
in the Company granted under the Plan, the taxation of which is pursuant to
Section 83 of the Code.

2.26 "Option" or "Stock Option" means a right, granted to a Participant
under Section 6.1 hereof, to purchase Common Stock or other Awards at a
specified price during specified time periods.

2.27 "Option Period" means the period during which an Option shall be
exercisable in accordance with the related Agreement and Article VI.

2.28 "Option Price" means the price at which the Common Stock may be
purchased under an Option as provided in Section 6.3(b).

2.29 "Other Stock Based Awards" means Awards granted to a Participant
under Section 10.3 hereof.

2.30 "Participant" means a person who satisfies the eligibility conditions
of Article V and to whom an Award has been granted by the Committee under the
Plan, and in the event a Representative is appointed for a Participant or
another person becomes a Representative, then the term "Participant" shall mean
such Representative. The term shall also include a trust for the benefit of the
Participant, a partnership the interest of which is held by or for the benefit
of the Participant, the Participant's parents, spouse or descendants, or a
custodian under a uniform gifts to

4
<PAGE>

minors act or similar statute for the benefit of the Participant's descendants,
to the extent permitted by the Committee and not inconsistent with Rule 16b-3 or
the status of the Option as an Incentive Stock Option, to the extent intended.
Notwithstanding the foregoing, the term "Termination of Employment" shall mean
the Termination of Employment of the person to whom the Award was originally
granted.

2.31 "Performance Award" means a right, granted to a Participant under
Section 10.4 hereof, to receive Awards based upon performance criteria specified
by the Committee.

2.32 "Plan" means The Leap Group Inc. Employee Incentive Compensation
Plan, as herein set forth and as amended from time to time.

2.33 "Representative" means (a) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
Beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been transferred with the permission of the
Committee or by operation of law; provided that only one of the foregoing shall
be the Representative at any point in time as determined under applicable law
and recognized by the Committee.

2.34 "Restricted Stock" means Common Stock granted to a Participant under
Section 8.1 hereof, that is subject to certain restrictions and to a risk of
forfeiture.

2.35 "Retirement" means the Participant's Termination of Employment after
attaining either the normal retirement age or the early retirement age as
defined in the principal (as determined by the Committee) tax-qualified plan of
the Company or an Affiliate, if the Participant is covered by such a plan, or if
the Participant is not covered by such a plan, then age 65, or age 55 with the
accrual of 10 years of service.

2.36 "Rule 16b-3" and "Rule 16a-1(c)(3)" mean Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.

2.37 "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

2.38 "Stock Appreciation Right" means a right granted under Article VII.

5
<PAGE>

2.39 "Termination of Employment" means the occurrence of any act or event,
whether pursuant to an employment agreement or otherwise, that actually or
effectively causes or results in the person's ceasing, for whatever reason, to
be an officer, independent contractor, director or employee of the Company or of
any Affiliate of the Company, or ceasing to be an officer, independent
contractor, director or employee of any entity that provides services to the
Company or a Affiliate of the Company, including, without limitation, death,
Disability, dismissal, severance at the election of the Participant, Retirement,
or severance as a result of the discontinuance, liquidation, sale or transfer by
the Company or its Affiliates of all businesses owned or operated by the Company
or its Affiliates. With respect to any person who is not an employee with
respect to the Company or a Affiliate of the Company, the Agreement shall
establish what act or event shall constitute a Termination of Employment for
purposes of the Plan. A transfer of employment from the Company to a Affiliate,
or from a Affiliate to the Company, will not be a Termination of Employment,
unless expressly determined by the Committee. A Termination of Employment shall
occur for an employee who is employed by a Affiliate of the company if the
Affiliate shall cease to be a Affiliate and the Participant shall not
immediately thereafter become an employee of the Company or a Affiliate of the
Company.

In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.

ARTICLE III
-----------

ADMINISTRATION
--------------

3.1 Committee Structure and Authority. Prior to the date of the first
registration of an equity security of the Company under the Exchange Act (the
"Registration Date"), the Plan shall be administered by one or more members of
the Board of Directors (which shall constitute the Committee for purposes of the
Plan). From and after the Registration Date, the Plan shall be administered by
the Committee which shall be comprised of one or more persons. The Committee
shall be the Compensation Committee of the Board of Directors, unless such
committee does not exist or the Board establishes or identifies another
committee whose purpose is the administration of this Plan; provided that only
those members of the Compensation Committee who participate in the decision
relative to Awards under this Plan shall be deemed to be the "Committee" for
purposes of this Plan. The Committee shall be comprised of such number of
Disinterested Persons as is required for application of Rule 16b-3 and the
deduction of compensation under Section 162(m) of the Code, if applicable. In
the absence of an appointment, the Board or the portion thereof that is a

6
<PAGE>

Disinterested Person shall be the Committee. A majority of the Committee shall
constitute a quorum at any meeting thereof (including by telephone conference)
and the acts of a majority of the members present, or acts approved in writing
by a majority of the entire Committee without a meeting, shall be the acts of
the Committee for purposes of this Plan. The Committee may authorize any one or
more of its members or an officer of the Company to execute and deliver
documents on behalf of the Committee. A member of the Committee shall not
exercise any discretion respecting himself or herself under the Plan. The Board
shall have the authority to remove, replace or fill any vacancy of any member of
the Committee upon notice to the Committee and the affected member. Any member
of the Committee may resign upon notice to the Board. The Committee may
allocate among one or more of its members, or may delegate to one or more of its
agents, such duties and responsibilities as it determines.

Among other things, the Committee shall have the authority, subject to the
terms of the Plan and the limitation of section (c)(2)(ii) of Rule 16b-3 so that
the Plan is described in that section:

(a) to select those persons to whom Awards may be granted from time to
time;

(b) to determine whether and to what extent Awards or any combination
thereof are to be granted hereunder;

(d) to determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the Option Price, the Option
Period, any exercise restriction or limitation and any exercise
acceleration, forfeiture or waiver regarding any Award, any shares of
Common Stock relating thereto, any performance criteria and the
satisfaction of each criteria);

(e) to adjust the terms and conditions, at any time or from time to
time, of any Award, subject to the limitations of Section 13.1;

(f) to determine to what extent and under what circumstances Common
Stock and other amounts payable with respect to an Award shall be deferred;

(g) to determine under what circumstances an Award may be settled in
cash or Common Stock;

7
<PAGE>

(h) to provide for the forms of Agreements to be utilized in
connection with the Plan;

(i) to determine whether a Participant has a Disability or a
Retirement;

(j) to determine what securities law requirements are applicable to
the Plan, Awards and the issuance of shares of Common Stock under the Plan
and to require of a Participant that appropriate action be taken with
respect to such requirements;

(k) to cancel, with the consent of the Participant or as otherwise
provided in the Plan or an Agreement, outstanding Awards;

(l) to interpret and make final determinations with respect to the
remaining number of shares of Common Stock available under this Plan;

(m) to require, as a condition of the exercise of an Award or the
issuance or transfer of a certificate of Common Stock, the withholding from
a Participant of the amount of any Federal, state or local taxes as may be
necessary in order for the Company or any other employer to obtain a
deduction or as may be otherwise required by law;

(n) to determine whether and with what effect a Participant has
incurred a Termination of Employment;

(o) to determine whether the Company or any other person has a right
or obligation to purchase Common Stock from a Participant and, if so, the
terms and conditions on which such Common Stock is to be purchased;

(p) to determine the restrictions or limitations on the transfer of
Common Stock;

(q) to determine whether an Award is to be adjusted, modified or
purchased, or is to become fully exercisable, under the Plan or the terms
of an Agreement;

(r) to determine the permissible methods of Award exercise and
payment, including cashless exercise arrangements;

(s) to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan; and

(t) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.

8
<PAGE>

Any determination made by the Committee pursuant to the provisions of the
Plan shall be made in its sole discretion, and in the case of any determination
relating to an Award, may be made at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or an Agreement, at any
time thereafter. All decisions made by the Committee pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company and
Participants. No determination shall be subject to de novo review if challenged
in court.

ARTICLE IV
----------

STOCK SUBJECT TO PLAN
---------------------

4.1 Number of Shares. Subject to the adjustment under Section 4.6, the
total number of shares of Common Stock reserved and available for distribution
pursuant to Awards under the Plan shall be 2,000,000 shares of Common Stock
authorized for issuance on the Effective Date. Such shares may consist, in
whole or in part, of authorized and unissued shares or treasury shares.

4.2 Release of Shares. The Committee shall have full authority to determine
the number of shares of Common Stock available for Award, and in its discretion
may include (without limitation) as available for distribution any shares of
Common Stock that have ceased to be subject to an Award, any shares of Common
Stock subject to any Award that are forfeited, any Award that otherwise
terminates without issuance of shares of Common Stock being made to the
Participant, or any shares (whether or not restricted) of Common Stock that are
received by the Company in connection with the exercise of an Award, including
the satisfaction of any tax liability or the satisfaction of a tax withholding
obligation. If any shares could not again be available for Options to a
particular Participant under applicable law, such shares shall be available
exclusively for Options to Participants who are not subject to such limitations.

4.3 Restrictions on Shares. Shares of Common Stock issued as or in
conjunction with an Award shall be subject to the terms and conditions specified
herein and to such other terms, conditions and restrictions as the Committee in
its discretion may determine or provide in an Award Agreement. The Company shall
not be required to issue or deliver any certificates for shares of Common Stock,
cash or

9
<PAGE>

other property prior to (i) the listing of such shares on any stock exchange or
NASDAQ (or other public market) on which the Common Stock may then be listed (or
regularly traded), (ii) the completion of any registration or qualification of
such shares under Federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(iii) the satisfaction of any applicable withholding obligation in order for the
Company or an Affiliate to obtain a deduction with respect to the exercise of an
Award. The Company may cause any certificate for any share of Common Stock to be
delivered to be properly marked with a legend or other notation reflecting the
limitations on transfer of such Common Stock as provided in this Plan or as the
Committee may otherwise require. The Committee may require any person exercising
an Award to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the shares
of Common Stock in compliance with applicable law or otherwise. Fractional
shares shall not be delivered, but shall be rounded to the next lower whole
number of shares.

4.4 Stockholder Rights. No person shall have any rights of a stockholder as
to shares of Common Stock subject to an Award until, after proper exercise of
the Award or other action required, such shares shall have been recorded on the
Company's official stockholder records as having been issued and transferred.
Upon exercise of the Award or any portion thereof, the Company will have a
reasonable time in which to issue the shares, and the Participant will not be
treated as a stockholder for any purpose whatsoever prior to such issuance. No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date such shares are recorded as issued and transferred in
the Company's official stockholder records, except as provided herein or in an
Agreement.

4.5 Best Efforts To Register. After the initial public offering of
shares of Common Stock under the Securities Act, the Company will register
under the Securities Act the Common Stock delivered or deliverable pursuant to
Awards on Commission Form S-8 if available to the Company for this purpose (or
any successor or alternate form that is substantially similar to that form to
the extent available to effect such registration), in accordance with the rules
and regulations governing such forms, as soon after stockholder approval of the
Plan as the Committee, in its sole discretion, shall deem such registration
appropriate. The Company will use its best efforts to cause the registration
statement to become effective and will file such supplements and amendments to
the registration statement as may be necessary to keep the registration
statement in effect until the earliest of (a) one year following the expiration
of the Option Period of the last Option outstanding, (b) the date the Company is
no longer a reporting company under the Exchange Act and (c) the date all
Participants have disposed of all shares delivered pursuant to any Award.

4.6 Anti-Dilution. In the event of any Company stock dividend, stock split,
reverse stock split, combination or exchange of shares, recapitalization or
other change in the capital structure of the Company, corporate separation or
division of the

10
<PAGE>

Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale by
the Company of all or a substantial portion of its assets (measured on either a
stand-alone or consolidated basis), reorganization, rights offering, a partial
or complete liquidation, or any other corporate transaction, Company stock
offering or event involving the Company and having an effect similar to any of
the foregoing, then the Committee may adjust or substitute, as the case may
be, the number of shares of Common Stock available for Awards under the Plan,
the number of shares of Common Stock covered by outstanding Awards, the maximum
number of Awards available for grant to any Participant for a stated period of
time (including the maximum number of Stock Appreciation Rights), the exercise
price per share of outstanding Awards, and performance conditions and any other
characteristics or terms of the Awards as the Committee shall deem necessary or
appropriate to reflect equitably the effects of such changes to the
Participants; provided, however, that the Committee may limit any such
adjustment so as to maintain the deductibility of the Awards under Section
162(m) of the Code, if applicable, and that any fractional shares resulting from
such adjustment shall be eliminated by rounding to the next lower whole number
of shares with appropriate payment for such fractional shares as shall
reasonably be determined by the Committee.

ARTICLE V

ELIGIBILITY

5.1 Eligibility. Except as herein provided, the persons who shall be
eligible to participate in the Plan and be granted Awards shall be those persons
who are directors, officers, employees and consultants of the Company or any
subsidiary of the Company, who shall be in a position, in the opinion of the
Committee, to make contributions to the growth, management, protection and
success of the Company and its subsidiaries. Of those persons described in the
preceding sentence, the Committee may, from time to time, select persons to be
granted Awards and shall determine the terms and conditions with respect
thereto. In making any such selection and in determining the form of the Award
with respect to Participants, the Committee may give consideration to the
person's functions and responsibilities, the person's contributions to the
Company and its subsidiaries, the value of the individual's service to the
Company and its subsidiaries and such other factors deemed relevant by the
Committee. The Committee may designate in writing any person who is not eligible
to participate in the Plan if such person would otherwise be eligible to
participate in this Plan (and members of the Committee are expressly excluded to
the extent such persons are intended to be Disinterested Persons).

11
<PAGE>

ARTICLE VI
----------

STOCK OPTIONS
-------------

6.1 General. The Committee shall have authority to grant Stock
Options under the Plan at any time or from time to time. Stock Options may be
granted alone or in addition to other Awards and may be either Incentive Stock
Options or Non-Qualified Stock Options. An Option shall entitle the Participant
to receive shares of Common Stock upon exercise of such Option, subject to the
Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement (the terms and
provisions of which may differ from other Agreements), including, without
limitation, payment of the Option Price. During any calendar year, Options to
purchase no more than 500,000 shares of Common Stock shall be granted to any
Participant.

6.2 Grant and Exercise. The grant of a Stock Option shall occur as
of the date the Committee determines. Each Option granted under this Plan shall
be evidenced by an Agreement, in a form approved by the Committee, which shall
embody the terms and condition of such Option and which shall be subject to the
express terms and conditions set forth in the Plan. Such Agreement shall become
effective upon execution by the Participant. Only a person who is a common-law
employee of the Company, any parent corporation of the Company or a subsidiary
(as such terms are defined in Section 424 of the Code) on the date of grant
shall be eligible to be granted an Option which is intended to be and is an
Incentive Stock Option. To the extent that any Stock Option is not designated
as an Incentive Stock Option or even if so designated does not qualify as an
Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.

6.3 Terms and Conditions. Stock Options shall be subject to such
terms and conditions as shall be determined by the Committee, including the
following:

(a) Option Period. The Option Period of each Stock Option shall be
fixed by the Committee; provided that no Stock Option shall be exercisable
more than ten (10) years after the date the Stock Option is granted. In
the case of an Incentive Stock Option granted to an individual who owns
more than ten percent (10%) of the combined voting power of all classes of
stock of the Company, a corporation which is a parent corporation of the
Company or any subsidiary of the Company (each as defined in Section 424 of
the Code), the Option Period shall not exceed five (5) years from the date
of grant. No Option

12
<PAGE>

which is intended to be an Incentive Stock Option shall be granted more
than ten (10) years from the date the Plan is adopted by the Company or the
date the Plan is approved by the stockholders of the Company, whichever is
earlier.

(b) Option Price. The Option Price per share of the Common Stock
purchasable under an Option shall be determined by the Committee; provided,
however, that the Option Price of an Incentive Stock Option shall be not
less than the Fair Market Value per share on the date the Option is
granted. If such Option is intended to qualify as an Incentive Stock Option
and is granted to an individual who owns or who is deemed to own stock
possessing more than ten percent (10%) of the combined voting power of all
classes of stock of the Company, a corporation which is a parent
corporation of the Company or any subsidiary of the Company (each as
defined in Section 424 of the Code), the Option Price per share shall not
be less than one hundred ten percent (110%) of such Fair Market Value per
share.

(c) Exercisability. Subject to Section 12.1, Stock Options shall be
exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee. If the Committee provides that any
Stock Option is exercisable only in installments, the Committee may at any
time waive such installment exercise provisions, in whole or in part. In
addition, the Committee may at any time accelerate the exercisability of
any Stock Option. If the Committee intends that an Option be an Incentive
Stock Option, the Committee may, in its discretion, provide that the
aggregate Fair Market Value (determined at the Grant Date) of the Common
Stock as to which such Incentive Stock Option is exercisable for the first
time during any calendar year shall not exceed $100,000.

(d) Method of Exercise. Subject to the provisions of this Article VI,
a Participant may exercise Stock Options, in whole or in part, at any time
during the Option Period by the Participant's giving written notice of
exercise on a form provided by the Committee (if available) to the Company
specifying the number of shares of Common Stock subject to the Stock Option
to be purchased. Except when waived by the Committee, such notice shall be
accompanied by payment in full of the purchase price by cash or check or
such other form of payment as the Company may accept. If approved by the
Committee (including approval at the time of exercise), payment in full or
in part may also be made (i) by delivering Common Stock already owned by
the Participant having a total Fair Market Value on the date of such
delivery equal to the Option Price; (ii) by the execution and delivery of a
note or other evidence of indebtedness (and any security agreement
thereunder) satisfactory to the Committee and permitted in accordance with
Section 6.3(e); (iii) by authorizing the Company to retain shares of Common
Stock which would otherwise be issuable upon exercise of the Option having
a total Fair Market

13
<PAGE>

Value on the date of delivery equal to the Option Price; (iv) by the
delivery of cash or the extension of credit by a broker-dealer to whom the
Participant has submitted a notice of exercise or otherwise indicated an
intent to exercise an Option (in accordance with Part 220, Chapter II,
Title 12 of the Code of Federal Regulations, so-called "cashless"
exercise); or (v) by certifying ownership of shares of Common Stock by the
Participant to the satisfaction of the Committee for later delivery to the
Company as specified by the Committee; or by any combination of the
foregoing or by any other method permitted by the Committee. If payment of
the Option Price of a Stock Option is made in whole or in part in the form
of Restricted Stock or Deferred Stock, the number of shares of Common Stock
to be received upon such exercise that is equal to the number of shares of
Restricted Stock or Deferred Stock used for payment of the Option Price
shall be subject to the same forfeiture restrictions or deferral
limitations to which such Restricted Stock or Deferred Stock was subject,
unless otherwise determined by the Committee. In the case of an Incentive
Stock Option, the right to make a payment in the form of already owned
shares of Common Stock of the same class as the Common Stock subject to the
Stock Option may be authorized only at the time the Stock Option is
granted. No shares of Common Stock shall be issued until full payment
therefor, as determined by the Committee, has been made. Subject to any
forfeiture restrictions or deferral limitations that may apply if a Stock
Option is exercised using Restricted Stock or Deferred Stock, a Participant
shall have all of the rights of a stockholder of the Company holding the
class of Common Stock that is subject to such Stock Option (including, if
applicable, the right to vote the shares and the right to receive
dividends), when the Participant has given written notice of exercise, has
paid in full for such shares and such shares have been recorded on the
Company's official stockholder records as having been issued or
transferred.

(e) Company Loan or Guarantee. Upon the exercise of any Option and
subject to the pertinent Agreement and the discretion of the Committee, the
Company may at the request of the Participant:

(i) lend to the Participant an amount equal to such portion of
the Option Price as the Committee may determine; or

(ii) guarantee a loan obtained by the Participant from a third-
party for the purpose of tendering the Option Price.

The terms and conditions of any loan or guarantee, including the term,
interest rate and any security interest thereunder and whether the loan
shall be with recourse, shall be determined by the Committee, except that
no extension of credit or guarantee shall obligate the Company for an
amount to exceed the lesser of the aggregate Fair Market Value per share of
the Common Stock on

14
<PAGE>

applicable laws or the regulations and rules of the Federal Reserve Board
and any other governmental agency having jurisdiction.

(f) Non-transferability of Options. Except as provided herein or in
an Agreement and then only consistent with the intent that the Option be an
Incentive Stock Option, no Stock Option or interest therein shall be
transferable by the Participant other than by will or by the laws of
descent and distribution or by a designation of beneficiary effective upon
the death of the Participant, and all Stock Options shall be exercisable
during the Participant's lifetime only by the Participant. If and to the
extent transferability is permitted by Rule 16b-3 or does not result in
liability to any Participant and except as otherwise provided herein or by
an Agreement, every Option granted hereunder shall be freely transferable,
but only if such transfer does not result in liability under Section 16 of
the Exchange Act to the Participant or other Participants and is consistent
with registration of the Option and sale of Common Stock on Form S-8 (or a
successor form) or is consistent with the use of Form S-8 (or the
Committee's waiver of such condition) and consistent with an Award's
intended status as an Incentive Stock Option (as applicable).

6.4 Termination by Reason of Death. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to death, any unexpired and unexercised Stock Option held by
such Participant shall thereafter be fully exercisable for a period of one (1)
year following the date of the appointment of a Representative (or such other
period or no period as the Committee may specify) or until the expiration of the
Option Period, whichever period is the shorter.

6.5 Termination by Reason of Disability. Unless otherwise provided in an
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to a Disability, any unexpired and unexercised Stock Option
held by such Participant shall thereafter be fully exercisable by the
Participant for the period of one (1) year (or such other period or no period as
the Committee may specify) immediately following the date of such Termination of
Employment or until the expiration of the Option Period, whichever period is
shorter, and the Participant's death at any time following such Termination of
Employment due to Disability shall not affect the foregoing. In the event of
Termination of Employment by reason of Disability, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.

6.6 Other Termination. Unless otherwise provided in an Agreement or
determined by the Committee, if a Participant incurs a Termination of Employment
due to Retirement, or the Termination of Employment is involuntary on the part
of the Participant (but is not due to death or Disability or with Cause), any
Stock Option held

15
<PAGE>

by such Participant shall thereupon terminate, except that such Stock Option, to
the extent then exercisable, may be exercised for the lesser of the ninety (90)
day period commencing with the date of such Termination of Employment or until
the expiration of the Option Period. Unless otherwise provided in an Agreement
or determined by the Committee, if the Participant incurs a Termination of
Employment which is either (a) voluntary on the part of the Participant (and is
not due to Retirement) or (b) with Cause, the Option shall terminate
immediately. Unless otherwise provided in an Agreement or determined by the
Committee, the death or Disability of a Participant after a Termination of
Employment otherwise provided herein shall not extend the time permitted to
exercise an Option.

6.7 Cashing Out of Option. On receipt of written notice of exercise, the
Committee may elect to cash out all or part of the portion of any Stock Option
to be exercised by paying the Participant an amount, in cash or Common Stock,
equal to the excess of the Fair Market Value of the Common Stock that is subject
to the Option over the Option Price times the number of shares of Common Stock
subject to the Option on the effective date of such cash-out. Cash-outs relating
to Options held by Participants who are actually or potentially subject to
Section 16(b) of the Exchange Act shall comply with the provisions of Rule 16b-
3, to the extent applicable.

ARTICLE VII
-----------

STOCK APPRECIATION RIGHTS
-------------------------

7.1 General. The Committee shall have authority to grant Stock
Appreciation Rights under the Plan at any time or from time to time. Subject to
the Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement, a Stock
Appreciation Right shall entitle the Participant to surrender to the Company the
Stock Appreciation Right and to be paid therefor in shares of the Common Stock,
cash or a combination thereof as herein provided, the amount described in
Section 7.3(b).

7.2 Grant. Stock Appreciation Rights may be granted in conjunction with
all or part of any Stock Option granted under the Plan, in which case the
exercise of the Stock Appreciation Right shall require the cancellation of a
corresponding portion of the Stock Option, and the exercise of a Stock Option
shall result in the cancellation of a corresponding portion of the Stock
Appreciation Right. In the case of a Non-Qualified Stock Option, such rights
may be granted either at or after the time of grant

16
<PAGE>

of such Stock Option. In the case of an Incentive Stock Option, such rights may
be granted only at the time of grant of such Stock Option. A Stock Appreciation
Right may also be granted on a stand-alone basis. The grant of a Stock
Appreciation Right shall occur as of the date the Committee determines. Each
Stock Appreciation Right granted under this Plan shall be evidenced by an
Agreement, which shall embody the terms and conditions of such Stock
Appreciation Right and which shall be subject to the terms and conditions set
forth in this Plan. During any calendar year, Stock Appreciation Rights
covering no more than 500,000 shares of Common Stock shall be granted to any
Participant.

7.3 Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee, including the
following:

(a) Period and Exercise. The term of a Stock Appreciation Right shall
be established by the Committee. If granted in conjunction with a Stock
Option, the Stock Appreciation Right shall have a term which is the same as
the Option Period and shall be exercisable only at such time or times and
to the extent the related Stock Options would be exercisable in accordance
with the provisions of Article VI. A Stock Appreciation Right which is
granted on a stand-alone basis shall be for such period and shall be
exercisable at such times and to the extent provided in an Agreement.
Stock Appreciation Rights shall be exercised by the Participant's giving
written notice of exercise on a form provided by the Committee (if
available) to the Company specifying the portion of the Stock Appreciation
Right to be exercised.

(b) Amount. Upon the exercise of a Stock Appreciation Right granted
in conjunction with a Stock Option, a Participant shall be entitled to
receive an amount in cash, shares of Common Stock or both as determined by
the Committee or as otherwise permitted in an Agreement equal in value to
the excess of the Fair Market Value per share of Common Stock over the
Option Price per share of Common Stock specified in the related Agreement
multiplied by the number of shares in respect of which the Stock
Appreciation Right is exercised. In the case of a Stock Appreciation Right
granted on a stand-alone basis, the Agreement shall specify the value to be
used in lieu of the Option Price per share of Common Stock. The aggregate
Fair Market Value per share of the Common Stock shall be determined as of
the date of exercise of such Stock Appreciation Right.

(c) Special Rules. In the case of Stock Appreciation Rights held by
Participants who are actually or potentially subject to Section 16(b) of
the Exchange Act

17
<PAGE>

the Committee may require that such Stock Appreciation Rights be
exercised only in accordance with the provisions of Rule 16b-3.

(d) Non-transferability of Stock Appreciation Rights. Stock
Appreciation Rights shall be transferable only when and to the extent that
a Stock Option would be transferable under the Plan unless otherwise
provided in an Agreement.

(e) Termination. A Stock Appreciation Right shall terminate at such
time as a Stock Option would terminate under the Plan, unless otherwise
provided in an Agreement.

(f) Effect on Shares Under the Plan. Upon the exercise of a Stock
Appreciation Right, the Committee will equitably determine for the purpose
of the limitation set forth in Section 4.2 the number of shares of Common
Stock covered by the Stock Appreciation Right at the time of exercise.

(g) Incentive Stock Option. A Stock Appreciation Right granted in
tandem with an Incentive Stock Option shall not be exercisable unless the
Fair Market Value of the Common Stock on the date of exercise exceeds the
Option Price. In no event shall any amount paid pursuant to the Stock
Appreciation Right exceed the difference between the Fair Market Value on
the date of exercise and the Option Price.

18
<PAGE>

ARTICLE VIII
------------

RESTRICTED STOCK
----------------

8.1 General. The Committee shall have authority to grant Restricted
Stock under the Plan at any time or from time to time. Shares of Restricted
Stock may be awarded either alone or in addition to other Awards granted under
the Plan. The Committee shall determine the persons to whom and the time or
times at which grants of Restricted Stock will be awarded, the number of shares
of Restricted Stock to be awarded to any Participant, the time or times within
which such Awards may be subject to forfeiture and any other terms and
conditions of the Awards. Each Award shall be confirmed by, and be subject to
the terms of, an Agreement. The Committee may condition the grant of Restricted
Stock upon the attainment of specified performance goals by the Participant or
by the Company or an Affiliate (including a division or department of the
Company or an Affiliate) for or within which the Participant is primarily
employed or upon such other factors or criteria as the Committee shall
determine. The provisions of Restricted Stock Awards need not be the same with
respect to any Participant.

8.2 Awards and Certificates. Notwithstanding the limitations on
issuance of shares of Common Stock otherwise provided in the Plan, each
Participant receiving an Award of Restricted Stock shall be issued a certificate
in respect of such shares of Restricted Stock. Such certificate shall be
registered in the name of such Participant and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award as
determined by the Committee. The Committee may require that the certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition of any Award of Restricted
Stock, the Participant shall have delivered a stock power, endorsed in blank,
relating to the Common Stock covered by such Award.

8.3 Terms and Conditions. Shares of Restricted Stock shall be
subject to the following terms and conditions:

(a) Limitations on Transferability. Subject to the provisions of the
Plan and the Agreement, during a period set by the Committee commencing
with the date of such Award (the "Restriction Period"), the Participant
shall not be permitted to sell, assign, transfer, pledge or otherwise
encumber any interest in shares of Restricted Stock.

(b) Rights. Except as provided in Section 8.3(a), the Participant
shall have, with respect to the shares of Restricted Stock, all of the
rights of a stockholder of the Company holding the class of Common Stock
that is the subject of the Restricted Stock, including, if applicable, the
right to vote the

19
<PAGE>

shares and the right to receive any dividends. Unless otherwise determined
by the Committee and subject to the Plan, cash dividends on the class of
Common Stock that is the subject of the Restricted Stock shall be
automatically deferred and reinvested in additional Restricted Stock, and
dividends on the class of Common Stock that is the subject of the
Restricted Stock payable in Common Stock shall be paid in the form of
Restricted Stock of the same class as the Common Stock on which such
dividend was paid.

(c) Acceleration. Based on service, performance by the Participant or
by the Company or an Affiliate, including any division or department for
which the Participant is employed, or such other factors or criteria as the
Committee may determine, the Committee may provide for the lapse of
restrictions in installments and may accelerate the vesting of all or any
part of any Award and waive the restrictions for all or any part of such
Award.

(d) Forfeiture. Unless otherwise provided in an Agreement or
determined by the Committee, if the Participant incurs a Termination of
Employment during the Restriction Period due to death or Disability, the
restrictions shall lapse and the Participant shall be fully vested in the
Restricted Stock. Except to the extent otherwise provided in the
applicable Agreement and the Plan, upon a Participant's Termination of
Employment for any reason during the Restriction Period other than death or
Disability, all shares of Restricted Stock still subject to restriction
shall be forfeited by the Participant, except the Committee shall have the
discretion to waive in whole or in part any or all remaining restrictions
with respect to any or all of such Participant's shares of Restricted
Stock.

(e) Delivery. If and when the Restriction Period expires without a
prior forfeiture of the Restricted Stock subject to such Restriction
Period, unlegended certificates for such shares shall be delivered to the
Participant.

(f) Election. A Participant may elect to further defer receipt of the
Restricted Stock for a specified period or until a specified event, subject
in each case to the Committee's approval and to such terms as are
determined by the Committee. Subject to any exceptions adopted by the
Committee, such election must be made one (1) year prior to completion of
the Restriction Period.

20
<PAGE>

ARTICLE IX
----------

DEFERRED STOCK
--------------

9.1 General. The Committee shall have authority to grant Deferred
Stock under the Plan at any time or from time to time. Shares of Deferred Stock
may be awarded either alone or in addition to other Awards granted under the
Plan. The Committee shall determine the persons to whom and the time or times
at which Deferred Stock will be awarded, the number of shares of Deferred Stock
to be awarded to any Participant, the duration of the period (the "Deferral
Period") prior to which the Common Stock will be delivered, and the conditions
under which receipt of the Common Stock will be deferred and any other terms and
conditions of the Awards. Each Award shall be confirmed by, and be subject to
the terms of, an Agreement. The Committee may condition the grant of Deferred
Stock upon the attainment of specified performance goals by the Participant or
by the Company or an Affiliate, including a division or department of the
Company or an Affiliate for or within which the Participant is primarily
employed, or upon such other factors or criteria as the Committee shall
determine. The provisions of Deferred Stock Awards need not be the same with
respect to any Participant.

9.2 Terms and Conditions. Deferred Stock Awards shall be subject
to the following terms and conditions:

(a) Limitations on Transferability. Subject to the provisions of the
Plan and the Agreement, Deferred Stock Awards, or any interest therein, may
not be sold, assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral Period (or Elective
Deferral Period as defined in Section 9.2(e), where applicable), the
Committee may elect to deliver Common Stock, cash equal to the Fair Market
Value of such Common Stock or a combination of cash and Common Stock to the
Participant for the shares covered by the Deferred Stock Award.

(b) Rights. Unless otherwise determined by the Committee and subject
to the Plan, cash dividends on the Common Stock that is the subject of the
Deferred Stock Award shall be automatically deferred and reinvested in
additional Deferred Stock, and dividends on the Common Stock that is the
subject of the Deferred Stock Award payable in Common Stock shall be paid
in the form of Deferred Stock of the same class as the Common Stock on
which such dividend was paid.

(c) Acceleration. Based on service, performance by the Participant or
by the Company or the Affiliate, including any division or department for
which the Participant is employed, or such other factors or criteria as the
Committee may determine, the Committee may provide for the lapse of
deferral limitations

21
<PAGE>

in installments and may accelerate the vesting of all or any part of any
Award and waive the deferral limitations for all or any part of such Award.

(d) Forfeiture. Unless otherwise provided in an Agreement or
determined by the Committee, if the Participant incurs a Termination of
Employment during the Deferral Period due to death or Disability, the
restrictions shall lapse and the Participant shall be fully vested in the
Deferred Stock. Unless otherwise provided in an Agreement or determined by
the Committee, upon a Participant's Termination of Employment for any
reason during the Deferral Period other than death or Disability, the
rights to the shares still covered by the Award shall be forfeited by the
Participant, except the Committee shall have the discretion to waive in
whole or in part any or all remaining deferral limitations with respect to
any or all of such Participant's Deferred Stock.

(e) Election. A Participant may elect further to defer receipt of the
Deferred Stock payable under an Award (or an installment of an Award) for a
specified period or until a specified event (an "Elective Deferral
Period"), subject in each case to the Committee's approval and to such
terms as are determined by the Committee. Subject to any exceptions
adopted by the Committee, such election must be made at least one (1) year
prior to completion of the Deferral Period for the Award (or of the
applicable installment thereof).

ARTICLE X
---------

OTHER AWARDS
------------

10.1 Bonus Stock and Awards In Lieu of Obligations. The Committee is
authorized to grant Common Stock as a bonus, or to grant Common Stock or other
Awards in lieu of Company obligations to pay cash or deliver other property
under other plans or compensatory arrangements. Common Stock or Awards granted
hereunder shall be subject to such other terms as shall be determined by the
Committee.

10.2 Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Common
Stock, other Awards, or other property equal in value to dividends paid with
respect to a specified number of shares of Common Stock. Dividend Equivalents
may be awarded on a free-standing basis or in connection with another Award.
The Committee may provide that Dividend Equivalents will be paid or distributed
when accrued or will be deemed to have been reinvested in additional Common
Stock, Awards, or other

22
<PAGE>

investment vehicles, and subject to such restrictions on transferability and
risks of forfeiture, as the Committee may specify.

10.3 Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Common Stock, purchase rights for Common Stock,
Awards with value and payment contingent upon performance of the Company or any
other factors designated by the Committee, and Awards valued by reference to the
book value of Common Stock or the value of securities of or the performance of
specified Subsidiaries. The Committee shall determine the terms and conditions
of such Awards. Common Stock delivered pursuant to an Award in the nature of a
purchase right granted under this Section 10.3 shall be purchased for such
consideration, paid for at such times, by such methods, and in such forms,
including, without limitation, cash, Common Stock, other Awards, or other
property, as the Committee shall determine. Cash awards, as an element of or
supplement to any other Award under the Plan, may also be granted pursuant to
this Section 10.3.

10.4 Performance Awards.

(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and its timing, may be subject
to performance conditions specified by the Committee. The Committee may
use business criteria and other measures of performance it deems
appropriate in establishing any performance conditions, and may exercise
its discretion to reduce or increase the amounts payable under any Award
subject to performance conditions, except as limited under Sections 10.4(b)
and 10.4(c) hereof in the case of a Performance Award intended to qualify
under Code Section 162(m).

(b) Performance Awards Granted to Designated Covered Employees. If
the Committee determines that a Performance Award to be granted to a person
the Committee regards as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the
grant and/or settlement of such Performance Award shall be contingent upon
achievement of preestablished performance goals and other terms set forth
in this Section 10.4(b).

(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria and
a targeted level or levels of performance with respect to such

23
<PAGE>

criteria, as specified by the Committee consistent with this Section
10.4(b). Performance goals shall be objective and shall otherwise
meet the requirements of Code Section 162(m), including the
requirement that the level or levels of performance targeted by the
Committee result in the performance goals being "substantially
uncertain." The Committee may determine that more than one
performance goal must be achieved as a condition to settlement of such
Performance Awards. Performance goals may differ for Performance
Awards granted to any one Participant or to different Participants.

(ii) Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or for
specified Affiliates or business units of the Company (except with
respect to the total stockholder return and earnings per share
criteria), shall be used exclusively by the Committee in establishing
performance goals for such Performance Awards: (1) total stockholder
return; (2) such total stockholder return as compared to total return
(on a comparable basis) of a publicly available index such as, but not
limited to, the Standard & Poor's 500 or the Nasdaq-U.S. Index; (3)
net income; (4) pre-tax earnings; (5) EBITDA; (6) pre-tax operating
earnings after interest expense and before bonuses, service fees, and
extraordinary or special items; (7) operating margin; (8) earnings per
share; (9) return on equity; (10) return on capital; (11) return on
investment; (12) operating income, before payment of executive
bonuses; and (13) working capital. The foregoing business criteria
shall also be exclusively used in establishing performance goals for
Cash Incentive Awards granted under Section 10.4(c) hereof.

(iii) Performance Period: Timing For Establishing Performance
Goals. Achievement of performance goals in respect of such
Performance Awards shall be measured over such periods as may be
specified by the Committee. Performance goals shall be established on
or before the dates that are required or permitted for "performance-
based compensation" under Code Section 162(m).

(iv) Settlement of Performance Awards; Other Terms. Settlement
of Performance Awards may be in cash or Common Stock, or other Awards,
or other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise to
be made in connection with such Performance Awards, but may not
exercise discretion to increase any such amount payable in respect of
a Performance Award subject to this Section 10.4(b). The Committee
shall specify the circumstances in which such Performance

24
<PAGE>

Awards shall be forfeited or paid in the event of a Termination of
Employment or a Change in Control prior to the end of a performance
period or settlement of Performance Awards, and other terms relating
to such Performance Awards.

(c) Cash Incentive Awards Granted to Designated Covered Employees.
The Committee may grant Cash Incentive Awards to Participants including
those designated by the Committee as likely to be Covered Employees, which
Awards shall represent a conditional right to receive a payment in cash,
unless otherwise determined by the Committee, after the end of a specified
calendar year or calendar quarter or other period specified by the
Committee, in accordance with this Section 10.6(c). With respect to any
calendar year, the maximum Cash Incentive Award payable to any Participant
shall not exceed 10% of the Company's operating income, before payment of
executive bonuses, for such year.

(i) Cash Incentive Award. The Cash Incentive Award for
Participants the Committee regards as likely to be regarded as Covered
Employees shall be based on achievement of a performance goal or goals
based on one or more of the business criteria set forth in Section
10.4(b), and may be based on such criteria for any other Participant.
The Committee may specify the amount of the individual Cash Incentive
Award as a percentage of any such business criteria, a percentage
thereof in excess of a threshold amount, or another amount which need
not bear a strictly mathematical relationship to such relationship
criteria. The Committee may establish an Cash Incentive Award pool
that includes Participants the Committee regards likely to be regarded
as Covered Employees, which shall be an unfunded pool, for purposes of
measuring Company performance in connection with Cash Incentive
Awards. The amount of the Cash Incentive Award pool shall be based
upon the achievement of a performance goal or goals based on one or
more of the business criteria set forth in Section 10.4(b) hereof in
the given performance period, as specified by the Committee. The
Committee may specify the amount of the Cash Incentive Award pool as a
percentage of any of such business criteria, a percentage thereof in
excess of a threshold amount, or as another amount which need not bear
a strictly mathematical relationship to such business criteria.

(ii) Potential Cash Incentive Awards. Not later than the date
required or permitted for "qualified performance-based compensation"
under Code Section 162(m), the Committee shall determine the
Participants who will potentially receive Cash Incentive Awards for
the specified year, quarter or other period, either as individual Cash
Incentive

25
<PAGE>

Awards or out of an Cash Incentive Award pool established by such date
and the amount or method for determining the amount of the individual
Cash Incentive Award or the amount of such Participant's portion of
the Cash Incentive Award pool or the individual Cash Incentive Award.

(iii) Payout of Cash Incentive Awards. After the end of the
specified year, quarter or other period, as the case may be, the
Committee shall determine the amount, if any, of potential individual
Cash Incentive Award otherwise payable to a Participant, the Cash
Incentive Award pool and the maximum amount of potential Cash
Incentive Award payable to each Participant in the Cash Incentive
Award pool. The Committee may, in its discretion, determine that the
amount payable to any Participant as a final Cash Incentive Award
shall be increased or reduced from the amount of his or her potential
Cash Incentive Award, including a determination to make no final Award
whatsoever, but may not exercise discretion to increase any such
amount in the case of an Cash Incentive Award intended to qualify
under Code Section 162(m). The Committee shall specify the
circumstances in which an Cash Incentive Award shall be paid or
forfeited in the event of Termination of Employment by the Participant
or a Change in Control prior to the end of the period for measuring
performance or the payout of such Cash Incentive Award, and other
terms relating to such Cash Incentive Award in accordance with the
Plan. Upon the completion of the measuring period and the
determination of the right to payment and the amount, the Committee
shall direct the Committee to make payment.

(d) Written Determinations. All determinations by the Committee as to
the establishment of performance goals and the potential Performance Awards
or Cash Incentive Awards related to such performance goals and as to the
achievement of performance goals relating to such Awards, the amount of any
Cash Incentive Award pool and the amount of final Cash Incentive Awards,
shall be made in writing in the case of any Award intended to qualify under
Code Section 162(m). The Committee may not delegate any responsibility
relating to such Performance Awards or Cash Incentive Awards.

ARTICLE XI
----------

PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
------------------------------------------------------

11.1 Limited Transfer During Offering. In the event there is an effective
registration statement under the Securities Act pursuant to which shares of
Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not,

26
<PAGE>

during the period requested by the underwriters managing the registered public
offering, effect any public sale or distribution of shares received directly or
indirectly pursuant to an exercise of an Award.

11.2 Committee Discretion. The Committee may in its sole discretion
include in any Agreement an obligation that the Company purchase a Participant's
shares of Common Stock received upon the exercise of an Award (including the
purchase of any unexercised Awards which have not expired), or may obligate a
Participant to sell shares of Common Stock to the Company, upon such terms and
conditions as the Committee may determine and set forth in an Agreement. The
provisions of this Article XI shall be construed by the Committee in its sole
discretion, and shall be subject to such other terms and conditions as the
Committee may from time to time determine. Notwithstanding any provision herein
to the contrary, the Company may upon determination by the Committee assign its
right to purchase shares of Common Stock under this Article XI, whereupon the
assignee of such right shall have all the rights, duties and obligations of the
Company with respect to purchase of the shares of Common Stock.

11.3 No Company Obligation. None of the Company, an Affiliate or the
Committee shall have any duty or obligation to disclose affirmatively to a
record or beneficial holder of Common Stock or an Award, and such holder shall
have no right to be advised of, any material information regarding the Company
or any Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Award or the Company's purchase of Common Stock or an Award from
such holder in accordance with the terms hereof.

ARTICLE XII
-----------

CHANGE IN CONTROL PROVISIONS
----------------------------

12.1 Impact of Event. Notwithstanding any other provision of the Plan to
the contrary, unless otherwise provided in an Agreement, in the event of a
Change in Control (as defined in Section 12.2):

(a) Any Stock Appreciation Rights and Stock Options outstanding as of
the date of such Change in Control and not then exercisable shall become
fully exercisable to the full extent of the original grant;

(b) The restrictions and deferral limitations applicable to any
Restricted Stock, Deferred Stock or other Award shall lapse, and such
Restricted Stock, Deferred Stock or other Award shall become free of all
restrictions and become fully vested and transferable to the full extent of
the original grant.

27
<PAGE>

(c) The performance goals and other conditions with respect to any
outstanding Performance Award or Cash Incentive Award shall be deemed to
have been satisfied in full, and such Award shall be fully distributable,
if and to the extent provided by the Committee in the Agreement relating to
such Award or otherwise, notwithstanding that the Award may not be fully
deductible to the Company under Section 162(m) of the Code.

(d) The Committee shall have full discretion, notwithstanding anything
herein or in an Award Agreement to the contrary, to do any or all of the
following with respect to an outstanding Award:

(1) To cause any Award to be cancelled, provided notice of at
least 15 days thereof is provided before the date of
cancellation;

(2) To provide that the securities of another entity be
substituted hereunder for the Common Stock and to make
equitable adjustment with respect thereto;

(3) To grant the Participant by giving notice during a pre-set
period to surrender all or part of a stock-based Award to
the Company and to receive cash in an amount equal to the
amount by which the "Change in Control Price" (as defined in
Section 12.3) per share of Common Stock on the date of such
election shall exceed the amount which the Participant must
pay to exercise the Award per share of Common Stock under
the Award (the "Spread") multiplied by the number of shares
of Common Stock granted under the Award;

(4) To require the assumption of the obligation of the Company
under the Plan subject to appropriate adjustment; and

(5) To take any other action the Committee determines to take.

12.2 Definition of Change in Control. For purposes of this Plan, a "Change
in Control" shall be deemed to have occurred if (a) any corporation, person or
other entity (other than the Company, a majority-owned subsidiary of the Company
or any of its subsidiaries, or an employee benefit plan (or related trust)
sponsored or maintained by the Company), including a "group" as defined in
Section 13(d)(3) of the Exchange Act, becomes the beneficial owner of stock
representing more than the greater of (i) fifty percent (50%) of the combined
voting power of the Company's then outstanding securities or (ii) the percentage
of the combined voting power of the Company's then outstanding securities which
equals (A) ten percent

28
<PAGE>

(10%) plus (B) the percentage of the combined voting power of the Company's
outstanding securities held by such corporation, person or entity on the
Effective Date; (b)(i) the stockholders of the Company approve a definitive
agreement to merge or consolidate the Company with or into another corporation
other than a majority-owned subsidiary of the Company, or to sell or otherwise
dispose of all or substantially all of the Company's assets, and (ii) the
persons who were the members of the Board of Directors of the Company prior to
such approval do not represent a majority of the directors of the surviving,
resulting or acquiring entity or the parent thereof; (c) the stockholders of the
Company approve a plan of liquidation of the Company; or (d) within any period
of 24 consecutive months, persons who were members of the Board of Directors of
the Company immediately prior to such 24-month period, together with any persons
who were first elected as directors (other than as a result of any settlement of
a proxy or consent solicitation contest or any action taken to avoid such a
contest) during such 24-month period by or upon the recommendation of persons
who were members of the Board of Directors of the Company immediately prior to
such 24-month period and who constituted a majority of the Board of Directors of
the Company at the time of such election, cease to constitute a majority of the
Board.

12.3 Change in Control Price. For purposes of the Plan, "Change in Control
Price" means the higher of (a) the highest reported sales price of a share of
Common Stock in any transaction reported on the principal exchange on which such
shares are listed or on NASDAQ during the 60-day period prior to and including
the date of a Change in Control or (b) if the Change in Control is the result of
a tender or exchange offer, merger, consolidation, liquidation or sale of all or
substantially all of the assets of the Company (in each case a "Corporate
Transaction"), the highest price per share of Common Stock paid in such
Corporate Transaction, except that, in the case of Incentive Stock Options and
Stock Appreciation Rights relating to Incentive Stock Options, such price shall
be based only on the Fair Market Value of the Common Stock on the date any such
Incentive Stock Option or Stock Appreciation Right is exercised. To the extent
that the consideration paid in any such Corporate Transaction consists all or in
part of securities or other non-cash consideration, the value of such securities
or other non-cash consideration shall be determined in the sole discretion of
the Committee.

ARTICLE XIII
------------

MISCELLANEOUS
-------------

13.1 Amendments and Termination. The Board may amend, alter or discontinue
the Plan at any time, but no amendment, alteration or discontinuation shall be
made which would (a) impair the rights of a Participant under a Stock Option,
Stock Appreciation Right, Restricted Stock Award or Deferred Stock Award

29
<PAGE>

theretofore granted without the Participant's consent, except such an amendment
(a) made to avoid an expense charge to the Company or an Affiliate, (b) made to
cause the Plan to qualify for the exemption provided by Rule 16b-3, (c) to
prevent the Plan from being disqualified from the exemption provided by Rule
16b-3, or (d) made to permit the Company or an Affiliate a deduction under the
Code. In addition, no such amendment shall be made without the approval of the
Company's stockholders to the extent such approval is required by law or
agreement.

The Committee may amend the Plan at any time subject to the same
limitations (and exceptions to limitations) as applied to the Board and further
subject to any approval or limitations the Board may impose.

The Committee may amend the terms of any Award or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Participant without the Participant's consent or reduce an Option
Price, except such an amendment made to cause the Plan or Award to qualify for
the exemption provided by Rule 16b-3, avoid an expense charge to the Company or
an Affiliate or qualify for a deduction.

Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments, and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval. Notwithstanding
anything in the Plan to the contrary, if any right under this Plan would cause a
transaction to be ineligible for pooling of interest accounting that would, but
for the right hereunder, be eligible for such accounting treatment, the
Committee may modify or adjust the right so that pooling of interest accounting
is available.

13.2 Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or exchange
for, any other Award or any award granted under another plan of the Company, any
subsidiary, or

30
<PAGE>

any business entity to be acquired by the Company or a subsidiary, or any other
right of a Participant to receive payment from the Company or any subsidiary.
Such additional, tandem, and substitute or exchange Awards may be granted at any
time. If an Award is granted in substitution or exchange for another Award or
award, the Committee shall require the surrender of such other Award or award in
consideration for the grant of the new Award. In addition, Awards may be
granted in lieu of cash compensation, including in lieu of cash amounts payable
under other plans of the Company or any subsidiary, in which the Fair Market
Value of Common Stock subject to the Award is equivalent in value to the cash
compensation, or in which the exercise price, grant price or purchase price of
the Award in the nature of a right that may be exercised is equal to the Fair
Market Value of the underlying Common Stock minus the value of the cash
compensation surrendered.

13.3 Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Agreement, payments to be made by the
Company or an Affiliate upon the exercise of an Award or settlement of an Award
may be made in such forms as the Committee shall determine, including, without
limitation, cash, Common Stock, other Awards or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. The
settlement of any Award may be accelerated, and cash paid in lieu of Common
Stock in connection with such settlement, in the discretion of the Committee or
upon occurrence of one or more specified events (in addition to a Change in
Control). Installment or deferred payments may be required by the Committee
(subject to Section 13.1 of the Plan) or permitted at the election of the
Participant. Payments may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred payments
or the granting or crediting of Dividend Equivalents in respect of installment
or deferred payments denominated in Common Stock.

13.4 Status of Awards Under Code Section 162(m). On and after the date
Section 162(m) of the Code applies to Awards, it is the intent of the Company
that Awards granted to persons who are Covered Employees within the meaning of
Code Section 162(m) shall constitute "qualified performance-based compensation"
satisfying the requirements of Code Section 162(m). Accordingly, the provisions
of the Plan shall be interpreted in a manner consistent with Code Section
162(m) after the date Section 162(m) is applicable. If any provision of the Plan
or any agreement relating to such an Award does not comply or is inconsistent
with the requirements of Code Section 162(m), such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.

13.5 Unfunded Status of Plan; Limits on Transferability. It is intended
that the Plan be an "unfunded" plan for incentive and deferred compensation.
The Committee may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver Common Stock or make payments;
provided, however, that, unless the Committee otherwise determines, the
existence of such

31
<PAGE>

trusts or other arrangements is consistent with the "unfunded" status of the
Plan. Unless otherwise provided in this Plan or in an Agreement, no Award shall
be subject to the claims of Participant's creditors and no Award may be
transferred, assigned, alienated or encumbered in any way other than by will or
the laws of descent and distribution or to a Representative upon the death of
the Participant.

13.6 General Provisions.

(a) Representation. The Committee may require each person purchasing
or receiving shares pursuant to an Award to represent to and agree with the
Company in writing that such person is acquiring the shares without a view
to the distribution thereof. The certificates for such shares may include
any legend which the Committee deems appropriate to reflect any
restrictions on transfer.

(b) No Additional Obligation. Nothing contained in the Plan shall
prevent the Company or an Affiliate from adopting other or additional
compensation arrangements for its employees.

(c) Withholding. No later than the date as of which an amount first
becomes includible in the gross income of the Participant for Federal
income tax purposes with respect to any Award, the Participant shall pay to
the Company (or other entity identified by the Committee), or make
arrangements satisfactory to the Company or other entity identified by the
Committee regarding the payment of, any Federal, state, local or foreign
taxes of any kind required by law to be withheld with respect to such
amount required in order for the Company or an Affiliate to obtain a
current deduction. Unless otherwise determined by the Committee,
withholding obligations may be settled with Common Stock, including Common
Stock that is part of the Award that gives rise to the withholding
requirement provided that any applicable requirements under Section 16 of
the Exchange Act are satisfied. The obligations of the Company under this
Plan shall be conditional on such payment or arrangements, and the Company
and its Affiliates shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment otherwise due to the Participant.
If the Participant disposes of shares of Common Stock acquired pursuant to
an Incentive Stock Option in any transaction considered to be a
disqualifying transaction under the Code, the Participant must give written
notice of such transfer and the Company shall have the right to deduct any
taxes required by law to be withheld from any amounts otherwise payable to
the Participant. Unless otherwise determined by the Committee, withholding
obligations may be settled with Common Stock, including Common Stock that
is part of the Award that gives rise to the withholding requirement,
provided that any applicable requirements under Section 16 of the Exchange
Act are satisfied. The obligations of the Company under the Plan shall be
conditional

32
<PAGE>

on such payment or arrangements, and the Company and its Affiliates shall,
to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Participant.

(d) Reinvestment. The reinvestment of dividends in additional
Deferred or Restricted Stock at the time of any dividend payment shall be
permissible only if sufficient shares of Common Stock are available under
the Plan for such reinvestment (taking into account then outstanding
Options and other Awards).

(e) Representation. The Committee shall establish such procedures as
it deems appropriate for a Participant to designate a Representative to
whom any amounts payable in the event of the Participant's death are to be
paid.

(f) Controlling Law. The Plan and all Awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws
of the State of Illinois (other than its law respecting choice of law)
except to the extent the General Corporation Law of the State of Delaware
would be mandatorily applicable. The Plan shall be construed to comply
with all applicable law and to avoid liability to the Company, an Affiliate
or a Participant, including, without limitation, liability under Section
16(b) of the Exchange Act.

(g) Offset. Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value
of any shares of Common Stock, cash or other thing of value under this Plan
or an Agreement to be transferred to the Participant, and no shares of
Common Stock, cash or other thing of value under this Plan or an Agreement
shall be transferred unless and until all disputes between the Company and
the Participant have been fully and finally resolved and the Participant
has waived all claims to such against the Company or an Affiliate.

(h) Fail Safe. With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or Rule 16a-1(c)(3), as applicable. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee. Moreover, in the event the Plan
does not include a provision required by Rule 16b-3 or Rule 16a-1(c)(3) to
be stated herein, such provision (other than one relating to eligibility
requirements or the price and amount of Awards) shall be deemed to be
incorporated by reference into the Plan with respect to Participants
subject to Section 16.

33
<PAGE>

(i) Capitalization. The grant of an Award shall in no way affect the
right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidation, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

13.7 Mitigation of Excise Tax. Subject to any agreement with the
Participant, if any payment or right accruing to a Participant under this Plan
(without the application of this Section 13.7), either alone or together with
other payments or rights accruing to the Participant from the Company or an
Affiliate ("Total Payments"), would constitute a "parachute payment" (as defined
in Section 280G of the Code and regulations thereunder), such payment or right
shall be reduced to the largest amount or greatest right that will result in no
portion of the amount payable or right accruing under the Plan being subject to
an excise tax under Section 4999 of the Code or being disallowed as a deduction
under Section 280G of the Code. The determination of whether any reduction in
the rights or payments under this Plan is to apply shall be made by the
Committee in good faith after consultation with the Participant, and such
determination shall be conclusive and binding on the Participant. The
Participant shall cooperate in good faith with the Committee in making such
determination and providing the necessary information for this purpose. The
foregoing provisions of this Section 13.7 shall apply with respect to any person
only if, after reduction for any applicable Federal excise tax imposed by
Section 4999 of the Code and Federal income tax imposed by the Code, the Total
Payments accruing to such person would be less than the amount of the Total
Payments as reduced, if applicable, under the foregoing provisions of the Plan
and after reduction for only Federal income taxes.

13.8 Rights with Respect to Continuance of Employment. Nothing contained
herein shall be deemed to alter the relationship between the Company or an
Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship. Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant. The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract. The Company or
an Affiliate shall have no obligation to retain the Participant in its employ or
service as a result of this Plan. There shall be no inference as to the length
of employment or service hereby, and the Company or an Affiliate reserves the
same rights to terminate the Participant's employment or service as existed
prior to the individual's becoming a Participant in this Plan.

13.9 Awards in Substitution for Awards Granted by Other Corporations.
Awards may be granted under the Plan from time to time in substitution for
awards

34
<PAGE>

in respect of other plans of other entities. The terms and conditions of the
Awards so granted may vary from the terms and conditions set forth in this Plan
at the time of such grant as the Committee may deem appropriate to conform, in
whole or in part, to the provisions of the awards in substitution for which they
are granted.

13.10 Procedure for Adoption. Any Affiliate of the Company may by
resolution of such Affiliate's board of directors, with the consent of the Board
of Directors and subject to such conditions as may be imposed by the Board of
Directors, adopt the Plan for the benefit of its employees as of the date
specified in the board resolution.

13.11 Procedure for Withdrawal. Any Affiliate ,which has adopted the Plan
may, by resolution of the board of directors of such Affiliate, with the consent
of the Board of Directors and subject to such conditions as may be imposed by
the Board of Directors, terminate its adoption of the Plan.

13.12 Delay. If at the time a Participant accrues a right under the Plan,
the Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under the Plan or an Agreement to the
extent necessary to avoid the imposition of liability shall be suspended and
delayed during the period the Participant would be subject to such liability,
but not more than six (6) months and one (1) day and not to exceed the Option
Period, or the period for exercise of a Stock Appreciation Right as provided in
the Agreement, whichever is shorter. The Company shall have the right to
suspend or delay any time period described in the Plan or an Agreement if the
Committee shall determine that the action may constitute a violation of any law
or result in liability under any law to the Company, an Affiliate or a
stockholder of the Company until such time as the action required or permitted
shall not constitute a violation of law or result in liability to the Company,
an Affiliate or a stockholder of the Company. The Committee shall have the
discretion to suspend the application of the provisions of the Plan required
solely to comply with Rule 16b-3 if the Committee shall determine that Rule 16b-
3 does not apply to the Plan or any Participant.

13.13 Headings. The headings contained in this Plan are for reference
purposes only and shall not affect the meaning or interpretation of this Plan.

13.14 Severability. If any provision of this Plan shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not effect any other provision hereby, and this Plan shall be construed as if
such invalid or unenforceable provision were omitted.

35
<PAGE>

13.15 Successors and Assigns. This Plan shall inure to the benefit of and
be binding upon each successor and assign of the Company. All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant's heirs, legal representatives and
successors.

13.16 Entire Agreement. This Plan and the Agreement constitute the entire
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between the Plan and the Agreement, the terms
and conditions of this Plan shall control.

Executed effective May 29, 1996.

THE LEAP GROUP, INC.

By:
---------------------------
R. Steven Lutterbach
Chief Executive Officer

<PAGE>

EXHIBIT 10.6

THE LEAP GROUP, INC.

NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

ARTICLE I
---------

ESTABLISHMENT
-------------

1.1 Purpose. The Leap Group, Inc. Non-employee Directors' Stock Option
Plan ("Plan") is hereby established by The Leap Group, Inc. ("Company"),
effective May 29, 1996 ("Effective Date"). The purpose of the Plan is to promote
the overall financial objectives of the Company and its stockholders by
motivating directors of the Company who are not employees, to further align the
interests of such directors with those of the stockholders of the Company and to
achieve long-term growth and performance of the Company. The Plan and the grant
of Options hereunder are expressly conditioned upon the Plan's approval by the
stockholders of the Company. If such approval is not obtained, then the Plan and
all Options granted thereunder shall be null and void ab initio.

ARTICLE II
----------

DEFINITIONS
-----------

For purposes of the Plan, the following terms are defined as set forth
below:

2.1 "Affiliate" means any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
association or other entity (other than the Company) that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the Company, including, without limitation, any
member of an affiliated group of which the Company is a common parent
corporation as provided in Section 1504 of the Code.

2.2 "Agreement" or "Option Agreement" means, individually or collectively,
any agreement entered into pursuant to this Plan pursuant to which an Option is
granted to a Participant.

2.3 "Board of Directors" or "Board" means the Board of Directors of the
Company.

2.4 "Change in Control" means the happening of any of the following events
following a Public Offering: (a) any corporation, person or other entity (other
than the Company, a majority-owned subsidiary of the Company or any of its
subsidiaries, or an employee benefit plan (or related trust) sponsored or
maintained by the Company), including a "group" as defined in Section 13(d)(3)
of the Exchange Act, becomes the
<PAGE>

beneficial owner of stock representing more than the greater of (i) fifty
percent (50%) of the combined voting power of the Company's then outstanding
securities or (ii) the percentage of the combined voting power of the Company's
then outstanding securities which equals (A) ten percent (10%) plus (B) the
percentage of the combined voting power of the Company's outstanding securities
held by such corporation, person or entity on the Effective Date; (b)(i) the
stockholders of the Company approve a definitive agreement to merge or
consolidate the Company with or into another corporation other than a majority-
owned subsidiary of the Company, or to sell or otherwise dispose of all or
substantially all of the Company's assets, and (ii) the persons who were the
members of the Board of Directors prior to such approval do not represent a
majority of the directors of the surviving, resulting or acquiring entity or the
parent thereof; (c) the stockholders of the Company approve a plan of
liquidation of the Company; or (d) within any period of 24 consecutive months,
persons who were members of the Board of Directors immediately prior to such 24-
month period, together with any persons who were first elected as directors
(other than as a result of any settlement of a proxy or consent solicitation
contest or any action taken to avoid such a contest) during such 24-month period
by or upon the recommendation of persons who were members of the Board of
Directors of the Company immediately prior to such 24-month period and who
constituted a majority of the Board of Directors at the time of such election,
cease to constitute a majority of the Board.

2.5 "Code" or "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any subsequent Internal Revenue Code.

2.6 "Commission" means the Securities and Exchange Commission or any
successor agency.

2.7 "Committee" means the person or persons appointed by the Board of
Directors to administer the Plan, as further described in the Plan.

2.8 "Common Stock" means the shares of the common stock, par value $.01
per share, of the Company, whether presently or hereafter issued, and any other
stock or security resulting from adjustment thereof as described hereinafter or
the common stock of any successor to the Company which is designated for the
purpose of the Plan.

2.9 "Company" means The Leap Group, Inc., a Delaware corporation, and
includes any successor or assignee corporation or corporations into which the
Company may be merged, changed or consolidated; any corporation for whose
securities all or substantially all of the securities of the Company shall be
exchanged; and any assignee of or successor to all or substantially all of the
assets of the Company.

2.10 "Director" means each and any director who serves on the Board and who
is not an officer or employee of the Company or any of its Affiliates.

2
<PAGE>

2.11 "Disability" means a mental or physical illness that renders a
Participant totally and permanently incapable of performing the Participant's
duties for the Company or an Affiliate. Notwithstanding the foregoing, a
Disability shall not qualify under the Plan if it is the result of (i) a
willfully self-inflicted injury or willfully self-induced sickness; or (ii) an
injury or disease contracted, suffered, or incurred, while participating in a
criminal offense. The determination of Disability shall be made by the
Committee. The determination of Disability for purposes of the Plan shall not
be construed to be an admission of disability for any other purpose.

2.12 "Effective Date" means May 29, 1996.

2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

2.14 "Fair Market Value" means:

(a) prior to a Public Offering, the value determined on the basis of the
good faith determination of the Committee and without regard to whether the
Common Stock is restricted, illiquid or represents a minority interest, unless
expressly provided otherwise in an Agreement;

(b) on the date of a Public Offering, the initial price to the public; and

(c) on or after a Public Offering, the value determined on the basis of the
good faith determination of the Committee, without regard to whether the Common
Stock is restricted or represents a minority interest, pursuant to the
applicable method described below:

(i) if the Common Stock is listed on a national securities exchange
or quoted on NASDAQ, the closing price of the Common Stock on the relevant
date (or, if such date is not a business day or a day on which quotations
are reported, then on the immediately preceding date on which quotations
were reported), as reported by the principal national exchange on which
such shares are traded (in the case of an exchange) or by NASDAQ, as the
case may be;

(ii) if the Common Stock is not listed on a national securities
exchange or quoted on NASDAQ, but is actively traded in the over-the-
counter market, the average of the closing bid and asked prices for the
Common Stock on the relevant date (or, if such date is not a business day
or a day on which quotations are reported, then on the immediately
preceding date on which quotations were reported), or the most recent
preceding date for which such quotations are reported; and

(iii) if, on the relevant date, the Common Stock is not publicly
traded or reported as described in (i) or (ii), the value determined in
good faith by the Committee.

3
<PAGE>

2.15 "Grant Date" means the date as of which an Option is granted pursuant
to the Plan.

2.16 "NASDAQ" means The Nasdaq Stock Market, including the Nasdaq National
Market.

2.17 "Option" means the right to purchase the number of shares of Common
Stock specified by the Plan at a price and for a term fixed by the Plan, and
subject to such other limitations and restrictions as the Plan and the Committee
imposes.

2.18 "Option Period" means the period during which the Option shall be
exercisable in accordance with the Agreement and Article V.

2.19 "Option Price" means the price at which the Common Stock may be
purchased under an Option as provided in Section 5.3.

2.20 "Participant" means a Director to whom an Option has been granted
under the Plan, and in the event a Representative is appointed for a Participant
or another person becomes a Representative, then the term "Participant" shall
mean such appointed Representative. The term shall also include a trust for the
benefit of the Participant, the Participant's parents, spouse or descendants; a
partnership the interests in which are for the benefit of the Participant, the
Participant's parents, spouse or descendants; or a custodian under a uniform
gifts to minors act or similar statute for the benefit of the Participant's
descendants, to the extent permitted by the Committee and not inconsistent with
an application of Rule 16b-3. Notwithstanding the foregoing, the term
"Termination of Directorship" shall mean the Termination of Directorship of the
Director.

2.21 "Plan" means The Leap Group, Inc. Non-employee Directors' Stock Option
Plan, as herein set forth and as may be amended from time to time.

2.22 "Public Offering" means the initial public offering of shares of
Common Stock under the Securities Act.

2.23 "Representative" means (a) the person or entity acting as the executor
or administrator of a Participant's estate pursuant to the last will and
testament of a Participant or pursuant to the laws of the jurisdiction in which
the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been transferred permissibly by the Committee
or by operation of law; provided that only one of the foregoing shall be the
Representative at any point in time as determined under applicable law and
recognized by the Committee.

2.24 "Rule 16b-3" or "Rule 16a-1(c)(3)" mean Rule 16b-3 and Rule 16a-
1(c)(3), as promulgated under the Exchange Act, as amended from time to time, or
any successor thereto, in effect and applicable to the Plan and Participants.

4
<PAGE>

2.25 "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.

ARTICLE III
-----------

ADMINISTRATION
--------------

3.1 Committee Structure and Authority. The Plan shall be administered by
the Committee which shall be comprised of one or more persons. The Committee
shall be the Compensation Committee of the Board of Directors, unless such
committee does not exist or the Board establishes another committee whose
purpose is the administration of the Plan. In the absence of an appointment, the
Board shall be the Committee; provided that only those members of the
Compensation Committee of the Board who participate in the decision relative to
Options under the Plan shall be deemed to be part of the "Committee" for
purposes of the Plan. A majority of the Committee shall constitute a quorum at
any meeting thereof (including telephone conference) and the acts of a majority
of the members present, or acts approved in writing by a majority of the entire
Committee without a meeting, shall be the acts of the Committee for purposes of
the Plan. The Committee may authorize any one or more of its members or an
officer of the Company to execute and deliver documents on behalf of the
Committee. A member of the Committee shall not exercise any discretion
respecting himself or herself under the Plan. The Board shall have the authority
to remove, replace or fill any vacancy of any member of the Committee upon
notice to the Committee and the affected member. Any member of the Committee may
resign upon notice to the Board. The Committee may allocate among one or more of
its members, or may delegate to one or more of its agents, such duties and
responsibilities as it determines.

Among other things, the Committee shall have the authority, subject to the
terms of the Plan and the limitation of section (c)(2)(ii) of Rule 16b-3 so that
the Plan is described in that section:

(a) to determine the terms and conditions of any Option hereunder
(including, but not limited to, the Option Period, any exercise restriction
or limitation and any exercise acceleration or forfeiture waiver regarding
any Option and the shares of Common Stock relating thereto);

(b) to adjust the terms and conditions, at any time or from time to
time, of any Option, subject to the limitations of Section 6.1;

(d) to determine whether a Participant has a Disability or a
retirement;

(e) to determine what securities law requirements are applicable to
the Plan, Options, and the issuance of shares of Common Stock and to
require of a Participant that appropriate action be taken with respect to
such requirements;

(f) to cancel, with the consent of the Participant or as otherwise
provided in the Plan or an Agreement, outstanding Options;

(g) to require as a condition of the exercise of an Option or the
issuance or transfer of a certificate of Common Stock, the withholding from
a Participant of the amount of any federal, state or local taxes as may be
necessary in order for the Company or any other employer to obtain a
deduction or as may be otherwise required by law;

(h) to determine whether and with what effect an individual has
ceased to be a Director;

(i) to determine whether the Company or any other person has a right
or obligation to purchase Common Stock from a Participant and, if so, the
terms and conditions on which such Common Stock is to be purchased;

(j) to determine the restrictions or limitations on the transfer of
Common Stock;

(k) to determine whether an Option is to be adjusted, modified or
purchased or is to become fully exercisable, under the Plan or the terms of
an Agreement;

(l) to interpret and make a final determination with respect to the
remaining number of shares of Common Stock available under the Plan;

(m) to determine the permissible methods of Option exercise and
payment, including cashless exercise arrangements;

(n) to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan; and

(o) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.

The Committee shall have the authority, subject to (i) the terms of the
Plan and (ii) relevant law, to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable, to interpret the terms and provisions of the Plan and any
Option issued under the Plan and to otherwise supervise the administration of
the Plan. The Committee's policies and procedures may differ with respect to
Options granted at different times or to different Participants.

Any determination made by the Committee pursuant to the provisions of the
Plan shall be made in its sole discretion. All decisions made by the Committee
pursuant to the provisions of the Plan shall be final and binding on all
persons, including the Company and Participants. Any determination shall not be
subject to de novo review if challenged in court.

5
<PAGE>

ARTICLE IV
----------

STOCK SUBJECT TO PLAN
---------------------

4.1 Number of Shares. Subject to the adjustment under Section 4.5, the
total number of shares of Common Stock reserved and available for issuance
pursuant to Options under the Plan shall be two hundred thousand (200,000)
shares of Common Stock authorized for issuance on the Effective Date. Such
shares may consist, in whole or in part, of authorized and unissued shares or
treasury shares.

4.2 Release of Shares. The Committee shall have full authority to
determine the number of shares of Common Stock available for Stock Options, and
in its discretion may include (without limitation) as available for distribution
any shares of Common Stock that have ceased to be subject to Stock Options, any
shares of Common Stock subject to any Stock Options that are forfeited, any
Stock Options that otherwise terminate without issuance of shares of Common
Stock being made to the Participant, or any shares (whether or not restricted)
of Common Stock that are received by the Company in connection with the exercise
of a Stock Option, including the satisfaction of any tax liability or the
satisfaction of a tax withholding obligation. If any shares could not again be
available for Options to a particular Participant under applicable law, such
shares shall be available exclusively for Options to Participants who are not
subject to such limitations.

4.3 Restrictions on Shares. Shares of Common Stock issued upon exercise of
an Option shall be subject to the terms and conditions specified herein and to
such other terms, conditions and restrictions as the Committee in its discretion
may determine or provide in the Option Agreement. The Company shall not be
required to issue or deliver any certificates for shares of Common Stock, cash
or other property prior to (i) the listing of such shares on any stock exchange,
NASDAQ or other public market on which the Common Stock may then be listed (or
regularly traded), (ii) the completion of any registration or qualification of
such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(iii) the satisfaction of any applicable withholding obligation in order for the
Company or an Affiliate to obtain a deduction with respect to the exercise of an
Option. The Company may cause any certificate for any share of Common Stock to
be delivered to be properly marked with a legend or other notation reflecting
the limitations on transfer of such Common Stock as provided in the Plan or as
the Committee may otherwise require. The Committee may require any person
exercising an Option to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
the shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares.

4.4 Reasonable Efforts To Register. If there has been a Public Offering,
the Company will register under the Securities Act the Common Stock delivered or
deliverable pursuant to Options on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that

6
<PAGE>

form to the extent available to effect such registration), in accordance with
the rules and regulations governing such forms, as soon as such forms are
available for registration to the Company for this purpose. The Company will
use its reasonable efforts to cause the registration statement to become
effective as soon as possible and will file such supplements and amendments to
the registration statement as may be necessary to keep the registration
statement in effect until the earliest of (a) one year following the expiration
of the Option Period of the last Option outstanding, (b) the date the Company is
no longer a reporting company under the Exchange Act and (c) the date all
Participants have disposed of all shares delivered pursuant to any Option. The
Company may delay the foregoing obligation if the Committee reasonably
determines that any such registration would materially and adversely affect the
Company's interests or if there is no material benefit to Participants.

4.5 Stockholder Rights. No person shall have any rights of a stockholder
as to shares of Common Stock subject to an Option until, after proper exercise
of the Option or other action required, such shares shall have been recorded on
the Company's official stockholder records as having been issued and
transferred. Upon exercise of the Option or any portion thereof, the Company
will have a reasonable time in which to issue the shares, and the Participant
will not be treated as a stockholder for any purpose whatsoever prior to such
issuance. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such shares are recorded as issued and
transferred in the Company's official stockholder records, except as provided
herein or in an Agreement.

ARTICLE V
---------

OPTIONS
-------

5.1 Eligibility. Each Director shall be granted Options to purchase
shares of Common Stock as provided herein.

7
<PAGE>

5.2 Grant and Exercise. Each person who is a Director on the effective
date of the initial Public Offering shall become a Participant and shall be
granted an Option on the effective date of the initial Public Offering to
purchase twenty thousand (20,000) shares of Common Stock without further action
by the Board or the Committee. Subsequent to a Public Offering, each person
other than a person who is a Director on the effective date of the Company's
initial Public Offering who is subsequently elected as a Director shall become a
Participant and shall, on his or her date of election and on each anniversary
thereof for as long as such person remains a Director, without further action by
the Board or the Committee, be granted an option to purchase five thousand
(5,000) shares of Common Stock. If the number of shares of Common Stock
available to grant under the Plan on a scheduled date of grant is insufficient
to make all automatic grants required to be made pursuant to the Plan on such
date, then each eligible Director shall receive an Option to purchase a pro rata
number of the remaining shares of Common Stock available under the Plan;
provided further, however, that if such proration results in fractional shares
of Common Stock, then such Option shall be rounded down to the nearest number of
whole shares of Common Stock. If there is no whole number of shares remaining to
be granted, then no grants shall be made under the Plan. Each Option granted
under the Plan shall be evidenced by an Agreement, in a form approved by the
Committee, which shall embody the terms and conditions of such Option and which
shall be subject to the express terms and conditions set forth in the Plan. Such
Agreement shall become effective upon execution by the Participant.

5.3 Terms and Conditions. Options shall be subject to such terms and
conditions as shall be determined by the Committee, including in each case the
following:

(a) Option Period. The Option Period of each Option shall be five (5)
years.

(b) Option Price. The Option Price per share of the Common Stock
purchasable under an Option shall be (1) with respect to persons who are
Participants on the date of the initial Public Offering, the Fair Market Value
and (2) with respect to all other Participants, unless the Committee determines
otherwise, the lower of (i) the average Fair Market Value of the Common Stock
(per share) on the twenty (20) consecutive trading days ending coincident with
the Grant Date (or if the Grant Date is not a trading date, then ending
coincident with the last trading date preceding a Grant Date) and (ii) the Fair
Market Value per share on the Grant Date.

(c) Exercisability. Unless an earlier time is specified in an Agreement,
and subject to the provisions of Section 6.3, Options granted on the Effective
Date of a Public Offering shall become fully exercisable upon the Grant Date and
Options granted thereafter shall become exercisable on the first anniversary of
the Grant Date. An Option only shall be exercisable during the Option Period.

(d) Method of Exercise. Subject to the provisions of this Article V, a
Participant may exercise Stock Options, in whole or in part, at any time during
the Option Period by the Participant's giving written notice of exercise on a
form provided by the Committee (if available) to the Company specifying the
number of shares of Common Stock subject to the Stock Option to be purchased.
Except when waived by the Committee, such notice shall be accompanied by payment
in full of the purchase price by cash or check or such other form of payment as
the Company may accept. If approved by the Committee (including approval at the
time of exercise), payment in full or in part may also be made (i) by delivering
Common Stock already owned by the Participant having a total Fair Market Value
on the date of such delivery equal to the Option Price; (ii) by the execution
and delivery of a note or other

8
<PAGE>

evidence of indebtedness (and any security agreement thereunder) satisfactory to
the Committee and permitted in accordance with Section 5.3(e); (iii) by
authorizing the Company to retain shares of Common Stock which would otherwise
be issuable upon exercise of the Option having a total Fair Market Value on the
date of delivery equal to the Option Price; (iv) by the delivery of cash or the
extension of credit by a broker-dealer to whom the Participant has submitted a
notice of exercise or otherwise indicated an intent to exercise an Option (in
accordance with Part 220, Chapter II, Title 12 of the Code of Federal
Regulations, so-called "cashless" exercise); (v) by certifying ownership of
shares of Common Stock owned by the Participant to the satisfaction of the
Committee for later delivery to the Company as specified by the Committee; (vi)
by certifying ownership of shares of Common Stock by the Participant to the
satisfaction of the Committee for later delivery to the company as specified by
the committee; or (vii) by any combination of the foregoing or by any other
method permitted by the Committee.

(e) Nontransferability of Options. Except as provided herein or in an
Agreement, no Option or interest therein shall be transferable by the
Participant other than by will or by the laws of descent and distribution, and
all Options shall be exercisable during the Participant's lifetime only by the
Participant. If and to the extent transferability is permitted by Rule 16b-3
and except as otherwise provided herein or by an Agreement, every Option granted
hereunder shall be freely transferable, but only if such transfer does not
result in liability under Section 16 of the Exchange Act to the Participant or
other Participants and is consistent with registration of the Option and sale of
Common Stock on Form S-8 (or a successor form) or the Committee's waiver of such
condition.

5.4 Termination. Unless otherwise provided in an Agreement or determined by
the Committee, if a Participant ceases to be a Director due to death, any
unexpired and unexercised Stock Option held by such Participant shall thereafter
be fully exercisable for a period of one (1) year following the date of the
appointment of a Representative (or such other period or no period as the
Committee may specify) or until the expiration of the Option Period, whichever
period is the shorter. Unless otherwise provided in an Agreement or determined
by the Committee, if a Participant ceases to be a Director due to a Disability,
any unexpired and unexercised Stock Option held by such Participant shall
thereafter be fully exercisable by the Participant for the period of one (1)
year (or such other period or no period as the Committee may specify)
immediately following the date the Participant ceases to be a Director or until
the expiration of the Option Period, whichever period is shorter, and the
Participant's death at any time following the date the Participant ceases to be
a Director due to Disability shall not affect the foregoing.

Unless otherwise provided in an Agreement or determined by the Committee, if
a Participant's directorship is terminated for any reason other than due to the
Participant's death or Disability, any Option held by such Participant shall
terminate ninety (90) days after the date such person ceases to be a Director.
Unless otherwise provided in an Agreement, the death or Disability of a
Participant after a termination of Directorship otherwise provided herein shall
not extend the exercisability of the time permitted to exercise an Option.

ARTICLE VI
----------

MISCELLANEOUS
-------------

6.1 Amendments and Termination.

The Board may amend, alter or discontinue the Plan at any time, but no
amendment, alteration or discontinuation shall be made which would (a) impair
the rights of a Participant under a Stock Option, theretofore granted without
the Participant's consent, except such an amendment (a) made to avoid an expense
charge to the Company or an Affiliate, (b) made to cause the Plan to qualify for
the exemption provided by Rule 16b-3, (c) to prevent the Plan from being
disqualified from the exemption provided by Rule 16b-3, or (d) made to permit
the Company a deduction under the Code. In addition, no such amendment shall be
made without the approval of the Company's stockholders to the extent such
approval is required by law or agreement.

9
<PAGE>

Notwithstanding the foregoing, the Plan may not be amended more often than
permitted to comply with Rule 16b-3, other than to comport with changes in the
Code or Rule 16b-3.

The Committee may amend the terms of any Stock Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without the Participant's consent or reduce an Option Price,
except such an amendment made to cause the Plan or Award to qualify for the
exemption provided by Rule 16b-3, avoid an expense charge to the Company or an
Affiliate or qualify for a deduction. The Committee's discretion to amend the
Plan or Agreement shall be consistent with Rule 16b-3.

Subject to the above provisions, the Board shall have authority to amend
the Plan, to take into account changes in law and tax and accounting rules, as
well as other developments, and to grant Stock Options which qualify for
beneficial treatment under such rules without stockholder approval.
Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee may modify or adjust the right so that
pooling of interest accounting is available.

6.2 General Provisions.

(a) Representation. The Committee may require each person purchasing or
receiving shares pursuant to an Option to represent to and agree with the
Company in writing that such person is acquiring the shares without a view to
the distribution thereof in violation of the Securities Act. The certificates
for such shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.

10
<PAGE>

(b) Withholding. If determined to be required to protect the Company, no
later than the date as of which an amount first becomes includable in the gross
income of the Participant for Federal income tax purposes with respect to any
Option, the Participant shall pay to the Company (or other entity identified by
the Committee), or make arrangements satisfactory to the Company or other entity
identified by the Committee regarding the payment of, any Federal, state, local
or foreign taxes of any kind required by law to be withheld with respect to such
amount. Unless otherwise determined by the Committee, withholding obligations
may be settled with Common Stock, including Common Stock that is part of the
Option that gives rise to the withholding requirement, provided that any
applicable requirements under Section 16 of the Exchange Act are satisfied. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the Participant.

(c) Controlling Law. The Plan and all Options made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Illinois (other than its law respecting choice of law) except to the
extent the General Corporation Law of the State of Delaware would be mandatorily
applicable. The Plan shall be construed to comply with all applicable law, and
to avoid liability to the Company, an Affiliate or a Participant, including,
without limitation, liability under Section 16(b) of the Exchange Act.

(d) Offset. Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value of
any shares of Common Stock, cash or other thing of value under the Plan or an
Agreement to be transferred to the Participant, and no shares of Common Stock,
cash or other thing of value under the Plan or an Agreement shall be transferred
unless and until all disputes between the Company and the Participant have been
fully and finally resolved and the Participant has waived all claims to such
against the Company or an Affiliate.

(e) Fail-Safe. With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or Rule 16a-1(c)(3). To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee. Moreover, in the event the Plan does not include a provision
required by Rule 16b-3 or Rule 16a-1(c)(3) to be stated therein, such provision
(other than one relating to eligibility requirements, or the price and amount of
Options) shall be deemed to be incorporated by reference into the Plan with
respect to Participants subject to Section 16.

(f) Capitalization. The grant of an Award shall in no way affect the right
of the Company to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.

6.3 Special Provisions Regarding a Change in Control.

Notwithstanding any other provision of the Plan to the contrary, unless
otherwise provided in an Agreement, in the event of a Change in Control:

11
<PAGE>

(a) Any Stock Options outstanding as of the date of such Change in Control
and not then exercisable shall become fully exercisable to the full extent of
the original grant;

(b) The Committee shall have full discretion, notwithstanding anything
herein or in an Option Agreement to the contrary, to do any or all of the
following with respect to an outstanding Stock Option;

(1) To cause any Stock Option to be cancelled, provided notice of at
least 15 days thereof is provided before the date of cancellation;

(2) To provide that the securities of another entity be substituted
hereunder for the Common Stock and to make equitable adjustment
with respect thereto;

(3) To grant the Participant by giving notice during a pre-set period
to surrender all or part of a Stock Option to the Company and to
receive cash in an amount equal to the amount by which the "Change
in Control Price" (as defined in Section 6.3(c)) per share of
Common Stock on the date of such election shall exceed the amount
which the Participant must pay to exercise the Option per share of
Common Stock, under the Option (the "Spread") multiplied by the
number of shares of Common Stock granted under the Option;

(4) To require the assumption of the obligation of the Company under
the Plan subject to appropriate adjustment; and

(5) To take any other action the Committee determines to take.

(c) For purposes of this Section, "Change in Control Price" means the
higher of (i) the highest reported sales price of a share of Common Stock in any
transaction reported on the principal exchange on which such shares are listed
or on NASDAQ during the sixty (60)-day period prior to and including the date of
a Change in Control, or (ii) if the Change in Control is the result of a
corporate transaction, the highest price per share of Common Stock paid in such
tender or exchange offer or a corporate transaction. To the extent that the
consideration paid in any such transaction described above consists all or in
part of securities or other non-cash consideration, the value of such securities
or other non-cash consideration shall be determined in the sole discretion of
the Committee.

6.4 Delay. If at the time, the Participant is subject to "short-swing"
liability under Section 16 of the Exchange Act, any time period provided for
under the Plan, to the extent necessary to avoid the imposition of liability,
shall be suspended and delayed during the period the Participant would be
subject to such liability.

6.5 Headings. The headings contained in the Plan are for reference
purposes only and shall not affect the meaning or interpretation of the Plan.

6.6 Severability. If any provision of the Plan shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not effect any other provision hereby, and the Plan shall be construed as if
such invalid or unenforceable provision were omitted.

6.7 Successors and Assigns. The Plan shall inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations imposed
upon a Participant, and all rights granted to the Company hereunder, shall be
binding upon the Participant's heirs, legal representatives and successors.

6.8 Entire Agreement. The Plan and the Agreement constitute the entire
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between the Plan and the Agreement, the terms
and conditions of the Plan shall control.

12
<PAGE>

Executed effective as of the 29th day of May, 1996.

THE LEAP GROUP, INC.

By:
-----------------------------
R. Steven Lutterbach
Chief Executive Officer

<PAGE>

EXHIBIT 10.7

THE LEAP GROUP, INC.
EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I
---------

ESTABLISHMENT
-------------

1.1 Purpose.
-------

The Leap Group, Inc. Employee Stock Purchase Plan ("Plan") is hereby
established by The Leap Group, Inc. ("Company"). The purpose of the Plan is to
promote the overall financial objectives of the Company's stockholders by
motivating those persons participating in the Plan to achieve long-term growth
in stockholder equity. The Plan and the grant of awards thereunder is expressly
conditioned upon the Plan's approval by the stockholders of the Company, and if
such approval is not obtained then the Plan and any Option granted thereunder
shall be null and void ab initio. The Plan is intended as an "employee stock
purchase plan" within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended, and Options granted hereunder are intended to constitute
options granted under such a plan, and the Plan document and all actions taken
in connection with the Plan shall be constructed consistently with such intent.
The Plan is adopted effective as of May 29, 1996.

ARTICLE II
----------

DEFINITIONS
-----------

For purposes of the Plan, the following terms are defined as set forth
below:

2.1 "Account" shall mean the bookkeeping account established on behalf of
a Participant to which shall be credited all contributions paid for the purpose
of purchasing Common Stock under the Plan, and to which shall be charged all
purchases of Common Stock pursuant to the Plan. The Company shall have custody
of such Account.

2.2 "Agreement" or "Option Agreement" means, individually or collectively,
any enrollment, subscription and withholding agreement entered into pursuant to
the Plan. An Agreement shall be the authorization of the Company or a
Subsidiary to withhold from payroll amounts to be applied to purchase Common
Stock.

2.3 "Beneficiary" means the person or entity which has been designated by
a Participant in his or her most recent written beneficiary designation filed
with the Committee to receive the benefits specified under the Plan upon such
Participant's death or to which Options or other rights are transferred if and
to the extent permitted hereunder (but only to the extent consistent with the
plan's being described in Section 423 of the Code). If, upon a Participant's
death, there is no designated Beneficiary or surviving designated Beneficiary,
then the term Beneficiary means the person or entity entitled by will or the
laws of descent and distribution to receive such benefits.
<PAGE>

2.4 "Board of Directors" or "Board" means the Board of Directors of the
Company.

2.5 "Cause" shall mean, for purposes of whether and when a Participant has
incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate the written agreement or arrangement between
the Participant and the Company or a Subsidiary for "cause" as defined in such
agreement or arrangement, or in the event there is no such agreement or
arrangement or the agreement or arrangement does not define the term "cause" or
a substantially equivalent term, then Cause shall consist of the following:
Participant's conviction on a felony charge or Participant's commission of any
crime involving moral turpitude; Participant's dishonesty or fraud resulting in
damage to the business of the Company or an Affiliate; Participant's
embezzlement or theft of assets of the Company or an Affiliate; in the sole
discretion of the Company, Participant's grossly negligent conduct,
Participant's course of personal conduct of an illegal or unethical nature which
tends to place the Company or an Affiliate in disrepute, or otherwise negatively
affects the ability of the Company or an Affiliate to conduct its business;
Participant's competition with the Company or aid to a competitor of the Company
to the detriment of the Company; or a breach of this Agreement by Participant,
including failure to perform duties and services to the Company or an Affiliate.
In the event Participant is arrested for any of the types of matters above, the
Company may place Participant on suspension without pay until such matter is
dismissed or the Participant is convicted.

2.6 "Change in Control" so shall be deemed to have occurred if (a) any
corporation, person or other entity (other than the Company, a majority-owned
subsidiary of the Company or any of its subsidiaries, or an employee benefit
plan (or related trust) sponsored or maintained by the Company), including a
"group" as defined in Section 13(d)(3) of the Exchange Act, becomes the
beneficial owner of stock representing more than the greater of (i) fifty
percent (50%) of the combined voting power of the Company's then outstanding
securities or (ii) the percentage of the combined voting power of the Company's
then outstanding securities which equals (A) ten percent (10%) plus (B) the
percentage of the combined voting power of the Company's outstanding securities
held by such corporation, person or entity on the Effective Date; (b)(i) the
stockholders of the Company approve a definitive agreement to merge or
consolidate the Company with or into another corporation other than a majority-
owned subsidiary of the Company, or to sell or otherwise dispose of all or
substantially all of the Company's assets, and (ii) the persons who were the
members of the Board of Directors of the Company prior to such approval do not
represent a majority of the directors of the surviving, resulting or acquiring
entity or the parent thereof; (c) the stockholders of the Company approve a plan
of liquidation of the Company; or (d) within any period of 24 consecutive
months, persons who were members of the Board of Directors of the Company
immediately prior to such 24-month period, together with any persons who were
first elected as directors (other than as a result of any settlement of a proxy
or consent solicitation contest or any action taken to avoid such a contest)
during such 24-month period by or upon the recommendation of persons who were
members of the Board of Directors of the Company immediately prior to such 24-
month period and who constituted a majority of the Board of Directors of the
Company at the time of such election, cease to constitute a majority of the
Board.

2
<PAGE>

2.7 "Code" or "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, Treasury Regulations (including proposed regulations)
thereunder and any successor thereto.

2.8 "Commission" means the Securities and Exchange Commission or any
successor agency.

2.9 "Committee" means the Compensation Committee of the Board or such
other Board committee as may be designated by the Board to administer the Plan,
provided that the Committee shall be comprised of only "disinterested persons"
as required for an application of Rule 16b-3.

2.10 "Common Stock" means the shares of the regular voting Common Stock,
$.01 par value per share, of the Company, whether presently or hereafter issued,
and any other stock or security resulting from adjustment thereof as described
hereinafter or the common stock of any successor to the Company which is
designated for the purpose of the Plan.

2.11 "Company" means The Leap Group, Inc., a Delaware corporation, and
includes any successor or assignee corporation or corporations into which the
Company may be merged, changed or consolidated; any corporation for whose
securities all or substantially all of the securities of the Company shall be
exchanged; and any assignee of or successor to all or substantially all of the
assets of the Company.

2.12 "Continuous Service" shall mean, subject to modification by the
Committee, an Eligible Employee's number of full years and completed months of
continuous employment with the Company or a Subsidiary (but only since the date
such entity became a Subsidiary) from the most recent date of hire to the date
of Termination of Employment for any reason. The Committee may provide rules
from time to time regarding the calculation of Continuous Service and the method
for crediting such service.

2.13 "Contribution Rate" means the rate determined under Section 5.5

2.14 "Disability" means a mental or physical injury or illness that
entitles the Participant to receive benefits under the long-term disability plan
of the Company or a Subsidiary of the Company, or if the Participant is not
covered by such a plan, a mental or physical injury or illness that renders a
Participant totally and permanently incapable of performing the Participant's
duties for the Company or a Subsidiary of the Company. Notwithstanding the
foregoing, a Disability shall not qualify under this Plan if it is the result of
(i) a willfully self-inflicted injury or willfully self-induced sickness; or
(ii) an injury or disease contracted, suffered, or incurred while participating
in a criminal offense. The determination of Disability shall be made by

3
<PAGE>

the Committee, in its sole discretion. The determination of Disability for
purposes of this Plan shall not be construed to be an admission of disability
for any other purpose.

2.15 "Effective Date" means May 29, 1996.

2.16 "Eligible Employee" means each current, common law employee of the
Company or a Subsidiary (if the Company has extended participation to the
employees of a Subsidiary) on a Grant Date, except that the Committee in its
sole discretion may exclude:

(a) any employee who has accrued less than a minimum period of
Continuous Service established by the Committee (but not to exceed 2
years).

(b) any employee whose customary employment is 20 hours or less per
week;

(d) any employee who is a highly compensated employee of the Company
or Subsidiary within the meaning of Section 414(q) of the Code.

As of the Effective Date and unless and until amended by the Committee,
employees described in Section 2.16(b) and (c) are excluded as Eligible
Employees. Any period of service described in this Section may be decreased in
the discretion of the Committee. Any employee who would directly or indirectly
own or hold (applying the rules of Section 424(d) of the Code to determine stock
ownership) immediately following the grant of an Option hereunder an aggregate
of five percent (5%) or more of the total combined voting power or value of all
outstanding shares of all classes of stock of the Company or any Subsidiary is
excluded as an Eligible Employee.

2.17 "Exercise Date" means such one or more dates determined by the
Committee on which the accumulated value of the Account shall be applied to
purchase Common Stock and unless otherwise specified by the Committee shall be
December 31, 1997 and December 31 of each calendar year thereafter. The
Committee may accelerate an Exercise Date in order to satisfy the employment
period requirement of Section 423(a)(2), and the date of a Change in Control
shall be an Exercise Date.

2.18 "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Commission thereunder.

2.19 "Fair Market Value" means the fair market value of Common Stock as
determined by the Committee or under procedures established by the Committee.

4
<PAGE>

Unless otherwise determined by the Committee, the Fair Market Value per share of
Common Stock as of any given date shall be the closing sale price per share
reported on a consolidated basis for stock listed on the principal stock
exchange or market on which Common Stock is traded on the date as of which such
value is being determined or, if there is no sale on that date, then on the last
previous day on which a sale was reported.

2.20 "Grant Date" means the date or dates established by the Committee on
which one or more Options are granted pursuant to the Plan. The Committee may
determine for any Plan Year that there shall be no Grant Date, in which case no
Options shall be granted for that Plan Year. The terms and conditions of any
Option granted on a particular Grant Date shall be independent of and have no
effect on the terms and conditions of any Option granted on another Grant Date.

2.21 "Option Period" means the period beginning on the day next following
an Exercise Date and ending on the next following Exercise Date, as determined
by the Committee, subject to the limitations of Section 5.3.

2.22 "Option Price" means the price at which the Common Stock granted as of
a specific Grant Date may be purchased under an Option. The price shall be
subject to the limitation set forth in Section 5.4.

2.23 "Participant" means a person who satisfies the eligibility conditions
of Article V and to whom an Option has been granted by the Committee under the
Plan, and in the event a Representative is appointed for a Participant or
another person becomes a Representative, then the term "Participant" shall mean
such Representative, to the extent consistent with Section 423 of the Code. The
term shall also include a trust for the benefit of the Participant, the
Participant's parents, spouse or descendants, or a custodian under a uniform
gifts to minors act or similar statute for the benefit of the Participant's
descendants, to the extent permitted by the Committee and not inconsistent with
an intended application of Rule 16b-3, the intent to comply with Section 423 of
the Code and the use of Commission Form S-8 (or the Committee's waiver of such).
Notwithstanding the foregoing, the term "Termination of Employment" shall mean
the Termination of Employment of the person to whom the Award was originally
granted.

2.24 "Plan" means The Leap Group, Inc. Employee Stock Purchase Plan, as
herein set forth and as may be amended from time to time.

2.25 "Plan Year" means the period beginning April 1, 1997 and continuing
through December 31, 1997, and each calendar year beginning thereafter. The
Committee may at any time in its discretion designate another period as the Plan
Year.

5
<PAGE>

2.26 "Representative" means (a) the person or entity acting as the executor
or administrator of a Participant's estate pursuant to the last will and
testament of a Participant or pursuant to the laws of the jurisdiction in which
the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
Beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option or shares of Common Stock have been transferred
with the permission of the Committee or by operation of law; provided that only
one of the foregoing shall be the Representative at any point in time as
determined under applicable law and recognized by the Committee.

2.27 "Retirement" means the Participant's Termination of Employment after
attaining either the normal retirement age or the early retirement age as
defined in the principal (as determined by the Committee) tax-qualified plan of
the Company, if the Participant is covered by such a plan, and if the
Participant is not covered by such a plan, then age sixty-five (65), or age
fifty-five (55) with the accrual of ten (10) years of service.

2.28 "Rule 16a-1(c)(3)" and "Rule 16b-3" mean Rule 16a-1(c)(3) and Rule
16b-3, as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Commission under Section 16 of the Exchange
Act.

2.29 "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

2.30 "Stock Option" or "Option" means the right to purchase the number of
shares of Common Stock specified by the Plan at a price and for a term fixed by
the Plan, and subject to such other limitations and restrictions as the Plan and
the Committee may impose.

2.31 "Subsidiary" means any company as currently defined in Section 424(f)
of the Code. Unless otherwise indicated the term "Company" shall hereinafter be
deemed to include all Subsidiaries of the Company having employees to which the
Company has extended participation in the Plan.

2.32 "Termination of Employment" means the occurrence of any act or event,
whether pursuant to an employment agreement or otherwise, that actually or
effectively causes or results in the person's ceasing, for whatever reason, to
be an employee of the Company, including, without limitation, death, Disability,
dismissal, severance at the election of the Participant, Retirement, or
severance as a result of the discontinuance, liquidation, sale or transfer by
the Company of all businesses owned or operated by the Company. A transfer of
employment from the Company to a Subsidiary, or from a Subsidiary to the
Company, will not be a Termination of Employment, unless expressly determined by
the Committee. A Termination of

6
<PAGE>

Employment shall occur for an employee who is employed by a Subsidiary of the
Company if the Subsidiary shall cease to be a Subsidiary and the Participant
shall not immediately thereafter become an employee of the Company or a
Subsidiary of the Company.

In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.

ARTICLE III
-----------

ADMINISTRATION
--------------

3.1 Committee Structure and Authority. The Plan shall be administered by
the Committee. A majority of the Committee shall constitute a quorum at any
meeting thereof (including by telephone conference) and the acts of a majority
of the members present, or acts approved in writing by a majority of the entire
Committee without a meeting, shall be the acts of the Committee for purposes of
this Plan. The Committee may authorize any one or more of its members or an
officer of the Company to execute and deliver documents on behalf of the
Committee. A member of the Committee shall not exercise any discretion
respecting himself or herself under the Plan. The Board shall have the
authority to remove, replace or fill any vacancy of any member of the Committee
upon notice to the Committee and the affected member. Any member of the
Committee may resign upon notice to the Board. The Committee may allocate among
one or more of its members, or may delegate to one or more of its agents, such
duties and responsibilities as it determines.

Among other things, the Committee shall have the authority, subject to the
terms of the Plan:

(a) to select those persons to whom Options may be granted from time
to time;

(b) to determine whether and to what extent Options are to be granted
hereunder;

(d) to determine any Grant Date, Exercise Date and Option Period, and
provide for all aspects of payroll deduction, suspension or withdrawal;

(e) to determine the number of shares of Common Stock to be covered by
each Option;

7
<PAGE>

(f) to determine the terms and conditions of any Option granted hereunder
(including, but not limited to, the Option Price, the Option Period, any
exercise restriction or limitation and any exercise acceleration or
forfeiture regarding any Option and the shares of Common Stock relating
thereto);

(g) to adjust the terms and conditions, at any time or from time to
time, of any Option, subject to the limitations of Section 6.1;

(h) to determine to what extent and under what circumstances Common
Stock and other amounts payable with respect to an Option shall be
deferred;

(i) to determine under what circumstances an Option may be settled in
cash or Common Stock;

(j) to provide for the forms of Agreement to be utilized in connection
with this Plan;

(k) to determine whether a Participant has a Disability or reached
Retirement;

(l) to interpret and make a final determination with respect to the
remaining number of shares of Common Stock available under the Plan;

(m) to determine what securities law requirements are applicable to
the Plan, Options and the issuance of shares of Common Stock, and to
require of a Participant that appropriate action be taken with respect to
such requirements;

(n) to cancel, with the consent of the Participant or as otherwise
provided in the Plan or an Agreement, outstanding Options;

(o) to require as a condition of the exercise of an Option or the
issuance or transfer of a certificate of Common Stock, the withholding from
a Participant of the amount of any Federal, state or local taxes as may be
necessary in order for the Company or any other entity to obtain a
deduction or as may be otherwise required by law;

(p) to determine whether and with what effect an individual has
incurred a Termination of Employment;

(q) to determine whether the Company or any other person has a right
or obligation to purchase Common Stock from a Participant and, if so, the
terms and conditions on which such Common Stock is to be purchased;

8
<PAGE>

(r) to determine the restrictions or limitations on the transfer of
Common Stock or Options;

(s) to determine whether an Option is to be adjusted, modified or
purchased, or is to become fully exercisable, under the Plan or the terms
of an Agreement;

(t) to determine the permissible methods of Option exercise and
payment;

(u) to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of this Plan; and

(v) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties.

The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Option issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan. The Committee's policies and
procedures may differ with respect to Options granted at different times or to
different Participants. Any determination made by the Committee pursuant to the
provisions of the Plan shall be made in its sole discretion, and in the case of
any determination relating to an Option, may be made at the time of the grant of
the Option or, unless in contravention of any express term of the Plan or an
Agreement, at any time thereafter. All decisions made by the Committee pursuant
to the provisions of the Plan shall be final and binding on all persons,
including the Company and Participants. Any determination shall not be subject
to de novo review if challenged in court.

ARTICLE IV
----------

STOCK SUBJECT TO PLAN
---------------------

4.1 Number of Shares. Subject to the adjustment under Section 4.6, the
total number of shares of Common Stock reserved and available for distribution
pursuant to Options under the Plan shall be 500,000 shares of Common Stock
authorized for issuance on the Effective Date. Such shares shall consist of
authorized and unissued shares.

4.2 Release of Shares. The Committee shall in its sole discretion
determine the number of shares of Common Stock available under the Plan, and may
include, in its sole discretion, any shares of Common Stock that cease to be
subject to an Option

9
<PAGE>

or are forfeited, any shares subject to an Option that terminates without
issuance of shares of Common Stock being made to a Participant, or any shares
(whether or not restricted) of Common Stock that are received by the Company in
connection with the exercise of an Option, including the satisfaction of tax
withholding.

4.3 Restrictions on Shares. Shares of Common Stock issued upon exercise
of an Option shall be subject to the terms and conditions specified herein and
to such other terms, conditions and restrictions as the Committee in its
discretion may determine or provide in the Option Agreement with respect to such
Option. The Company shall not be required to issue or deliver any certificates
for shares of Common Stock, cash or other property prior to (i) the listing of
such shares on any stock exchange (or other public market) on which the Common
Stock may then be listed (or regularly traded), (ii) the completion of any
registration or qualification of such shares under Federal or state law, or any
ruling or regulation of any government body which the Committee determines to be
necessary or advisable, and (iii) the satisfaction of any applicable withholding
obligation in order for the Company to obtain a deduction with respect to the
exercise of an Option. The Company may cause any certificate for any shares of
Common Stock to be delivered to be properly marked with a legend or other
notation reflecting the limitations on transfer of such Common Stock as provided
in this Plan or as the Committee may otherwise require. The Committee may
require any person exercising an Option to make such representations and furnish
such information as it may consider appropriate in connection with the issuance
or delivery of the shares of Common Stock in compliance with applicable law or
otherwise. Fractional shares shall not be delivered, but shall be rounded to
the next lower whole number of shares.

4.4 Stockholder Rights. No person shall have any rights of a stockholder
as to shares of Common Stock subject to an Option until, after proper exercise
of the Option or other action required, such shares shall have been recorded on
the Company's official stockholder records as having been issued and
transferred. Subject to Section 4.3, upon exercise of the Option or any portion
thereof, the Company shall issue the shares of Common Stock at such time as
determined by the Committee, and the Participant will not be treated as a
stockholder for any purpose whatsoever prior to such issuance. No adjustment
shall be made for cash dividends or other rights for which the record date is
prior to the date such shares are recorded as issued and transferred in the
Company's official stockholder records, except as provided in an Agreement.

4.5 Anti-Dilution. In the event of any Company stock dividend, stock
split, combination or exchange of shares, merger, recapitalization or other
change in the capital structure of the Company, corporate separation or division
of the Company (including, but not limited to, a split-up, spin-off, split-off
or distribution to Company stockholders other than a normal cash dividend), sale
by the Company of all or a substantial portion of its assets (measured on either
a stand-alone or consolidated

10
<PAGE>

basis), reorganization, reclassification, rights offering, partial or complete
liquidation or any other corporate transaction, Company share offering or other
event involving the Company and having an effect similar to any of the
foregoing, then the Committee may adjust or substitute, as the case may be,
the number of shares of Common Stock available for Options under the Plan, the
number of shares of Common Stock covered by outstanding Options, the exercise
price per share of outstanding Options, the Exercise Date, and any other
characteristics or terms of the Options as the Committee shall deem necessary or
appropriate to reflect equitably the effects of such changes to the
Participants; provided, however, that any fractional share resulting from such
adjustment shall be eliminated by rounding to the next lower whole number of
shares with appropriate payment for such fractional share as shall reasonably be
determined by the Committee.

4.6 Custodian. Shares of Common Stock purchased pursuant to the Plan may
be delivered to and held in the custody of such investment or financial firm as
shall be appointed by the Committee. The custodian may hold in nominee or
street name certificates for shares purchased pursuant to the Plan, and may
commingle shares in its custody pursuant to the Plan in a single account without
identification as to individual Participants. By appropriate instructions to
the custodian on forms to be provided for the purpose, a Participant may from
time to time obtain (a) transfer into the Participant's own name or into the
name of the Participant and another individual of all or part of the whole
shares held by the custodian for the Participant's account; (b) transfer of all
or part of the whole shares held for the Participant's account by the custodian
to a regular individual brokerage account in the Participant's own name or in
the name of the Participant and another individual, either with the firm then
acting as custodian or with another firm, or (c) sell all or part of the
whole shares held by the custodian for the Participant's account at the market
price at the time the order is executed and remittance of the net proceeds of
the sale to the Participant. Upon termination of participation in the Plan, and
upon receipt of instructions from the Participant, the shares held by the
custodian for the account of the Participant will be transferred to the
Participant in accordance with (a) above, transferred to a brokerage account in
accordance with (b) above, or sold in accordance with (c), above.

ARTICLE V
---------

ELIGIBILITY
-----------

5.1 Eligibility. Except as herein provided, the persons who shall be
eligible to participate in the Plan as of any Grant Date shall be those persons
(and only those persons) who are Eligible Employees of the Company or Eligible
Employees of a Subsidiary to whom the Company has extended participation on a
Grant Date.

11
<PAGE>

5.2 Grant of Options. The Committee shall have authority to grant Options
under the Plan at any time or from time to time to all Eligible Employees as of
a Grant Date. (To the extent an Option is granted to any Eligible Employee of
an entity on a relevant date, all Eligible Employees of the entity shall be
granted an Option to the extent required by law.) An Option shall entitle the
Participant to receive shares of Common Stock at the conclusion of the Option
Period, subject to the Participant's satisfaction in full of any conditions,
restrictions or limitations imposed in accordance with the Plan or an Agreement,
including without limitation, payment of the Option Price. Each Option granted
under this Plan shall be evidenced by an Agreement, in a form approved by the
Committee, which shall embody the terms and conditions of such Option and which
shall be subject to the express terms and conditions set forth in this Plan and
to such other terms and conditions as the Committee may deem appropriate. The
grant and exercise of Options hereunder shall be subject to all applicable
Federal, state and local laws, rules and regulations and to such approvals by
any governmental or regulatory agencies as may be required. As of any Grant
Date, each Eligible Employee shall be granted Options with the same rights and
privileges as the Options granted to each other Eligible Employee on that Grant
Date, except the amount of the Common Stock which may be purchased by any
Participant under any Option may bear a uniform relationship to the total
compensation, or the basic or regular rate of compensation (as determined by the
Committee), of all Eligible Employees on that Grant Date, and the Option may
establish a maximum amount of Common Stock which may be purchased.

5.3 Option Period. Each Agreement shall specify the period for which the
Option thereunder is granted, which shall be determined by the Committee. In no
event shall the Option Period extend beyond the period permitted under Section
423(b)(7) of the Code.

5.4 Option Price. Subject to the limits stated herein, the Option Price
per share at which shares of Common Stock may be acquired upon exercise of an
Option shall be determined by the Committee. Unless otherwise specified by the
Committee, with respect to any Exercise Date, the Option Price shall not be less
than the lesser of (a) eighty-five percent (85%) of the Fair Market Value of a
share of Common Stock (averaged over such period as the Committee may determine
and as permitted by law) on the applicable Grant Date and (b) eighty-five
percent (85%) of the Fair Market Value of a share of Common Stock (averaged over
such period as the Committee may determine and as permitted by law) on the
applicable Exercise Date. The Committee reserves the right to increase the
Option Price by the value of any accretion to the amounts credited to an Account
if the Participant is credited with such accretion regardless of the method of
accounting for such accretion.

5.5 Contribution Rate. If an Eligible Employee elects to participate, the
Participant shall file an Agreement with the Committee within the time period
designated by the Committee. The Committee may provide that the Agreement shall

12
<PAGE>

specify the percentage or amount of the Participant's compensation (as defined
by the Committee) determined by the Participant to be deducted each pay period.
Such amount shall be credited to the Account and shall be the Participant's
Contribution Rate. Such deductions shall begin as of the first regularly
scheduled payroll date on or after the later of the Grant Date and the date
specified by the Committee. Unless otherwise determined by the Committee,
participants may not make any separate cash payments outside payroll deductions
under the Plan, except that, in the event of a Change in Control, the Committee
may permit each Participant to make a single sum payment with respect to the
Option before the Exercise Date equal to the amount the Participant would have
contributed as determined by the Committee for the payroll periods remaining to
the Exercise Date. The Committee may establish minimum and maximum percentages
or amount to be contributed and a date by when any Agreement must be filed with
the Committee. Unless otherwise permitted by the Committee, such contributions
will be held in the general funds of the Company, and no interest shall accrue
on any amounts held under this Plan, unless expressly determined by the
Committee, and any separate accounting shall not limit the Company's use of the
funds. If payroll deduction are made by a Subsidiary, that corporation will
promptly remit the amount of the deduction to the Company. A Participant's
Contribution Rate, once established, shall remain in effect until the next
following Grant Date unless and until contributions are suspended or fully
discontinued in order to comply with Section 401(k) of the Code or for such
other reasons as the Committee in its sole discretion may determine, or if the
Participant shall request suspension or discontinuance. If a Participant
requests to suspend payroll deductions the Participant may do so at such times
and in such manner as the Committee may permit, and previously deducted amounts
shall be retained until the Exercise Date. A Participant who has suspended
contributions (1) will receive any shares of Common Stock as of the Exercise
Date and (2) may recommence payroll deductions at such time, if at all, as
determined by the Committee. If a Participant requests to cancel and totally
discontinue payroll deductions, the Participant may do so by providing written
notice to the Committee, and there shall be paid to the Participant the value of
the Participant's Account at such time as the Committee directs and the
Participant shall not receive any shares of Common Stock as of the Exercise
Date.

5.6 Purchase of Shares. Subject to Sections 5.7, 5.8, 5.9, 5.10 and 5.11,
on each Exercise Date, a Participant who has previously executed an Agreement
with respect to a specific Grant Date and made one or more payments described in
Section 5.5 shall be deemed to have exercised the Option to the extent of the
value of the Account, and shall be deemed to have purchased such number of full
shares of Common Stock as equals the value of the Account, subject to the limits
of Sections 423(b)(3) and 423(b)(8) of the Code and the number of shares
available as of the Exercise Date and proportionably allocable to other
Participants for that Grant Date. The number of shares of Common Stock to be
purchased as of any Exercise Date shall be determined by dividing the Option
Price per share of the Common Stock into the Account value and the value of the
shares so purchased shall be charged to the Account. Any value remaining in an
Account of the Participant shall be retained

13
<PAGE>

by the Plan as an initial value credited to the Account of the Participant if
there is an effective Agreement respecting the Participant on the Grant Date
immediately following the Exercise Date, or if there is not an effective
Agreement regarding the Participant in the Grant Date immediately following the
Exercise Date, then the remaining value shall be returned at such time as
determined by the Committee to the Participant and not applied to purchase
Common Stock. Certificates of Common Stock purchased hereunder may be held by
the custodian as provided in Section 4.6. The Committee may determine and
designate that any Common Stock issued to the Participant who is subject to
reporting under Section 16 of the Exchange Act must be held for six (6) months
to the extent required by law to avoid liability under the Exchange Act. The
Committee may amend the Plan or any Agreement or provide in operation for
Participants to dispose of shares of Common Stock received upon the Exercise
Date on or immediately thereafter (which time may include any period during
which the Option is held) to the extent such disposition would not result in
liability under Section 16 of the Exchange Act. If the total number of shares
to be purchased as of any Exercise Date by all Participants exceeds the number
of shares authorized and remaining available under this Plan or made available
by the Committee as to any Exercise Date, a pro rata allocation of the available
shares will be made among all Participants authorizing such payroll deductions
based on the amount of their respective payroll deductions through the Exercise
Date. Any cash remaining will be returned to Participants.

5.7 Cancellation of Options. Except as otherwise provided in an
Agreement, an Option shall cease to be exercisable and shall be cancelled on or
after the expiration of the Option Period.

5.8 Terminated Employees. Except as otherwise provided by the Committee
or in an Agreement, any Participant who incurs a Termination of Employment for
any reason, except death, Disability or Retirement, during the Option Period
shall cease to be a Participant, the Option of the Participant shall be null and
void on the date of the Termination of Employment without notice to the
Participant and the balance of the Account of the Participant shall be
distributed to the Participant at such time as the Committee determines.

5.9 Deceased Employees. If a Participant shall die during an Option
Period while an Eligible Employee, no further contributions by deduction from
regularly scheduled payments on behalf of the deceased Participant shall be
made, except that unless otherwise determined by the Committee, the
Representative of such Participant may make a single sum payment with respect
to the Option of the Participant at any time on or before the Exercise Date
equal to the amount the Participant would have contributed as determined by the
Committee for the payroll periods remaining to the Exercise Date. The
Representative of such Participant may at any time prior to the Exercise Date
request a distribution of the Account of the Participant. If the Representative
does not request a distribution, the

14
<PAGE>

balance accumulated in the deceased Participant's Account shall be used to
purchase shares of Common Stock on the Exercise Date.

5.10 Disabled or Retired Employees. If a Participant incurs a Termination
of Employment due to Disability, or if a Participant incurs a Termination of
Employment due to Retirement, during an Option Period, no further contributions
by deduction from regularly scheduled payments on behalf of the disabled or
retired Participant shall be made, except that unless otherwise determined by
the Committee, the Participant may make a single sum payment with respect to the
Option of the Participant at any time on or before the Exercise Date equal to
the amount the Participant would have contributed as determined by the Committee
for the payroll periods remaining to the Exercise Date. The Participant may at
any time prior to the Exercise Date request a distribution of the Account. If
the Participant does not request a distribution of the Account, the balance
accumulated in the disabled or retired Participant's Account shall be used to
purchase shares of Common Stock on the Exercise Date.

5.11 Limitations. Notwithstanding any other provision of this Plan, in no
event may a Participant (i) purchase under the Plan during any Plan Year Common
Stock having a fair market value (determined at the Grant Date) of more than
$25,000 or (ii) receive any rights to purchase stock hereunder if he or she
beneficially owns, immediately after the Option is granted, five percent (5%) or
more of the total voting power or value of all classes of stock of the Company.
Subject to the foregoing, as of any Grant Date a Participant may not receive an
Option to purchase a number of shares of Common Stock in excess of the maximum
number of shares of Common Stock determined by the Committee, and in the absence
of a determination, the maximum number shall be determined by dividing $25,000
by the lowest closing price of the Common Stock as reported on the principal
exchange or market on which the Common Stock was traded during the 12-month
period ending immediately prior to the Grant Date.

5.12 Nonassignability. Except as provided herein or in an Agreement, no
Option or interest therein shall be transferable by a Participant other than by
will or by the laws of descent and distribution, and all Options shall be
exercisable during the Participant's lifetime only by the Participant or, if
consistent with Section 423 of the Code, by designation of a Beneficiary upon
the death of the Participant.

ARTICLE VI
----------

MISCELLANEOUS
-------------

6.1 Amendments and Termination. The Board may amend, alter, or
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would (a) impair the rights of a Participant
under an Option theretofore

15
<PAGE>

granted without the Participant's consent, except such an amendment made to
cause the Plan to qualify for the exemption provided by Rule 16b-3 or as a Plan
described in Section 423 of the Code. In addition, no amendment shall be made
without the approval of the Company's stockholders to the extent such approval
is required by law or agreement.

The Committee may amend the Plan at any time subject to the same
limitations on its right to amend the Plan as apply to the Board as described in
the preceding paragraph, and any such amendment shall be subject to the approval
or rejection of the Board.

The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without the Participant's consent, except such an amendment made
to cause the Plan or Option to qualify for the exemption provided by Rule 16b-3
or to qualify as an Option under Section 423 of the Code.

Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments and to grant Options which qualify for beneficial
treatment under such rules without stockholder approval. Notwithstanding
anything to the contrary herein, if any right or action under this Plan or an
Agreement would cause a transaction to be ineligible for pooling of interests
accounting that would, but for the right or action, be eligible for such
accounting treatment, the Committee may modify or adjust the right or action so
that pooling of interest accounting is available.

6.2 Unfunded Status of Plan. It is intended that the Plan be an
"unfunded" plan for incentive and deferred compensation. The Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock or make payments; provided,
however, that, unless the Committee otherwise determines, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.

6.3 General Provisions.

(a) Representation. The Committee may require each person purchasing
or receiving shares pursuant to an Option to represent to and agree with
the Company in writing that such person is acquiring the shares without a
view to the distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.

16
<PAGE>

(b) Impact on other Compensation. Nothing contained in the Plan shall
prevent the Company from adopting other or additional compensation
arrangements for its employees.

(c) Withholding. No later than the date as of which an amount first
becomes includible in the gross income of the Participant for Federal
income tax purposes with respect to any Option, the Participant shall pay
to the Company (or other entity identified by the Committee), or make
arrangements satisfactory to the Company or other entity identified by the
Committee regarding the payment of, any Federal, state, local or foreign
taxes of any kind required by law to be withheld with respect to such
amount required in order for the Company to obtain a current deduction.
Unless otherwise determined by the Committee, withholding obligations may
be settled with Common Stock, including Common Stock that is part of the
Option that gives rise to the withholding requirement, provided that any
applicable requirements under Section 16 of the Exchange Act are satisfied.
The obligations of the Company under the Plan shall be conditional on such
payment or arrangements, and the Company shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment otherwise due
to the Participant. If the Participant disposes of shares of Common Stock
acquired pursuant to an Option in any transaction considered to be a
disqualifying transaction under the Code, the Participant must give the
Company written notice of such transfer and the Company shall have the
right to deduct any taxes required by law to be withheld from any amounts
otherwise payable to the Participant.

(d) Representative. The Committee shall establish such procedures as
it deems appropriate for a Participant to designate a Representative to
whom any amounts payable in the event of the Participant's death are to be
paid.

(e) Controlling Law. The Plan and all Options made and actions taken
thereunder shall be governed by and construed in accordance with the laws
of the State of Illinois (other than its law respecting choice of law),
except to the extent that the General Corporation Law of the State of
Delaware would be mandatorily applicable. The Plan shall be construed to
comply with all applicable law, and to avoid liability to the Company or a
Participant, including, without limitation, liability under Section 16(b)
of the Exchange Act.

(f) Offset. Any amounts owed to the Company by a Participant of
whatever nature may be offset by the Company from the value of any shares
of Common Stock, cash or other thing of value under the Plan or an
Agreement to be transferred to the Participant, and no shares of Common
Stock, cash or other thing of value under the Plan or an Agreement shall be
transferred unless and until all disputes of any type between the Company
and

17
<PAGE>

the Participant have been fully and finally resolved and the Participant
has waived all claims to such against the Company.

(g) Fail Safe. With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or Rule 16a-1(c)(3), as applicable. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee. Moreover, in the event the Plan
does not include a provision required by Rule 16b-3 or Rule 16a-1(c)(3) to
be stated herein, such provision (other than one relating to eligibility
requirements or the price and amount of Options) shall be deemed to be
incorporated by reference into the Plan with respect to Participants
subject to Section 16.

(h) Capitalization. The grant of an Award shall in no way affect the
right of the Company to adjust, reclassify, reorganize, or otherwise change
its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.

6.4 Mitigation of Excise Tax. Subject to any agreement between the
Participant and the Company, any payment or right accruing to a Participant
under this Plan (without the application of this Section 6.4), either alone or
together with other payments or rights accruing to the Participant from the
Company ("Total Payments") would constitute a "parachute payment" (as defined in
Section 280G of the Code and regulations thereunder), such payment or right
shall be reduced to the largest amount or greatest right that will result in no
portion of the amount payable or right accruing under the Plan being subject to
an excise tax under Section 4999 of the Code or being disallowed as a deduction
under Section 280G of the Code. The determination of whether any reduction in
the rights or payments under this Plan is to apply shall be made by the
Committee in good faith after consultation with the Participant, and such
determination shall be conclusive and binding on the Participant. The
Participant shall cooperate in good faith with the Committee in making such
determination and providing the necessary information for this purpose. The
foregoing provisions of this Section 6.4 shall apply with respect to any person
only if after reduction for any applicable Federal excise tax imposed by Section
4999 of the Code and Federal income tax imposed by the Code, the Total Payments
accruing to such person would be less than the amount of the Total Payments as
reduced, if applicable, under the foregoing provisions of the Plan and after
reduction for only Federal income taxes.

6.5 Rights with Respect to Continuance of Employment. The Plan does not,
directly or indirectly, create any absolute right for the benefit of any
Employee or class of Employees to purchase any Common Stock under the Plan.
Nothing contained herein shall be deemed to alter the relationship between the
Company and a Participant, or the contractual relationship between a Participant
and the Company if there is a written contract regarding such relationship.
Nothing contained herein shall be construed to constitute a contract of
employment between the Company and a Participant. The Company and each of the
Participants continue to have the right to terminate this employment
relationship at any time for any reason, except as provided in a written
contract. The Company shall have no obligation to retain the Participant

18
<PAGE>

in its employ or service as a result of this Plan. There shall be no inference
as to the length of employment or service hereby, and the Company reserves the
same rights to terminate the Participant's employment or service as existed
prior to the individual becoming a Participant in this Plan.

6.6 Options in Substitution for Options Granted by Other Corporations.
Options may be granted under the Plan from time to time in substitution for
awards in respect of other plans of other entities. The terms and conditions of
the Options so granted may vary from the terms and conditions set forth in this
Plan at the time of such grant as the majority of the members of the Committee
may deem appropriate to conform, in whole or in part, to the provisions of the
awards in substitution for which they are granted.

6.7 Delay. Any time period provided for under the Plan or an Agreement,
to the extent necessary to avoid the imposition of liability, shall be suspended
or delayed during the period a Participant would be subject to liability under
Section 16 of the Exchange Act, but not by more than six (6) months and one (1)
day. The Company shall have the right to suspend or delay any time period for
an action described in the Plan or an Agreement if the Committee shall determine
that the action may constitute a violation of any law or result in liability
under any law to the Company or a stockholder of the Company until such time as
the action required or permitted shall not constitute a violation of law or
result in liability to the Company or a stockholder of the Company. The
Committee shall have the discretion to suspend the application of the provisions
of the Plan required solely to comply with Rule 16b-3 if the Committee shall
determine that Rule 16b-3 does not apply to the Plan and may amend the Plan's
provisions or operations to reduce obligations imposed by Rule 16b-3 if Rule
16b-3 is amended to reduce obligations imposed on the Plan and its operations.

6.8 Headings. The headings contained in the Plan are for reference
purposes only and shall not affect the meaning or interpretation of the Plan.

6.9 Severability. If any provision of the Plan shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not effect any other provision hereby, and the Plan shall be construed as if
such invalid or unenforceable provision were omitted.

6.10 Successors and Assigns. The Plan shall inure to the benefit of and be
binding upon each successor and assign of the Company. All obligations imposed
upon a Participant, and all rights granted to the Company hereunder, shall be
binding

19
<PAGE>

upon or insure to the benefit of the Participant's heirs, legal representatives
and successors.

6.11 Entire Agreement. The Plan and an Agreement constitute the entire
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between the Plan and the Agreement, the terms
and conditions of the Agreement shall control.

Executed effective this 29th day of May, 1996.

THE LEAP GROUP, INC.

By:
---------------------------------
R. Steven Lutterbach
Chief Executive Officer

<PAGE>

EXHIBIT 11

STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Period from Fiscal Year Ended Six Months Ended
inception (September 20, January 31, July 31,
1993) to January 31, -------------------------- --------------------------
1994 1995 1996 1995 1996
------------------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Weighted average and common
shares outstanding.......... 9,600,000 9,600,000 9,600,000 9,600,000 9,600,000
Effect of options granted
within one year prior to
the offering, based on the
treasury stock method....... 508,680 508,680 508,680 508,680 508,680

Total...................... 10,108,680 10,108,680 10,108,680 10,108,680 10,108,680

Net income (loss)............ $ (75,739) $(1,065,309) $ 700,460 $ 675,016 257,243

Net income (loss)
per common share............ $ (.01) $ (.11) $ .07 $ .07 $ .03
</TABLE>

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
and to all references to our Firm included in or made a part of this
registration statement.

Arthur Andersen LLP

Chicago, Illinois

September 4, 1996