RMH TELESERVICES INC, S-1, 1996-07-03

RMH TELESERVICES INC
S-1, 1996-07-03

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION VIA EDGAR ON JULY 3, 1996

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RMH TELESERVICES, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
PENNSYLVANIA 7389 23-2250564
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

40 MORRIS AVENUE, BRYN MAWR, PA 19010, (610) 520-5300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

RAYMOND J. HANSELL
CHIEF EXECUTIVE OFFICER
RMH TELESERVICES, INC.
40 MORRIS AVENUE
BRYN MAWR, PA 19010
(610) 520-5300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPY TO:

<TABLE>
<S> <C>
HERBERT HENRYSON II, ESQUIRE BARRY M. ABELSON, ESQUIRE
JASON M. SHARGEL, ESQUIRE ROBERT A. FRIEDEL, ESQUIRE
WOLF, BLOCK, SCHORR AND SOLIS-COHEN PEPPER, HAMILTON & SCHEETZ
TWELFTH FLOOR PACKARD BUILDING 3000 TWO LOGAN SQUARE
S.E. CORNER 15TH & CHESTNUT STREETS 18TH & ARCH STREETS
PHILADELPHIA, PA 19102 PHILADELPHIA, PA 19103
(215) 977-2000 (215) 981-4000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
promptly as practicable after the effective date of this Registration Statement.

If 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, please 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

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<CAPTION>
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PROPOSED
MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF OFFERING REGISTRATION
SECURITIES TO BE REGISTERED PRICE(1) FEE(1)
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<S> <C> <C>
Common Stock, no par value..................................... $43,470,000 $14,990
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</TABLE>

(1) The registration fee has been calculated pursuant to Rule 457(o) under the
Securities Act of 1933.

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 SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2

RMH TELESERVICES, INC.

CROSS-REFERENCE SHEET REQUIRED BY ITEM 501(b) OF
REGULATION S-K SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS OF PART I OF FORM S-1

<TABLE>
<CAPTION>
FORM S-1 ITEM NO. AND CAPTION LOCATION IN PROSPECTUS
--------------------------------------------------- -----------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus..................... Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus......................................... Inside Front and Outside Back Cover
Pages of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges.......................... Prospectus Summary; Risk Factors
4. Use of Proceeds.................................... Use of Proceeds
5. Determination of Offering Price.................... Outside Front Cover Page of
Prospectus; Underwriting
6. Dilution........................................... Risk Factors; Dilution
7. Selling Security Holders........................... Not Applicable
8. Plan of Distribution............................... Outside Front Cover Page of
Prospectus; Underwriting
9. Description of Securities to be Registered......... Outside Front Cover Page of
Prospectus; Description of Capital
Stock
10. Interests of Named Experts and Counsel............. Not Applicable
11. Information with Respect to the Registrant......... Prospectus Summary; Risk Factors;
Dividend Policy; Selected Financial
Information; Management's
Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management;
Principal Shareholders; Certain
Transactions; Legal Matters;
Experts; Additional Information;
Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities..... Not Applicable
</TABLE>
<PAGE> 3

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 JULY 3, 1996

PROSPECTUS

2,800,000 SHARES

RMH TELESERVICES, INC.
COMMON STOCK
------------------
All of the shares of Common Stock being offered hereby are being sold by
RMH Teleservices, Inc. (the "Company").

Prior to this offering, there has not been a public market for the Common
Stock of the Company. It is currently estimated that the initial public offering
price will be between $ and $ per share. See "Underwriting"
for information relating to the factors considered in determining the initial
public offering price. Application has been made to have the Common Stock listed
on The Nasdaq Stock Market's National Market under the symbol "RMHT."

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

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.

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

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 REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share $ $ $
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Total(3) $ $ $
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</TABLE>

(1) For information regarding indemnification of the Underwriters, see
"Underwriting."

(2) Before deducting expenses estimated at $ payable by the Company.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
420,000 additional shares of Common Stock solely to cover over-allotments,
if any. See "Underwriting." If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions, and Proceeds to
Company will be $ , $ and $ , respectively.

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

The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be available for delivery on or about
, 1996, at the office of Smith Barney Inc., 333 West 34th Street,
New York, New York 10001.

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

SMITH BARNEY INC. HAMBRECHT & QUIST
, 1996
<PAGE> 4

[The pictures to be inserted are a collage of four photographs. The first
photograph shows the interaction of a supervisor coaching a telemarketing sales
representative. The second photograph is a picture of selected components of the
Company's systems and technology including a call processor and file server. The
third photograph depicts a training class for telemarketing sales
representatives. The fourth photograph is of a call center operation.]

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

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

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<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus. As
used in this Prospectus, references to a fiscal year are to the Company's fiscal
year ended September 30 of such year.

THE COMPANY

RMH Teleservices, Inc. (the "Company") is a leading provider of outbound
teleservices to major corporations in the insurance and financial services
industries. The Company distinguishes itself through its high quality service
and disciplined management approach, which have led to long-term client
relationships and sustained profitable growth. The Company originated
relationships with Mass Marketing Insurance Group ("MMIG"), J.C. Penney Life
Insurance Company ("J.C. Penney"), AT&T/Universal Card Services ("AT&T") and
Advanta Corp. ("Advanta") over five years ago and, since fiscal 1991, the
Company's aggregate revenues from these clients have grown each year. Since
fiscal 1993, the Company has generated internal revenue growth at a compound
annual rate of 57.5% to reach $25.5 million in fiscal 1995. Over the same
period, operating income has grown at a compound annual rate of 87.7% to reach
$2.0 million in fiscal 1995.

The Company, which has established inbound as well as outbound call center
capabilities, recently began to capitalize on the increased demand for call
center services by the telecommunications industry. The Company opened its
eighth call center in April 1996 and currently operates 744 workstations. The
Company intends to add a total of 48 additional workstations in three existing
call centers and open a new call center with 80 workstations by the end of
calendar 1996, for a total of 872 workstations. As of June 30, 1996, the Company
employed 1,484 people, 167 of whom are licensed to sell insurance in a total of
41 states.

According to Direct Marketing Magazine, the teleservices industry has grown
from $34 billion in 1984 to $77 billion in 1995, of which only a small
percentage is currently being outsourced to independent providers. The rapid
growth of the industry is primarily due to the increased cost-effectiveness of
personalized teleservices programs over traditional marketing channels. Growth
in the market for outsourced call center services is accelerating as large
corporations focus on their core competencies and turn to independent providers
with the industry expertise, sophisticated technology and resources to service
their long-term needs efficiently. The Company believes that the demand for call
center services will continue to increase in its core markets and will expand to
include new industries and broader applications.

The Company's objective is to become the leading national provider of
outsourced teleservices. The Company intends to pursue this objective through
the following operating and growth strategies.

OPERATING STRATEGY. The Company selectively develops client relationships
and concentrates on improving productivity through the following operating
strategies:

- Proactive Account Management. The Company focuses on developing
long-term relationships with its clients and strengthening those
relationships through its account management. As a result of this
partnering approach, the Company is better able to improve service
quality, predict revenues and maximize utilization of its facilities,
equipment and personnel.

- Innovative Human Resource Management. By hiring the most qualified
applicants, training them effectively and providing an innovative
compensation package that includes health insurance to qualifying
full-time employees, the Company is better able to retain employees,
reduce recruiting and training expenditures and improve productivity.

- Strategic Investments in Technology. The Company invests in proven
state-of-the-art technologies and develops proprietary software to enhance
efficiency and provide high quality services.

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the management of each call center and to generate operational
efficiencies, the Company's strategy is to locate its call centers in
geographic clusters.

GROWTH STRATEGY. The Company is capitalizing on its operational strengths
to participate in the growth of the teleservices industry and the accelerating
trend towards outsourcing among large corporations. The Company's growth
strategy includes the following key elements:

- Deploy a National Account Sales Team. In fiscal 1996, the Company
initiated a national account sales program to focus its direct sales
efforts on developing long-term relationships with the leading users of
teleservices in targeted industries.

- Expand Client Relationships in Core Industries. As a recognized provider
of high quality services to the insurance and financial services
industries, the Company seeks to expand its business with existing clients
and to establish new relationships in these industries.

- Increase Penetration of the Telecommunications Industry. The Company is
targeting its sales efforts on the telecommunications industry to
capitalize on that industry's rapid increase in demand for teleservices.
The Company commenced serving a major telecommunications client in January
1996.

- Expand Inbound Teleservices. In response to the increased demand for
inbound teleservices and requests from existing clients, the Company
intends to increase its inbound service offerings. The Company has
developed an inbound customer service program for Blue Cross/Blue Shield
of Florida for which it won the Gold Cup Award from Telemarketing Magazine
in October 1995.

- Expand Business-to-Business Teleservices. The Company is pursuing the
growing opportunities for the development of long-term relationships and
large-scale campaigns in the business-to-business segment.

- Selectively Pursue Strategic Acquisitions. The Company intends to
explore possible acquisitions of companies with demonstrated competencies
and existing client relationships in areas of strategic interest to the
Company.

The Company was founded in 1983 by Raymond J. Hansell, Vice Chairman and
Chief Executive Officer, and MarySue Lucci, Director, President and Chief
Operating Officer (the "Founders"). In May 1996, the Company completed a
leveraged recapitalization (the "Recapitalization") pursuant to which Advanta
Partners LP ("Advanta Partners"), a venture capital affiliate of Advanta, became
the largest equity holder of the Company. See "Certain
Transactions -- Recapitalization." The Company is a Pennsylvania corporation and
its principal business office is located at 40 Morris Avenue, Bryn Mawr,
Pennsylvania 19010. Its telephone number is (610) 520-5300.

THE OFFERING

Common Stock offered by the
Company.......................... 2,800,000 shares

Common Stock to be outstanding
after this offering.............. shares(1)

Use of Proceeds.................. To repay indebtedness incurred in
connection with the
Recapitalization; to redeem the Company's
Series B Preferred Stock; to pay bonuses to
the Founders pursuant to their employment
agreements; and for working capital and
other general corporate purposes, including
possible future acquisitions.

Proposed Nasdaq National Market
symbol........................... RMHT
- ---------------

(1) Does not include shares issuable upon exercise of employee stock
options to be granted prior to the completion of this offering at the
initial public offering price or 142,105 shares issuable upon exercise of an
outstanding warrant at $.01 per share.

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SUMMARY FINANCIAL DATA

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------------
PRO FORMA,
ACTUAL PRO FORMA(3) AS ADJUSTED(3)(4)
------ ------------ -----------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)...................................... $2,427 $ (1,311) $
Total assets................................................... 8,453 6,375
Long-term debt and capitalized leased obligations, less
current maturities........................................... 1,750 10,143
Founders' note................................................. -- 1,686
Redeemable Preferred and Common Stock and warrant.............. -- 7,623
Shareholders' equity (deficit)................................. 4,735 (16,468)
</TABLE>

- ---------------
(1) Operating income reflects Founders' compensation of $370,000, $308,000,
$386,000, $660,000, and $766,000 for fiscal 1991, fiscal 1992, fiscal 1993,
fiscal 1994 and fiscal 1995, respectively, and $353,000 and $394,000 for the
six months ended March 31, 1995 and 1996, respectively. Pursuant to
employment contracts entered into in May 1996 in connection with the
Recapitalization, Founders' compensation is fixed at a combined base amount
of $400,000 per year for three years (subject to annual adjustment based on
the inflation rate), plus a discretionary bonus which is not expected to
exceed 20% of base compensation.
(2) The Company operated as an S Corporation for income tax purposes since April
1, 1990 and terminated such status in connection with the Recapitalization.
See "Certain Transactions -- Recapitalization" and Note 2 of Notes to
Financial Statements for information concerning the computation of pro forma
net income and pro forma net income per share.
(3) Reflects the Recapitalization and the termination of the Company's S
Corporation status. See Note 2 of Notes to Financial Statements.
(4) Adjusted to give effect to the exchange of Common Stock for the Founders'
Note (as defined under "Certain Transactions -- Recapitalization") and the
Company's Series A Preferred Stock and the sale by the Company of the
2,800,000 shares of Common Stock offered hereby (at an assumed initial
public offering price of $ per share) and the application of the
estimated net proceeds therefrom as set forth in "Use of Proceeds."

Except as otherwise indicated, all information in this Prospectus reflects
the following transactions which will occur on or before the completion of this
offering: (i) the issuance of shares of Common Stock in exchange for
all outstanding shares of the Company's Series A Preferred Stock (the "Series A
Preferred Stock"); (ii) the issuance of shares of Common Stock in
exchange for the Founders' Note; and (iii) the issuance of 1,279,573 shares of
Common Stock upon conversion of all outstanding shares of Class B Common Stock.
See "Certain Transactions" and "Description of Capital Stock." The information
in this Prospectus assumes that this offering is consummated at an assumed
initial public offering price of $ per share. In addition, except as
otherwise noted, all information in this Prospectus assumes no exercise of the
Underwriters' over-allotment option, an outstanding warrant to purchase 142,105
shares of Common Stock or employee stock options to be granted prior to the
completion of this offering to purchase shares of Common Stock. See
"Management -- 1996 Stock Incentive Plan," "Description of Capital Stock" and
"Underwriting."

5
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RISK FACTORS

In addition to the other information in this Prospectus, the following
matters should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus. This Prospectus contains
forward-looking statements that involve risks and uncertainties. The Company's
actual results and the timing of certain events 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.

RELIANCE ON PRINCIPAL CLIENT RELATIONSHIPS

Because a substantial portion of the Company's revenues is generated from a
few key clients, the loss of all or a substantial portion of the business
resulting from these clients could have a material adverse effect on the
Company. MMIG, AT&T, J.C. Penney and Advanta accounted for 29.2%, 14.6%, 12.7%
and 8.3% of the Company's revenues, respectively, for fiscal 1995 and accounted
for 39.4%, 23.8%, 6.7% and 13.0% of the Company's revenues, respectively, for
the six months ended March 31, 1996. In addition, First USA Inc. accounted for
18.8% of the Company's revenues for fiscal 1995. None of the Company's clients
is contractually obligated to continue to use the Company's services, and there
can be no assurance that such use will continue at historic levels or at all.
All services provided to MMIG, AT&T and J.C. Penney are invoiced to J.C. Penney,
as a result of which adverse developments with respect to J.C. Penney's
creditworthiness could have a material adverse effect on the Company. See
"Business -- The Company's Services." There is no assurance that other clients
or potential clients of the Company will not reduce the level of business they
otherwise would provide to the Company as a result of the recent purchase by
Advanta Partners, which is a venture capital affiliate of Advanta, of an
ownership interest in the Company pursuant to the Recapitalization. See
"Principal Shareholders" and "Certain Transactions."

DEPENDENCE ON CERTAIN INDUSTRIES

The Company's success is dependent in large part on continued demand for
the Company's services from businesses within the insurance and financial
services industries, which accounted for 59.3% and 39.7%, respectively, of the
Company's revenues for fiscal 1995 and 75.2% and 19.6%, respectively, of the
Company's revenues for the six months ended March 31, 1996. A trend in either of
these industries to reduce or eliminate their use of teleservices could have a
material adverse effect on the Company. See "Business -- The Company's
Services."

CHALLENGES OF MANAGING GROWTH

The Company has experienced rapid growth over the past several years and it
anticipates continued future growth. The Company's continued rapid growth can be
expected to place significant strain on the Company's management, operations,
employees and resources. There can be no assurance that the Company will be able
to maintain or accelerate its current growth, effectively manage its expanding
operations or achieve planned growth on a timely or profitable basis. In
addition, growth in the Company's business may result in geographic expansion
that may make effective oversight of its call centers more difficult and
expensive. There is no assurance that, as the Company seeks to expand its
business by serving new industries, increasing its provision of
business-to-business and inbound teleservices or acquiring other companies, it
will be able to maintain its historical profit margins, which may be adversely
affected by, among other factors, the pricing of such business and additional
technological and other costs involved in servicing such business. In addition,
there can be no assurance that the Company will successfully integrate any
acquired business into the Company or that any acquired business will be
profitable. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

DEPENDENCE ON KEY PERSONNEL

The Company relies on its executive officers and other key operations and
technical personnel, particularly Raymond J. Hansell, the Company's Vice
Chairman and Chief Executive Officer, and MarySue Lucci, the Company's President
and Chief Operating Officer. Although the Company maintains key man life
insurance policies on the lives of the Founders, the loss of the services of
either of the Founders could have a

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<PAGE> 9

material adverse effect on the Company. Furthermore, there can be no assurance
that the Company will be able to retain its existing key personnel or recruit
additional key personnel as needed. Although the Company has entered into
employment contracts with the Founders that contain non-competition provisions
and has entered into non-competition agreements with its sales force, the
Company does not have non-competition agreements with its other executive
officers and key personnel. See "Management."

DEPENDENCE ON LABOR FORCE

By its nature, the teleservices industry is very labor intensive.
Telemarketing sales representatives ("TSRs"), who make up the majority of the
Company's workforce, generally receive modest hourly wages. The industry's labor
force is characterized by a high turnover rate, which increases the Company's
recruiting and training costs. Some of the Company's telemarketing activities,
particularly insurance product sales and inbound customer service, require
highly trained employees. The Company competes for qualified personnel with
other teleservices firms and other businesses. An increase in hourly wages,
costs of employee benefits or employment taxes could materially adversely affect
the Company. While the Company believes that its compensation policies are
attractive by industry standards, there can be no assurance that the Company
will be able to continue to hire and retain a sufficient number of qualified
personnel to support its anticipated growth. If the Company were unable to
recruit and retain a sufficient number of qualified employees, its business
could be materially adversely affected. See "Business -- The Company's
Operations -- Personnel and Training."

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company has experienced and expects to continue to experience
fluctuations in quarterly results of operations. The Company's results of
operations depend on numerous factors, including the timing of clients'
telemarketing campaigns, the commencement and expiration of contracts, the
Company's revenue mix, the timing and amount of new business generated by the
Company, the timing of the opening of call centers or the expansion of existing
centers, the timing of additional selling, general and administrative expenses
and competitive conditions in the teleservices industry. As a result, the
Company believes that period-to-period comparisons of results of operations are
not necessarily meaningful and should not be relied upon as an indication of
future results of operations. The Company's planned operating expenditures are
based on revenue forecasts, and if revenues are below expectations in any given
quarter, operating results are likely to be materially adversely affected. There
can be no assurance that, in the future, the Company will experience revenue
growth or be profitable on a quarterly or annual basis. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

NON-RECURRING CHARGES; EXPECTED LOSS IN QUARTER ENDING SEPTEMBER 30, 1996 AND
FISCAL 1996

As a result of the payment of the one-time bonuses to the Founders in the
aggregate amount of $6.0 million and an extraordinary charge of approximately
$2.2 million resulting from the early extinguishment of bank indebtedness and
the exchange of the Founders' Note upon the completion of this offering, the
Company expects to incur a non-recurring pre-tax charge of approximately $8.2
million for the quarter in which this offering is completed. This charge is
expected to result in a net loss for that quarter and for fiscal 1996. See "Use
of Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Certain Transactions" and Note 2 of Notes to Financial
Statements.

RELIANCE ON AUTOMATED SYSTEMS; TECHNOLOGY RISKS

The Company's business is highly dependent on its automated systems,
including its proprietary telemarketing software, predictive dialing equipment,
automated telemarketing workstations and telecommunications systems. The
temporary or permanent loss of all or a portion of the operation of these
systems, software and equipment, for any cause, could have a material adverse
effect on the Company. In the future, the Company's ability to compete
effectively against others in the teleservices industry is dependent upon its
continuing to make substantial investments in advanced computer and
telecommunications technology, including predictive dialers, automated call
distributors and digital switches. The inability of equipment vendors to supply,
on a timely basis, the systems on which the Company depends could have a
material

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<PAGE> 10

adverse effect on the Company. Moreover, the technologies upon which the Company
is dependent are rapidly evolving and characterized by short product life
cycles, which require the Company to anticipate and adapt to technological
shifts. There can be no assurance that the Company will be successful in
anticipating or adapting to technological changes or in selecting and developing
new and enhanced technologies on a timely basis. See "Business -- Business
Strategy" and "-- The Company's Operations -- Technology."

RELIANCE ON TELECOMMUNICATIONS SERVICES

The Company's ability to offer its services at competitive rates is highly
dependent upon the cost of long distance and local telephone service provided by
various local and long distance telephone companies. Any change in the
telecommunications market that would affect the Company's ability to obtain
favorable rates on telephone calling services could have a material adverse
effect on the Company. Moreover, any significant interruption in telephone
service or developments that could limit the ability of telephone companies to
provide the Company with increased capacity in the future could adversely affect
the Company's existing operations and prospects for future growth. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

COMPETITION WITHIN THE TELESERVICES INDUSTRY

The teleservices industry is highly competitive. The Company competes with
numerous independent teleservices providers, many of which are as large as or
larger than the Company, as well as the in-house telemarketing operations of
many of its clients or potential clients. Most businesses that are significant
consumers of teleservices utilize more than one teleservices firm at a time and
reallocate work among various firms from time to time. A significant amount of
such work is contracted on an individual project basis, with the effect that the
Company and other firms seeking such business are frequently required to compete
with each other as individual projects are initiated. There can be no assurance
that the Company will be able to compete effectively against its current
competitors or that additional competitors, some of which may have greater
resources than the Company, will not enter the industry and compete effectively
against the Company. Furthermore, as competition in the industry increases, the
Company may face increased pricing pressure. To the extent the Company is unable
to compete successfully against its existing and future competitors, its
business may be materially adversely affected. See "Business -- Competition."

COMPETITION FROM OTHER INDUSTRIES; RISKS AFFECTING THE TELESERVICES INDUSTRY

Providers of teleservices compete with providers of other marketing formats
and, in particular, other forms of direct marketing activities, such as direct
mail. In recent years, there have been significant advances in new forms of
direct marketing, such as the development of interactive shopping and data
collection through television, the Internet and other media. To the extent that
new information technologies permit the development of new direct marketing
techniques, they could have a material adverse effect on the demand for
teleservices. In addition, the introduction of new telephone-based technologies
could reduce the demand for certain of the Company's services. As the
teleservices industry continues to grow, the effectiveness of teleservices as a
direct marketing tool may decrease as a result of consumer saturation and
increased consumer resistance to telemarketing generally. See
"Business -- Industry Overview."

GOVERNMENT REGULATION

The telemarketing industry has become subject to an increasing amount of
federal and state regulation in the past five years. The Federal Telephone
Consumer Protection Act of 1991 (the "TCPA") and Federal Communications
Commission ("FCC") regulations limit the hours during which teleservices
providers may call consumers and prohibit the use of automated telephone dialing
equipment to call certain telephone numbers. The TCPA creates a right of action
for both consumers and state attorneys general. The Federal Telemarketing and
Consumer Fraud and Abuse Prevention Act of 1994 (the "TCFAPA") and Federal Trade
Commission ("FTC") regulations prohibit deceptive, unfair or abusive practices
in telemarketing sales. Both the FTC and state attorneys general have authority
to prosecute telemarketing activities that constitute "unfair or deceptive acts
or practices." Additionally, some states have enacted laws and others are
considering

8
<PAGE> 11

enacting laws targeted directly at telemarketing practices. Most of these
statutes allow a private right of action for the recovery of damages or provide
for enforcement by state agencies permitting the recovery of significant civil
or criminal penalties, costs and attorneys' fees. There can be no assurance that
any such laws, if enacted, will not adversely affect or limit the Company's
current or future operations. Several of the industries served by the Company,
particularly the insurance and financial services industries, are subject to
government regulation. Although compliance with these regulations is generally
the responsibility of the Company's clients, the Company could be subject to a
variety of enforcement or private actions for its failure or the failure of its
clients to comply with such regulations. The Company and its employees who sell
insurance products are required to be licensed by various state insurance
commissions for the particular type of insurance product to be sold and
participate in regular continuing education programs, which currently are
provided by the Company. The Company's participation in such insurance programs
requires the Company to comply with certain state regulations, changes in which
could materially increase the Company's operating costs associated with
complying with such regulations. In the financial services industry, the Company
is subject to various federal regulations governing the use of information
disclosed by credit card holders. See "Business -- Government Regulation."

CONTROL BY EXISTING SHAREHOLDERS

Upon completion of this offering, the Founders, Advanta Partners and
Glengar International Investments Limited ("Glengar") will own an aggregate of
% of the outstanding Common Stock. Consequently, upon completion of this
offering, the Founders, Advanta Partners and Glengar will continue to be able to
elect the Company's directors, to determine the outcome of corporate actions
requiring shareholder approval and otherwise to control the business affairs of
the Company. Of the current members of the Company's Board of Directors, Messrs.
Brenner and Hollin are senior management personnel of Advanta Partners and Mr.
Lubner is the nominee of Glengar. The Founders and Advanta Partners have entered
into a voting agreement, effective upon the completion of this offering,
pursuant to which Advanta Partners, on the one hand, and the Founders, on the
other, agree to vote for two nominees of the other to the Company's Board of
Directors. Each party's rights under such agreement terminate when such party's
ownership of Common Stock becomes less than 25% of such ownership upon
completion of this offering. See "Management" and "Principal Shareholders."

BENEFITS TO FOUNDERS, ADVANTA PARTNERS AND OTHER AFFILIATES

In connection with this offering, certain officers, directors and
shareholders of the Company will receive substantial benefits. The Founders will
receive one-time bonuses of $3,000,000 each pursuant to their employment
agreements with the Company. In addition, the Company intends to use a portion
of the proceeds of this offering to redeem all of the Company's outstanding
Series B Preferred Stock for an aggregate of $6,500,000 (which is equal to the
amount paid for the Series B Preferred Stock in May 1996 pursuant to the
Recapitalization), plus accrued dividends, and to repay bank indebtedness.
Advanta Partners owns 96% of the outstanding Series B Preferred Stock and the
balance is owned by Glengar. The bank indebtedness is secured in part by a
pledge of all of the outstanding capital stock of the Company held by the
Founders, Advanta Partners and Glengar. The repayment of bank indebtedness will
reduce these shareholders' exposure resulting from such pledge. See "Use of
Proceeds," "Management," "Principal Shareholders" and "Certain Transactions."

NO PRIOR PUBLIC MARKET; POTENTIAL VOLATILITY

Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or be sustained after this offering. The initial public offering price will be
determined through negotiation between the Company and the Representatives of
the Underwriters and may bear no relationship to the price at which the Common
Stock will trade after this offering. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price. The
market price of the Common Stock may be volatile and may be significantly
affected by factors such as actual or anticipated fluctuations in the Company's
operating results, announcements of new services by the Company or its
competitors, developments with respect to conditions and trends in the call
center services industry or in the industries served by the Company,
governmental regulation, general market

9
<PAGE> 12

conditions and other factors, many of which are beyond the Company's control. In
addition, the stock market has from time to time experienced significant price
and volume fluctuations that have adversely affected the market prices of
securities of companies irrespective of such companies' operating performances.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of the Common Stock in the public market
following this offering could adversely affect the market price of the Common
Stock. Upon the completion of this offering, the Company will have shares
of Common Stock outstanding. Of these shares, the 2,800,000 shares of Common
Stock sold in this offering will be freely tradeable without restriction or
further registration under the Securities Act of 1933, as amended (the
"Securities Act"). The remaining shares of Common Stock outstanding as of
the date of this Prospectus are "restricted securities" as defined by Rule 144
under the Securities Act ("Rule 144"). Of these, the shares held by the
Founders (including the shares to be issued in exchange for the Founders' Note
and Series A Preferred Stock) would be able to be sold in accordance with the
provisions of Rule 144 beginning 90 days from the date of this Prospectus. See
"Certain Transactions -- Recapitalization." The balance of the restricted
securities cannot be sold in accordance with the provisions of Rule 144 until
May 1998 unless registered pursuant to the Securities Act.

Upon the completion of this offering, there will be shares of Common
Stock issuable upon exercise of options under the 1996 Stock Incentive Plan and
142,105 shares of Common Stock issuable upon exercise of an outstanding warrant.
The Company intends to file a registration statement on Form S-8 covering the
shares of Common Stock issuable upon exercise of options within one year from
the date of this Prospectus. The shares registered under such registration
statement will be available for resale in the open market upon the exercise of
options, subject to Rule 144 volume limitations applicable to affiliates. The
holder of the Company's outstanding warrant has the right to have the shares
issuable upon exercise thereof included in future registration statements filed
by the Company, subject to specified limitations.

The Company and its directors, executive officers and existing
securityholders have agreed that, for a period of 180 days after the date of
this Prospectus, they will not, without the prior written consent of Smith
Barney Inc., offer, sell, contract to sell or otherwise dispose of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for any shares of Common Stock except, in the case of the Company, in certain
limited circumstances.

AUTHORIZATION OF PREFERRED STOCK; ANTI-TAKEOVER PROTECTIONS

The Company's Articles of Incorporation, as amended (the "Articles"),
authorize the issuance of "blank check" preferred stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without shareholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Common Stock (including those of the purchasers in
this offering). Holders of the Common Stock will have no preemptive rights to
subscribe for a pro rata portion of any capital stock which may be issued by the
Company. In the event of issuance, the preferred stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company. Although the Company has no present intention
to issue any shares of its preferred stock, there can be no assurance that the
Company will not do so in the future. See "Description of Capital Stock."
Furthermore, the Company is subject to certain anti-takeover provisions of the
Pennsylvania Business Corporation Law of 1988, as amended. The existence of
these provisions, as well as the Company's classified Board of Directors and the
control of the Company by the Founders, Advanta Partners and Glengar, would be
expected to have an anti-takeover effect, including possibly discouraging
takeover attempts that might result in a premium over the market price for the
shares of Common Stock. See "Management," "Principal Shareholders" and
"Description of Capital Stock -- Certain Provisions that May Have an
Anti-Takeover Effect."

10
<PAGE> 13

DILUTION

The initial public offering price is substantially higher than the pro
forma net tangible book value (deficit) per share of the Common Stock.
Purchasers of shares of Common Stock in this offering will, therefore, suffer
immediate and substantial dilution of $ (assuming an initial public
offering price of $ per share) in the pro forma net tangible book value
per share of Common Stock. To the extent that the currently outstanding warrant
to purchase shares of the Common Stock is exercised, investors will experience
further dilution. See "Dilution."

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
being offered hereby are estimated to be $ ($ if the
Underwriters' over-allotment option is exercised in full), assuming an initial
public offering price of $ per share and after deducting the estimated
underwriting discounts and commissions and offering expenses payable by the
Company. The Company will use a portion of the proceeds to repay the full
principal amount and accrued interest on its existing bank term loan (the "Term
Loan"), to repay all or a portion of the then outstanding principal amount and
accrued interest on the Company's existing revolving line of credit (the
"Revolver" and, collectively with the Term Loan, the "Credit Facility"), and to
redeem all of the outstanding shares of the Company's Series B Preferred Stock
(the "Series B Preferred Stock") for an aggregate redemption price of $6.5
million plus accrued dividends. Aggregate accrued dividends on the Series B
Preferred Stock will be approximately $ as of , 1996. A
portion of the proceeds will be used to pay one-time bonuses in the aggregate
amount of $6.0 million to the Founders pursuant to the employment agreements
that they entered into with the Company in connection with the Recapitalization.
See "Management -- Employment Agreements" and "Certain
Transactions -- Recapitalization." The remainder of the net proceeds will be
added to working capital to be used for general corporate purposes, including
possible acquisitions. No active negotiations relating to acquisitions are
currently taking place. Pending such uses, the Company intends to invest the net
proceeds in investment grade, interest-bearing securities.

As of June 30, 1996, the Company's indebtedness under the Term Loan
amounted to $14.0 million. The Term Loan and the $6.0 million Revolver were
obtained in connection with the Recapitalization from Chemical Bank, New York,
New York. No draws had been made on the Revolver as of June 30, 1996. Borrowings
under the Credit Facility accrue interest at the bank's base rate plus 1.5% or
LIBOR plus 3.0% (8.5% as of June 30, 1996). See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Certain
Transactions -- Recapitalization."

DIVIDEND POLICY

The Company intends to retain future earnings to finance its growth and
development and therefore does not expect to pay cash dividends on its Common
Stock in the foreseeable future. In addition, the Credit Facility prohibits the
payment of cash dividends without the prior written consent of the lender. No
dividends have been paid on the Common Stock subsequent to fiscal 1993. For
information regarding certain payments to the Founders in connection with the
Recapitalization, see "Certain Transactions -- Recapitalization."

11
<PAGE> 14

CAPITALIZATION

The following table sets forth, as of March 31, 1996: (i) the actual
capitalization of the Company, (ii) the pro forma capitalization of the Company
after giving effect to the Recapitalization and the termination of the Company's
S corporation status and (iii) the pro forma capitalization of the Company as
adjusted to give effect to exchange of the Founders' Note and Series A Preferred
Stock for shares of Common Stock, the sale by the Company of 2,800,000
shares of Common Stock offered hereby and the application of the estimated net
proceeds as set forth in "Use of Proceeds." This table should be reviewed in
conjunction with the Financial Statements and Notes thereto appearing elsewhere
in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
---------------------------------
PRO FORMA,
ACTUAL PRO FORMA AS ADJUSTED
------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt:
Borrowings on lines of credit................................ $ -- $ -- $
Current portion of long-term debt and capitalized lease
obligations(1)............................................ 589 621
------- --------- -----------
Total short-term debt................................ $ 589 $ 621 $
======= ======== =========
Long-term debt and capitalized lease obligations, net of
current portion(1)........................................... $ 1,750 $ 10,143 $
------- --------- -----------
Loans payable to shareholders.................................. 133 133
------- --------- -----------
Redeemable warrant(2).......................................... -- 450
------- --------- -----------
Founders' Note(2).............................................. -- 1,686
------- --------- -----------
Redeemable Preferred Stock(2)(3)............................... -- 4,308
------- --------- -----------
Redeemable Common Stock(2)(4).................................. -- 2,865
------- --------- -----------
Shareholders' equity (deficit):
Preferred Stock, $1.00 par value; 2,500,000 shares
authorized, no shares issued and outstanding.............. -- --
Common Stock, no par value; 20,000,000 shares authorized,
10,000,000 shares (actual), 3,000,000 shares (pro forma)
and shares (pro forma, as adjusted) issued and
outstanding(2)(5)......................................... 80 5,717
Additional paid-in capital................................... -- --
Retained earnings (deficit).................................. 4,655 (22,185)
------- --------- -----------
Total shareholders' equity (deficit)................. 4,735 (16,468)
------- --------- -----------
Total capitalization................................. $ 6,618 $ 3,117
======= ======== =========
</TABLE>

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

(1) See Notes 5 and 6 of Notes to Financial Statements for information
concerning the Company's long-term debt and capitalized lease obligations.
(2) See Note 2 of Notes to Financial Statements for a description of the
Founders' Note, redeemable warrant, Redeemable Preferred Stock, Redeemable
Common Stock and Common Stock.
(3) Represents 1,000,000 shares of Series A Preferred Stock and 6,500,000 shares
of Series B Preferred Stock with an aggregate liquidation value of
$7,500,000.
(4) Represents 1,500,000 shares of Class A Common Stock.
(5) The 3,000,000 shares (pro forma) consist of 1,720,427 shares of Class A
Common Stock and 1,279,573 shares of Class B Common Stock, all of which will
be reclassified to Common Stock upon the completion of this offering. See
"Description of Capital Stock."

12
<PAGE> 15

DILUTION

The pro forma net tangible book value (deficit) of the Company at March 31,
1996, was $ or $ per share. Pro forma net tangible book value
per share is determined by dividing the pro forma net tangible book value
(deficit) of the Company (total tangible assets less total liabilities) by the
number of shares of Common Stock outstanding on a pro forma basis, after giving
effect to the exchange of the Founders' Note and Series A Preferred Stock for
shares of Common Stock, which will occur upon the completion of this
offering. Without taking into effect any changes in pro forma net tangible book
value after March 31, 1996, other than to give effect to the sale of the Common
Stock offered hereby and the application of the estimated net proceeds
therefrom, the Company's adjusted pro forma net tangible book value as of March
31, 1996, would have been $ or $ per share. This represents an
immediate increase in pro forma net tangible book value per share of $
to existing holders and immediate dilution in pro forma net tangible book value
of $ per share to new investors purchasing Common Stock in this
offering. The following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.................. $
Pro forma net tangible book value (deficit) per share before
this offering............................................... $
Increase per share attributable to new investors...............
--------
Pro forma net tangible book value per share after this
offering.......................................................
--------
Dilution per share to new investors(1)........................... $
========
</TABLE>

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

(1) If the Underwriters' over-allotment option is exercised in full, dilution
per share to new investors would be $ .

The following table summarizes, on a pro forma basis as of March 31, 1996,
the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by existing shareholders
and by new investors, after giving effect to the exchange of the Founders' Note
and Series A Preferred Stock for shares of Common Stock at the initial
public offering price, which will occur upon completion of this offering:

<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION AVERAGE
----------------- ----------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders.......................... % $ % $
New investors..................................
------- ------- ------- -------
Total................................ % $ %
======= ===== ======= =====
</TABLE>

The foregoing tables do not include (i) 142,105 shares of Common Stock
issuable upon exercise of the warrant held by the lender under the Credit
Facility, at an exercise price per share of $.01, (ii) shares of
Common Stock issuable upon exercise of options to be granted prior to the
completion of this offering at the initial public offering price, and (iii)
shares of Common Stock reserved for future option awards under the
Company's 1996 Stock Incentive Plan. Because the warrant has an exercise price
that is significantly below the initial public offering price, there will be
$ per share of additional dilution to new investors upon exercise of
the warrant. See "Management -- 1996 Stock Incentive Plan," "Description of
Capital Stock" and Note 2 of Notes to Financial Statements.

13
<PAGE> 16

SELECTED FINANCIAL INFORMATION

(IN THOUSANDS, EXCEPT PER SHARE DATA)

The selected financial information as of and for fiscal 1993, fiscal 1994
and fiscal 1995 is derived from the audited Financial Statements of the Company
included elsewhere in this Prospectus. The selected financial information as of
and for fiscal 1991 and fiscal 1992 is derived from the unaudited financial
statements of the Company not included herein. The selected financial
information for the six months ended March 31, 1995 and 1996 has been derived
from the unaudited financial statements of the Company and, in the opinion of
management, includes all adjustments (consisting only of normal recurring
adjustments) which are necessary to present fairly the results of operations and
financial position of the Company for those periods in accordance with generally
accepted accounting principles. The selected financial information for the six
months ended March 31, 1996 is not necessarily indicative of the results to be
expected for the full year. The following selected financial information should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Financial Statements and Notes
thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
--------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
------ ------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................................. $6,217 $6,988 $10,292 $17,105 $25,545 $11,315 $14,784
------ ------ ------- ------- ------- ------- -------
Operating expenses:
Cost of services...................................... 4,697 5,189 7,642 13,286 18,209 8,181 10,436
Selling, general and administrative(1)................ 1,094 1,428 2,076 3,007 5,312 2,271 3,119
------ ------ ------- ------- ------- ------- -------
Total operating expenses..................... 5,791 6,617 9,718 16,293 23,521 10,452 13,556
------ ------ ------- ------- ------- ------- -------
Operating income...................................... 426 371 574 812 2,023 863 1,228
Interest expense...................................... 129 125 137 170 261 112 146
------ ------ ------- ------- ------- ------- -------
Income before state income taxes...................... 297 246 437 642 1,762 751 1,082
State income taxes.................................... -- -- -- 40 21 9 15
------ ------ ------- ------- ------- ------- -------
Net income................................... $ 297 $ 246 $ 437 $ 602 $ 1,741 $ 742 $ 1,067
------ ------ ------- ------- ------- ------- -------
Pro forma net income(2)............................... $ 1,048 $ 644
======== ========
Pro forma net income per share(2)..................... $ 0.23 $ 0.14
======== ========
Shares used in computing pro forma net income per
share(2)............................................ 4,642 4,642
Supplemental pro forma net income per share........... $ $
======== ========
Shares used in computing supplemental pro forma net
income per share....................................
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
SEPTEMBER 30, -----------------------------------------
------------------------------------------ PRO FORMA, AS
1991 1992 1993 1994 1995 ACTUAL PRO FORMA(3) ADJUSTED(3)(4)
------ ------ ------ ------ ------ ------ ------------ -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)............. $ 80 $ 21 $ 282 $ 829 $1,061 $2,427 $ (1,311) $
Total assets.......................... 2,145 2,364 3,743 5,576 8,757 8,453 6,375
Long-term debt, less current
maturities.......................... 149 51 20 355 592 1,463 10,129
Capitalized lease obligations, less
current maturities.................. 389 287 525 623 436 287 14
Loans payable to shareholders......... 118 125 125 125 133 133 133
Redeemable warrant.................... -- -- -- -- -- 450
Founders' Note........................ -- -- -- -- -- -- 1,686
Redeemable Preferred Stock............ -- -- -- -- -- -- 4,308
Redeemable Common Stock............... -- -- -- -- -- -- 2,865
Shareholders' equity (deficit)........ 641 887 1,325 1,927 3,668 4,735 (16,468)
</TABLE>

- ---------------
(1) Selling, general and administrative expenses include Founders' compensation
of $370,000, $308,000, $386,000, $660,000, and $766,000 for fiscal 1991,
fiscal 1992, fiscal 1993, fiscal 1994 and fiscal 1995, respectively, and
$353,000 and $394,000 for the six months ended March 31, 1995 and 1996,
respectively. Pursuant to employment contracts entered into in May 1996 in
connection with the Recapitalization, the Founders' compensation is fixed at
a combined base amount of $400,000 per year for three years (subject to
annual adjustment based on the inflation rate), plus a discretionary bonus
which is not expected to exceed 20% of base compensation.
(2) The Company operated as an S Corporation for income tax purposes since April
1, 1990 and terminated such status in connection with the Recapitalization.
See "Certain Transactions -- Recapitalization" and Note 2 of Notes to
Financial Statements for information concerning the computation of the pro
forma net income and pro forma net income per share.
(3) Reflects the Recapitalization and the termination of the Company's S
Corporation status. See Note 2 of Notes to Financial Statements.
(4) Adjusted to give effect to the exchange of Common Stock for the Founders'
Note and Series A Preferred Stock and the sale by the Company of the
2,800,000 shares of Common Stock offered hereby (at an assumed initial
public offering price of $ per share) and the application of the
estimated net proceeds therefrom as set forth in "Use of Proceeds."

14
<PAGE> 17

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

The following discussion of the Company's historical results of operations
and its liquidity and capital resources should be read in conjunction with
"Selected Financial Information" and the Financial Statements of the Company and
Notes thereto appearing elsewhere in the Prospectus.

OVERVIEW

The Company is a leading provider of outbound teleservices to major
corporations in the insurance and financial services industries. Founded in 1983
by Raymond J. Hansell and MarySue Lucci to provide direct marketing and sales
consulting, the Company opened its first call center focusing on
business-to-business teleservices in 1985 to support the marketing efforts of
its consulting customers. By the late 1980s, outbound business-to-consumer
teleservices had become the predominant business of the Company. On May 24,
1996, the Company completed the Recapitalization which included the purchase of
a significant equity interest in the Company by Advanta Partners. See "Certain
Transactions -- Recapitalization."

The Company's business has grown rapidly, resulting in increases in
revenues and operating income during each of the last three fiscal years. The
increase in revenues from $10.3 million in fiscal 1993 to $25.5 million in
fiscal 1995 has largely been driven by increases in call volumes from existing
clients, primarily in the insurance industry, coupled with the development of
new clients primarily in the financial services industry. Operating income
increased from $574,000 or 5.6% of revenues in fiscal 1993 to $2.0 million or
7.9% of revenues in fiscal 1995.

The increase in operating income over the three-year period resulted from
both the growth in revenues and the reduction in cost of services as a
percentage of revenues. Cost of services, which primarily consists of labor,
telephone and other call center-related operating and support expenses, declined
from 74.3% of revenues in fiscal 1993 to 71.3% of revenues in fiscal 1995. These
costs have decreased as a percentage of revenues as the Company has expanded its
call center locations to lower cost geographic areas, improved its operating
efficiencies and negotiated more favorable long distance rates. Selling, general
and administrative expenses are comprised principally of corporate expenses,
including management, sales and marketing activities, account management
services, accounting and finance, human resources, information services and
other administrative costs. Corporate expenses include, among other items,
compensation to Founders which amounted to $386,000, $660,000, $766,000 and
$394,000 for fiscal 1993, fiscal 1994, fiscal 1995 and the six months ended
March 31, 1996. See Note 1 to "Selected Financial Information." Pursuant to
employment contracts entered into in May 1996 in connection with the
Recapitalization, the Founders' compensation is fixed at a combined base amount
of $400,000 per year for three years (subject to annual adjustments based on the
inflation rate), plus a discretionary bonus which is not expected to exceed 20%
of base compensation.

The Company was subject to taxation under Subchapter S of the Internal
Revenue Code of 1986, as amended, from April 1, 1990 to May 24, 1996. As a
result, the net income of the Company, for federal and certain state tax
purposes, was taxed directly to the Company's Founders from April 1, 1990 to May
24, 1996 rather than the Company. Upon completion of the Recapitalization, the
Company terminated its Subchapter S status. Pro forma net income for fiscal 1995
and the six months ended March 31, 1996 reflect an income tax provision at an
effective rate of 40.5% as if the Company had been subject to federal and state
income taxes as a Subchapter C corporation.

15
<PAGE> 18

RESULTS OF OPERATIONS

The following table sets forth statements of operations and other data as a
percentage of revenues from services provided by the Company for the periods
indicated:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED SEPTEMBER ENDED
30, MARCH 31,
--------------------- -------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
Operating expenses:
Cost of services................................. 74.3 77.7 71.3 72.3 70.6
Selling, general and administrative(1)........... 20.1 17.6 20.8 20.1 21.1
----- ----- ----- ----- -----
Total operating expense....................... 94.4 95.3 92.1 92.4 91.7
----- ----- ----- ----- -----
Operating income.............................. 5.6 4.7 7.9 7.6 8.3
Interest expense................................... 1.3 1.0 1.0 0.9 1.0
----- ----- ----- ----- -----
Income before state income taxes.............. 4.3 3.7 6.9 6.7 7.3
State income taxes................................. -- .2 .1 .1 .1
----- ----- ----- ----- -----
Net income......................................... 4.3% 3.5% 6.8% 6.6% 7.2%
===== ===== ===== ===== =====
</TABLE>

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

(1) Compensation to Founders represents 3.8%, 3.9% and 3.0% of revenues for
fiscal 1993, fiscal 1994 and fiscal 1995, respectively, and 3.1% and 2.7%
for the six months ended March 31, 1995 and 1996, respectively.

SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO SIX MONTHS ENDED MARCH 31, 1995

Revenues. Revenues increased to $14.8 million for the six months ended
March 31, 1996 from $11.3 million for the six months ended March 31, 1995, an
increase of $3.5 million or 31.0%. The increase in revenues was attributable
primarily to increased calling volumes from existing clients, new clients in the
financial services industry and a new client in the telecommunications industry.
To meet the demands of increased call volumes, the Company added a new
80-workstation call center in November 1995 and expanded capacity in three
existing call centers by an aggregate of 48 workstations during February and
March 1996.

Cost of Services. Cost of services increased to $10.4 million in the six
months ended March 31, 1996 from $8.2 million for the six months ended March 31,
1995. As a percentage of revenues, cost of services decreased to 70.6% in the
1996 period from 72.3% in the 1995 period. This decrease was primarily the
result of lower long distance rates and the spreading of fixed costs over a
larger revenue base.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $3.1 million for the six months ended March 31, 1996 from
$2.3 million for the six months ended March 31, 1995. As a percentage of
revenues, selling, general and administrative expenses increased to 21.1% in the
1996 period from 20.1% in the 1995 period. The increase was principally due to
the addition of 14 administrative personnel and corporate expenses associated
with the Company's growth.

Interest Expense. Interest expense rose to $147,000 for the six months
ended March 31, 1996 from $112,000 for the six months ended March 31, 1995. The
increase reflects the financing of equipment purchases related primarily to the
opening of the additional call center and the expansion of three other call
centers.

FISCAL 1995 COMPARED TO FISCAL 1994

Revenues. Revenues increased to $25.5 million for fiscal 1995 from $17.1
million for fiscal 1994, an increase of $8.4 million or 49.4%. The increase in
revenues was attributable primarily to increased calling volumes from existing
insurance clients and the addition of new clients in the financial services
industry. To meet the demands of increased call volumes, the Company added two
new 64-workstation call centers in April 1994 and February 1995, respectively.

16
<PAGE> 19

Cost of Services. Cost of services increased to $18.2 million for fiscal
1995 from $13.3 million for fiscal 1994. As a percentage of revenues, cost of
services decreased to 71.3% in fiscal 1995 from 77.7% in fiscal 1994. This
decrease was primarily the result of realizing substantial operating
efficiencies, the most significant of which was a reduction in long distance
telephone rates.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $5.3 million for fiscal 1995 from $3.0 million for fiscal
1994. As a percentage of revenues, selling, general and administrative expenses
increased to 20.8% for fiscal 1995 from 17.6% for fiscal 1994. The increase was
principally due to the addition of 34 administrative personnel, corporate
expenses associated with the Company's growth and an increase in Founders'
compensation.

Interest Expense. Interest expense rose to $262,000 for fiscal 1995 from
$170,000 for fiscal 1994. The increase reflects the financing of equipment
purchases related primarily to the opening of two additional call centers and
expenditures related to the relocation of the Company's corporate headquarters.

FISCAL 1994 COMPARED TO FISCAL 1993

Revenues. Revenues increased to $17.1 million for fiscal 1994 from $10.3
million for fiscal 1993, an increase of $6.8 million or 66.2%. The increase in
revenues was attributable primarily to increased calling volumes from existing
insurance clients and the addition of new clients in the financial services
industry.

Cost of Services. Cost of services increased to $13.3 million for fiscal
1994 from $7.6 million for fiscal 1993. As a percentage of revenues, cost of
services increased to 77.7% for fiscal 1994 from 74.3% for fiscal 1993. This
increase primarily reflected increases in operations staff to facilitate growth
and enhance the Company's training and quality assurance programs.

Selling, General and Administrative. Selling, general and administrative
expenses increased to $3.0 million for fiscal 1994 from $2.1 million for fiscal
1993. As a percentage of revenues, selling, general and administrative expenses
decreased to 17.6% for fiscal 1994 from 20.1% for fiscal 1993 due to the
spreading of fixed costs over a larger revenue base.

Interest Expense. Interest expense rose to $170,000 in fiscal 1994 from
$137,000 in fiscal 1993.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company's primary sources of liquidity have been cash
flow from operations and borrowings under its credit facilities. These funds,
combined with borrowings under capitalized lease obligations, have provided the
liquidity to finance the growth of the Company. Current liquidity is provided
from cash flow from operations and available borrowing capacity under the Credit
Facility.

Cash provided by operating activities was $897,000 for the six months ended
March 31, 1996 compared to $245,000 for the same period in 1995, and cash
provided by operating activities was $497,000, $659,000 and $1.7 million for
fiscal 1993, fiscal 1994 and fiscal 1995, respectively. The increases were due
to higher net income before depreciation and amortization, which were partially
offset by cash used for working capital.

Cash used in investing activities was $871,000 for the six months ended
March 31, 1996 compared to $720,000 for the same period in 1995, and was
$176,000, $339,000 and $2.2 million for fiscal 1993, fiscal 1994 and fiscal
1995, respectively. The increases were due to increasing levels of property and
equipment purchases to support the growth in the Company's teleservices
activities. Expenditures for fiscal 1995 included approximately $500,000 related
to the Company's relocation of its corporate headquarters to Bryn Mawr,
Pennsylvania and expansion of its data processing capability. From October 1,
1993 through March 31, 1996, the Company's capital expenditures totaled $3.6
million. During that period, the Company increased its number of workstations by
416.

Cash used in financing activities was $329,000 for the six months ended
March 31, 1996 compared to $613,000 provided by financing activities for the
same period in 1995, and cash used in financing activities was $260,000 and
$44,000 for fiscal 1993 and fiscal 1994, respectively. For fiscal 1995, cash
provided by financing

17
<PAGE> 20

activities was $285,000. The cash provided by financing activities represented
borrowings under bank lines of credit, term loans and capitalized lease
obligations.

Immediately prior to the Recapitalization, the Company distributed to the
Founders $4.6 million of accounts receivable. As part of the Recapitalization,
the Company distributed $15.9 million in cash, $1.0 million in Series A
Preferred Stock, and the Founders' Note in the initial principal amount of $3.0
million (subject to increase by $1.0 million if adjusted earnings of the Company
from May 24, 1996 through September 30, 1996 meet a defined level) in redemption
of an aggregate of 8,500,000 shares of Common Stock owned by the Founders. In
addition, Advanta Partners and Glengar invested $9.5 million in Series B
Preferred Stock and Class A and Class B Common Stock. Upon completion of this
offering, the Founders have agreed to exchange the Series A Preferred Stock and
the Founders' Note (including the $1.0 million adjustment regardless of whether
the defined earnings level is met) for Common Stock at the initial public
offering price. In addition, all shares of Class B Common Stock will be
converted into Common Stock upon completion of this offering. See "Certain
Transactions."

In conjunction with the Recapitalization, the Company entered into the
Credit Facility with Chemical Bank, which provides for the $14.0 million Term
Loan and the $6.0 million Revolver. The Term Loan and Revolver are secured by
all of the assets of the Company and a pledge of all the shares of the Company's
capital stock held by the Founders, Advanta Partners and Glengar. In addition,
the loan agreement contains financial covenants and certain restrictions on the
Company's ability to pay dividends on the Common Stock, incur debt and make
capital expenditures and acquisitions. Borrowings on the Revolver are limited to
85% of eligible accounts receivable. The Term Loan and Revolver bear interest at
the bank's base rate plus 1.5% or LIBOR plus 3.0% (8.5% as of June 30, 1996).
The Term Loan commences amortization of principal on December 31, 1996 and
matures on June 30, 2002. The Revolver expires on May 24, 2001. As of June 30,
1996, the Company had borrowed the full $14.0 million amount of the Term Loan
and had not made any draws on the Revolver. The Company intends to use a portion
of the proceeds of this offering to repay all amounts outstanding under the Term
Loan and all or a portion of amounts outstanding under the Revolver. See "Use of
Proceeds."

The Company's teleservices operations will continue to require significant
capital expenditures. Capital expenditures, including capitalized leases, were
$926,000 in fiscal 1993, $1.1 million in fiscal 1994 and $2.4 million in fiscal
1995. The Company expects to spend approximately $2.1 million on capital
expenditures in fiscal 1996 (of which $976,000 has been spent through March 31,
1996), primarily for the addition of two call centers and capacity expansion at
three existing centers from 80 to 96 workstations.

The Company believes that funds generated from operations, together with
the net proceeds to the Company from this offering and available credit under
the Revolver, will be sufficient to finance its current operations and planned
capital expenditures at least through the end of fiscal 1997.

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth statement of operations data for each of the
four quarters of fiscal 1995 and the first two quarters of fiscal 1996, as well
as such data expressed as a percentage of revenues. This quarterly information
is unaudited, but has been prepared on a basis consistent with the audited
Financial Statements of the Company presented elsewhere in this Prospectus and,
in the Company's opinion, includes all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the information for
the quarters presented. The results for any quarter are not necessarily
indicative of results for any future period.

18
<PAGE> 21

<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1994 1995 1995 1995 1995 1996
-------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues..................................... $5,632 $5,683 $7,132 $ 7,098 $7,278 $7,506
------ ------ ------ ------ ------ ------
Operating expenses:
Cost of services........................... 3,941 4,240 4,921 5,107 5,127 5,309
Selling, general and administrative........ 1,064 1,208 1,348 1,693 1,575 1,545
Total operating expenses................ 5,005 5,448 6,269 6,800 6,702 6,854
------ ------ ------ ------ ------ ------
Operating income........................ 627 235 863 298 576 652
Interest expense............................. 54 57 71 80 75 71
------ ------ ------ ------ ------ ------
Income before state income taxes........ $ 573 $ 178 $ 792 $ 218 $ 501 $ 581
====== ====== ====== ====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------
DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1994 1995 1995 1995 1995 1996
-------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues..................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- ----- -----
Operating expenses:
Cost of services........................... 70.0 74.6 69.0 72.0 70.5 70.7
Selling, general and administrative........ 18.9 21.3 18.9 23.8 21.6 20.6
Total operating expenses................ 88.9 95.9 87.9 95.8 92.1 91.3
----- ----- ----- ----- ----- -----
Operating income........................ 11.1 4.1 12.1 4.2 7.9 8.7
Interest expense............................. 1.0 1.0 1.0 1.1 1.0 1.0
----- ----- ----- ----- ----- -----
Income before state income taxes........ 10.1% 3.1% 11.1% 3.1% 6.9% 7.7%
===== ===== ===== ===== ===== =====
</TABLE>

The Company has experienced and expects to continue to experience quarterly
variations in operating results, principally as a result of the timing of
clients' telemarketing campaigns, the commencement and expiration of contracts,
the timing and amount of new business generated by the Company, the Company's
revenue mix, the timing of the opening of call centers or expansion of existing
centers, the timing of additional selling, general and administrative expenses
and competitive conditions in the teleservices industry. The variations in
quarterly results during fiscal 1995 are primarily due to the opening of the
Reading, Pennsylvania call center in February 1995, an increase in management
compensation and the write-off of leasehold improvements associated with the
relocation of the Company's headquarters in September 1995.

In connection with this offering, the Company will incur a non-recurring
pre-tax charge of approximately $8.2 million in the quarter ending September 30,
1996. The expense consists of a one-time bonus of $6.0 million to the Founders
pursuant to their employment agreements and an extraordinary charge of
approximately $2.2 million resulting from the early extinguishment of the Term
Loan and the exchange of the Founders' Note. This charge is expected to result
in a net loss for the quarter and for fiscal 1996. See "Certain
Transactions -- Recapitalization" and Note 2 of Notes to Financial Statements.

19
<PAGE> 22

BUSINESS

GENERAL

The Company is a leading provider of outbound teleservices to major
corporations in the insurance and financial services industries. The Company
distinguishes itself through its high quality service and disciplined management
approach, which have led to long-term client relationships and sustained
profitable growth. The Company originated relationships with MMIG, J.C. Penney,
AT&T and Advanta over five years ago and, since fiscal 1991, the Company's
aggregate volume with these clients has grown each year. Since fiscal 1993, the
Company has generated internal revenue growth at a compound annual rate of 57.5%
to reach $25.5 million in fiscal 1995. Over the same period, operating income
has grown at a compound annual rate of 87.7% to reach $2.0 million in fiscal
1995.

INDUSTRY OVERVIEW

The teleservices industry includes outbound and inbound telephone
marketing, as well as customer support and service programs and other
value-added services. Teleservices provides customized service with higher
response rates and higher customer acquisition and retention rates at a lower
cost per transaction than other marketing media. As a result, call centers have
become robust channels for the marketing and sale of a wide variety of products
and services as sophisticated telemarketers are able to market effectively and
collect valuable customer data. According to Direct Marketing Magazine,
telemarketing expenditures in the United States grew from approximately $34
billion in 1984 to approximately $77 billion in 1995. The call center services
industry is extremely fragmented and includes a large number of small,
independent organizations. A small percentage of teleservices business is
currently being outsourced to independent providers, and the Company believes
that both the total market and the percentage of this market that is outsourced
will increase as businesses continue to recognize the benefits of such services.

Many large companies have begun to outsource their telemarketing and
customer support services in order to access the industry expertise, breadth of
services and specialized capabilities of large-scale,
technologically-sophisticated teleservices providers such as the Company. Using
such providers enables these companies to concentrate on their core businesses
and improve the quality and cost-effectiveness of their customer contact
functions. As a result, the Company believes that the enhanced quality and
economic advantages provided by independent teleservices companies will
accelerate the outsourcing trend in the industry. In addition, the Company
believes that the deregulation of the telecommunications industry and the
expected deregulation of the public utilities industry will significantly
increase the demand for telemarketing services.

The Company believes that businesses considering outsourcing their
telemarketing activities increasingly are seeking to partner with a teleservices
company that possesses industry expertise and the resources to serve their
long-term needs efficiently. Additionally, because teleservices involve direct
interaction with a client's customers, the teleservices provider's reputation
for quality is critical to winning new clients. As a recognized provider of high
quality teleservices, the Company has positioned itself as an attractive partner
to large users of call center services.

BUSINESS STRATEGY

The Company's objective is to leverage its position as a recognized
provider of high quality outbound teleservices to become the leading national
teleservices provider of outsourced call center services. The Company
distinguishes itself through selective partnering with its clients, a
disciplined approach to managing growth profitably, and an emphasis on total
quality management.

20
<PAGE> 23

Operating Strategy

The Company has achieved strong financial and operating performance in
recent years through the following elements of its operating strategy:

- Proactive Account Management. The Company focuses on developing
long-term relationships with its clients. As a result of this partnering
approach, the Company is better able to improve service quality, predict
revenues and maximize the utilization of its facilities, equipment and
personnel. The Company's emphasis on its account management functions
helps it foster and strengthen its client relationships. The Company's
account managers enhance the effectiveness of client campaigns by
proactively providing consulting, monitoring and reporting services.

- Innovative Human Resource Management. The Company's ability to provide
high quality service to its clients is based on its success in selecting,
training and managing its employees. The Company uses a highly structured
hiring program, including comprehensive screening and testing, to select
the most qualified applicants. Through a rigorous training program,
employees develop superior sales skills. In addition, the Company believes
it has reduced employee turnover by maintaining a relatively high
proportion of full-time employees and offering an innovative compensation
and benefits package that includes health insurance to qualifying
full-time TSRs. As a result, the Company is better able to retain
employees, reduce its recruiting and training expenditures and improve
productivity.

- Strategic Investments in Technology. The Company has invested in proven
state-of-the-art technologies and developed proprietary software to
provide real-time access to comprehensive information regarding the
Company's telemarketing campaigns and customer sales. The Company was a
pioneer in utilizing predictive dialing technology, was an early adopter
of centralized data management systems and recently implemented an optical
disk archiving system. The Company intends to continue to invest in
technology to enhance efficiency and provide high quality services.

- Systematic Call Center Site Selection. The Company takes a systematic
approach to selecting call center locations that provide both lower
operating costs and access to a quality labor force. To facilitate the
management of each call center and to generate operational efficiencies,
the Company's strategy is to locate its call centers in geographic
clusters. Prior to opening a call center, the Company analyzes the
demographics of the targeted geographic area in order to determine the
quality, quantity and availability of the local labor pool. The Company is
currently evaluating several additional regions in which to locate future
call centers.

Growth Strategy

The Company is capitalizing on its operational strengths to participate in
the growth of the teleservices industry and the accelerating trend towards
outsourcing among large corporations. The Company's growth strategy includes the
following key elements:

- Deploy a National Account Sales Team. The Company believes that
effective marketing to the major users of teleservices in existing and
emerging industries requires the sophisticated selling skills and the
structured processes of a national account sales team. The Company
initiated a national account sales program during fiscal 1996 to focus its
direct sales efforts on developing relationships with the leading users of
teleservices in targeted industries. As part of this initiative, the
Company hired a new Vice President of Sales and Marketing with extensive
experience in directing a national accounts sales program and expanded its
direct sales and marketing staff. This program will be the basis for
expanding the Company's client relationships in the areas described below.

- Expand Client Relationships in Core Industries. The Company believes
that the current trends causing rapid growth in the teleservices market
will enable the Company to continue to grow by building on its existing
reputation as a recognized provider of high quality outbound teleservices
to the insurance and financial services industries. The Company intends to
continue to expand its relationships with existing clients to increase
both the call volume allocated to the Company in existing

21
<PAGE> 24

programs and the number of client programs in which the Company
participates. In addition, the Company intends to continue to pursue
relationships with new clients in these industries.

- Increase Penetration of the Telecommunications Industry. The Company
believes that the combination of deregulation and the proliferation of new
products and services in the telecommunications industry will greatly
increase demand for teleservices. The telecommunications industry
primarily uses teleservices to market long distance services and calling
features (e.g., call waiting, caller identification and voicemail) to
businesses and consumers. The Company commenced serving a major
telecommunications client in January 1996 and is currently in discussions
with a number of prospective clients in that industry.

- Expand Inbound Teleservices. In response to the growth in the market for
inbound teleservices and requests from existing clients, the Company
intends to increase its inbound service offerings. The Company has
demonstrated its expertise in this area through its customer service
program for Blue Cross/Blue Shield of Florida ("BC/BS-FL"), for which it
earned a Gold Cup Award from Telemarketing Magazine in October 1995.
Management is currently in discussions with a number of existing outbound
teleservices clients with respect to providing inbound teleservices.

- Expand Business-to-Business Teleservices. General trends towards
outsourcing teleservices and the rapid growth in demand for teleservices
from the telecommunications and other industries have created the
opportunity for long-term client relationships and large-scale campaigns
in the business-to-business market. The Company intends to use its prior
business-to-business experience and current business-to-consumer expertise
to pursue these opportunities on a basis that will permit it to leverage
its workstation capacity effectively.

- Selectively Pursue Strategic Acquisitions. The Company believes that the
current fragmented nature of the teleservices industry provides an
opportunity for growth through acquisition. The Company intends to explore
possible acquisitions of companies with demonstrated competencies and
existing client relationships in areas of strategic interest to the
Company, including companies with an emphasis on inbound teleservices.

THE COMPANY'S SERVICES

Outbound Teleservices

Historically, the Company has concentrated on providing outbound
business-to-consumer teleservices. In this market, the Company has sought and
established relationships with large corporate clients, many of which have been
clients of the Company for over five years.

Outbound teleservices refers to the service the Company performs when its
TSRs place calls to parties targeted by the client to offer products or services
or to obtain information. At the beginning of a typical outbound program, the
Company receives customer data files that the client has selected to match the
demographic profile of the targeted customer for the product or service being
offered. These files contain each targeted customer's name, address, phone
number and other relevant data. The Company's data management system sorts the
records, removes information regarding customers whom the Company is prohibited
from contacting and assigns each file electronically to one of its outbound call
centers. Actual telephone calling at the centers is controlled by computerized
call management systems that utilize predictive dialers to automatically dial
the telephone numbers in the files. The call management system then forwards all
connected calls, along with the customer's name and other information
electronically to the workstation of a TSR who has been trained for the client's
program. The TSR then uses a prepared script to solicit an order for the product
or service or to request information that will be added to the client's
database. Information regarding sales and other aspects of the program is
captured by the Company's proprietary software systems and made available to
clients in customized report formats.

Insurance. The Company is a major telemarketer of insurance products
throughout the United States. Management believes this sector to be the most
attractive area in business-to-consumer telemarketing from the perspective of
the teleservices provider due to its large size, relative predictability and
relative lack of seasonality. The Company works with large consumer insurance
companies and their agents to market such products as accidental death and
dismemberment policies, graded benefit life insurance and other niche

22
<PAGE> 25

insurance products primarily to credit card customers. The Company has also
assisted clients in marketing supplemental dental and vision coverage to credit
card holders.

As of June 30, 1996, the Company employed 167 insurance agents licensed to
sell insurance in a total of 41 states. The Company's significant relationships
in this industry include those with MMIG, AT&T, J.C. Penney and Advanta, which
were responsible for 29.2%, 14.6%, 12.7% and 8.3%, respectively, of the
Company's revenues for fiscal 1995 (including services to Advanta related to
financial services products). The Company originated its relationship with MMIG
over eight years ago and originated its relationship with J.C. Penney, AT&T and
Advanta over five years ago. The Company's aggregate revenues from these key
clients have grown each year since fiscal 1991. In fiscal 1995 and the six
months ended March 31, 1996, 59.3% and 75.2%, respectively, of the Company's
revenues were generated from services related to insurance products.

Financial Services. The Company provides teleservices to several of the
largest credit card issuers, banks and other financial institutions in the
United States. The Company's services include customer account acquisition,
customer retention programs, and programs to sell credit card enhancement
features such as higher credit limits, lower interest rates and lower fees. The
Company also cross-sells additional services such as home equity loans and
related banking services. In fiscal 1995 and the six months ended March 31,
1996, 39.7% and 19.6%, respectively, of the Company's revenues were generated
from services related to financial services products.

Telecommunications. The Company expects the demand for teleservices within
the telecommunications industry to increase as the industry continues to be
deregulated and as the number of products (e.g., long distance, cellular, paging
and "800" services) and call features (e.g., call waiting, caller identification
and voice mail) increases. The Company commenced serving a major
telecommunications client in January 1996, and is in discussions with a number
of prospective clients in the industry to provide outbound business-to-consumer
and business-to-business services.

Other Industries. The Company is currently marketing travel club and
dining club programs to credit card holders on behalf of one of its clients. In
addition, the Company believes that the utilities, on-line services and cable
industries, among others, provide significant opportunities for future growth.
The Company is in discussions with targeted customers in these industries.

Inbound Teleservices

Inbound teleservices involves the processing of incoming calls, often
placed by customers using toll-free numbers, to a customer service
representative for service, order fulfillment or product information. Inbound
teleservices include activities such as customer care services, credit card and
loan application processing and catalog sales. More sophisticated inbound
programs assist clients in responding to customer inquiries, offering technical
and product support services and assessing overall customer satisfaction.

The Company currently operates a 24-seat dedicated inbound customer service
center in its Lansdowne, Pennsylvania call center facility and intends to
install additional inbound facilities as the Company's inbound business expands.
The Company has developed an inbound customer service program for BC/BS-FL
pursuant to which the Company's TSRs respond to customer inquiries and
complaints following important changes in certain of BC/BS-FL's group medical
plans. The Company intends to expand its inbound business and is currently in
discussions with a number of existing outbound teleservices clients with respect
to providing such services.

Business-to-Business Teleservices

The Company believes that the dynamics of the business-to-business
teleservices marketplace have now changed so as to permit the development of the
type of long-term client relationships and large-scale campaigns that have
formed the core of the Company's business-to-consumer services. The Company
expects that the demand for business-to-business applications will grow rapidly,
especially among telecommunications companies, as many large companies recognize
that telemarketing is a more efficient method of reaching business customers
than a field sales force. Growth in the business-to-business teleservices market
will enable

23
<PAGE> 26

the Company to leverage its existing workstation capacity because such services
are provided primarily during the day while business-to-consumer services are
provided primarily during the evening. The Company believes that its prior
experience in business-to-business teleservices and current expertise in
business-to-consumer teleservices position it to take advantage of the growth in
this market.

THE COMPANY'S OPERATIONS

Sales, Marketing and Account Management

During fiscal 1996, the Company initiated a national account sales program
to focus its direct sales efforts on developing relationships with the leading
users of teleservices in its targeted industries. As part of this initiative,
the Company hired a new Vice President of Sales and Marketing with extensive
experience in directing a national accounts sales program and expanded its sales
and marketing staff. Supporting this initiative, the Company will continue to
market its services by attending trade shows, advertising in industry
publications, responding to requests for proposals, pursuing client referrals
and cross-selling to existing clients.

A critical element of the Company's effort to build long-term client
relationships is its account management program. To improve the effectiveness of
the client's program, account managers offer proactive advice and consulting
services. The account managers initially provide advice on all aspects of
program implementation, including scripting, performance specifications and
reporting, and then manage the process on behalf of the client through
interaction with each of the Company's internal departments. Periodic internal
audits are performed by the account manager to determine compliance with the
applicable program specifications. The Company believes that this detailed
attention to account management has contributed significantly to retaining
clients, expanding business from existing clients and attracting new clients.

Call Centers

The Company believes that its call center selection process has helped
lower its operating costs and enhance the quality of its labor force by locating
centers in areas in which there is an ample supply of qualified labor. Prior to
opening a call center, the Company obtains a detailed demographic analysis of
targeted geographic areas to determine the quality, quantity and availability of
the local labor pool. This analysis is followed by interviews with major
employers in the area to obtain additional information regarding the quality and
quantity of the labor pool. If the area is determined to be suitable, the
Company seeks to locate sites that are safe and easily accessible, and that
provide a working environment that is conducive to employee productivity. Once a
site is selected, it is generally available for operations within 60 to 90 days.
T-1 telecommunications lines are installed at each new call center to provide a
direct data connection between the center and the Company's corporate
headquarters in suburban Philadelphia, Pennsylvania. Security features are
installed at each call center in order to provide protection for client data.

24
<PAGE> 27

The Company operates eight call centers at which there were an aggregate of
744 automated call stations, as of June 30, 1996, as detailed below:

<TABLE>
<CAPTION>
DATE OF INITIAL DATE OF MOST CURRENT
LOCATION OPENING WORKSTATIONS RECENT EXPANSION WORKSTATIONS
------------------------------ -------------- ------------ ---------------- ------------
<S> <C> <C> <C> <C>
Bryn Mawr, PA(1).............. March 1985 15 February 1996 96
Lansdowne, PA(2).............. October 1990 80 November 1991 120
Pleasantville, NJ............. November 1992 64 February 1996 96
Scranton, PA.................. July 1993 64 May 1996 96
Wilkes-Barre, PA.............. April 1994 64 March 1996 96
Reading, PA................... February 1995 64 May 1995 80
Ocean Township, NJ............ November 1995 80 80
Allentown, PA................. April 1996 80 80
---
Total: 744
==========
</TABLE>

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

(1) Facilities transferred from Wynnewood, PA (the original headquarters) to
Bryn Mawr in September 1995.
(2) Includes a 24-seat inbound capability.

The Company believes that the geographic clustering of call centers
enhances its operating efficiency by facilitating oversight of the centers by
regional and corporate supervisory personnel. By December 31, 1996, the Company
intends to open a new 80-workstation call center and expand the capacity of
three existing call centers from 80 to 96 workstations, which would result in a
total of 872 workstations. In addition, the Company is currently evaluating
several additional regions in which to locate future call centers.

Personnel and Training

The Company emphasizes the recruitment, training and development of its
TSRs, which enables it to increase productivity, reduce employee turnover and
enhance the quality of its services. TSRs are selected through a three-step
process that includes an initial telephone screening interview, followed by an
in-person interview and extensive testing to gauge competence, suitability for
telemarketing projects and integrity.

Newly-hired TSRs receive an intensive three-day training course that
emphasizes modeling and role-playing as well as instruction on effective sales
techniques and product knowledge. New TSRs are closely monitored for an initial
30-day period and thereafter receive ongoing coaching and training. As of June
30, 1996, the Company employed 167 TSRs who are licensed insurance agents
specializing in the marketing of insurance-related products. These licensed
agents receive continuing insurance-related education to comply with applicable
state licensing requirements. To further assure the continuity and consistency
of management practices, each call center has dedicated recruiting and training
personnel who report directly to corporate management. The Company also provides
significant ongoing training to its supervisory and management personnel on
coaching, counseling and total quality management techniques.

The Company has developed an innovative compensation and performance
recognition plan in order to motivate employees and reduce turnover. The Company
generally targets base TSR compensation at higher levels than is paid by other
businesses competing for the same labor pool. In addition, the Company recently
implemented a benefits package, including health insurance, for qualifying
full-time TSRs. For performance recognition, the Company pays cash bonuses to
TSRs who achieve sales targets and quality benchmarks and also offers non-cash
incentives and creative programs to improve performance and maintain morale.
Although it is typical in the teleservices industry for TSRs to be part-time
employees, over 70% of the Company's TSRs are full-time employees (working at
least 33 hours per week.). The Company believes that its relatively high
proportion of full-time employees provides a more stable workforce and reduces
the Company's recruiting and training expenditures.

As of June 30, 1996, the Company employed 1,484 persons, of whom more than
1,250 were TSRs. None of the Company's employees is represented by a labor
union. The Company considers its relations with its employees to be good.

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<PAGE> 28

Quality Assurance

The Company's reputation for quality services is critical to acquiring and
retaining clients. The Company is committed to the principles of total quality
management in order to continuously improve its operational processes. The
Company establishes both internal and external benchmarks as a means to measure
continuous improvement. The Company measures the quality of its services on the
basis of sales per hour, level of customer inquiries, call abandonment rates and
other quality performance criteria. In order to provide ongoing improvement to
the TSRs' performance and to assure compliance with the Company's quality
standards, quality assurance personnel monitor each TSR on a frequent basis and
provide coaching to the TSR based on this review. Clients also participate in
the monitoring process. Sales confirmations are recorded with the customer's
consent to ensure accuracy and to provide a record of the sale. Company
personnel review all sales confirmation tapes for compliance with client
specifications. In addition, these tapes are selectively reviewed in order to
provide additional coaching to TSRs. The Company's information systems enable it
to provide its clients with customized reports on the status of an ongoing
telemarketing campaign and can transmit information electronically to clients if
desired. Access to this data enables the Company's clients to modify or enhance
an ongoing campaign in order to improve its effectiveness. Each Company call
center has dedicated quality assurance personnel who provide on-going employee
training and coaching to the center's TSRs.

Technology

The Company was a pioneer in utilizing predictive dialing technology and
was an early adopter of centralized management systems. The Company continues to
invest strategically in proven systems and software technologies in order to
enhance operational efficiency and maintain high quality services. These
technologies reduce the cost per call and improve sales and customer service by
providing the Company's TSRs and account management personnel with enhanced
real-time access to customer and production information. As of June 30, 1996,
the Company's management information systems department consisted of 31
technical professionals who maintain, upgrade and expand the Company's systems.
The Company's call management and database systems have been designed to ensure
quality service to its clients and to provide effective tools for the management
of the Company's business.

The Company uses UNIX-based predictive dialing systems at each call center,
which are linked via a wide-area network to network servers at the Company's
corporate headquarters. The Company's call center and network systems both use a
flexible database architecture permitting the easy sharing of data among users
of the system. As a result, the Company's scalable systems can be configured to
work cost-effectively at low and high volumes and permit the efficient addition
of capacity.

To effectively manage and control calling campaigns, the Company has
developed its own proprietary software. The Track System monitors the status and
performance of each client program throughout its life cycle. Information
relating to each customer file (including a complete record of each sale
transaction) is archived to the Customer Information System, which includes a
dedicated server and an optical disk storage system. This system is designed to
respond to a client request to review details of a particular sales call in
minutes and is able to identify the program, the date and time of the call and
the TSR who recorded the sale. The Company has implemented procedures to protect
the integrity of data against power loss, fire and other casualty.

COMPETITION

The teleservices industry is intensely competitive and the Company's
principal competition in its primary markets comes from large teleservices
organizations, including APAC TeleServices, Inc., ICT Group, Inc., SITEL
Corporation, ITI Marketing Services, Inc. and Ed Blank Associates, Inc. In
addition, the Company competes with the in-house telemarketing operations of
many of its clients or potential clients. The Company also competes with direct
mail, television, radio and other advertising media, as well as emerging direct
marketing channels, such as interactive shopping and data collection through the
television, the Internet and other media.

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<PAGE> 29

Competition with other teleservices organizations is based primarily upon
performance (measures include sales per hour, contact rate, conversion ratio and
cost per sale), technological and reporting capabilities, industry experience,
quality of client services and staff and price. The Company believes that it
generally compares favorably with its competitors with respect to each of these
factors.

GOVERNMENT REGULATION

Telemarketing sales practices are regulated at both the federal and state
level. The TCPA, enforced by the FCC, imposes restrictions on unsolicited
automated telephone calls to residential telephone subscribers. Under the TCPA
and the regulations promulgated thereunder, it is unlawful to initiate telephone
solicitations to residential telephone subscribers before 8:00 a.m. or after
9:00 p.m., local time at the subscriber's location, or to use automated
telephone dialing systems or artificial or prerecorded voices to call certain
subscribers. Additionally, the TCPA regulations require telemarketing firms to
develop a written policy implementing a "do not call" list and to train its
telemarketing personnel to comply with these restrictions. The TCPA creates a
right of action for both consumers and state attorneys general. A court may
award damages or impose penalties of $500 per violation, which may be trebled
for willful or knowing violations. Currently, the Company trains its service
representatives to comply with the regulations of the TCPA and programs its call
management system to avoid initiating telephone calls during restricted hours or
to individuals maintained on the Company's "do not call" list.

The FTC regulates both general sales practices and telemarketing
specifically. Under the Federal Trade Commission Act (the "FTC Act"), the FTC
has broad authority to prohibit a variety of advertising or marketing practices
that may constitute "unfair or deceptive acts and practices." Pursuant to its
general enforcement powers, the FTC can obtain a variety of types of equitable
relief, including injunctions, refunds, disgorgement, the posting of bonds, and
bars from continuing to do business for a violation of the acts and regulations
it enforces.

The FTC also administers the TCFAPA under which the FTC has issued
regulations prohibiting a variety of deceptive, unfair or abusive practices in
telemarketing sales. Generally, these rules prohibit misrepresentations of the
cost, quantity, terms, restrictions, performance or characteristics of products
or services offered by telephone solicitation or of refund, cancellation or
exchange policies. The regulations also regulate the use of prize promotions in
telemarketing to prevent deception and require that a telemarketer identify
promptly and clearly the seller on whose behalf the telemarketer is calling, the
purpose of the call, the nature of the goods or services offered and, if
applicable, that no purchase or payment is necessary to win a prize. The
regulations also require that a telemarketer maintain records on various aspects
of its business.

Most states have enacted statutes similar to the FTC Act prohibiting unfair
or deceptive acts and practices. For example, telephone sales in certain states
are not final until a written contract is delivered to and signed by the buyer,
and such a contract often may be canceled within three business days. At least
one state also prohibits telemarketers from requiring credit card payment, and
several other states require certain telemarketers to obtain licenses, post
bonds or submit sales scripts to the state's attorney general. Under these
general enabling statutes, depending on the willfulness and severity of the
violation, penalties can include imprisonment, fines and a range of equitable
remedies such as consumer redress or the posting of bonds before continuing in
business. Additionally, some states have enacted laws and others are considering
enacting laws targeted directly at telemarketing practices. Most of these
statutes allow a private right of action for the recovery of damages or provide
for enforcement by state agencies permitting the recovery of significant civil
or criminal penalties, costs and attorneys' fees. There can be no assurance that
any such laws, if enacted, will not adversely affect or limit the Company's
current or future operations.

The industries served by the Company are also subject to government
regulation, and, from time to time, bills are introduced in Congress which, if
enacted, would affect the Company's operations. The Company and its employees
who sell insurance products are required to be licensed by various state
insurance commissions for the particular type of insurance product to be sold
and to participate in regular continuing education programs, which currently are
paid for by the Company.

The Company believes that it is in compliance with all applicable
regulations.

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<PAGE> 30

FACILITIES

The Company's corporate headquarters facility is located in Bryn Mawr,
Pennsylvania in an approximately 45,000 square-foot building leased to the
Company through December 1998. The Company leases all of the facilities used in
its call center operations. The Company believes that its existing facilities
are suitable and adequate for its current operations, but additional facilities
will be required to support growth. The Company believes that suitable
additional or alternative space will be available as needed on commercially
reasonable terms.

LITIGATION

From time to time, the Company is involved in litigation incidental to its
business. In the view of management, no litigation to which the Company is
currently a party is likely to have a material adverse effect on the Company, if
decided adversely to the Company.

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<PAGE> 31

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

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

<TABLE>
<CAPTION>
NAME AGE POSITION
---------------------------- --- -------------------------------------------------------
<S> <C> <C>
Anthony P. Brenner.......... 38 Chairman of the Board
Raymond J. Hansell.......... 46 Vice Chairman of the Board and Chief Executive Officer
MarySue Lucci............... 47 Director, President and Chief Operating Officer
Michael J. Scharff.......... 49 Senior Vice President of Finance
Richard P. Keenan........... 50 Vice President of Sales and Marketing
William D. Mulvihill........ 55 Vice President of Account Management
David Clautice.............. 54 Vice President of Management Information Systems
Mitchell L. Hollin.......... 33 Director
Derek Lubner................ 33 Director
</TABLE>

Mr. Brenner has served as the Chairman of the Company's Board of Directors
since May 1996. Mr. Brenner is Senior Managing Director of Advanta Partners,
where he is also a member of its Board of Directors. He also serves as a
director of Advanta, a publicly-traded financial services company. Prior to the
formation of Advanta Partners in May 1994, Mr. Brenner was President of Cedar
Point Partners LP, a private equity investment firm he founded in 1989.

Mr. Hansell currently serves as Vice Chairman and Chief Executive Officer
of the Company. From the Company's founding in 1983 until the Recapitalization
in May 1996, Mr. Hansell served as the Chairman of the Board of Directors of the
Company. Mr. Hansell has been an active industry leader and served on the
operating committee of the Direct Marketing Association's Telephone Marketing
Council from 1993 to 1995. Mr. Hansell was named a Top Ten Telepro by
Teleprofessional Magazine in October 1995 for his contributions to the industry.
Prior to co-founding the Company, Mr. Hansell served in various managerial sales
and marketing positions at Shared Medical Systems, NCR and Automatic Data
Processing.

Ms. Lucci has served as the Company's President and Chief Operating Officer
since December 1995, prior to which she had served as an Executive Vice
President for more than five years. Ms. Lucci also has acted as a director and
the Secretary of the Company since its founding in 1983. Ms. Lucci was recently
a recipient of the 1996 Distinguished Women in Telemarketing Award by
Telemarketing Magazine. From 1981 to 1983, Ms. Lucci was Vice President of New
Product Publications Development for Clement Communications, a national business
marketing publisher. From 1969 to 1981, Ms. Lucci was employed by Colonial Penn
Insurance Company, a leading direct marketer of insurance products, where she
managed marketing, training and customer service functions, most recently as a
Vice President.

Mr. Hansell and Ms. Lucci are husband and wife.

Mr. Scharff is the Company's Senior Vice President of Finance. Mr. Scharff
was Vice President and Treasurer from November 1994 to November 1995 and, from
the time he joined the Company in October 1988 until November 1994, Mr. Scharff
served as the Company's Controller. From 1984 until joining the Company, Mr.
Scharff was the President of Audobon Automotive Supply Co., an automotive parts
distributor. Mr. Scharff was a divisional controller of Safeguard Business
Systems from 1979 to 1984.

Mr. Keenan is the Company's Vice President of Sales and Marketing. For 18
years prior to joining the Company in March 1996, Mr. Keenan was employed by
Tektronix, Inc., a computer software and graphics company serving most recently
as Tektronix's Regional Sales Manager for the Eastern United States in charge of
a national account sales program for that region. For seven years prior thereto,
Mr. Keenan served in various sales and management capacities at NCR.

Mr. Mulvihill is the Company's Vice President of Account Management. From
August 1994 until he joined the Company in May 1996, Mr. Mulvihill was an
independent consultant. From October 1993 until August 1994, Mr. Mulvihill
served as a Team Leader in the telemarketing group at Towers Perrin, a national

29
<PAGE> 32

management consulting firm. From 1982 until joining Towers Perrin, Mr. Mulvihill
served as Vice President of Customer Service for Users, Inc., an information
systems company.

Mr. Clautice serves as the Company's Vice President of Management
Information Systems. Prior to joining the Company in June 1995, Mr. Clautice was
President of Clautice Associates, Inc., an information systems consulting firm
he founded in 1974. From 1974 to 1985, Mr. Clautice was President of Electronic
Processing Center, a data processing service organization.

Mr. Hollin was elected to the Company's Board of Directors in May 1996. Mr.
Hollin has been a Managing Director of Advanta Partners since its founding in
May 1994. Prior to that time, Mr. Hollin was a Partner and Vice President of
Cedar Point Partners LP which he joined in 1991.

Mr. Lubner was elected to the Company's Board of Directors in May 1996 as
the nominee of Glengar. Since June 1995, Mr. Lubner has served as the Marketing
Director of Concepts and Interpretations, a developer of leisure attractions
based in England. From June 1993 to June 1995, Mr. Lubner served as a director
of Two Heads Publishing, a book publisher. Prior to joining Two Heads
Publishing, Mr. Lubner served as marketing coordinator of Belron International,
a windshield replacement company.

CLASSIFIED BOARD; ADDITION OF INDEPENDENT DIRECTORS; COMMITTEES

The Company's Board of Directors is divided into three classes. Each class
holds office until the third annual meeting for the election of directors
following the election of such class, except that the initial terms of the Class
I, Class II and Class III directors expire in 1997, 1998 and 1999, respectively.
Mr. Lubner is the Class I director, Ms. Lucci and Mr. Hollin are the Class II
directors, and Messrs. Brenner and Hansell are the Class III directors. Although
the Company's Board of Directors intends to appoint two independent directors
unaffiliated with Advanta Partners or Glengar within 90 days after the
completion of this offering, the Company does not currently have candidates to
fill these positions.

The Board of Directors intends to establish a Compensation Committee and an
Audit Committee. The Compensation Committee will determine salaries and bonuses
and other compensation matters for officers of the Company, determine employee
health and benefit plans, and administer the Company's 1996 Stock Incentive Plan
and any similar plans created in the future. The Audit Committee will recommend
the appointment of the Company's independent public accountants and will review
the scope and results of audits, internal accounting controls and tax and other
accounting related matters.

Officers of the Company are elected by the Board of Directors and serve at
the discretion of the Board.

DIRECTOR COMPENSATION

The Company intends to implement directors' compensation arrangements, but
has not yet determined the amount or manner of such compensation. Messrs.
Brenner, Hansell and Hollin and Ms. Lucci will not receive compensation in their
capacity as directors.

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<PAGE> 33

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to
compensation paid or accrued by the Company for fiscal 1995 to the Company's
Chief Executive Officer and to each of the other executive officers of the
Company whose salary and bonus for fiscal 1995 exceeded $100,000 for all
services rendered in all capacities to the Company (the "Named Executive
Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION(1)
- ----------------------------------------------------------- -------- -------- ---------------
<S> <C> <C> <C>
Raymond J. Hansell......................................... $159,895 $368,727 $ 6,070
Vice Chairman and Chief Executive Officer
MarySue Lucci.............................................. $159,895 $ 63,464 $ 7,767
President and Chief Operating Officer
Michael J. Scharff......................................... $ 89,343 $ 11,453 $ 5,617
Senior Vice President of Finance
John F. Owens (1).......................................... $144,265 $ 11,202 $ 123
Vice President of Telemarketing Operations
</TABLE>

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

(1) Represents the amount in premiums paid by the Company with respect to a life
insurance for the benefit of the referenced officer and the amount
contributed by the Company to the 401(k) account of the referenced officer.
(2) Mr. Owens served as the Company's Vice President of Telemarketing Operations
until December 1995 and currently is employed on a part-time basis.

EMPLOYMENT AGREEMENTS

On May 24, 1996, the Company entered into an employment agreement with Mr.
Hansell providing for Mr. Hansell's employment as Chief Executive Officer of the
Company. The initial term of the agreement is to expire on May 31, 1999;
however, the agreement will be extended for an additional two years unless
either party provides notice of termination to the other at least 180 days
before the expiration of such term. At any time during the extended term, either
party may terminate upon 180 days' notice. Under the terms of the employment
agreement, Mr. Hansell is to be paid an annual salary of $200,000, which will be
adjusted annually to reflect increases in the consumer price index. The
employment agreement also entitles Mr. Hansell to a discretionary annual bonus
and a one-time lump sum payment of $3,000,000 in the event the Company sells
equity interests in an initial public offering within six months from the date
of the agreement. See "Use of Proceeds" and "Certain Transactions." In addition,
in the event Mr. Hansell's employment is terminated without cause (as defined in
the agreement), the Company is obligated to continue to pay Mr. Hansell's annual
salary, fringe benefits and all other compensation and benefits other than the
discretionary bonus, as such amounts would have accrued through the end of the
initial term of the agreement or, if such termination occurs during the extended
term of the agreement, through the end of such term. The employment agreement
contains provisions regarding the protection of confidential information and
assignment of inventions to the Company, and a covenant not to compete from the
date of the agreement until the later to occur of the seventh anniversary
thereof or the second anniversary of Mr. Hansell's termination for any reason.

The Company has also entered into an employment agreement with Ms. Lucci
providing for her employment with the Company as President and Chief Operating
Officer. The terms of Ms. Lucci's employment agreement are otherwise
substantially identical to those contained in Mr. Hansell's employment
agreement.

1996 STOCK INCENTIVE PLAN

Under the Company's 1996 Stock Incentive Plan (the "Plan"), a variety of
awards, including stock options, stock appreciation rights and restricted and
unrestricted stock grants may be made to the Company's employees, officers,
consultants and advisors who are expected to contribute to the Company's future
growth and success. shares of Common Stock are reserved for issuance
under the Plan. The Compensation Committee will administer the Plan and
determine the price and other terms upon which awards shall be

31
<PAGE> 34

made. Stock options may be granted either in the form of incentive stock options
or non-statutory stock options. The option exercise price of incentive stock
options may not be less than the fair market value of the Common Stock on the
date of the grant. While the Company currently anticipates that most grants
under this Plan will consist of stock options, the Company may grant stock
appreciation rights, which represent rights to receive any excess in value of
shares of Common Stock over the exercise price; restricted stock awards, which
entitle recipients to acquire shares of Common Stock, subject to the right of
the Company to repurchase all or a part of such shares at their purchase price
in the event that the conditions specified in the award are not satisfied; or
unrestricted stock awards, which represent grants of shares to participants free
of any restrictions under the plan. Options or other awards that are granted
under the Plan but expire unexercised are available for future grants. It is
expected that, prior to the completion of this offering, options to purchase
shares of Common Stock will be granted under the Plan to employees
other than the Founders with an exercise price equal to the initial public
offering price per share and a vesting schedule that is dependent upon the
optionholders' tenure with the Company. No options to purchase Common Stock have
been granted to date.

VOTING AGREEMENT

The Founders and Advanta Partners have entered into a voting agreement (the
"Voting Agreement"), effective upon the completion of this offering, pursuant to
which Advanta Partners, on the one hand, and the Founders, on the other, agree
to vote for two nominees of the other to the Company's Board of Directors. Each
party's rights under the Voting Agreement terminate when such party's ownership
of Common Stock becomes less than 25% of such ownership upon the completion of
this offering.

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the ownership
of the Common Stock as of June 30, 1996, and as adjusted to reflect the sale of
shares offered pursuant to this Prospectus, (i) by each of the Company's Named
Executive Officers and directors; (ii) all of the executive officers and
directors as a group; and (iii) each person known to the Company to beneficially
own more than five percent of the outstanding shares of Common Stock.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
NUMBER OF BENEFICIALLY OWNED
SHARES BENEFICIALLY --------------------------------
EXECUTIVE OFFICERS, DIRECTORS AND BENEFICIAL OWNERS OWNED BEFORE OFFERING AFTER OFFERING
- ----------------------------------------------------- ------------------- --------------- --------------
<S> <C> <C> <C>
Advanta Partners LP(1)............................... 2,873,685 63.9% %
Anthony P. Brenner(1)(2)............................. 2,873,685 63.9
Mitchell L. Hollin(1)(3)............................. 2,873,685 63.9
Raymond J. Hansell(4)................................ 1,500,000 33.3
MarySue Lucci(4)..................................... 1,500,000 33.3
Derek Lubner (5)..................................... -0- -0-
Michael J. Scharff................................... -0- -0-
John F. Owens........................................ -0- -0-
All Executive Officers and Directors as a Group (9
persons)(2)(3)(4)(5)............................... 4,373,685 97.2% %
</TABLE>

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

(1) The address of this beneficial owner is Five Horsham Business Center, 300
Welsh Road, Horsham, PA 19044.
(2) Includes 2,873,685 shares of Common Stock owned by Advanta Partners of which
Mr. Brenner is the Senior Managing Director. Mr. Brenner could be deemed to
beneficially own these shares.
(3) Includes 2,873,685 shares of Common Stock owned by Advanta Partners of which
Mr. Hollin is a Managing Director. Mr. Hollin could be deemed to
beneficially own these shares.
(4) Of the shares indicated, 750,000 shares are owned by Mr. Hansell and 750,000
are owned by Ms. Lucci. Their address is 40 Morris Avenue, Bryn Mawr, PA
19010. Excludes shares of Common Stock to be issued upon the exchange of the
Founders' Note and the Series A Preferred Stock.
(5) Mr. Lubner is the nominee of Glengar pursuant to a shareholders' agreement.
See "Certain Transactions -- Recapitalization."

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<PAGE> 35

CERTAIN TRANSACTIONS

RECAPITALIZATION

General

On May 24, 1996, the Company completed the Recapitalization as provided
under the terms of a Recapitalization and Stock Purchase Agreement (the
"Recapitalization Agreement"). In accordance with the Recapitalization
Agreement: (i) the Company redeemed 8,500,000 shares of the Class A Common Stock
held by the Founders at an aggregate redemption price consisting of (A) $15.9
million (as adjusted as described below) in cash (the "Initial Cash Redemption
Price"), (B) a 6% Subordinated Promissory Note due May 2004 of the Company in
favor of the Founders in the initial principal amount of $3.0 million (subject
to increase as set forth below) (the "Founders' Note") and (C) 1,000,000 shares
of Series A Preferred Stock of the Company with a stated value of $1.00 per
share; (ii) Advanta Partners purchased 1,594,112 shares of Class A Common Stock
and 1,279,573 shares of Class B Common Stock for an aggregate purchase price of
$2,873,685 and 6,226,316 shares of Series B Preferred Stock for an aggregate
purchase price of $6,226,316; and (iii) Glengar purchased 126,315 shares of
Class A Common Stock for an aggregate purchase price of $126,315 and 273,684
shares of Series B Preferred Stock for an aggregate purchase price of $273,684.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operation" and "Description of Capital Stock -- Preferred Stock." Total amounts
due on account of interest and dividends to be paid to the Founders, Advanta
Partners and Glengar pursuant to the Founders' Note, the Series A Preferred
Stock and the Series B Preferred Stock from May 24, 1996 through ,
1996 will equal $ , $ and $ , respectively. In
connection with the Recapitalization, the Company entered into the Credit
Facility under which it initially borrowed $11.2 million to finance the Initial
Cash Redemption Price and repay certain indebtedness of the Company. The Company
also issued a warrant to the Credit Facility lender. See "Description of Capital
Stock -- Warrant."

On May 23, 1996, the Company distributed to the Founders as a dividend $4.6
million in accounts receivable, which were substantially all of the Company's
outstanding accounts receivable. In connection with this distribution, the
Company agreed to use its best efforts to collect such accounts receivable,
without fee or commission, and remit the proceeds of such accounts receivable to
the Founders.

Post-Closing Adjustments to Redemption Price

The Initial Cash Redemption Price will be increased or decreased by the
amount that actual working capital on May 24, 1996 and actual capital
expenditures of the Company for the period from October 1, 1995 through May 24,
1996 are determined to have been greater or less than specified targets for such
measures (the "Redemption Price Adjustment"). It is currently estimated that
$437,000 will be paid to the Founders by the Company prior to the completion of
this offering as a result of the Redemption Price Adjustment. In addition, the
principal amount of the Founders' Note was subject to increase by $1.0 million
(the "Additional Amount") if the Company's adjusted earnings for the period May
24, 1996 through September 30, 1996 meet a defined level.

Exchange of the Founders' Note and Series A Preferred Stock; Conversion of
Class B Common Stock

The Company and the Founders have agreed that the Founders' Note and Series
A Preferred Stock will be exchanged for shares of Common Stock at the
initial public offering price upon the completion of this offering. For this
purpose, it was agreed that the Additional Amount will be included in the
principal amount of the Founders' Note regardless of whether the defined
earnings level is met and the Series A Preferred Stock will be valued at its
$1.0 million stated value. Any accrued and unpaid interest on the Founders' Note
and dividends on the Series A Preferred Stock will be paid in cash. In addition,
Advanta Partners and Glengar have agreed to convert all shares of Class B Common
Stock into Common Stock on a one-for-one basis upon completion of this offering.

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<PAGE> 36

Indemnification

In connection with the Recapitalization, the Founders, on the one hand, and
Advanta Partners, Glengar and the Company, on the other hand, agreed to
indemnify each other against any loss suffered by the indemnified parties
related to the breach of any representation or warranty or non-fulfillment of
any covenant or agreement set forth in the Recapitalization Agreement. The
indemnification obligations apply only if the indemnifiable losses exceed
$100,000 and are limited to an aggregate of $4.6 million (except for losses
resulting from breaches by the Founders of representations, warranties and
covenants with respect to tax matters). The representations and warranties
expire on May 24, 1998, except for those made by the Founders regarding taxes
which survive until the expiration of applicable statutes of limitations.

Shareholders' Agreement

The Company's current shareholders entered into a shareholders' agreement
(the "Shareholders' Agreement") in connection with the Recapitalization. The
majority of the provisions of the Shareholders' Agreement will terminate upon
completion of this offering, including provisions entitling the parties to
nominate directors to the Company's Board of Directors. After the completion of
this offering, and for so long as the Founders and Advanta Partners continue to
own in excess of 50% of the outstanding Common Stock, each of the Founders and
Advanta Partners (i) may not transfer in any one year following this offering
more than 15% of the Common Stock owned by such party at the beginning of such
year, except in a registered public offering, and (ii) may not sell any shares
of Common Stock without offering the other parties the opportunity to purchase
such shares of Common Stock. Transfers by (x) the Founders by will or intestate
succession, (y) Advanta Partners to its affiliates and (z) either of the
Founders or Advanta Partners in any year of less than 5% of the Common Stock
owned by such shareholder at the beginning of that year are not subject to
either of the above-described restrictions.

Fees to Advanta Partners; Advanta Partners' Interest in Other Teleservices
Companies

In connection with the Recapitalization, the Company paid to Advanta
Partners an investment banking/advisory fee of $250,000 and agreed to reimburse
Advanta Partners for certain of its transaction-related expenses. The Company
also entered into a five-year Management Fee Agreement with Advanta Partners
pursuant to which the Company agreed to pay Advanta Partners an annual fee of
$100,000 for technical and management assistance to be rendered by Advanta
Partners to the Company (the "Management Agreement"). The Management Agreement
will be terminated upon completion of this offering. Beginning at that time,
Advanta Partners will provide consulting services to the Company pursuant to a
consulting agreement and will receive annual fees of $50,000 through May 24,
2001. Advanta Partners owns substantial equity interests in two other
teleservices companies. Mr. Brenner is a director of one of these companies and
Mr. Hollin is a director of the other.

TELESERVICES PROVIDED TO ADVANTA

The Company has provided teleservices to Advanta, of which Advanta Partners
is a venture capital affiliate, primarily related to the marketing of insurance
and credit card products. Amounts billed by the Company to Advanta equaled
$608,860 and $2,130,352 in fiscal 1994 and fiscal 1995, respectively, and
$1,920,375 for the six months ended March 31, 1996. No such amounts were billed
in fiscal 1993.

LOANS FROM FOUNDERS

As of March 31, 1996, the Company was indebted to the Founders in the net
amount of $98,475 for advanced funds. Interest has been paid on such advances at
the lowest applicable Federal rate. This amount is expected to be repaid in full
upon payment of the Redemption Price Adjustment.

34
<PAGE> 37

DESCRIPTION OF CAPITAL STOCK

As of the date of this Prospectus, the authorized capital stock of the
Company consists of 20,000,000 shares of Common Stock, no par value (the "Common
Stock"), divided into two classes consisting of 10,000,000 authorized shares of
(the "Class A Common Stock") and 10,000,000 authorized shares of Class B
Non-Voting Common Stock (the "Class B Common Stock"), and 10,000,000 shares of
Preferred Stock, $1.00 par value (the "Preferred Stock").

As of the date of this Prospectus, the Company has 3,220,427 shares of
Class A Common Stock, 1,279,573 shares of Class B Common Stock, 1,000,000 shares
of Series A Preferred Stock and 6,500,000 shares of Series B Preferred Stock
issued and outstanding. Upon completion of this offering, all of the outstanding
Class B Common Stock and Series A Preferred Stock will be converted into or
exchanged for shares of Common Stock, all of the outstanding Series B Preferred
Stock will be redeemed, and the provisions dividing the Common Stock into two
classes and establishing the Series A Preferred Stock and Series B Preferred
Stock will be eliminated. See "Use of Proceeds" and "Certain
Transactions -- Recapitalization."

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. All holders of Common
Stock are entitled to share equally in dividends declared on the Common Stock.
Stock dividends may be paid on Common Stock, whether or not there are shares of
Preferred Stock outstanding, as long as they are paid on all classes of Common
Stock, and such dividends must be paid only in shares of the class on which they
are being so paid. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, after payment has been made to the
holders of shares of Preferred Stock, if any, for the full amount to which they
are entitled, the holders of the shares of Common Stock are entitled to share
equally in the assets available for distribution.

The Company will be selling Common Stock pursuant to this offering. All
currently outstanding shares of Common Stock are, and upon issuance as set forth
herein, the shares of Common Stock being sold by the Company will be, duly
authorized, validly issued, fully paid and non-assessable.

PREFERRED STOCK

Series A Preferred Stock

Holders of Series A Preferred Stock are entitled to receive dividends at a
rate of 6% per year, payable quarterly in arrears on the same terms and subject
to certain restrictions. Unpaid dividends continue to accrue and accumulate at
the above-described dividend rate until paid. With respect to the payment of
dividends, the Series A Preferred Stock ranks senior to the Common Stock and the
Series B Preferred Stock. Holders of Series A Preferred Stock have the right to
require the Company to redeem such shares under certain terms and conditions.
The outstanding Series A Preferred Stock will be exchanged for Common Stock at
the initial public offering price upon completion of this offering. See "Certain
Transactions -- Recapitalization."

Series B Preferred Stock

Holders of Series B Preferred Stock are entitled to dividends at a rate of
8% per annum, payable in cash quarterly in arrears. Cash dividends may not be
paid until the date that no shares of Series A Preferred Stock remain
outstanding. If the payment of cash dividends is then prohibited, the Company
will pay dividends currently by the issuance of additional shares of Series B
Preferred Stock whose stated value equals the amount of dividends that otherwise
would be payable. The outstanding Series B Preferred Stock, including accrued
and unpaid dividends, will be redeemed with a portion of the net proceeds of
this offering. See "Use of Proceeds."

Holders of Series A Preferred Stock and Series B Preferred Stock are not
entitled to vote, except on any matter submitted to shareholders that would
create a class of Preferred Stock senior to or pari passu with such class, in
which case two-thirds of the outstanding shares of such class are required to
approve the action.

35
<PAGE> 38

Undesignated Preferred Stock

Pursuant to an amendment to the Articles to be filed prior to the
completion of this offering, the Board of Directors will be authorized, without
further action by the shareholders, to issue up to 5,000,000 shares of Preferred
Stock in one or more series and to establish the designations, preferences,
qualifications, privileges, limitations, restrictions, options, conversion
rights and other special or relative rights of any series of Preferred Stock so
issued. The issuance of shares of Preferred Stock could adversely affect the
voting power and other rights of holders of Common Shares. Because the terms of
the Preferred Stock may be fixed by the Board of Directors of the Company
without shareholder action, the Preferred Stock could be issued quickly with
terms designed to defeat a proposed takeover of the Company, or to make the
removal of management of the Company more difficult. The authority to issue
Preferred Stock or rights to purchase such stock could be used to discourage a
change in control of the Company. Management of the Company is not aware of any
such threatened transaction to obtain control of the Company, and the Board of
Directors has no current plans to designate and issue any additional shares of
Preferred Stock.

WARRANT

In connection with obtaining the Credit Facility, the Company issued to
Chemical Bank a warrant which, upon completion of this offering, will be
exercisable to purchase 142,105 shares of Common Stock at an exercise price of
$.01 per share. The warrant expires on May 31, 2006. The Company has granted to
Chemical Bank certain rights to register the sale of shares of Common Stock to
be issued upon the exercise of this warrant.

CERTAIN PROVISIONS THAT MAY HAVE AN ANTI-TAKEOVER EFFECT

Provisions of the Articles and the Company's Bylaws may have an
antitakeover effect and may delay, defer or prevent a tender offer or takeover
attempt not approved by the Board of Directors, including those made at a
premium over the prevailing market price of the Common Stock held by
shareholders.

The Company's classified Board of Directors and the authority of the Board
to issue Preferred Stock and establish certain rights, preferences, privileges,
limitations and other special rights therefor without any further vote or action
by the shareholders of the Company could have the effect of delaying, impeding
or discouraging the acquisition of control of the Company in a transaction not
approved by the Board of Directors. See "Management -- Classified Board;
Addition of Independent Directors; Committees."

Subchapter F of Chapter 25 of the Pennsylvania Business Corporation Law of
1988, as amended (the "PBCL"), which is applicable to the Company, may have an
anti-takeover effect and may delay, defer or prevent a tender offer or takeover
attempt that a shareholder might consider in his or her best interest, including
those attempts that might result in a premium over the market price for the
shares held by shareholders. In general, Subchapter F of Chapter 25 of the PBCL
delays for five years and imposes conditions upon "business combinations"
between an "interested shareholder" and the Company, unless prior approval of
the Board of Directors is given. The term "business combination" is defined
broadly to include various merger, consolidation, division, exchange or sale
transactions, including transactions utilizing the Company's assets for purchase
price amortization or refinancing purposes. An "interested shareholder," in
general, would be a beneficial owner of shares entitling that person to cast at
least 20% of the votes that all shareholders would be entitled to cast in an
election of directors of the Company.

LIMITATION OF LIABILITY; INDEMNIFICATION OF OFFICERS AND DIRECTORS

As permitted by the PBCL, the Company's Articles provide that a director
shall not be personally liable for monetary damages as such for any action
taken, or any failure to take any action, unless the director breaches or fails
to perform the duties of his or her office under the PBCL, and the breach or
failure to perform constitutes self-dealing, willful misconduct or recklessness.
These provisions of the Articles, however, do not apply to the responsibility or
liability of a director pursuant to any criminal statute, or to the liability of
a director for the payment of taxes pursuant to local, Pennsylvania or federal
law. These provisions offer persons who serve on the Board of Directors of the
Company protection against awards of monetary damages

36
<PAGE> 39

for negligence in the performance of their duties. The Articles also provide
that every person who is or was a director or executive officer of the Company,
or of any corporation which he served as such at the request of the Company,
shall be indemnified by the Company to the fullest extent permitted by law
against all expenses and liabilities reasonably incurred by or imposed upon him,
in connection with any proceeding to which he may be made, or threatened to be
made, a party, or in which he may become involved by reason of his being or
having been a director or executive officer of the Company, or of such other
Company, whether or not he is a direct or of executive officer of the Company or
such other Company at the time the expenses or liabilities are incurred.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is StockTrans, Inc.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the Common
Stock. Sales of substantial amounts of shares of the Common Stock in the public
market following this offering could adversely affect the market price of the
Common Stock, making it more difficult for the Company to sell equity securities
in the future at a time and price which it deems appropriate.

Upon the completion of this offering, assuming no exercise of outstanding
options, the Company will have outstanding shares of Common Stock. Of
these shares, the 2,800,000 shares of Common Stock sold in this offering will be
freely tradeable without restriction or registration under the Securities Act.
The remaining shares of Common Stock outstanding as of the date of this
Prospectus are "restricted securities" as defined by Rule 144. Of these, the
shares held by the Founders (including shares to be issued in exchange
for the Founders' Note and Series A Preferred Stock) would be able to be sold in
accordance with the provisions of Rule 144 beginning 90 days after the date of
this Prospectus. The balance cannot be sold until May 1998 unless they are
registered under the Securities Act. All of the Company's current
securityholders have agreed not to sell or otherwise dispose of any such shares
for a period of 180 days after the date of this Prospectus without the prior
written consent of Smith Barney Inc.

In general, under Rule 144 as currently in effect, a person who has
beneficially owned shares for at least two years (or one year if the currently
proposed amendments to Rule 144 become effective), including an "affiliate," as
that term is defined in the Securities Act, is entitled to sell within any
three-month period a number of shares that does not exceed the greater of one
percent of the then outstanding shares of Common Stock (approximately
shares after the completion of this offering), or the average weekly trading
volume during the four calendar weeks preceding filing of notice of such sale,
subject to certain requirements concerning availability of public information,
manner and notice of sale.

In addition, affiliates must comply with the restrictions and requirements
of Rule 144, other than the two-year holding period requirements, in order to
sell shares of Common Stock which are not restricted securities. Under Rule
144(k), a person who is not an affiliate and has not been an affiliate for at
least three months prior to the sale and who has beneficially owned restricted
shares for at least a three year holding period may resell such shares without
compliance with the foregoing requirements. The Securities and Exchange
Commission is considering a proposal to amend Rule 144 to shorten the two-year
and three-year holding periods referred to above to one and two years,
respectively.

Upon the completion of this offering, it is expected that there will be
shares of Common Stock issuable upon exercise of options granted under
the 1996 Stock Incentive Plan and 142,105 shares of Common Stock issuable upon
exercise of the warrant granted in connection with the Credit Facility. The
Company intends to file a Form S-8 registration statement covering the shares
issuable under the 1996 Stock Incentive Plan within one year from the date of
this Prospectus. The shares registered under such registration statement will be
available for resale in the open market upon the exercise of vested options,
subject to Rule 144 volume limitations applicable to affiliates. The holder of
the warrant has the right to have the shares issuable upon exercise thereof
included in future registration statements filed by the Company, subject to
specified limitations.

37
<PAGE> 40

UNDERWRITING

Under the terms and subject to the conditions contained in the Underwriting
Agreement dated the date hereof, each Underwriter named below has severally
agreed to purchase, and the Company has agreed to sell to such Underwriter,
shares of Common Stock which equal the number of shares set forth opposite the
name of such Underwriter below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------------- ----------
<S> <C>
Smith Barney Inc.........................................................
Hambrecht & Quist LLC....................................................
----------
Total.......................................................... 2,800,000
=========
</TABLE>

The Underwriters are obligated to take and pay for all shares of Common
Stock offered hereby (other than those covered by the over-allotment option
described below) if any such shares are taken.

The Underwriters, for whom Smith Barney Inc. and Hambrecht & Quist LLC are
acting as Representatives, propose initially to offer part of the shares of
Common Stock directly to the public at the public offering price set forth on
the cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ per share under the public offering
price. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share to other Underwriters or to certain other
dealers. After the initial public offering, the public offering price and such
concessions may be changed by the Underwriters. The Representatives have
informed the Company that the Underwriters do not intend to confirm sales to
accounts over which they exercise discretionary authority.

The Company has granted to the Underwriters an option exercisable for 30
days from the date of this Prospectus, to purchase up to an aggregate of 420,000
additional shares of Common Stock at the public offering price set forth on the
cover page hereof less underwriting discounts and commissions. The Underwriters
may exercise such option to purchase additional shares solely for the purpose of
covering over-allotments, if any, incurred in connection with the sale of the
shares offered hereby. To the extent such option is exercised, each Underwriter
will become obligated, subject to certain conditions, to purchase approximately
the same percentage of such additional shares as the number set forth next to
such Underwriter's name in the preceding table bears to the total number of
shares in such table.

At the Company's request, the Representatives have agreed to reserve up to
shares of Common Stock for sale at the public offering price to Company
employees and other persons having certain relationships with the Company. The
number of shares available for sale to the general public will be reduced to the
extent these persons purchase such reserved shares. Any reserved shares not
purchased will be offered by the Underwriters to the general public on the same
basis as the other shares offered hereby.

The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.

The Company and its directors, executive officers and current
securityholders have agreed that, for a period of 180 days after the date of
this Prospectus, they will not, without the prior written consent of Smith
Barney Inc., offer, sell, contract to sell or otherwise dispose of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for any shares of Common Stock except, in the case of the Company, in certain
limited circumstances.

Prior to this offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the Common Stock has
been determined by negotiations between the Company and the Representatives of
the Underwriters. Among the factors considered in determining the initial public
offering price were the history of, and the prospects for, the Company's
business and the industry in which it competes, an assessment of the Company's
management, its past and present operations, its past and present earnings and
the trend of such earnings, the prospects for earnings of the Company, the
present state of the

38
<PAGE> 41

Company's development, the general condition of the securities market at the
time of this offering and the market prices and earnings of similar securities
of comparable companies at the time of the offering.

LEGAL MATTERS

Wolf, Block, Schorr and Solis-Cohen, Philadelphia, Pennsylvania, has
rendered an opinion that the shares of Common Stock offered hereby will be
legally issued, fully paid and non-assessable. Certain legal matters relating to
this offering will be passed upon for the Underwriters by Pepper, Hamilton &
Scheetz, Philadelphia, Pennsylvania.

EXPERTS

The financial statements included in this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen LLP and Asher & Company, Ltd.,
independent public accountants, and are included herein in reliance upon the
authority of said firms as experts in giving said reports.

INFORMATION CONCERNING INDEPENDENT PUBLIC ACCOUNTANTS

In June 1996, the Company engaged Arthur Andersen LLP as independent public
accountants to audit the Company's financial statements for fiscal 1995,
replacing the firm of Asher & Company, Ltd., which had previously served as the
Company's independent public accountants and had completed its audit of the
Company's financial statements for fiscal 1993 and fiscal 1994. The Company's
decision to change accountants was ratified by the Board of Directors of the
Company.

In connection with the audit of the Company's financial statements for
fiscal 1993 and fiscal 1994, there were no disagreements with Asher & Company,
Ltd. during such two years or during the period through the date of such firm's
replacement on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which if not resolved to its
satisfaction would have caused Asher & Company, Ltd. to make reference thereto
in connection with its report. Asher & Company, Ltd.'s reports on the Company's
financial statements for fiscal 1993 and fiscal 1994 contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration
Statement on Form S-1 under the Securities Act with respect to the shares of
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. For further information with respect to the Company and the
shares of Common Stock, reference is hereby made to the Registration Statement
and the exhibits and schedules filed as a part thereof. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. The
Registration Statement, including exhibits and schedules thereto, may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's Regional Offices located at Seven World Trade Center, Suite 1300,
New York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials may also be obtained at
prescribed rates from the Public Reference Section of the Commission,
Washington, D.C. 20549. In addition, registration statements and certain other
filings made with the Commission through its Electronic Data Gathering, Analysis
and Retrieval ("EDGAR") system are publicly available through the Commission's
site on the Internet's World Wide Web, located at http://www.sec.gov. The
Registration Statement, including all exhibits thereto and amendments thereof,
has been filed with the Commission through EDGAR.

39
<PAGE> 42

The Company intends to furnish to its shareholders annual reports
containing financial statements audited by an independent accounting firm and
quarterly reports containing unaudited financial information for the first three
quarters of each fiscal year.

40
<PAGE> 43

RMH TELESERVICES, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
Reports of Independent Public Accountants...................................... F-2 and F-3
Balance Sheets................................................................. F-4
Statements of Operations....................................................... F-5
Statements of Shareholders' Equity............................................. F-6
Statements of Cash Flows....................................................... F-7
Notes to Financial Statements.................................................. F-8
</TABLE>

F-1
<PAGE> 44

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To RMH Teleservices, Inc.:

We have audited the accompanying balance sheet of RMH Teleservices, Inc. (a
Pennsylvania corporation) as of September 30, 1995, and the related statements
of operations, shareholders' equity and cash flows for the year then ended.
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 audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of RMH Teleservices, Inc. as of
September 30, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
July 2, 1996

F-2
<PAGE> 45

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To RMH Teleservices, Inc.:

We have audited the accompanying balance sheet of RMH Teleservices, Inc. (a
Pennsylvania corporation) as of September 30, 1994, and the related statements
of operations, shareholders' equity and cash flows for each of the two years in
the period then ended. 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 financial statements referred to above present fairly,
in all material respects, the financial position of RMH Teleservices, Inc. as of
September 30, 1994, and the results of its operations and its cash flows for
each of the two years in the period then ended in conformity with generally
accepted accounting principles.

ASHER & COMPANY, LTD.

Philadelphia, Pa.,
June 27, 1996

F-3
<PAGE> 46

RMH TELESERVICES, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31, 1996
SEPTEMBER 30, --------------------------
------------------------- PRO FORMA
1994 1995 ACTUAL (NOTE 2)
----------- ----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................... $ 511,665 $ 322,024 $ 19,484 $ 1,285,564
Accounts receivable, net of allowance for doubtful
accounts of $2,600, $47,000 and $56,000 in 1994,
1995 and 1996.................................... 2,665,602 4,449,351 3,914,713 --
Receivable from shareholders....................... 32,000 34,500 34,500 34,500
Prepaid expenses................................... 164,462 182,518 293,478 329,938
Deferred income taxes.............................. -- -- -- 28,500
----------- ----------- ----------- ------------
Total current assets........................ 3,373,729 4,988,393 4,262,175 1,678,502
----------- ----------- ----------- ------------
PROPERTY AND EQUIPMENT:
Communications and computer equipment.............. 3,147,032 4,959,500 5,576,387 5,576,387
Furniture and fixtures............................. 417,070 732,135 941,022 941,022
Leasehold improvements............................. 204,490 322,106 472,283 472,283
----------- ----------- ----------- ------------
3,768,592 6,013,741 6,989,692 6,989,692
Less -- Accumulated depreciation and
amortization..................................... (1,649,491) (2,349,792) (2,857,265) (2,857,265)
----------- ----------- ----------- ------------
Net property and equipment.................. 2,119,101 3,663,949 4,132,427 4,132,427
----------- ----------- ----------- ------------
OTHER ASSETS......................................... 83,240 104,841 57,991 563,621
----------- ----------- ----------- ------------
$ 5,576,070 $ 8,757,183 $ 8,452,593 $ 6,374,550
============ ============ ============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Borrowings on lines of credit...................... $ 700,000 $ 975,000 $ -- $ --
Current portion of long-term debt.................. 124,568 205,006 205,006 560,000
Current portion of capitalized lease obligations... 272,243 353,716 384,291 60,610
Accounts payable................................... 794,413 1,126,768 170,935 170,935
Accrued expenses................................... 613,803 1,206,226 1,023,879 1,023,879
Deferred income taxes.............................. 40,000 61,000 51,378 51,378
Payable to shareholders on Common Stock
redemption....................................... -- -- -- 1,122,267
----------- ----------- ----------- ------------
Total current liabilities................... 2,545,027 3,927,716 1,835,489 2,989,069
----------- ----------- ----------- ------------
LONG-TERM DEBT....................................... 355,444 592,105 1,462,574 10,129,124
----------- ----------- ----------- ------------
CAPITALIZED LEASE OBLIGATIONS........................ 622,916 436,338 286,941 14,002
----------- ----------- ----------- ------------
LOANS PAYABLE TO SHAREHOLDERS........................ 125,448 132,975 132,975 132,975
----------- ----------- ----------- ------------
DEFERRED INCOME TAXES................................ -- -- -- 269,500
----------- ----------- ----------- ------------
REDEEMABLE WARRANT................................... -- -- -- 450,000
----------- ----------- ----------- ------------
SUBORDINATED NOTE PAYABLE TO FOUNDERS
(face amount of $3,000,000)........................ -- -- -- 1,685,639
----------- ----------- ----------- ------------
REDEEMABLE PREFERRED STOCK
(liquidation value of $7,500,000).................. -- -- -- 4,307,509
----------- ----------- ----------- ------------
REDEEMABLE CLASS A VOTING COMMON
STOCK.............................................. -- -- -- 2,865,000
----------- ----------- ----------- ------------
COMMITMENTS AND CONTINGENCIES (Note 8)
SHAREHOLDERS' EQUITY (DEFICIT):
Class A Voting Common Stock........................ 80,200 80,200 80,200 3,278,666
Class B Non-Voting Common Stock.................... -- -- -- 2,438,275
Retained earnings (deficit)........................ 1,847,035 3,587,849 4,654,414 (22,185,209)
----------- ----------- ----------- ------------
Total shareholders' equity (deficit)........ 1,927,235 3,668,049 4,734,614 (16,468,268)
----------- ----------- ----------- ------------
$ 5,576,070 $ 8,757,183 $ 8,452,593 $ 6,374,550
============ ============ ============ =============
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE> 47

RMH TELESERVICES, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
--------------------------------------- -------------------------
1993 1994 1995 1995 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES...................... $10,292,032 $17,105,333 $25,544,790 $11,314,725 $14,784,290
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES:
Cost of services............ 7,642,130 13,285,998 18,209,525 8,181,253 10,436,484
Selling, general and
administrative........... 2,075,563 3,007,363 5,311,905 2,270,827 3,119,327
----------- ----------- ----------- ----------- -----------
Total operating
expenses.......... 9,717,693 16,293,361 23,521,430 10,452,080 13,555,811
----------- ----------- ----------- ----------- -----------
Operating income.... 574,339 811,972 2,023,360 862,645 1,228,479
INTEREST EXPENSE.............. 136,888 169,641 261,546 111,647 146,914
----------- ----------- ----------- ----------- -----------
Income before state
income taxes...... 437,451 642,331 1,761,814 750,998 1,081,565
STATE INCOME TAXES............ -- 40,000 21,000 9,000 15,000
----------- ----------- ----------- ----------- -----------
NET INCOME.................... $ 437,451 $ 602,331 $ 1,740,814 $ 741,998 $ 1,066,565
========== ========== ========== ========== ==========
PRO FORMA DATA (UNAUDITED)
(Note 2):
Historical income before
state income taxes....... $ 1,761,814 $ 1,081,565
Pro forma income taxes...... 713,535 438,034
----------- -----------
Pro forma net income........ $ 1,048,279 $ 643,531
========== ==========
Pro forma net income per
share.................... $ .23 $ .14
========== ==========
Shares used in computing pro
forma net income per
share.................... 4,642,105 4,642,105
========== ==========
Supplemental pro forma net
income per share......... $ $
========== ==========
Shares used in computing
supplemental pro forma
net income per share.....
========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE> 48

RMH TELESERVICES, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
CLASS A VOTING CLASS B NON-VOTING
COMMON STOCK COMMON STOCK TOTAL
----------------------- ---------------------- RETAINED SHAREHOLDERS'
SHARES AMOUNT SHARES AMOUNT EARNINGS EQUITY
---------- ---------- --------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1992...... 10,000,000 $ 80,200 -- $ -- $ 807,253 $ 887,453
Net income..................... -- -- -- -- 437,451 437,451
---------- ---------- --------- ---------- ------------ -------------
BALANCE, SEPTEMBER 30, 1993...... 10,000,000 80,200 -- -- 1,244,704 1,324,904
Net income..................... -- -- -- -- 602,331 602,331
---------- ---------- --------- ---------- ------------ -------------
BALANCE, SEPTEMBER 30, 1994...... 10,000,000 80,200 -- -- 1,847,035 1,927,235
Net income..................... -- -- -- -- 1,740,814 1,740,814
---------- ---------- --------- ---------- ------------ -------------
BALANCE, SEPTEMBER 30, 1995...... 10,000,000 80,200 -- -- 3,587,849 3,668,049
Net income (unaudited)......... -- -- -- -- 1,066,565 1,066,565
---------- ---------- --------- ---------- ------------ -------------
BALANCE, MARCH 31, 1996
(unaudited).................... 10,000,000 80,200 -- -- 4,654,414 4,734,614
---------- ---------- --------- ---------- ------------ -------------
Distribution of accounts
receivable (unaudited)....... -- -- -- -- (4,600,000) (4,600,000)
Sale of Class A and Class B
Common Stock (unaudited)..... 1,720,427 3,278,666 1,279,573 2,438,275 -- 5,716,941
Redemption of Class A Voting
Common Stock (unaudited)..... (8,500,000) (68,170) -- -- (19,145,653) (19,213,823)
Reclassification of Redeemable
Class A Common Stock outside
of shareholders' equity
(unaudited).................. (1,500,000) (12,030) -- -- (2,852,970) (2,865,000)
Net deferred taxes recorded
upon termination of S
Corporation status
(unaudited).................. -- -- -- -- (241,000) (241,000)
---------- ---------- --------- ---------- ------------ -------------
PRO FORMA BALANCE, MARCH 31, 1996
(unaudited).................... 1,720,427 $3,278,666 1,279,573 $2,438,275 $(22,185,209) $ (16,468,268)
========== ========== ========= ========== ============= =============
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE> 49

RMH TELESERVICES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED SEPTEMBER 30, MARCH 31,
----------------------------------- ---------------------
1993 1994 1995 1995 1996
--------- --------- ----------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income........................ $ 437,451 $ 602,331 $ 1,740,814 $741,998 $1,066,565
Adjustments to reconcile net
income to net cash provided by
operating activities --
Depreciation and
amortization................. 452,619 638,734 786,065 351,323 507,482
Loss on disposal of
equipment.................... 4,950 -- 73,230 -- --
Deferred income taxes.......... -- 40,000 21,000 (10,174) (9,622)
Changes in operating assets and
liabilities --
Accounts receivable.......... (882,547) (965,764) (1,783,749) (596,585) 534,638
Prepaid expenses............. (48,697) (69,726) (18,056) (34,084) (110,960)
Other assets................. 4,746 (23,549) (21,601) 19,891 46,850
Accounts payable............. 47,018 486,062 332,355 (319,637) (955,833)
Accrued expenses............. 480,974 (48,699) 592,423 92,717 (182,347)
--------- --------- ----------- -------- ----------
Net cash provided by
operating activities.... 496,514 659,389 1,722,481 245,449 896,773
--------- --------- ----------- -------- ----------
INVESTING ACTIVITIES:
Purchases of property and
equipment...................... (253,152) (338,564) (2,197,482) (719,963) (870,526)
Proceeds from disposal of
equipment...................... 77,199 -- -- -- --
--------- --------- ----------- -------- ----------
Net cash used in investing
activities.............. (175,953) (338,564) (2,197,482) (719,963) (870,526)
--------- --------- ----------- -------- ----------
FINANCING ACTIVITIES:
Net borrowings (repayments) on
lines of credit................ 140,000 300,000 275,000 300,000 (975,000)
Proceeds from long-term debt...... -- 513,847 500,000 500,000 1,100,000
Repayments on long-term debt...... (97,880) (85,322) (182,901) (70,200) (229,531)
Repayments on capitalized lease
obligations.................... (301,624) (740,700) (311,766) (148,731) (224,256)
Net borrowings (repayments) on
loans payable to
shareholders................... -- (32,000) 5,027 32,000 --
--------- --------- ----------- -------- ----------
Net cash provided by (used
in) financing
activities.............. (259,504) (44,175) 285,360 613,069 (328,787)
--------- --------- ----------- -------- ----------
NET INCREASE (DECREASE) IN CASH..... 61,057 276,650 (189,641) 138,555 (302,540)
CASH, BEGINNING OF PERIOD........... 173,958 235,015 511,665 511,665 322,024
--------- --------- ----------- -------- ----------
CASH, END OF PERIOD................. $ 235,015 $ 511,665 $ 322,024 $650,220 $ 19,484
========= ========= ========== ======== =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-7
<PAGE> 50

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1996 AND FOR THE SIX MONTHS
ENDED MARCH 31, 1996 AND 1995 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BUSINESS

RMH Teleservices, Inc. (the "Company") is a leading provider of outbound
teleservices to major corporations in the insurance and financial services
industries.

INTERIM FINANCIAL STATEMENTS

The balance sheet as of March 31, 1996 and the statements of operations for
the six months ended March 31, 1995 and 1996 are unaudited and, in the opinion
of management of the Company, include all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of the results for
those interim periods. The results of operations for the six months ended March
31, 1996 are not necessarily indicative of the results to be expected for the
full year.

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
reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company recognizes revenues on programs as services are performed,
generally based on hours incurred.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation and amortization
are provided over the estimated useful lives of the applicable assets using the
straight-line method. The lives used are as follows:

<TABLE>
<S> <C>
Computer equipment..................................................... 5 years
Communications equipment............................................... 5-7 years
Furniture and fixtures................................................. 7 years
Leasehold improvements................................................. Lease term
</TABLE>

Repairs and maintenance are charged to expense as incurred, while additions
and betterments are capitalized. Gains or losses on the disposition of property
and equipment are charged to operations.

Equipment under capital leases included in property and equipment is
$2,204,468 and $2,425,250, with accumulated depreciation of $830,315 and
$1,265,307 as of September 30, 1994 and 1995, respectively.

INCOME TAXES

At March 31, 1996, the Company was an S Corporation for federal and
Pennsylvania income tax purposes and, accordingly, income was passed through to
the shareholders and taxed at the individual level. The Company was not an S
Corporation in New Jersey and, therefore, the Company paid income taxes on its
taxable income in that state. The S Corporation status was terminated on May 24,
1996 (see Note 2).

On October 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." SFAS 109 requires a change
from the deferred method of accounting for

F-8
<PAGE> 51

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

income taxes to the liability method of accounting for income taxes. Under the
liability method, deferred tax assets and liabilities are recognized for the
future tax consequences, measured by enacted tax rates, attributable to
temporary differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards, for years which taxes are expected to be paid
or recovered. The impact of adopting SFAS 109 was not material to the statement
of operations for the year ended September 30, 1994.

State deferred income taxes are provided primarily for temporary
differences between the accrual basis of accounting for financial reporting
purposes and the cash basis of accounting for income tax purposes and for
differences in the bases of property and equipment.

SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended September 30, 1993, 1994 and 1995, and the six months
ended March 31, 1995 and 1996, the Company paid interest of $136,888, $165,207,
$252,828, $97,584 and $151,344, respectively. Capitalized lease obligations of
$672,903, $765,689 and $220,782 were incurred on equipment leases entered into
in fiscal 1993, 1994 and 1995, and $154,788 and $105,434 for the six months
ended March 31, 1995 and 1996, respectively.

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

The Company is dependent on several large customers for a significant
portion of its revenues. Three customers accounted for 31.3%, 23.7% and 21.3% of
revenues for the year ended September 30, 1993. Four customers accounted for
23.7%, 19.2%, 18.8% and 16.2% of revenues for the year ended September 30, 1994
and four customers accounted for 29.2%, 18.8%, 14.6% and 12.7% of revenues for
the year ended September 30, 1995. Three customers accounted for 39.4%, 23.8%
and 13.0% of revenues for the six months ended March 31, 1996. The loss of one
or more of these customers could have a materially adverse effect on the
Company's business.

As a result of the issuance of the Series B Preferred and Class A Common
Stock and Class B Common Stock (see Note 2), the Company is now affiliated with
one of its customers. This customer represented 3.6% and 8.3% of revenues for
the year ended September 30, 1994 and 1995, respectively, and 13.0% for the six
months ended March 31, 1996. There were no sales to this customer for the year
ended September 30, 1993.

In fiscal 1993, 1994 and 1995, revenues from customers within the insurance
industry accounted for 80.9%, 63.3% and 59.3% of revenues, respectively, and
customers within the financial services industry accounted for 18.4%, 36.4% and
39.7% of revenues, respectively.

Concentration of credit risk is limited to accounts receivable and is
subject to the financial conditions of the Company's customers. Three of the
Company's largest customers are engaged in transactions with each other and
represent a single credit risk to the Company. The Company does not require
collateral or other securities to support customer receivables. At March 31,
1996, the accounts receivable from the three customers that represent a single
credit risk were approximately $2,397,000 and the accounts receivable from the
other significant customer during the six months ended March 31, 1996 were
approximately $305,000.

CASH

The Company maintains cash accounts, which, at times, may exceed federally
insured limits. The Company has not experienced any losses from maintaining cash
accounts in excess of federally insured limits. Management believes that it is
not exposed to any significant credit risks on its cash accounts.

F-9
<PAGE> 52

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash, accounts receivable, accounts payable and accrued liabilities are
reflected in the financial statements at fair value due to the short-term nature
of those instruments. The carrying amount of the long-term debt and capitalized
lease obligations approximates fair value at September 30, 1995 and March 31,
1996.

NEW ACCOUNTING PRONOUNCEMENT

The Financial Accounting Standards Board has issued SFAS No. 123,
"Accounting for Stock-Based Compensation." The Company is required to adopt this
standard for the year ending September 30, 1997. The Company has elected to
adopt the disclosure requirement of this pronouncement. Accordingly, this
pronouncement will have no impact on the Company's reported financial position
or results of operations.

RECAPITALIZATION

On May 24, 1996, the Company authorized (i) 20,000,000 shares of Common
Stock, no par value, consisting of 10,000,000 shares of Class A Voting Common
Stock (the Class A Common) and 10,000,000 shares of Class B Non-Voting Common
Stock (the Class B Common) and (ii) 10,000,000 shares of Preferred Stock, of
which 1,000,000 shares were designated as Series A Preferred Stock (the Series A
Preferred) and 6,500,000 shares were designated as Series B Preferred Stock (the
Series B Preferred). The previously outstanding Common Stock was converted into
10,000,000 shares of Class A Common. All references in the accompanying
financial statements to the number of Common shares have been retroactively
restated to reflect the recapitalization.

2. PRO FORMA INFORMATION (UNAUDITED):

In May 1996, the Company distributed certain accounts receivable to its
shareholders, redeemed Common Stock, sold Preferred and Common Stock, entered
into a new bank credit agreement and repaid existing bank debt and certain lease
obligations. These transactions are described below and have been reflected in
the accompanying pro forma balance sheet as if they had occurred on March 31,
1996.

COMMON STOCK REDEMPTION

On May 24, 1996, the Company redeemed 8,500,000 shares of Class A Common
for $19,213,823, as follows:

<TABLE>
<S> <C>
Cash payment............................................................ $15,936,975
Estimated redemption price adjustment................................... 436,980
Issuance of 6%, $3,000,000 subordinated note payable to Founders (the
"Founders' Note")..................................................... 1,685,639
Issuance of 1,000,000 shares of 6%, Series A Preferred.................. 524,450
Transaction costs....................................................... 629,779
-----------
$19,213,823
==========
</TABLE>

The face amounts of the Founders' Note and Series A Preferred have been
discounted at estimated market rates of 14% and 15% for interest and dividends,
respectively, on similar-type instruments. The original issue discounts will be
amortized over the terms of the Founders' Note and the Series A Preferred.
Subsequent to May 24, 1996, an estimate of the redemption price adjustment was
made, resulting in an additional amount due to the original shareholders (the
"Founders").

F-10
<PAGE> 53

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

On May 23, 1996, the Company distributed $4,600,000 of accounts receivable
to the Founders as a Subchapter S distribution of previously taxed income. The
accounts receivable distribution has been recorded in the March 31, 1996 pro
forma balance sheet as a reduction of the outstanding receivables as of that
date of $3,914,713, with the remaining $685,287 included in the payable to
shareholders on Common Stock redemption.

The Founders' Note currently has a face amount of $3,000,000 and is
subordinated to all other liabilities. The Founders' Note bears interest at an
annual rate of 6%, payable quarterly, and becomes due in two equal installments
on May 24, 2003 and 2004, subject to acceleration upon the occurrence of certain
defined events, including an initial public offering. The provisions of the
Founders' Note, among other things, limit the incurrence of debt, as defined. If
a defined earnings level for the period from May 24, 1996 through September 30,
1996 is met, the face amount of the Founders' Note will increase by $1,000,000
and the related discounted amount will be recorded as a charge to retained
earnings. Upon the completion of the planned initial public offering, the face
amount of the Founders' Note will automatically be increased to $4,000,000,
regardless of whether the defined earnings level is met.

The Series A Preferred has 1,000,000 shares outstanding, a face amount of
$1,000,000 and requires a dividend of 6% per year, payable quarterly. The Series
A Preferred has no voting rights and is senior to the Series B Preferred upon
liquidation. The holders of the Series A Preferred may require the Company to
redeem their shares in two equal installments on May 24, 2003 and 2004, subject
to acceleration upon the occurrence of certain defined events. The redemption
price is $1,000,000 plus unpaid dividends.

SALE OF PREFERRED AND COMMON STOCK

On May 24, 1996, the Company issued Preferred and Common Stock for
$9,500,000 to two investors (the Investors), as follows:

<TABLE>
<S> <C>
Series B Preferred Stock................................................. $3,783,059
Class A Voting Common Stock.............................................. 3,278,666
Class B Non-Voting Common Stock.......................................... 2,438,275
----------
$9,500,000
=========
</TABLE>

The Company issued 6,500,000 shares of Series B Preferred for an aggregate
of $6,500,000 or $1.00 per share. The Series B Preferred requires a dividend of
8% per year, payable quarterly. The face amount of the Series B Preferred has
been discounted at the estimated market dividend rate of 15% and the discount of
$2,716,941 will be amortized over the expected term. Due to the discount applied
to the face amount of the Series B Preferred, its value for accounting purposes
is $.58 per share. The Series B Preferred has no voting rights, is senior to the
Common Stock upon liquidation and has a liquidation value of $6,500,000 plus
unpaid dividends. The holders of the Series B Preferred may require the Company
to redeem their shares on May 24, 2004, subject to acceleration upon the
occurrence of certain defined events, including an initial public offering. The
redemption price is $6,500,000 plus unpaid dividends.

The Company issued 1,720,427 shares of Class A Common and 1,279,573 shares
of Class B Common for an aggregate of $3,000,000 or $1.00 per share. The Common
Stock was valued at $1.91 per share based on the relative estimated fair values
of the Series B Preferred and Class A and B Common Stock issued to the
Investors. While the Class B Common shares are non-voting, they can be converted
into an equal number of Class A Common shares upon the earlier of an initial
public offering or May 24, 2001.

F-11
<PAGE> 54

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

BANK FINANCING

On May 24, 1996, the Company and its shareholders entered into an agreement
with a bank (the Credit Agreement), which provides the Company with a
$14,000,000 term loan (the Term Loan) and $6,000,000 in revolving credit loans
(the Revolver). On May 24, 1996, the Company borrowed $11,200,000 on the Term
Loan and incurred $505,630 in financing costs, which have been deferred and will
be amortized over the term of the Credit Agreement. The borrowings on the Term
Loan were used to fund a portion of the Common Stock redemption, to repay a bank
line of credit and to buy out certain leases. The Credit Agreement requires an
annual administrative fee of $15,000 and an annual commitment fee of one-half of
1% on the average unused portion of the Revolver.

All borrowings under the Credit Agreement are collateralized by the assets
of the Company and the pledge by the shareholders of their Preferred and Common
Stock in the Company. The interest rate varies based on whether the borrowing is
designated as a Eurodollar loan, the level of market interest rates such as the
prime or LIBO rates, and the ratio of the Company's debt to earnings, as
defined. At May 24, 1996, the interest rate on the Term Loan was 8.4%.

In June 1996, the Company borrowed the final $2,800,000 on the Term Loan.
The Term Loan must be repaid in 23 quarterly installments beginning at $300,000
on December 31, 1996 and increasing to $750,000 on June 30, 2002, the final
payment date. The Term Loan is subject to prepayment based on excess cash flow,
as defined, beginning with the twelve months ending June 30, 1997.

Borrowings on the Revolver are limited to the lesser of $6,000,000 or 85%
of eligible accounts receivable, as defined, less outstanding letters of credit
which cannot exceed $1,000,000. In certain circumstances, amounts outstanding
under the Revolver can be converted to term loans. The Revolver expires on May
24, 2001.

The Company is subject to certain covenants described in the Credit
Agreement. Such covenants, among other things, restrict the Company's ability to
incur debt, pay dividends, or make capital expenditures and acquisitions. The
Company is also subject to a number of restrictive financial covenants, which
include ratios related to debt service, total debt to earnings and interest
coverage, as defined.

In connection with the Credit Agreement, the bank received a warrant to
purchase 236,842 shares of Class B Common for $.01 per share. The warrant
expires on May 31, 2006 and is exercisable upon the earlier of an initial public
offering or a change in control of the Company, as defined. The number of shares
which can be purchased upon exercise of the warrant is subject to reduction
based on the timing of an initial public offering. If the offering is completed
prior to May 24, 1997, the number of shares subject to the warrant is reduced to
142,105. The bank can require the Company to redeem the warrant prior to an
initial public offering and after May 24, 2001 or upon the occurrence of certain
defined events. The redemption price is equal to the appraised fair market
value, as defined. For financial reporting purposes, the warrant has been valued
at $450,000 on May 24, 1996, based on the estimated fair value of the Class B
Common, and has been recorded as original issue discount on the Term Loan. This
original issue discount will be amortized to interest expense over the term of
the Credit Agreement. The redemption value of the warrant will be adjusted
through charges to retained earnings for changes in its fair market value.

F-12
<PAGE> 55

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Scheduled annual principal payments on the Term Loan balance as of May 24,
1996 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30,
-------------
<S> <C>
1997.................................................................... $ 1,200,000
1998.................................................................... 1,520,000
1999.................................................................... 1,960,000
2000.................................................................... 2,320,000
2001.................................................................... 2,400,000
2002.................................................................... 1,800,000
-----------
11,200,000
Less: Original issue discount........................................... (450,000)
-----------
$10,750,000
==========
</TABLE>

EMPLOYMENT AND MANAGEMENT AGREEMENTS

The Founders have entered into employment contracts which expire on May 31,
1999. The contracts require an annual base compensation of $200,000 per employee
subject to an annual inflation adjustment, plus a discretionary annual bonus. In
addition, each employee will receive a bonus of $3,000,000 if an initial public
offering occurs by November 24, 1996, or if the initial public offering occurs
between November 24, 1996 and January 24, 2001, an amount equal to $3,000,000
less $60,000 for each month from November 24, 1996 through the date of the
initial public offering.

The Company has entered into an agreement with one of the Investors which
requires the payment of an annual management fee of $100,000, payable quarterly.
The management agreement will be terminated upon completion of the planned
initial public offering. Beginning at that time, the Investors will provide
consulting services to the Company pursuant to a consulting agreement and will
receive annual fees of $50,000. The consulting agreement expires on May 24,
2001.

SHAREHOLDERS' AGREEMENT

On May 24, 1996, the shareholders of the Company entered into an agreement
which, among other things, imposes certain restrictions on the transfer and sale
of Preferred and Common Stock, requires the approval of the shareholders for
certain major changes and transactions and designates the composition of the
Board of Directors. The Founders, who now own 1,500,000 shares of Class A
Common, have the right to require the Company to purchase their shares beginning
on May 24, 2002, at appraised fair market value, as defined. Based on the value
per share for accounting purposes of the Class B Common, the redeemable shares
have been valued at $2,865,000 and classified outside of shareholders' equity.
Upon completion of the planned initial public offering, the right to require the
Company to purchase these shares will expire.

DEFERRED INCOME TAX LIABILITY

As a result of the sale of Preferred and Common Stock, the Company's S
Corporation status was terminated on May 24, 1996, and a net deferred income tax
liability of $241,000 was recorded as additional income tax expense on that
date. The deferred income tax liability represents the tax effect of the
cumulative differences between the financial reporting and income tax bases of
certain assets and liabilities as of the

F-13
<PAGE> 56

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

termination of the S Corporation status. The significant items comprising the
Company's pro forma net deferred income tax liability are as follows:

<TABLE>
<S> <C>
Current deferred income tax asset:
Cash basis of accounting............................................... $ 28,500
---------
Noncurrent deferred income tax asset (liability):
Cash basis of accounting............................................... 85,500
Depreciation of property and equipment................................. (355,000)
---------
(269,500)
---------
Net deferred income tax liability.............................. $(241,000)
=========
</TABLE>

PRO FORMA INCOME STATEMENT

For informational purposes, the accompanying statements of operations for
the year ended September 30, 1995 and the six months ended March 31, 1996
include an unaudited pro forma adjustment for the income taxes which would have
been recorded if the Company had not been an S Corporation, based on the tax
laws in effect during the respective periods. The income tax provision was
recorded at an effective rate of 40.5%, which consists of the federal statutory
rate of 34.0% plus state income taxes, net of federal tax benefit, of 6.5%.

PRO FORMA NET INCOME PER SHARE

Pro forma net income per share was calculated by dividing pro forma net
income by 4,642,105 shares. The shares represent the 4,500,000 shares of Common
Stock outstanding and the 142,105 shares of Common Stock issuable upon the
exercise of the bank's warrant.

SUPPLEMENTAL PRO FORMA NET INCOME PER SHARE

Supplemental pro forma net income per share is based on the number of
shares used in the calculation of pro forma net income per share plus the number
of shares that will be issued at an assumed public offering price of $ per
share in exchange for the Founders Note and the Series A Preferred and the
number of shares that would be required to be sold at an assumed initial public
offering price of $ per share to repay the Term Loan and all or a portion of
the Revolver and redeem the Series B Preferred. Pro forma net income is
increased by $ and $ for the year ended September 30, 1995 and
the six months ended March 31, 1996, respectively, for the elimination of
interest expense, net of tax, and the elimination of the Series A and Series B
Preferred dividends.

3. LINES OF CREDIT:

The Company had available lines of credit with a bank of $2,600,000 as of
September 30, 1995, with interest ranging from the prime rate plus 1/2% to 1%.
The prime rate was 8.75% as of September 30, 1995. The average interest rate on
outstanding borrowings was 7.75%, 8.17% and 9.60% for the years ended September
30, 1993, 1994 and 1995, respectively. The highest outstanding borrowings during
fiscal 1995 was $1,575,000. All amounts outstanding under the lines of credit
were repaid on May 24, 1996 with the proceeds from the Term Loan (see Note 2).

F-14
<PAGE> 57

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. ACCRUED EXPENSES:

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------- MARCH 31,
1994 1995 1996
-------- ---------- ----------
<S> <C> <C> <C>
Payroll and related benefits........................ $484,645 $ 751,315 $ 552,216
Telecommunications expense.......................... 88,042 393,480 407,620
Other............................................... 41,116 61,431 64,043
-------- ---------- ----------
$613,803 $1,206,226 $1,023,879
======== ========= =========
</TABLE>

5. LONG TERM DEBT:

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------- MARCH 31,
1994 1995 1996
--------- --------- ----------
<S> <C> <C> <C>
Note payable to a bank, interest at 7.5%, payable
in monthly installments through April 1999 of
$8,333 plus interest, collateralized by the
assets of the Company and the personal
guarantees of the shareholders.................. $ 450,000 $ 350,000 $ 291,667
Note payable to a bank, interest at 9.5%, payable
in monthly installments through January 2000 of
$8,333 plus interest, collateralized by all
assets of the Company........................... -- 441,667 383,333
Note payable to a bank, interest at 9.25%, payable
in monthly installments through October 2000 of
$18,333 plus interest, collateralized by all
assets of the Company........................... -- -- 990,000
Other............................................. 30,012 5,444 2,580
--------- --------- ----------
480,012 797,111 1,667,580
Less -- Current portion........................... (124,568) (205,006) (205,006)
--------- --------- ----------
$ 355,444 $ 592,105 $1,462,574
========= ========= =========
</TABLE>

The above notes were repaid on May 24, 1996 with the proceeds from the Term
Loan (see Note 2).

Aggregate maturities at September 30, 1995 for long-term debt over the next
five years were as follows:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30,
---------------------------------------------------------------
<S> <C>
1996........................................................ $205,006
1997........................................................ 200,438
1998........................................................ 200,000
1999........................................................ 150,000
2000........................................................ 41,667
--------
$797,111
========
</TABLE>

6. CAPITALIZED LEASE OBLIGATIONS:

The Company has various capitalized lease obligations payable to several
finance companies. The obligations mature between 1996 and 2000 and are
collateralized by computer and other equipment with an aggregate cost of
$2,425,251 as of September 30, 1995.

F-15
<PAGE> 58

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Minimum future lease payments and imputed interest on the obligations under
the capital leases, together with the present value of the net minimum lease
payments as of September 30, 1995, are as follows:

<TABLE>
<CAPTION>
YEARS ENDING SEPTEMBER 30,
--------------------------------------------------------------
<S> <C>
1996....................................................... $ 425,860
1997....................................................... 323,364
1998....................................................... 130,790
1999....................................................... 14,453
2000....................................................... 6,022
---------
Total minimum lease payments.................................. 900,489
Less -- Imputed interest...................................... (110,435)
---------
Present value of net minimum lease payments................... 790,054
Less -- Current portion....................................... (353,716)
---------
$ 436,338
=========
</TABLE>

7. LOANS PAYABLE TO SHAREHOLDERS:

The shareholders have made long-term unsecured loans to the Company. There
have been no repayment terms established on these loans which are subordinated
to bank debt and bear interest at a variable rate (6.5% as of September 30,
1995). It is expected that these loans will be repaid in connection with the
payment of the estimated redemption price adjustment (see Note 2).

8. COMMITMENTS AND CONTINGENCIES:

The Company leases its offices and communications and computer equipment
under noncancellable operating leases which expire through 2001. The rental
payments for fiscal 1993, 1994 and 1995 were approximately $562,000, $753,000
and $911,000, respectively.

Aggregate minimum rental payments under the noncancellable operating leases
at September 30, 1995 are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
SEPTEMBER 30,
-------------
<S> <C>
1996............................................................. $ 814,376
1997............................................................. 543,786
1998............................................................. 505,572
1999............................................................. 179,072
2000............................................................. 93,684
2001............................................................. 46,842
----------
$2,183,332
=========
</TABLE>

The Company enters into agreements with its telephone long distance
carriers which currently range from one to three years, which provide for, among
other things, annual minimum purchases and termination penalties. The annual
minimum purchases under such agreements total approximately $1,377,000.

From time to time, the Company is involved in certain legal actions arising
in the ordinary course of business. In management's opinion, the outcome of such
actions will not have a material adverse effect on the Company's financial
position, results of operations or liquidity.

F-16
<PAGE> 59

RMH TELESERVICES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. PROFIT SHARING PLAN:

In fiscal 1995, the Company adopted a defined contribution savings plan
available to substantially all employees under Section 401(k) of the Internal
Revenue Code. Employee contributions are generally limited to 15% of
compensation. On an annual basis, the Company may match a portion of the
participating employee's contribution. The Company's contributions were $8,317
in fiscal 1995. Employees are fully vested in their contributions, while vesting
for the Company's contributions occurs ratably over seven years beginning in
year three.

9. PROPOSED INITIAL PUBLIC OFFERING:

In connection with the Company's proposed initial public offering of
2,800,000 shares of Common Stock, the following transactions are expected to
occur:

(i) the Term Loan will be repaid;

(ii) the Series B Preferred will be redeemed for $6,500,000 plus unpaid
dividends;

(iii) the Founders' Note and the Series A Preferred will be exchanged
for shares of Common Stock at the initial public offering price;

(iv) the redeemable warrant and Redeemable Common Stock will no longer
be subject to redemption by the holders;

(v) the outstanding shares of Class B Common will be converted into
Class A Voting Common (and the division of Common Stock into two
classes will be eliminated);

(vi) a combined $6,000,000 bonus will be paid to two officers pursuant
to their employment agreements (see Note 2); and

(vii) the voting agreement entered into by the Founders and the majority
investor will become effective. Pursuant to this voting agreement,
one of the Investors, on the one hand, and the Founders, on the
other, agree to vote for two nominees of the other to the
Company's Board of Directors. Each party's rights under the voting
agreement terminate when such party's ownership of Common Stock
becomes less than 25% of such ownership upon the completion of the
offering.

As a result of the above transactions, the Company will record a
non-recurring pre-tax charge of $8.2 million in the quarter ending September 30,
1996, consisting of the one-time bonus of $6.0 million and an extraordinary
charge of $2.2 million resulting from the early extinguishment of the Term Loan
and the Founders' Note.

F-17
<PAGE> 60

INSIDE BACK COVER OF PROSPECTUS

[THE PICTURE TO BE INSERTED SHOWS THE EXTERIOR FACADE OF THE COMPANY'S
CORPORATE HEADQUARTERS IN BRYN MAWR, PENNSYLVANIA.]
<PAGE> 61

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT
RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER
IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION 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........................ 11
Dividend Policy........................ 11
Capitalization......................... 12
Dilution............................... 13
Selected Financial Information......... 14
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 15
Business............................... 20
Management............................. 29
Principal Shareholders................. 32
Certain Transactions................... 33
Description of Capital Stock........... 35
Shares Eligible for Future Sale........ 37
Underwriting........................... 38
Legal Matters.......................... 39
Experts................................ 39
Information Concerning Independent
Public Accountants................... 39
Additional Information................. 39
Index to Financial Statements.......... F-1
</TABLE>

Until , 1996 (25 days after the commencement of the offering), all
dealers effecting transactions in the Common Stock, whether or not participating
in this distribution, may be required to deliver a Prospectus. This is in
addition to the obligation of dealers to deliver a Prospectus when acting as
Underwriters and with respect to their unsold allotments or subscriptions.

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

2,800,000 SHARES

RMH TELESERVICES, INC.

COMMON STOCK

[LOGO]
------------

PROSPECTUS

, 1996

------------
SMITH BARNEY INC.

HAMBRECHT & QUIST
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 62

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth expenses in connection with the issuance and
distribution of the securities being registered, all of which are being borne by
the Registrant.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................... $ 14,990
National Association of Securities Dealers, Inc. fee.............................. 4,847
Nasdaq National Market fee........................................................ 36,750
Printing and engraving expenses................................................... 125,000*
Accountants' fees and expenses.................................................... 425,000*
Legal fees and expenses........................................................... 200,000*
Blue Sky and NASD-related legal fees and expenses................................. 20,000*
Transfer agent's fees and expenses................................................ 5,000*
Director's and officer's insurance................................................ *
--------
Miscellaneous..................................................................... *
--------
Total................................................................... $ *
========
</TABLE>

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

* Estimated

The foregoing, except for the Securities and Exchange Commission
registration fee, the National Association of Securities Dealers, Inc. fee, and
the Nasdaq National Market fee are estimates.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Sections 1741 through 1750 of Subchapter C, Chapter 17, of the Pennsylvania
Business Corporation Law of 1988, as amended (the "PBCL"), contain provisions
for mandatory and discretionary indemnification of a corporation's directors,
officers and other personnel, and related matters.

Under Section 1741, subject to certain limitations, a corporation has the
power to indemnify directors and officers under certain prescribed circumstances
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with an action or
proceeding, whether civil, criminal, administrative or investigative (other than
derivative actions), to which any of them is a party or is threatened to be made
a party by reason of his being a representative, director or officer of the
corporation or serving at the request of the corporation as a representative,
director or officer of the corporation, partnership, joint venture, trust or
other enterprise, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful.

Section 1742 permits indemnification in derivative actions if the
appropriate standard of contact is met, except in respect of any claim, issue or
matter as to which the person has been adjudged to be liable to the corporation
unless and only to the extent that the proper court determines upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, the person is fairly and reasonably entitled to indemnity for the
expenses that the court deems proper.

Under Section 1743, indemnification is mandatory to the extent that the
officer or director has been successful on the merits or otherwise in defense of
any action or proceeding referred to in Section 1741 or 1742.

Section 1744 provides that, unless ordered by a court, any indemnification
under Section 1741 or 1742 shall be made by the corporation only as authorized
in the specific case upon a determination that the representative met the
applicable standard of conduct, and such determination will be made by (i) the
board of directors by a majority vote of a quorum of directors not parties to
the action or proceeding; (ii) if a quorum

II-1
<PAGE> 63

is not obtainable, or if obtainable and a majority of disinterested directors so
directs, by independent legal counsel; or (iii) by the shareholders.

Section 1745 provides that expenses incurred by an officer, director,
employee or agent in defending a civil or criminal action or proceeding may be
paid by the corporation in advance of the final disposition of such action or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by the corporation.

Section 1746 provides generally that, except in any case where the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness, the
indemnification and advancement of expenses provided by Subchapter 17D of the
PBCL shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors of otherwise, both as
to action in his official capacity and as to action in another capacity while
holding that office.

Section 1747 also grants a corporation the power to purchase and maintain
insurance on behalf of any director of officer against any liability incurred by
him in his capacity as officer or director, whether or not the corporation would
have the power to indemnify him against the liability under Subchapter 17D of
the PBCL.

Sections 1748 and 1749 extend the indemnification and advancement of
expenses provisions contained in Subchapter 17D of the PBCL to successor
corporations in fundamental changes and to representatives serving as
fiduciaries of employee benefit plans.

Section 1750 provides that the indemnification and advancement of expenses
provided by, or granted pursuant to, Subchapter 17d of the PBCL shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs and personal representative of such person.

The Registrant's Bylaws, as amended, filed as Exhibit 3.2 hereto, provides
in general that the Registrant shall indemnify its officers and directors to the
fullest extent permitted by law.

See Section 7(c) of the Underwriting Agreement, filed as Exhibit 1 hereto,
pursuant to which the Underwriters agree to indemnify the Registrant, its
directors, officers and controlling persons against certain liabilities,
including liabilities under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On May 24, 1996 the Company sold 1,594,112 shares of Class A Common Stock,
1,279,573 shares of Class B Common Stock and 6,226,316 shares of Series B
Preferred Stock to Advanta Partners, 126,315 shares of Class A Common Stock and
273,684 shares of Series B Preferred Stock to Glengar and 1,000,000 shares of
Series A Preferred Stock to the Founders. The shares issued to Advanta Partners
and Glengar were sold at an aggregate cash purchase price of $9,500,000. The
shares issued to the Founders were distributed in connection with the redemption
of 8,500,000 shares of Class A Common Stock of the Founders. In addition, on May
24, 1996, warrants to purchase shares of Class B Common Stock exercisable at
$.01 per share were issued to Chemical Bank in connection with obtaining a
Credit Facility. The Company and the Founders have agreed that the Founders'
Note and Series A Preferred Stock will be exchanged for shares of
Common Stock upon completion of this offering. Advanta Partners has agreed to
convert its Class B Common Stock into 1,279,573 shares of Class A Common Stock
upon completion of this offering.

These transactions were effected in reliance upon the exemption from
registration contained in Section 4(2) of the Securities Act.

II-2
<PAGE> 64

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<C> <C> <S>
1 -- Form of Underwriting Agreement.
2 -- Recapitalization and Stock Purchase Agreement among the Company, Advanta Partners,
Glengar and the Founders, dated May 24, 1996. The Schedules and Exhibits to the
Recapitalization and Stock Purchase Agreement (the contents of which are described
in the Recapitalization and Stock Purchase Agreement) are not being filed as a part
of this Exhibit 2. The Company agrees to furnish supplementally a copy of any such
Schedules and Exhibits to the Commission upon request.
3.1 -- Articles of Incorporation of the Company, as amended.
3.2 -- By-laws of the Company, as amended.
*5 -- Opinion of Wolf, Block, Schorr and Solis-Cohen with respect to the legality of the
securities being offered.
9 -- Voting Agreement among the Founders and Advanta Partners dated as of July 2, 1996.
*10.1 -- 1996 Stock Incentive Plan.
10.2 -- Shareholders' Agreement by and among the Company, the Founders, Advanta Partners
and Glengar, dated May 24, 1996.
10.3 -- Employment Agreement by and between the Company and Raymond J. Hansell, dated May
24, 1996.
10.4 -- Employment Agreement by and between the Company and MarySue Lucci Hansell, dated
May 24, 1996.
10.5 -- Warrant for the Purchase of Class B Non-Voting Common Stock of the Company in favor
of Chemical Bank.
10.6 -- Management Fee Agreement by and between Advanta Partners and the Company, dated May
24, 1996.
10.7 -- Credit Agreement among the Company and Chemical Bank, as agent, and as lender,
dated May 24, 1996
10.8 -- Revolving Credit Note made by the Company in favor of Chemical Bank, as agent, and
as lender, dated May 24, 1996.
10.9 -- Term Note made by the Company in favor of Chemical Bank, as agent, and as lender,
dated May 24, 1996.
10.10 -- Security Agreement between the Company and Chemical Bank, as agent.
10.11 -- 6% Subordinated Note made by the Company, in favor of the Founders, dated May 24,
1996.
10.12 -- Exchange and Conversion Agreement among the Company, the Founders, Advanta Partners
and Glengar dated as of July 2, 1996.
*10.13 -- Consulting Agreement between the Company and Advanta Partners.
10.14 -- Letter Agreement between the Company and Chemical Bank, dated as of June 28, 1996.
16 -- Letter Regarding Change in certifying accountant, dated July 2, 1996.
23.1 -- Consent of Arthur Andersen LLP, dated July 2, 1996.
23.2 -- Consent of Asher & Company, Ltd., dated July 2, 1996.
*23.3 -- Consent of Wolf, Block, Schorr and Solis-Cohen (included as part of Exhibit 5).
24 -- Power of Attorney (included on signature page of this Registration Statement).
27.1 -- Financial Data Schedule for year ended September 30, 1995.
27.2 -- Financial Data Schedule for six months ended March 31, 1996.
</TABLE>

- ---------------
* To be filed by amendment.

(b) Financial Statement Schedules

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable or the required information is given in
the Financial Statements or Notes thereto, and therefore have been omitted.

II-3
<PAGE> 65

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to Item 14 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
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.

The undersigned Registrant hereby undertakes that:

(1) 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 shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) 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.

II-4
<PAGE> 66

SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Bryn Mawr, Pennsylvania, on the 3rd
day of July, 1996.

RMH TELESERVICES, INC.

By: /s/ MARYSUE LUCCI
------------------------------------
MarySue Lucci
President

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Anthony P. Brenner, Raymond J. Hansell and
Mitchell L. Hollin, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection herewith, with authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
their substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------ ---------------------
<C> <S> <C>
/s/ ANTHONY P. BRENNER Chairman June 30, 1996
- ---------------------------------------------
Anthony P. Brenner

/s/ RAYMOND J. HANSELL Vice-Chairman and Chief July 3, 1996
- --------------------------------------------- Executive Officer
Raymond J. Hansell (principal executive
officer)

/s/ MARYSUE LUCCI Director, President and July 3, 1996
- --------------------------------------------- Chief Operating
MarySue Lucci Officer

/s/ MICHAEL J. SCHARFF Senior Vice President of July 3, 1996
- --------------------------------------------- Finance (principal
Michael J. Scharff financial and
accounting officer)

/s/ MITCHELL L. HOLLIN Director July 3, 1996
- ---------------------------------------------
Mitchell L. Hollin

/s/ DEREK LUBNER Director June 29, 1996
- ---------------------------------------------
Derek Lubner
</TABLE>

II-5
<PAGE> 67

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<C> <C> <S>
1 -- Form of Underwriting Agreement.
2 -- Recapitalization and Stock Purchase Agreement among the Company, Advanta Partners,
Glengar and the Founders, dated May 24, 1996.
3.1 -- Articles of Incorporation of the Company, as amended.
3.2 -- By-laws of the Company, as amended.
*5 -- Opinion of Wolf, Block, Schorr and Solis-Cohen with respect to the legality of the
securities being offered.
9 -- Voting Agreement among the Founders and Advanta Partners dated as of July 2, 1996.
*10.1 -- 1996 Stock Incentive Plan.
10.2 -- Shareholders' Agreement by and among the Company, the Founders, Advanta Partners
and Glengar, dated May 24, 1996.
10.3 -- Employment Agreement by and between the Company and Raymond J. Hansell, dated May
24, 1996.
10.4 -- Employment Agreement by and between the Company and MarySue Lucci Hansell, dated
May 24, 1996.
10.5 -- Warrant for the Purchase of Class B Non-Voting Common Stock of the Company in favor
of Chemical Bank.
10.6 -- Management Fee Agreement by and between Advanta Partners and the Company, dated May
24, 1996.
10.7 -- Credit Agreement among the Company and Chemical Bank, as agent, and as lender,
dated May 24, 1996
10.8 -- Revolving Credit Note made by the Company in favor of Chemical Bank, as agent, and
as lender, dated May 24, 1996.
10.9 -- Term Note made by the Company in favor of Chemical Bank, as agent, and as lender,
dated May 24, 1996.
10.10 -- Security Agreement between the Company and Chemical Bank, as agent.
10.11 -- 6% Subordinated Note made by the Company, in favor of the Founders, dated May 24,
1996.
10.12 -- Exchange and Conversion Agreement among the Company, the Founders, Advanta Partners
and Glengar dated as of July 2, 1996.
*10.13 -- Consulting Agreement between the Company and Advanta Partners.
10.14 -- Letter Agreement between the Company and Chemical Bank, dated as of June 28, 1996.
16 -- Letter Regarding Change in certifying accountant, dated July 2, 1996.
23.1 -- Consent of Arthur Andersen LLP, dated July 2, 1996.
23.2 -- Consent of Asher & Company, Ltd., dated July 2, 1996.
*23.3 -- Consent of Wolf, Block, Schorr and Solis-Cohen (included as part of Exhibit 5).
24 -- Power of Attorney (included on signature page of this Registration Statement).
27.1 -- Financial Data Schedule for year ended September 30, 1995.
27.2 -- Financial Data Schedule for six months ended March 31, 1996.
</TABLE>

- ---------------
* To be filed by amendment.

<PAGE> 1
Exhibit 1

Proof of July 3, 1996

2,800,000 Shares

RMH TELESERVICES, INC.

Common Stock

UNDERWRITING AGREEMENT

, 1996

SMITH BARNEY INC.
HAMBRECHT & QUIST LLC

As Representatives of the Several Underwriters

c/o SMITH BARNEY INC.
333 West 34th Street
New York, New York 10001

Dear Sirs:

RMH Teleservices, Inc., a Pennsylvania corporation (the "Company"),
proposes to issue and sell an aggregate of 2,800,000 shares (the "Firm Shares")
of its common stock, no par value per share (the "Common Stock"), to the several
Underwriters named in Schedule I hereto (the "Underwriters"). The Company also
proposes to sell to the Underwriters, upon the terms and conditions set forth in
Section 2 hereof, up to an additional 420,000 shares (the "Additional Shares")
of Common Stock. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "Shares".

The Company wishes to confirm as follows its agreement with you (the
"Representatives") and the other several Underwriters on whose behalf you are
acting, in connection with the several purchases of the Shares by the
Underwriters.

1. Registration Statement and Prospectus. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-1 under the Act (the "registration
statement"), including a prospectus subject to completion relating to the
<PAGE> 2
Shares. The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended at the time it becomes effective, or, if the registration statement
became effective prior to the execution of this Agreement, as supplemented or
amended prior to the execution of this Agreement. If it is contemplated, at the
time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed and must be declared effective before the
offering of the Shares may commence, the term "Registration Statement" as used
in this Agreement means the registration statement as amended by said
post-effective amendment. The term "Prospectus" as used in this Agreement means
the prospectus in the form included in the Registration Statement, or, if the
prospectus included in the Registration Statement omits information in reliance
on Rule 430A under the Act and such information is included in a prospectus
filed with the Commission pursuant to Rule 424(b) under the Act, the term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement as supplemented by the addition of the Rule 430A
information contained in the prospectus filed with the Commission pursuant to
Rule 424(b). The term "Prepricing Prospectus" as used in this Agreement means
the prospectus subject to completion in the form included in the registration
statement at the time of the initial filing of the registration statement with
the Commission, and as such prospectus shall have been amended from time to time
prior to the date of the Prospectus.

2. Agreements to Sell and Purchase. The Company hereby agrees, subject
to all the terms and conditions set forth herein, to issue and sell to each
Underwriter and, upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions set forth herein, each Underwriter agrees, severally and not jointly,
to purchase from the Company, at a purchase price of $ per Share (the
"purchase price per share"), the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto (or such number of Firm Shares
increased as set forth in Section 10 hereof).

The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company herein contained and
subject to all the terms and

-2-
<PAGE> 3
conditions set forth herein, the Underwriters shall have the right to purchase
from the Company, at the purchase price per share, pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
time prior to 9:00 P.M., New York City time, on the 30th day after the date of
the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday,
on the next business day thereafter when the New York Stock Exchange is open for
trading), up to an aggregate of 420,000 Additional Shares. Upon any exercise of
the over-allotment option, each Underwriter, severally and not jointly, agrees
to purchase from the Company the number of Additional Shares (subject to such
adjustments as you may determine in order to avoid fractional shares) which
bears the same proportion to the number of Additional Shares to be purchased by
the Underwriters as the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule I hereto (or such number of Firm Shares increased
as set forth in Section 10 hereof) bears to the aggregate number of Firm Shares.

3. Terms of Public Offering. The Company has been advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable and initially to offer the
Shares upon the terms set forth in the Prospectus.

4. Delivery of the Shares and Payment Therefor. Delivery to the
Underwriters of and payment for the Firm Shares shall be made at the office of
Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, at 10:00 A.M., New
York City time, on ____________, 1996 (the "Closing Date"). The place of closing
for the Firm Shares and the Closing Date may be varied by agreement between you
and the Company.

Delivery to the Underwriters of and payment for any Additional Shares
to be purchased by the Underwriters shall be made at the aforementioned office
of Smith Barney Inc. at such time on such date (the "Option Closing Date"),
which may be the same as the Closing Date but shall in no event be earlier than
the Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from you on behalf of the Underwriters to the Company of the
Underwriters' determination to purchase a number, specified in such notice, of
Additional Shares. The place of

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<PAGE> 4
closing for any Additional Shares and the Option Closing Date for such Shares
may be varied by agreement between you and the Company.

Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor by certified or official bank check or checks payable in New York
Clearing House (next day) funds to the order of the Company.

5. Agreements of the Company. The Company agrees with the several
Underwriters as follows:

(a) If, at the time this Agreement is executed and delivered,
it is necessary for the Registration Statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may commence,
the Company will endeavor to cause the Registration Statement or such
post-effective amendment to become effective as soon as possible and will advise
you promptly and, if requested by you, will confirm such advice in writing, when
the Registration Statement or such post-effective amendment has become
effective.

(b) The Company will advise you promptly and, if requested by
you, will confirm such advice in writing: (i) of any request by the Commission
for amendment of or a supplement to the Registration Statement, any Prepricing
Prospectus or the Prospectus or for additional information; (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) within the period of time referred to in paragraph (f)
below, of any change in the Company's condition (financial or other), business,
prospects,

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<PAGE> 5
properties, net worth or results of operations, or of the happening of any
event, which makes any statement of a material fact made in the Registration
Statement or the Prospectus (as then amended or supplemented) untrue or which
requires the making of any additions to or changes in the Registration Statement
or the Prospectus (as then amended or supplemented) in order to state a material
fact required by the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or of the
necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.

(c) The Company will furnish to you, without charge, three
signed copies of the registration statement as originally filed with the
Commission and of each amendment thereto, including financial statements and all
exhibits thereto, and will also furnish to you, without charge, such number of
conformed copies of the registration statement as originally filed and of each
amendment thereto, but without exhibits, as you may request.

(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the Prospectus of
which you shall not previously have been advised or to which you shall object
after being so advised or (ii) so long as, in the opinion of counsel for the
Underwriters, a Prospectus is required to be delivered in connection with sales
by any Underwriter or dealer, file any information, documents or reports
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), without delivering a copy of such information, documents or reports to
you, as Representatives of the Underwriters, prior to or concurrently with such
filing.

(e) Prior to the execution and delivery of this Agreement, the
Company has delivered to you, without charge, in such quantities as you have
requested, copies of each form of the Prepricing Prospectus. The Company
consents to the use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares are offered
by the several Underwriters and by dealers, prior to the

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<PAGE> 6
date of the Prospectus, of each Prepricing Prospectus so furnished by the
Company.

(f) As soon after the execution and delivery of this Agreement
as possible and thereafter from time to time for such period as in the opinion
of counsel for the Underwriters a prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer, the Company
will expeditiously deliver to each Underwriter and each dealer, without charge,
as many copies of the Prospectus (and of any amendment or supplement thereto) as
you may request. The Company consents to the use of the Prospectus (and of any
amendment or supplement thereto) in accordance with the provisions of the Act
and with the securities or Blue Sky laws of the jurisdictions in which the
Shares are offered by the several Underwriters and by all dealers to whom Shares
may be sold, both in connection with the offering and sale of the Shares and for
such period of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer. If during such
period of time any event shall occur that in the judgment of the Company or in
the opinion of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Prospectus to comply with the Act or any other law, the Company will
forthwith prepare and, subject to the provisions of paragraph (d) above, file
with the Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Underwriters and dealers a reasonable number of
copies thereof. In the event that the Company and you, as Representatives of the
several Underwriters, agree that the Prospectus should be amended or
supplemented, the Company, if requested by you, will promptly issue a press
release announcing or disclosing the matters to be covered by the proposed
amendment or supplement.

(g) The Company will cooperate with you and with counsel for
the Underwriters in connection with the registration or qualification of the
Shares for offering and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws of such jurisdictions as you may designate and
will file such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification;

-6-
<PAGE> 7
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction where it
is not now so subject.

(h) The Company will make generally available to its security
holders a consolidated earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement and ending not later than 15 months thereafter, as soon as practicable
after the end of such period, which consolidated earnings statement shall
satisfy the provisions of Section 11(a) of the Act.

(i) During the period of five years hereafter, the Company
will furnish to you (i) as soon as available, a copy of each report of the
Company mailed to stockholders or filed with the Commission, and (ii) from time
to time such other information concerning the Company as you may request.

(j) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provisions hereof (otherwise than pursuant to
the second paragraph of Section 10 hereof or by notice given by you terminating
this Agreement pursuant to Section 10 or Section 11 hereof) or if this Agreement
shall be terminated by the Underwriters because of any failure or refusal on the
part of the Company to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse the Representatives for all
out-of-pocket expenses (including fees and expenses of counsel for the
Underwriters) incurred by you in connection herewith.

(k) The Company will apply the net proceeds from the sale of
the Shares substantially in accordance with the description set forth in the
Prospectus.

(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectus pursuant to Rule 424(b) under the Act and will advise
you of the time and manner of such filing.

(m) Except as provided in this Agreement, the Company will not
sell, contract to sell or otherwise dispose of any Common Stock or any
securities convertible into or exercisable or

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<PAGE> 8
exchangeable for Common Stock, or grant any options or warrants to purchase
Common Stock, for a period of 180 days after the date of the Prospectus, without
the prior written consent of Smith Barney Inc.

(n) The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current officers and directors and each of its securityholders.

(o) Except as stated in this Agreement and in the Prepricing
Prospectus and Prospectus, the Company has not taken, nor will it take, directly
or indirectly, any action designed to or that might reasonably be expected to
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.

(p) The Company will use its best efforts to have the Common
Stock listed, subject to notice of issuance, on the Nasdaq National Market
concurrently with the effectiveness of the registration statement.

(q) On the Closing Date, effective immediately prior
to the purchase of the Firm Shares hereunder:

(i) all of the Company's Class B Common Stock
("Class B Common Stock") will be converted into Class A Common Stock;

(ii) the articles of incorporation of the Company
will be amended ("Charter Amendment") so as to eliminate the provisions thereof
dividing the Company's common stock into two classes and all shares of the
Company's Class A Common Stock ("Class A Common Stock") then outstanding will
be reclassified into and will become shares of voting Common Stock ("Common
Stock");

(iii) all of the Company's Series A Preferred Stock
("Series A Preferred Stock") will be exchanged for shares of Common Stock at
the purchase price per share;

(iv) the outstanding principal under that certain 6%
Subordinated Promissory Note due May 2004 of the Company which is held by
Raymond J. Hansell and MarySue Lucci (which shall not exceed $4,000,000) (the
"Founders' Note") will be exchanged for Common Stock at the purchase price
per share;

(v) the Charter Amendment will also eliminate the
designation of the Series A Preferred Stock and the Company's Series B
Preferred Stock ("Series B Preferred Stock") as series of preferred stock; and

(vi) all of the Series B Preferred Stock will be
redeemed.

For purposes hereof, the shares of Common Stock to be issued pursuant to clauses
(iii) and (iv) above, together with the shares of Common Stock to be issued
following the reclassification of the shares issuable pursuant to clause (i)
above, are herein referred to as the "Exchange Shares."

6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:

(a) Each Prepricing Prospectus included as part of the
registration statement as originally filed or as part of any amendment or
supplement thereto, or filed pursuant to Rule 424 under the Act, complied when
so filed in all material respects with the provisions of the Act. The Commission
has not issued any order preventing or suspending the use of any Prepricing
Prospectus.

(b) The registration statement in the form in which it became
or becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectus and any supplement
or amendment thereto when filed with the Commission under Rule 424(b) under the
Act, complied or will comply in all material respects with the provisions of the
Act and did not or will not at any such times contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, except that this
representation and warranty does not apply to statements in or omissions from
the registration statement

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<PAGE> 9
or the Prospectus made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by or on behalf
of any Underwriter through you expressly for use therein.

-9-
<PAGE> 10
and validly issued, are fully paid and nonassessable and are free of any
preemptive or similar rights; all of the shares of Common Stock to be
outstanding following the Charter Amendment (including, without limitation, the
Exchange Shares) will have been duly authorized and validly issued, will be
fully paid and nonassessable and will be free of any preemptive or similar
rights; the Shares have been duly authorized and, when issued and delivered to
the Underwriters against payment therefor in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and free of any preemptive
or similar rights; and the capital stock of the Company conforms to the
description thereof in the Registration Statement and the Prospectus.

(d) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus, and is duly registered and qualified to conduct its business and is
in good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does not have
a material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole.

(e) All the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in an exhibit to the Registration Statement. Each
Subsidiary is a corporation duly organized, validly existing and in good
standing in the jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus, and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of such Subsidiary; all the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable,

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<PAGE> 11
and are owned by the Company directly, or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity, or other encumbrance.

(f) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective properties is subject, that are required to be described
in the Registration Statement or the Prospectus but are not described as
required, and there are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement that
are not described or filed as required by the Act.

(g) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation or by-laws, or other
organizational documents, or of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of the
Subsidiaries or of any decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries, or in default in any
material respect in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
in any material agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound.

(h) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby and by the
Prospectus (A) requires any consent, approval, authorization or other order of
or registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official (except such as may be
required for the registration of the Shares under the Act and the Exchange Act
and compliance with the securities or Blue Sky laws of various jurisdictions,
all of which have been or will be effected in accordance with this Agreement) or
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, the certificate or articles of incorporation or bylaws, or

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<PAGE> 12
other organizational documents, of the Company or any of the Subsidiaries or (B)
conflicts or will conflict with or constitutes or will constitute a breach of,
or a default under, any agreement, indenture, lease or other instrument to which
the Company or any of the Subsidiaries is a party or by which any of them or any
of their respective properties may be bound, or violates or will violate any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Company or any of the Subsidiaries or any of their respective
properties, or will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.

(i) The accountants, Arthur Andersen LLP, who have certified
or shall certify the financial statements included in the Registration Statement
and the Prospectus (or any amendment or supplement thereto) are independent
public accountants as required by the Act.

(j) The financial statements, together with related schedules
and notes, included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the consolidated financial
position, results of operations and changes in financial position of the Company
and the Subsidiaries on the basis stated in the Registration Statement at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial and
statistical information and data included in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) are accurately presented
and prepared on a basis consistent with such financial statements and the books
and records of the Company and the Subsidiaries.

(k) The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement have been duly and validly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as rights

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<PAGE> 13
to indemnity and contribution hereunder may be limited by federal or state
securities laws.

(l) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or entered into any transaction, not in the
ordinary course of business, that is material to the Company and the
Subsidiaries taken as a whole, and there has not been any change in the capital
stock, or material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or any
development involving or which may reasonably be expected to involve, a
prospective material adverse change, in the condition (financial or other),
business, net worth or results of operations of the Company and the Subsidiaries
taken as a whole.

(m) Each of the Company and the Subsidiaries has good and
marketable title to all property (real and personal) described in the Prospectus
as being owned by it, free and clear of all liens, claims, security interests or
other encumbrances except such as are described in the Registration Statement
and the Prospectus or in a document filed as an exhibit to the Registration
Statement and all the property described in the Prospectus as being held under
lease by each of the Company and the Subsidiaries is held by it under valid,
subsisting and enforceable leases.

(n) The Company has not distributed and, prior to the later to
occur of (i) the Closing Date and (ii) completion of the distribution of the
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the Act.

(o) The Company and each of the Subsidiaries and their
respective personnel have such permits, licenses, franchises and authorizations
of governmental or regulatory authorities ("permits") as are necessary for the
Company and each of the Subsidiaries to own their respective properties and to
conduct their business in the manner described in the Prospectus, subject

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<PAGE> 14
to such qualifications as may be set forth in the Prospectus; the Company and
each of the Subsidiaries have fulfilled and performed all their material
obligations with respect to such permits and no event has occurred which allows,
or after notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the holder of any
such permit, subject in each case to such qualification as may be set forth in
the Prospectus; and, except as described in the Prospectus, none of such permits
contains any restriction that is materially burdensome to the Company or any of
the Subsidiaries.

(p) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(q) To the Company's knowledge, neither the Company nor any of
its Subsidiaries nor any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Prospectus.

(r) The Company and each of the Subsidiaries have filed all
tax returns required to be filed, which returns are complete and correct, and
neither the Company nor any Subsidiary is in default in the payment of any taxes
which were payable pursuant to said returns or any assessments with respect
thereto.

(s) No holder of any security of the Company has any right to
require registration of shares of Common Stock or any other security of the
Company because of the filing of the registration statement or consummation of
the transactions contemplated by this Agreement, except such rights as are
described in the Registration Statement and waived prior to the date hereof.

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<PAGE> 15
(t) The Company and the Subsidiaries own or possess all
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets and
rights described in the Prospectus as being owned by them or any of them or
necessary for the conduct of their respective businesses, and the Company is not
aware of any claim to the contrary or any challenge by any other person to the
rights of the Company and the Subsidiaries with respect to the foregoing.

(u) The Company is not now, and after sale of the Shares to be
sold by it hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds" will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

(v) The Company has complied with all provisions of Florida
Statutes, +517.075, relating to issuers doing business with Cuba.

(w) Following the issuance of the Exchange Shares, no
securityholder of the Company will have any right to require the Company to
redeem or repurchase any securities of the Company.

7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each of you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or in
the Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information relating to such Underwriter furnished in writing to the Company by
or on behalf of any Underwriter through you expressly for use in connection
therewith; provided, however, that the indemnification contained in this
paragraph (a) with respect to any Prepricing Prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account

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<PAGE> 16
of any such loss, claim, damage, liability or expense arising from the sale of
the Shares by such Underwriter to any person if a copy of the Prospectus shall
not have been delivered or sent to such person within the time required by the
Act and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
Prepricing Prospectus was corrected in the Prospectus, provided that the Company
has delivered the Prospectus to the several Underwriters in requisite quantity
on a timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Company may otherwise
have.

(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company, such Underwriter or such
controlling person shall promptly notify the Company, and the Company shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Such Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Underwriter or such controlling person
unless (i) the Company has agreed in writing to pay such fees and expenses, (ii)
the Company has failed to assume the defense and employ counsel, or (iii) the
named parties to any such action, suit or proceeding (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company and such Underwriter or such controlling person shall have been advised
by its counsel that representation of such indemnified party and the Company by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
action, suit or proceeding on behalf of such Underwriter or such controlling
person). It is understood, however, that the Company shall, in connection with
any one such action, suit or proceeding or separate but substantially similar or
related actions, suits or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys (in addition to any local
counsel) at any time for all such Underwriters and

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<PAGE> 17
controlling persons not having actual or potential differing interests with you
or among themselves, which firm shall be designated in writing by Smith Barney
Inc., and that all such fees and expenses shall be reimbursed as they are
incurred. The Company shall not be liable for any settlement of any such action,
suit or proceeding effected without its written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the Company agrees to indemnify and hold
harmless any Underwriter, to the extent provided in the preceding paragraph, and
any such controlling person from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment.

(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with respect to information relating to such Underwriter furnished in writing by
or on behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company, any of its directors, any such officer, or any such
controlling person based on the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto, and in respect of
which indemnity may be sought against any Underwriter pursuant to this paragraph
(c), such Underwriter shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company, its directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which the
Underwriters may otherwise have.

(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or

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<PAGE> 18
expenses referred to therein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or by the Underwriters on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

(e) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by a
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages,
liabilities and expenses referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding the
provisions of this Section 7, no Underwriter shall be required

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<PAGE> 19
to contribute any amount in excess of the amount by which the total price of the
Shares underwritten by it and distributed to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective numbers of Firm Shares set forth opposite their names in Schedule I
hereto (or such numbers of Firm Shares increased as set forth in Section 10
hereof) and not joint.

(f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.

(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 7 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution, and reimbursement agreements
contained in this Section 7.

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<PAGE> 20
(h) Advanta Partners LP, Raymond J. Hansell and MarySue Lucci,
jointly and severally but subject to the limitation set forth in this paragraph
(h), agree to indemnify and hold harmless the parties indemnified under
paragraph (a) hereof in the manner set forth in such paragraph (a), and agree
to the contribution required by paragraph (d) hereof; provided, however,
that such additional indemnifying and contributing parties shall have no
liability under this Section 7 in excess of : (A) with respect to Advanta
Partners LP, the amount of redemption proceeds (including accrued dividends)
paid to it by the Company in respect of the redemption of the Series B Preferred
Stock held by Advanta Partners LP; (B) with respect to Raymond J. Hansell,
$3,000,000, representing the one-time bonus payment required to be paid to him
as set forth in the Prospectus; and (C) with respect to MarySue Lucci,
$3,000,000, representing the one-time bonus payment required to be paid to her
as set forth in the Prospectus.

8. Conditions of Underwriters' Obligations. The several obligations of
the Underwriters to purchase the Firm Shares hereunder are subject to the
following conditions:

(a) If, at the time this Agreement is executed and delivered,
it is necessary for the registration statement or a post-effective amendment
thereto to be declared effective before the offering of the Shares may commence,
the registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by you, and all
filings, if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the registration
statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or any Underwriter,
threatened by the Commission, and any request of the Commission for additional
information (to be included in the registration statement or the prospectus or
otherwise) shall have been complied with to your satisfaction.

(b) Subsequent to the effective date of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting the condition (financial or other),
business, properties, net worth, or results of operations of the Company or the
Subsidiaries not contemplated

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<PAGE> 21
by the Prospectus, which in your opinion, as Representatives of the several
Underwriters, would materially, adversely affect the market for the Shares, or
(ii) any event or development relating to or involving the Company or any
officer or director of the Company which makes any statement made in the
Prospectus untrue or which, in the opinion of the Company and its counsel or the
Underwriters and their counsel, requires the making of any addition to or change
in the Prospectus in order to state a material fact required by the Act or any
other law to be stated therein or necessary in order to make the statements
therein not misleading, if amending or supplementing the Prospectus to reflect
such event or development would, in your opinion, as Representatives of the
several Underwriters, materially adversely affect the market for the Shares.

(c) You shall have received on the Closing Date, an opinion of
Wolf, Block, Schorr & Solis-Cohen, counsel for the Company, dated the Closing
Date and addressed to you, as Representatives of the several Underwriters, to
the effect that:

(i) The Company is a corporation duly incorporated
and validly existing in good standing under the laws of the Commonwealth of
Pennsylvania with full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), and is
duly registered and qualified to conduct its business and is in good standing in
each jurisdiction or place where the nature of its properties or the conduct of
its business requires such registration or qualification, except where the
failure so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole;

(ii) Each of the Subsidiaries is a corporation duly
organized and validly existing in good standing under the laws of the
jurisdiction of its organization, with full corporate power and authority to
own, lease, and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto); and all the outstanding shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued, are fully paid
and

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<PAGE> 22
nonassessable, and are owned by the Company directly, or indirectly through one
of the other Subsidiaries, free and clear of any perfected security interest,
or, to the best knowledge of such counsel after reasonable inquiry, any other
security interest, lien, adverse claim, equity or other encumbrance;

(iii) The authorized and outstanding capital stock
of the Company is as set forth under the caption "Capitalization" in the
Prospectus; and the authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained in
the Prospectus under the caption "Description of Capital Stock";

(iv) all of the Class B Common Stock has been
converted into Class A Common Stock;

(v) the Charter Amendment has become effective
resulting in the elimination of the provisions of the Company's articles of
incorporation dividing the Company's common stock into two classes, and all
shares of Class A Common Stock outstanding immediately prior to the
effectiveness of the Charter Amendment have been reclassified into and have
become shares of Common Stock;

(vi) the Charter Amendment has eliminated the
designation of the Series A Preferred Stock and the Series B Preferred Stock as
series of preferred stock.

(vii) All the shares of capital stock of the Company
outstanding prior to the issuance of the Shares (including, without limitation,
the Exchange Shares) have been duly authorized and validly issued, and are fully
paid and nonassessable;

(viii) The Shares have been duly authorized and, when
issued and delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully

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<PAGE> 23
paid and nonassessable and free of any preemptive, or to the best knowledge of
such counsel after reasonable inquiry, similar rights that entitle or will
entitle any person to acquire any Shares upon the issuance thereof by the
Company;

(ix) The form of certificates for the Shares
conforms to the requirements of the Pennsylvania Business Corporation Law of
1988;

(x) The Registration Statement and all
post-effective amendments, if any, have become effective under the Act and, to
the best knowledge of such counsel after reasonable inquiry, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectus pursuant to Rule 424(b)
has been made in accordance with Rule 424(b);

(xi) The Company has corporate power and authority
to enter into this Agreement and to issue, sell and deliver the Shares to the
Underwriters as provided herein, and this Agreement has been duly authorized,
executed and delivered by the Company and is a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as enforcement of rights to indemnity and contribution hereunder
may be limited by Federal or state securities laws or principles of public
policy and subject to the qualification that the enforceability of the Company's
obligations hereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other laws relating to or affecting
creditors' rights generally and by general equitable principles;

(xii) Neither the Company nor any of the
Subsidiaries is in violation of its respective certificate or articles of
incorporation or bylaws, or other organizational documents, or to the best
knowledge of such counsel after reasonable inquiry, is in default in the
performance of any material obligation, agreement or condition contained in any
bond, debenture, note or other evidence of indebtedness, except as may be
disclosed in the Prospectus;

(xiii) Neither the offer, sale or delivery of the
Shares, the execution, delivery or performance of this Agreement, compliance by
the Company with the provisions hereof nor

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<PAGE> 24
consummation by the Company of the transactions contemplated hereby and by the
Prospectus conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under, the certificate or articles of incorporation or
bylaws, or other organizational documents, of the Company or any of the
Subsidiaries or any agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their respective properties is bound that is an exhibit to the Registration
Statement, or is known to such counsel after reasonable inquiry, or will result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries, nor will any such
action result in any violation of any existing law, regulation, ruling (assuming
compliance with all applicable state securities and Blue Sky laws), judgment,
injunction, order or decree known to such counsel after reasonable inquiry,
applicable to the Company, the Subsidiaries or any of their respective
properties;

(xiv) No consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency, or official is
required on the part of the Company (except as have been obtained under the Act
and the Exchange Act or such as may be required under state securities or Blue
Sky laws governing the purchase and distribution of the Shares) for the valid
issuance and sale of the Shares to the Underwriters as contemplated by this
Agreement;

(xv) The Registration Statement and the Prospectus
and any supplements or amendments thereto (except for the financial statements
and the notes thereto and the schedules and other financial and statistical data
included therein, as to which such counsel need not express any opinion) comply
as to form in all material respects with the requirements of the Act;

(xvi) To the best knowledge of such counsel after
reasonable inquiry, (A) other than as described or contemplated in the
Prospectus (or any supplement thereto), there are no legal or governmental
proceedings pending or threatened against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or any of
their property, is subject, which are required to be described in the
Registration Statement or Prospectus (or any amendment or supplement thereto)
and (B) there

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<PAGE> 25
are no agreements, contracts, indentures, leases or other instruments, that are
required to be described in the Registration Statement or the Prospectus (or any
amendment or supplement thereto) or to be filed as an exhibit to the
Registration Statement that are not described or filed as required, as the case
may be;

(xvii) To the best knowledge of such counsel after
reasonable inquiry, neither the Company nor any of the Subsidiaries is in
violation of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the Subsidiaries or of any decree
of any court or governmental agency or body having jurisdiction over the Company
or any of the Subsidiaries;

(xviii) The statements in the Registration Statement
and Prospectus, insofar as they are descriptions of contracts, agreements or
other legal documents, or refer to statements of law or legal conclusions, are
accurate and present fairly the information required to be shown;

(xix) Although counsel has not undertaken, except as
otherwise indicated in their opinion, to determine independently, and does not
assume any responsibility for, the accuracy or completeness of the statements in
the Registration Statement, such counsel has participated in the preparation of
the Registration Statement and the Prospectus, including review and discussion
of the contents thereof, and nothing has come to the attention of such counsel
that has caused it to believe that the Registration Statement at the time the
Registration Statement became effective, or the Prospectus, as of its date and
as of the Closing Date or the Option Closing Date, as the case may be, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that any amendment or supplement to the Prospectus, as of its
respective date, and as of the Closing Date or the Option Closing Date, as the
case may be, contained any untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other financial
and statistical data included in the Registration Statement or the Prospectus).

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<PAGE> 26
In rendering their opinion as aforesaid, counsel may rely upon an
opinion or opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the United States
or the Commonwealth of Pennsylvania, provided that (1) each such local counsel
is acceptable to the Representatives, (2) such reliance is expressly authorized
by each opinion so relied upon and a copy of each such opinion is delivered to
the Representatives and is, in form and substance satisfactory to them and their
counsel, and (3) counsel shall state in their opinion that they believe that
they and the Underwriters are justified in relying thereon.

(d) You shall have received on the Closing Date an opinion of
Pepper, Hamilton & Scheetz, counsel for the Underwriters, dated the Closing Date
and addressed to you, as Representatives of the several Underwriters, with
respect to the matters referred to in clauses (v), (vii), (viii), (xii) and
(xvi) of the foregoing paragraph (c) and such other related matters as you may
request.

(e) You shall have received letters addressed to you, as
Representatives of the several Underwriters, and dated the date hereof and the
Closing Date from Arthur Andersen LLP, independent certified public accountants,
substantially in the forms heretofore approved by you.

(f)(i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there shall
not have been any change in the capital stock of the Company or any material
increase in the short-term or long-term debt of the Company (other than in the
ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or Supplement
thereto); (iii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus (or
any amendment or supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectus (or any amendment or supplement thereto),
any material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and the
Subsidiaries taken as

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<PAGE> 27
a whole; (iv) the Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and (v) all the
representations and warranties of the Company contained in this Agreement shall
be true and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have received a
certificate, dated the Closing Date and signed by the chief executive officer
and the chief financial officer of the Company (or such other officers as are
acceptable to you), to the effect set forth in this Section 8(f) and in Section
8(g) hereof.

(g) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements herein
contained and required to be performed or complied with by it hereunder at or
prior to the Closing Date.

(h) The Shares shall have been listed or approved for listing
upon notice of issuance on the Nasdaq National Market.

(i) All of the Class B Common Stock shall have been converted
into Class A Common Stock.

(j) The Charter Amendment shall have become effective
resulting in the elimination of the provisions of the Company's articles of
incorporation dividing the Company's common stock into two classes, and all
shares of Class A Common Stock outstanding immediately prior to the
effectiveness of the Charter Amendment have been reclassified into and have
become shares of Common Stock.

(k) All of the Series A Preferred Stock shall have been
exchanged for shares of Common Stock at the purchase price per share.

(l) The outstanding principal under the Founders' Note (which
shall not exceed $4,000,000) shall have been exchanged for shares of Common
Stock at the purchase price per share.

(m) The Charter Amendment shall have eliminated the
designation of the Series A Preferred Stock and the Series B Preferred Stock as
series of preferred stock.

(n) All of the Series B Preferred Stock shall have been
redeemed.

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<PAGE> 28
(o) The Company shall have furnished or caused to be furnished
to you such further certificates and documents as you shall have requested.

All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel.

Any certificate or document signed by any officer of the Company and
delivered to you, as Representatives of the Underwriters, or to counsel for the
Underwriters, shall be deemed a representation and warranty by the Company to
each Underwriter as to the statements made therein.

The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of any Option Closing
Date of the conditions set forth in this Section 8, except that, if any Option
Closing Date is other than the Closing Date, the certificates, opinions and
letters referred to in paragraphs (c) through (f) shall be dated the Option
Closing Date in question and the opinions called for by paragraphs (c) and (d)
shall be revised to reflect the sale of Additional Shares.

9. Expenses. The Company agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus,
and each amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the registration statement, each
Prepricing Prospectus, the Prospectus, and all amendments or supplements to any
of them as may be reasonably requested for use in connection with the offering
and sale of the Shares; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Shares, including any stamp taxes
in connection with the original issuance and sale of the Shares; (iv) the
printing (or reproduction) and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda and all other agreements or documents printed
(or reproduced) and delivered in connection with

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<PAGE> 29
the offering of the Shares; (v) the registration of the Common Stock under the
Exchange Act and the listing of the Shares on the Nasdaq National Market; (vi)
the registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(g)
hereof (including the reasonable fees, expenses and disbursements of counsel for
the Underwriters relating to the preparation, printing or reproduction, and
delivery of the preliminary and supplemental Blue Sky Memoranda and such
registration and qualification); (vii) the filing fees and the fees and expenses
of counsel for the Underwriters in connection with any filings required to be
made with the National Association of Securities Dealers, Inc.; (viii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Shares; (ix) the fees and expenses of the Company's accountants and the fees
and expenses of counsel (including local and special counsel) for the Company.

10. Effective Date of Agreement. This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Shares may commence, when notification of
the effectiveness of the registration statement or such post-effective amendment
has been released by the Commission. Until such time as this Agreement shall
have become effective, it may be terminated by the Company, by notifying you, or
by you, as Representatives of the several Underwriters, by notifying the
Company.

If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than
one-tenth of the aggregate number of Shares which the Underwriters are obligated
to purchase on the Closing Date, each non-defaulting Underwriter shall be
obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule I hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting Underwriters or
in such other proportion as you may specify in accordance with Section 20

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<PAGE> 30
of the Master Agreement Among Underwriters of Smith Barney Inc., to purchase the
Shares which such defaulting Underwriter or Underwriters are obligated, but fail
or refuse, to purchase. If any one or more of the Underwriters shall fail or
refuse to purchase Shares which it or they are obligated to purchase on the
Closing Date and the aggregate number of Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares which
the Underwriters are obligated to purchase on the Closing Date and arrangements
satisfactory to you and the Company for the purchase of such Shares by one or
more non-defaulting Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any such default of any such Underwriter under this Agreement. The term
"Underwriter" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule I hereto who, with your approval and
the approval of the Company, purchases Shares which a defaulting Underwriter is
obligated, but fails or refuses, to purchase.

Any notice under this Section 10 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.

11. Termination of Agreement. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company, by notice to the Company, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Shares), as the case may be, (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York or Pennsylvania
shall have been declared by either federal or state authorities, or (iii) there
shall have

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<PAGE> 31
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States is
such as to make it, in your judgment, impracticable or inadvisable to commence
or continue the offering of the Shares at the offering price to the public set
forth on the cover page of the Prospectus or to enforce contracts for the resale
of the Shares by the Underwriters. Notice of such termination may be given to
the Company by telegram, telecopy or telephone and shall be subsequently
confirmed by letter.

12. Information Furnished by the Underwriters. The statements set forth
in the last paragraph on the cover page, the stabilization legend on the inside
cover page, and the statements in the first and third paragraphs under the
caption "Underwriting" in any Prepricing Prospectus and in the Prospectus,
constitute the only information furnished by or on behalf of the Underwriters
through you as such information is referred to in Sections 6(b) and 7 hereof.

13. Miscellaneous. Except as otherwise provided in Sections 5, 10 and
11 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at RMH Teleservices, Inc., 40 Morris Avenue, Bryn Mawr, Pennsylvania
19010, Attention: Anthony P. Brenner, Chairman; or (ii) if to you, as
Representatives of the several Underwriters, care of Smith Barney Inc., 333 West
34th Street, New York, New York 10001, Attention: Manager, Investment Banking
Division.

This Agreement has been and is made solely for the benefit of the
several Underwriters, the Company, its directors and officers, and the other
controlling persons referred to in Section 7 hereof and their respective
successors and assigns, to the extent provided herein, and no other person shall
acquire or have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.

14. Applicable Law; Counterparts. This Agreement shall be governed by
and construed in accordance with the laws of the

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<PAGE> 32
State of New York applicable to contracts made and to be performed within the
State of New York.

This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.

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<PAGE> 33
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.

Very truly yours,

RMH TELESERVICES, INC.

By
---------------------------
Anthony P. Brenner
Chairman of the Board

Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Underwriters named in Schedule I
hereto.

SMITH BARNEY INC.
HAMBRECHT & QUIST LLC

As Representatives of the Several Underwriters

By SMITH BARNEY INC.

By
-------------------------
Managing Director

Intending to be legally bound, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the undersigned have executed this
Underwriting Agreement solely for the purpose of agreeing to the provisions of
Section 7(h) hereof.

ADVANTA PARTNERS LP

By: AP CAPITAL, INC.,
General Partner

By:
____________________________
Anthony P. Brenner,
President

________________________________
Raymond J. Hansell

________________________________
MarySue Lucci

-33-
<PAGE> 34
SCHEDULE I

NAME OF COMPANY

<TABLE>
<CAPTION>
Number of Number of
Underwriter Firm Shares Underwriter Firm Shares
----------- ----------- ----------- -----------
<S> <C> <C> <C>
Smith Barney Inc. ......
Hambrecht & Quist LLC ..
---------
Total.....
=========
</TABLE>

-34-

<PAGE> 1
EXHIBIT 2

RECAPITALIZATION AND STOCK PURCHASE AGREEMENT

among

RMH SALES AND MARKETING CONSULTING, INC.,
a Pennsylvania corporation trading as RMH Telemarketing
(the "Company")

RAYMOND J. HANSELL, an individual and

MARYSUE LUCCI HANSELL, an individual

(collectively, the "Principals")

ADVANTA PARTNERS LP,

a Pennsylvania limited partnership (the "AP Investor")

and

GLENGAR INTERNATIONAL INVESTMENTS LIMITED

(the "Glengar Investor")

May 24, 1996

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
1. Definitions and Rules of Construction................................................-1-
1.1 Definitions.........................................................-1-
1.2 Rules of Construction...............................................-8-
2. Recapitalization of the Company......................................................-8-
2.1 Authorization of Capital Stock; Stock
Split Distribution of Accounts Receivable. .........................-8-
2.2 Partial Redemption of the Principals................................-9-
2.3 Refinancing of Company Debt........................................-11-
2.4 Other Transactions to Occur At the Closing:........................-11-
3. Purchase of Stock by the Investors. ..............................................-12-
3.1 Authorization of Stock.............................................-12-
3.2 Sale of Stock to the Investors.....................................-12-
3.3 Certain Terms......................................................-13-
4. Closing Date; Conditions to Closing; Deliveries.....................................-13-
4.1 The Closing........................................................-13-
4.2 Conditions to the Investor's Obligations...........................-13-
4.3 Conditions to the Principals' Obligations..........................-14-
4.4 Deliveries of the Company at Closing...............................-15-
4.5 Deliveries of the Principals at Closing............................-17-
4.6 Deliveries of the Investors at Closing.............................-18-
5. Representations, Warranties and Agreements of the Principals
as to the Company...................................................................-18-
5.1 Corporate Status; Outstanding Stock................................-18-
5.2 Authority; No Conflict; Binding Agreement..........................-19-
5.3 Officers; Directors; Bank Accounts.................................-19-
5.4 Subsidiaries and Joint Ventures....................................-19-
5.5 Financial Statements...............................................-19-
5.6 Real Estate........................................................-20-
5.7 Personal Property..................................................-20-
5.8 Accounts Receivable................................................-21-
5.9 Insurance..........................................................-21-
5.10 Liabilities........................................................-21-
5.11 Contracts, Leases, Agreements and Other
Commitments........................................................-22-
5.12 Employment Matters.................................................-22-
5.13 Employee Benefit Plans.............................................-23-
5.14 Litigation.........................................................-25-
5.15 Environmental Matters..............................................-26-
5.16 Conflicting Interests..............................................-27-
5.17 Compliance with Law and Regulations................................-27-
5.18 Taxes..............................................................-27-
5.19 No Payments to Principals or Others................................-30-
</TABLE>

-ii-

<PAGE> 3

<TABLE>
<S> <C> <C>
5.20 Actions since Balance Sheet Date...................................-31-
5.21 No Material Adverse Change.........................................-31-
5.22 Statements and Other Documents Not
Misleading.........................................................-31-
6. Additional Representations, Warranties and Covenants
of Principals.......................................................................-31-
6.1 Ownership of Capital Stock of the Company..........................-32-
6.2 Agreement Not in Breach of Other Instruments
Affecting Principal................................................-32-
6.3 Valid and Binding Agreement........................................-32-
7. Representations, Warranties, and Agreements of the Investors........................-32-
7.1 Representations, Warranties, and Agreements
of AP Investor.....................................................-32-
(a) Organizational Status and Authority.......................-32-
(b) Agreement Not in Breach of Other
Instruments Affecting Investor;
Governmental Consent......................................-33-
7.2 Representations, Warranties and Agreement
of Glengar Investor................................................-33-
(a) Organizational Status and Authority.......................-33-
(b) Agreement Not in Breach of Other
Instruments Affecting Glengar Investor;
Governmental Consent......................................-34-
8. Continuation and Survival of Representations and
Warranties..........................................................................-33-
9. Additional Covenants................................................................-34-
9.1 Access Rights Prior to Closing....................................-34-
9.2 Conduct of Business Pending Closing...............................-35-
9.3 Tax Covenants.....................................................-36-
9.4 "No Shop" Covenant................................................-37-
9.5 Notices of Breach.................................................-37-
10. Indemnification.....................................................................-38-
10.1 Indemnification of the Investors..................................-38-
10.2 Indemnification of the Principals.................................-38-
10.3 Definitions.......................................................-38-
10.4 Procedures for Establishment of Deficiencies......................-39-
10.5 Payment of Deficiencies; Remedies for
Non-Payment.......................................................-40-
10.6 Limitations.......................................................-41-
11. Securities Laws Compliance Procedures................................................-41-
11.1 Status of Shares to be Issued.....................................-41-
12. Further Assurances...................................................................-43-
13. Indemnity Against Brokerage Commissions and
Finder's Fees........................................................................-43-
</TABLE>

-iii-

<PAGE> 4

<TABLE>
<S> <C> <C> <C>
14. Miscellaneous.......................................................................-43-
14.1 Costs and Expenses.................................................-43-
14.2 Indulgences, Etc...................................................-43-
14.3 Controlling Law....................................................-44-
14.4 Notices............................................................-44-
14.5 Schedules and Exhibits.............................................-46-
14.6 Binding Nature of Agreement; No Assignment.........................-46-
14.7 Execution in Counterparts..........................................-46-
14.8 Provisions Separable...............................................-46-
14.9 Entire Agreement, Amendment, Modification
and Termination....................................................-46-
14.10 Number of Days.....................................................-46-

LIST OF EXHIBITS

Exhibit A Capital Acquisition Budget
Exhibit B Assignment and Collection Agreement
Exhibit C Employment Agreements
Exhibit D Projected Balance Sheet
Exhibit E Articles of Amendment to the Company's Articles of Incorporation
Exhibit F Amended and Restated By-Laws
Exhibit G Principals' Notes
Exhibit H Shareholders' Agreement
Exhibit I Management Agreement
Exhibit J Opinion of Eckell Sparks Levy Auerbach Monte & Emper, P.C.
Exhibit K Opinion of Wolf, Block, Schorr and Solis-Cohen
</TABLE>

-iv-

<PAGE> 5
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT

This AGREEMENT is entered into as of this 24th day of May,
1996, by and among RMH SALES AND MARKETING CONSULTING, INC., a Pennsylvania
corporation trading as RMH Telemarketing (the "Company"), RAYMOND J. HANSELL,
an individual ("Hansell"), MARYSUE LUCCI HANSELL, an individual ("Lucci")
(Hansell and Lucci are referred to herein collectively as the "Principals"),
ADVANTA PARTNERS LP, a Pennsylvania limited partnership, or its assignee as
permitted under Section 14.6 below (the "AP Investor"), and GLENGAR
INTERNATIONAL INVESTMENTS LIMITED, a limited liability company organized in the
British Virgin Islands "Glengar" (AP Investor and Glengar Investor are referred
to herein collectively as the "Investors").

THE BACKGROUND OF THIS TRANSACTION IS AS FOLLOWS:

A. The Principals are the sole shareholders of the
Company, which is engaged in the telemarketing services business.

B. The Investors desire to make an equity investment
in the Company, and the parties desire to utilize the proceeds of that equity
investment, together with the proceeds of a third party financing, to make a
partial redemption of the shares of stock held by the Principals in the
Company.

C. The parties desire to recapitalize the Company in
order to facilitate the agreed-upon transactions.

D. The parties desire to set forth in this Agreement
their mutual understandings with respect to these matters.

In consideration of the mutual agreements, undertakings and
covenants herein contained, the parties, intending to be legally bound hereby,
agree as follows:

1. Definitions and Rules of Construction

1.1 Definitions. The following defined terms shall,
unless the context requires otherwise, have the meanings ascribed in this
Section 1.1:

"Acquisition Proposal" shall have the meaning specified in
Section 9.4.

"Action" shall mean any order, writ, injunction, judgment or
decree outstanding or claim, suit, litigation, proceeding, labor dispute (other
than routine grievance procedures or routine, uncontested claims for benefits
under any benefit plans for employees, officers or directors),

<PAGE> 6

complaint or charge with any local, state or federal agency, commission or
other Government Authority, including but not limited to any charge or
complaint of discrimination or retaliation or any unfair labor practice charge,
arbitral action or investigation.

"AP Investor" shall have the meaning specified in the preamble
to this Agreement.

"Actual Capital Expenditures" shall mean the aggregate of all
sums paid or incurred by the Company for items which are classified under GAAP
as capital expenditures from October 1, 1995 through the Closing Date, as shall
be set forth on the Closing Balance Sheet and determined on a basis consistent
with the Capital Acquisition Budget for fiscal year ending September 30, 1996,
a copy of which is attached hereto as Exhibit A.

"Actual Working Capital" shall mean, as of the Closing Date,
the positive or negative number which is the difference of the following
amounts, as shall be set forth in the Closing Balance Sheet and determined on a
basis consistent with the determinations set forth on the Projected Balance
Sheet: (a) the sum of cash plus accounts receivable (including for this purpose
all accounts receivable distributed to the Principals prior to Closing pursuant
to Section 2.1(c) below and taken into account in the Base Cash Redemption
Price adjustment described in paragraph 2.2 (b)(i)(D) below) plus prepaid
expenses plus an amount equal to all reasonable expenses paid by the Company
before the Closing Date relating to the transactions effectuated by this
Agreement, minus (b) the sum of accounts payable plus accrued expenses (without
regard to accruals for the Tax Distribution or for shareholder bonuses as
permitted herein) plus accrued and withheld payroll taxes and deferred income
taxes.

"Adjusted Stub Period Earnings" shall mean the earnings of
the Company for the period from the Closing Date through September 30, 1996,
before deduction for: (a) interest, taxes on net income, depreciation and
amortization; (b) all expenses incurred by the Company relating to the
transactions contemplated by this Agreement (including, without limitation, the
reasonable fees and expenses of attorneys, accountants and other professional
advisors, the Transition Bonus Compensation, any prepayment premiums or
penalties required to be paid to the holders of unaffiliated debt instruments
or capital lease obligations in connection with the payment of the Liabilities
to be Discharged, any fees paid to Advanta Partners LP or its affiliates with
respect to this Agreement, all premiums incurred with respect to the
"key-person" life insurance policies referred to in paragraph 4.2(i) below or
with respect to the life insurance policies referred to in Section 6(d) of the
Employment Agreement, and all expenses, if any, incurred in connection with the
creation of a two-tier holding/operating company structure as contemplated in
Section 15 of the Shareholders' Agreement); and (c) any non-recurring expenses
related to the acquisition, development, leasing, equipping, furnishing or
opening of any new facilities. All of the foregoing shall be as determined by
the independent auditors of the Company in the preparation and review of the
financial statements of the Company for the period ending September 30, 1996,
prepared in accordance with GAAP and on a basis consistent with the Projected
Balance Sheet, and subject to the dispute resolution provisions of Section
2.2(b)(ii) below.

-2-

<PAGE> 7

"Agreement" shall mean this Recapitalization and Stock
Purchase Agreement, as it may be amended from time to time.

"Amended and Restated By-Laws" shall have the meaning
specified in Section 2.1(b).

"Amendment" shall have the meaning specified in Section
2.1(b).

"Ancillary Agreements" shall mean, collectively, the
Principals' Note, the Amendment, the Shareholders Agreement, the Assignment and
Collection Agreement, the Management Agreement, the Employment Agreements, and
all other instruments, certificates and documents executed pursuant to this
Agreement.

"Assignment and Collection Agreement" shall mean the
Agreement of that name in the form attached hereto as Exhibit "B".

"Balance Sheet Date" shall mean September 30, 1995.

"Best Knowledge" means, with respect to a representation and
warranty, the actual knowledge of the party making such representation and
warranty or the facts that such party should have known after reasonable
inquiry into the facts and circumstances surrounding the matter to which the
representation and warranty pertains.

"Capital Stock" shall mean the Common Stock and the Preferred
Stock.

"Cash Redemption Price" shall have the meaning specified in
Section 2.2(b).

"Class A Common Stock" shall have the meaning specified in
Section 2.1(a).

"Class B Common Stock" shall have the meaning specified in
Section 2.1(a).

"Closing" shall have the meaning specified in Section 4.1.

"Closing Balance Sheet" shall have the meaning specified in
Section 2.2(c).

"Closing Date" shall have the meaning specified in Section
4.1.

"Code" shall mean the Internal Revenue Code of 1986, as
amended.

"Common Stock" shall mean the common stock, no par value, of
the Company, consisting of the Class A Common Stock and Class B Common Stock.

"Company" shall mean RMH Sales and Marketing Consulting,
Inc., a Pennsylvania corporation trading as RMH Telemarketing.

-3-

<PAGE> 8

"Company Agreements" shall have the meaning specified in
Section 5.11.

"Deficiency" shall have the meaning specified in Section
10.3.

"Employment Agreements" shall mean the Employment Agreements
to be entered between the Company and each of the Principals, substantially in
the form of Exhibit C attached hereto.

"Encumbrances" shall mean any mortgage, claim, lien, pledge,
option, charge, easement, security interest, right-of-way, encumbrance or other
similar right.

"Environmental Laws" shall mean any federal, state or local
law, statute, ordinance, order, decree, rule or regulation relating to
releases, discharges, emissions or disposals to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use, handling or
disposal of polychlorinated biphenyls, asbestos or urea formaldehyde, to the
treatment, storage, disposal or management of Hazardous Materials, to exposure
to toxic, hazardous or other controlled, prohibited or regulated substances,
and to the transportation, release or any other use of Hazardous Materials,
including the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601, et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901, et seq. ("RCRA"), the Toxic Substances
Control Act, 15 U.S.C. ss. 2601 et seq. ("TSCA"), the Occupational, Safety and
Health Act, 29 U.S.C. ss. 651, et seq., the Clean Air Act, 42 U.S.C. ss. 7401
et. seq. the Federal Water Pollution Control Act, 33 U.S.C. ss. 1251, et seq.,
the Safe Drinking Water Act, 42 U.S.C. ss. 300f et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. ss. 1802 et seq. ("HMTA") and the
Emergency Planning and Community Right to Know Act, 42 U.S.C. 11001 et seq.
("EPCRA"), and other comparable state laws and all rules, regulations and
guidance documents promulgated pursuant thereto or published thereunder.

"ERISA" shall have the meaning specified in Section 5.13.

"Escrow Account" shall have the meaning specified in Section
10.5(b).

"Escrow Agent" shall mean First American Title Insurance
Company.

"Escrow Agreement" shall have the meaning specified in
Section 10.5(b).

"Facilities" shall mean all offices, facilities, operations
centers, and other real property and related facilities which are owned or
leased by the Company.

"Fixtures and Equipment" shall mean all of the furniture,
fixtures, furnishings, machinery and equipment owned or leased by the Company
and located in, at or upon the Facilities.

"GAAP" shall mean, as of any date of determination,
accounting principles that are (a) set forth as generally accepted in then
currently effective Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants, (b) set forth as generally accepted

-4-

<PAGE> 9

in then currently effective Statements of the Financial Accounting Standards
Board or (c) then approved by such other entity as may be approved by a
significant segment of the accounting profession in the United States of
America. The term "consistently applied," as used in connection therewith,
means that the accounting principles applied are consistent in all material
respects to those applied at prior dates or for prior periods.

"Government Authority" shall mean any agency, authority,
board, bureau, commission, court, department, office or instrumentality of any
nature whatsoever of the United States, any state, any province or any county,
city or other political subdivision, or any officer or official thereof acting
in an official capacity.

"Hansell" shall have the meaning specified in the preamble to
this Agreement.

"Hazardous Materials" shall mean each and every element,
compound, chemical mixture, contaminant, pollutant, material, waste or other
substance which is regulated as hazardous or toxic under Environmental Laws or
the release of which is regulated under Environmental Laws. Without limiting
the generality of the foregoing, the term includes: "hazardous substances" as
defined in and regulated under CERCLA; "extremely hazardous substances" as
defined in and regulated under EPCRA; "hazardous waste" as defined in and
regulated under RCRA; "hazardous materials" as defined in and regulated under
HMTA; "chemical substances or mixture" as defined in and regulated under TSCA;
crude oil, petroleum products or any fraction thereof; radioactive materials
including source, by-product or special nuclear materials; asbestos or
asbestos-containing materials; and radon.

"Glengar Investor" shall have the meaning specified in the
preamble to this Agreement.

"Initial Principal Amount" shall have the meaning specified
in Section 2.2(a).

"Investors" shall have the meaning specified in the preamble
to this Agreement.

"Investors' Purchase Price" shall have the meaning specified
in Section 3.3.

"Liabilities to be Discharged" shall mean all liabilities,
indebtedness and Encumbrances of the Company as of the Closing Date, as set
forth on the Closing Balance Sheet, with the exception of Retained Liabilities.
The Liabilities to be Discharged shall expressly include, but shall not be
limited to, all liabilities described on the Closing Balance Sheet as follows:
lines of credit, current portion of notes payable, current portion of capital
lease obligations, notes payable, capital lease obligations and loans
payable-stockholders, each of the foregoing to be determined on a basis
consistent with the Projected Balance Sheet.

"Lucci" shall have the meaning specified in the preamble to
this Agreement.

"Management Agreement" shall have the meaning specified in
Section 2.4(c).

-5-

<PAGE> 10

"Material Adverse Effect" shall mean a material adverse
effect on the financial condition, results of operations, business, properties
or prospects of the Company.

"Options" shall mean all options, warrants, rights to
subscribe to (including any preemptive rights), calls or commitments of any
character whatsoever to which a company is or may be bound, requiring the
issuance or sale of shares of any capital stock or other equity securities of
such company or securities or rights convertible into or exchangeable for such
shares or other equity or debt securities.

"Permitted Distribution" shall mean (a) for the period from
October 1, 1995 through December 31, 1995, base salaries to Hansell and Lucci
in the aggregate amount of $33,333 dollars per month plus shareholders bonuses
in the aggregate amount of $28,233 per month; (b) for the period from January
1, 1996 through the Closing Date, base salaries to Hansell and Lucci in the
aggregate amount of $33,333 per month, pro rated for partial months; (c) the
Tax Distribution; and (d) payments of principal and/or interest on the existing
loans payable by the Company to the Principals.

"Permitted Exceptions" shall mean (i) any and all federal,
state, local, foreign and other real estate, property, ad valorem, transfer,
license, excise or other taxes, fees, general and special assessments or
charges of any kind which are a lien not yet due and payable, (ii)
Encumbrances, including, without limitation, encroachments, building or use
restrictions, exceptions, reservations or other limitations, which do not in
any material respect interfere with or impair the present and continued use of
any one or more of the Facilities in the usual and normal conduct of the
business of the Company, (iii) Encumbrances, including, without limitation,
encroachments, building or use restrictions, exceptions, reservations or other
limitations, which do not materially detract from the value of the property or
assets subject thereto, and (iv) Encumbrances securing any indebtedness,
obligation or liability disclosed on the Balance Sheet.

"Person" shall mean any individual, firm, corporation,
partnership, limited liability company, trust, unincorporated organization or
other entity or a Government Authority, and shall include any successor (by
merger or otherwise) of such Person.

"Preferred Stock" shall have the meaning specified in Section
2.1(a).

"Preliminary Closing Balance Sheet" shall have the meaning
specified in Section 5.5.

"Principals' Note" shall have the meaning specified in
Section 2.2(a).

"Projected Balance Sheet" shall mean the proforma balance
sheet, dated as of April 30, 1996, prepared by the Company and provided to the
Investor on or about January 16, 1996, a copy of which is attached hereto as
Exhibit D.

"Recapitalization Loan" shall have the meaning specified in
Section 2.3.

-6-

<PAGE> 11

"Redemption" shall have the meaning specified in Section
2.2(a).

"Redemption Price" shall have the meaning specified in
Section 2.2(a).

"Redemption Shares" shall have the meaning specified in
Section 2.2(a).

"Representatives" shall mean, with respect to any Person, the
directors, officers, employees, agents or representatives of such Person.

"Retained Liabilities" shall mean all liabilities classified
on the Closing Balance Sheet as follows: accounts payable, accrued expenses
(excluding any accruals for shareholder bonuses), accrued and withheld payroll
taxes and deferred income taxes (other than the Transition Tax), each of the
foregoing classifications to be determined on a basis consistent with the
Projected Balance Sheet.

"Securities" shall have the meaning specified in Section 3.3.

"Securities Act" shall mean the Securities Act of 1933, as
amended, and the Rules and Regulations promulgated thereunder, as applicable.

"Series A Preferred Stock" shall have the meaning specified
in Section 2.1(a).

"Series B Preferred Stock" shall have the meaning specified
in Section 2.1(a).

"Shareholders' Agreement" shall have the meaning specified in
Section 2.4(a).

"Stock Split" shall have the meaning specified in Section
2.1(a).

"Target Capital Expenditures" shall mean the sum of
$1,586,000.

"Target Working Capital" shall mean the sum of $3,905,684.

"Tax Distribution" shall mean an amount calculated to provide
for the federal and state income tax obligations of the Principals arising from
including in the personal federal and state income tax returns of the
Principals the items of income, gain, loss, deduction and credit of the Company
from its operations as an "S corporation" under the Code and comparable state
provisions at the agreed upon effective tax rate of 41.5%, for the short
taxable year commencing with October 1, 1995 and ending on the day before the
Closing Date.

"Taxes" shall have the meaning specified in Section 5.18.

"Transition Bonus Compensation" shall mean bonuses payable to
employees of the Company other than the Principals, in an aggregate amount up
to $100,000, to be disbursed at such

-7-

<PAGE> 12

times, in such amounts and to such employees as may be jointly approved by the
Principals and AP Investor, based upon the achievement of agreed upon financial
performance targets.

"Transition Tax" shall mean all federal and state income tax
obligations of the Company arising from a change in accounting methods of the
Company required by Section 448 of the Code from the cash receipts and
disbursements method to the accrual method as of the Closing Date.

1.2 Rules of Construction.

(a) As used in this Agreement, the singular shall be
deemed to refer to the plural, the masculine gender shall be deemed to refer to
the feminine and neuter genders, and vice versa, as the context requires.

(b) Unless otherwise expressly stated herein, each
reference to any party in this Agreement shall include such party's permitted
successors and assigns.

(c) The table of contents and headings of the
various Sections of this Agreement are for convenience of reference only and
shall not modify, define or limit any of the terms or provisions.

2. Recapitalization of the Company

2.1 Authorization of Capital Stock; Stock Split;
Distribution of Accounts Receivable.

(a) Before the execution of this Agreement,
the Company has authorized, subject to the completion of the Closing, the
following transactions:

(i) the issuance of up to 20,000,000 shares
of Common Stock divided into two classes (the "Common Stock") consisting of
10,000,000 authorized shares of Class A Voting Common Stock (the "Class A
Common Stock") and 10,000,000 authorized shares of Class B Non-Voting Common
Stock (the "Class B Common Stock");

(ii) the conversion of each share of Common
Stock of the Company outstanding immediately prior to the date of this
Agreement into 10,000 shares of Class A Common Stock (the "Stock Split"); and

(iii) the issuance of up to 10,000,000
shares of Preferred Stock of the Company, par value $1.00 per share (the
"Preferred Stock"), of which 7,500,000 shares shall be issuable in two series
consisting of 1,000,000 shares of Series A Preferred Stock (the "Series A
Preferred Stock") and 6,500,000 shares of Series B Preferred Stock (the "Series
B Preferred Stock").

(b) At or before Closing, the Company shall:
(i) consummate the recapitalization transactions described in the previous
subsection 2.1(a) by filing with the Secretary

-8-

<PAGE> 13

of State of the Commonwealth of Pennsylvania Articles of Amendment to the
Company's Articles of Incorporation, in the form attached hereto as Exhibit E
(the "Amendment"), and (ii) adopt by-laws in substantially the form attached
hereto as Exhibit F (the "Amended and Restated By-Laws").

(c) Prior to the date hereof, pursuant to
the Assignment and Collection Agreement, the Company has distributed to the
Principals, in equal shares, those accounts receivable of the Company as are
set forth in said Assignment and Collection Agreement. After Closing, all sums
received, by the Company on account of such accounts receivable so distributed
shall be promptly remitted to the Principals in accordance with the Assignment
and Collection Agreement, subject to the Company's right to pay to the
Investors or to the Company, out of such receipts any sums payable by the
Principals to the Investors or to the Company pursuant to Section 10 below.

2.2 Partial Redemption of the Principals.

(a) As a result of the Stock Split, each of
the Principals will hold 5,000,000 shares of Class A Common Stock. At Closing,
subject to the terms and conditions of this Agreement, the Company will redeem
an aggregate of 8,500,000 shares of Class A Common Stock held by the Principals
(the "Redemption Shares") immediately after the effectiveness of the Stock
Split (the "Redemption") and will pay the Principals an aggregate redemption
price (the "Redemption Price") equal to the sum of:

(i) $23,500,000 (the "Base Cash
Redemption Price"), subject to adjustment pursuant to Section 2.2(b)(i) below,
by wire transfer of funds to an account or accounts designated by the
Principals;

(ii) 1,000,000 shares of Series A
Preferred Stock; and

(iii) $3,000,000 in principal amount (the
"Initial Principal Amount") of the 6% junior subordinated promissory note of
the Company in the form set forth as Exhibit G hereto (the "Principals' Note"),
subject to increase pursuant to Section 2.2(b)(ii) below.

(b) Adjustments to Redemption Price. The
Redemption Price shall be subject to adjustment as follows:

(i) Adjustments to Base Cash Redemption
Price. The Base Cash Redemption Price shall be adjusted as follows, with the
adjustments in paragraphs (A), (B) and (C) below being governed by the
procedures set forth in Section 2.2(c) below:

(A) The Base Cash Redemption Price
shall be decreased, on a dollar-for-dollar basis, by the amount of the
Liabilities to be Discharged.

-9-

<PAGE> 14

(B) The Base Cash Redemption Price
shall be increased or decreased, by the amount by which the Actual Working
Capital is, respectively, greater than or less than the Target Working Capital.

(C) The Base Cash Redemption Price
shall be increased or decreased, by the amount by which the Actual Capital
Expenditures are, respectively, greater than or less than the Target Capital
Expenditures.

(D) The Base Cash Redemption Price
shall be decreased, on a dollar-for-dollar basis, in an amount equal to the
face amount of all receivables distributed to the Principals pursuant to
Section 2.1(c) above.

The Base Cash Redemption Price, as adjusted pursuant to paragraphs (A) through
(D) above, is referred to in this Agreement as the "Cash Redemption Price".

(ii) Increase in Principal Amount of the
Principals' Note. The Principals' Note shall provide that the Initial Principal
Amount of the Note shall be increased by the additional principal sum of
$1,000,000, if and only if the Adjusted Stub Period Earnings are greater than
(A) $4,000,000, divided by (B) 274, and multiplied by (C) the number of days
from and including the day after the Closing Date through and including
September 30, 1996. The increase in principal sum of the Principals' Note, if
applicable as aforesaid, shall occur upon the date on which the independent
auditors of the Company have completed their review and audit of the financial
condition of the Company for the period ending September 30, 1996 and have
issued their final audit report with respect thereto, subject to the dispute
provisions of the following sentence. If the Principals or their independent
auditors dispute the determination of the Adjusted Stub Period Earnings as
reported by the Company's auditors, they shall notify AP Investor and the
Company's auditors within ten (10) days after receipt of the audit report. The
parties and their respective auditors shall promptly meet in a good faith,
diligent effort to resolve the dispute. If they are unable to resolve such
dispute within ten (10) days after notice of the dispute from the Principals,
the matter shall be referred to one of the following accounting firms mutually
designated by the auditors of the Company and the accountants of the
Principals: Coopers & Lybrand; Ernst & Young; Price Waterhouse; or KPMG Peat
Marwick. The decision of such third accounting firm shall be binding and
conclusive. If, after final determination of the Adjusted Stub Period Earnings
as aforesaid, the condition set forth in the first sentence of this
subparagraph (ii) shall have been satisfied, the increase in the principal
amount of the Principals' Note shall occur automatically and shall be effective
retroactive to the Closing Date, without any further act or instrument of the
Company; provided, however, that the Investors shall cause the Company to
acknowledge such increase, by endorsement to the Principals' Note or other
appropriate written instrument.

(c) Procedures for Determining Closing
Adjustments. The parties acknowledge that the financial statements of the
Company as of and for the period ending on the Closing Date, which are to be
utilized for the Closing adjustments hereunder, will not yet be available on
the Closing Date. Accordingly, at Closing the parties shall make preliminary
adjustments based on the Preliminary Closing Balance Sheet. At Closing, the
adjustments set forth

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in paragraphs (A), (B) and (C) of Section 2.2(b)(i) above shall be made
pursuant to the Preliminary Closing Balance Sheet, subject to later
reconciliation as set forth below. Within sixty (60) days after Closing, the
parties shall cause Asher & Company, Ltd. to prepare and deliver to the parties
the balance sheet of the Company as of and for the period ending on the Closing
Date, prepared in accordance with GAAP and on a basis consistent with the
Projected Balance Sheet, and prepared as though the Company were still an "S
corporation" as of the Closing Date. Any of the Principals or the Investors who
disputes such balance sheet shall so notify the other parties within ten (10)
days of receipt thereof. The parties and their respective auditors shall
promptly meet in a diligent, good faith effort to resolve such dispute. If they
are unable to resolve such dispute within ten (10) days of the delivery of
notice in accordance with the previous sentence, the matter shall be referred
to one of the following accounting firms mutually designated by the accountants
of the Principals and the auditors of the Company: Coopers & Lybrand; Ernst &
Young; Price Waterhouse; or KPMG Peat Marwick. The decision of such third
accounting firm shall be binding and conclusive. The balance sheet so
established is referred to herein as the "Closing Balance Sheet." Upon the
establishment of the Closing Balance Sheet, the closing adjustments to the Cash
Redemption Price shall be finally reconciled and an appropriate payment shall
be made by the Principals to the Company or by the Company to the Principals,
as may be appropriate.

2.3 Refinancing of Company Debt. At Closing, the
Company will obtain a loan or loans from one or more banks or other financial
institutions, on terms and conditions mutually acceptable to the Principals and
the Investors (the "Recapitalization Loan"). At or promptly after Closing, the
Company will use the proceeds of the Recapitalization Loans and of the
Investors' Purchase Price, to the extent necessary, to satisfy in full all
Liabilities to be Discharged.

2.4 Other Transactions to Occur At the Closing:

(a) At Closing, the Investors and the
Principals, as all holders of Capital Stock of the Company, shall mutually
execute and deliver a Shareholders' Agreement (the "Shareholders' Agreement"),
substantially in the form attached hereto as Exhibit H.

(b) At Closing, the Company and each of
the Principals shall mutually execute and deliver the Employment Agreements,
substantially in the form attached hereto as Exhibit C.

(c) At Closing, the Company and AP
Investor shall mutually execute and deliver the Management Agreement
substantially in the form attached hereto as Exhibit I (the "Management
Agreement").

3. Purchase of Stock by the Investors.

3.1 Authorization of Stock. The Company has
authorized, subject to the consummation of Closing hereunder, the issuance of
the Series B Preferred Stock to be redeemable at the option of holders of the
Series B Preferred Stock under certain conditions, and otherwise have the
designations, preferences, limitations, and rights, all as provided for in the
Amendment.

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<PAGE> 16

3.2 Sale of Stock to the Investors.

(a) At Closing, subject to the terms and conditions
of this Agreement, the Company shall issue and sell to AP Investor, and AP
Investor shall purchase from the Company:

(i) 6,226,316 shares of Series B
Preferred Stock, for an aggregate purchase price of $6,226,316 (the "AP
Preferred Stock Purchase Price");

(ii) 1,594,112 shares of Class A Common
Stock for an aggregate purchase price of $1,594,112 (the "AP Class A Common
Stock Purchase Price"); and

(iii) 1,279,573 shares of Class B Common
Stock for an aggregate purchase price of $1,279,573 (the "AP Class B Common
Stock Purchase Price").

(b) At Closing, subject to the terms and conditions
of this Agreement, the Company shall issue and sell to Glengar Investor, and
Glengar Investor shall purchase from the Company:

(i) 273,684 shares of Series B Preferred
Stock, for an aggregate purchase price of $273,684 (the "Glengar Preferred
Stock Purchase Price"); and

(ii) 126,315 shares of Class A Common
Stock, for an aggregate purchase price of $126,315 (the "Glengar Common Stock
Purchase Price").

3.3 Certain Terms. The AP Class A Common Stock
Purchase Price, the AP Class B Common Stock Purchase Price and the AP Preferred
Stock Purchase Price are referred to collectively herein as the "AP Investor's
Purchase Price". The Glengar Preferred Stock Purchase Price and the Glengar
Common Stock Purchase Price are referred to collectively herein as the Glengar
Investor Purchase Price. The AP Investor's Purchase Price and the Glengar
Investor's Purchase Price are referred to collectively herein as the Investors'
Purchase Price. The Preferred Stock and the Common Stock issuable to the
Investors hereunder shall hereinafter collectively be referred to as the
"Securities."

4. Closing Date; Conditions to Closing; Deliveries.

4.1 The Closing. The closing of the transactions
described in this Agreement shall be held on May 24, 1996, at the offices of
Wolf, Block, Schorr and Solis-Cohen, 15th and Chestnut Streets, Philadelphia,
PA 19102 (the "Closing"), subject to fulfillment of all of the conditions to
the Closing set forth in this Agreement, or at such time and place as the
Principals and the Investors may agree. (The date of the Closing is hereinafter
referred to as the "Closing Date.")

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<PAGE> 17

4.2 Conditions to the Investor's Obligations. The
Investors' obligations to consummate the Closing shall be subject to the
fulfillment on or before the Closing Date of the following conditions, any of
which may be waived by both of the Investors in writing:

(a) The representations and warranties
made by the Principals in this Agreement shall be true and correct when made,
and shall be true and correct on the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date.

(b) The Company and the Principals shall
have performed all obligations and conditions herein required to be performed
or observed by it and them on or prior to the Closing Date.

(c) The Company shall have obtained, and
the Company and the Principals hereby agree to exercise diligent, good faith
efforts to obtain, all consents, permits and waivers necessary or appropriate
for the consummation of the transactions contemplated by this Agreement,
including (if necessary) the consent (or other appropriate comfort acceptable
to the parties) of the holders of all notes payable of the Company and lessors
of equipment to the Company to permit the prepayment of all such notes and
lease obligations on or about the Closing Date without penalty or premium.

(d) The Amendment shall have been filed
with the proper offices of the Secretary of the Commonwealth of the
Commonwealth of Pennsylvania.

(e) Pursuant to the Shareholders'
Agreement, the Principals shall have voted their shares of Class A Common Stock
in favor of two nominees to the Company's Board of Directors identified by AP
Investor and one nominee to the Company's Board of Directors identified by
Glengar Investor and such nominees shall have been elected as directors of the
Company.

(f) Each of the Investors shall have
completed all investigations of the Company's business that such Investor deems
necessary pursuant to Section 9 of this Agreement, including, but not limited
to, discussions with the Company's customers, and each Investor shall be
satisfied with the results of such investigations.

(g) Closing and funding shall have
occurred under the Recapitalization Loan on terms and conditions acceptable to
each Investor in its sole discretion.

(h) No event or circumstance shall exist
or have occurred between the date of this Agreement and the scheduled date for
Closing which cause or is reasonably likely to cause a Material Adverse Effect
on the Company or a material adverse change in capital markets in the United
States of America that has a material adverse effect on the investment decision
of the Investors.

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<PAGE> 18

(i) The Company shall have obtained
"key-person" life insurance on the lives of Hansell and Lucci, each in the
amount of five million dollars ($5,000,000) and on terms reasonably acceptable
to the Investor.

(j) The Principals shall have repaid in
full all indebtedness of the Principals to the Company together with any
accrued interest thereon, or alternatively all such indebtedness shall have
been netted against any loans payable by the Company to the Principals.

(k) None of the parties hereto shall be
subject to any order or injunction of a Government Authority of competent
jurisdiction which prohibits the consummation of the transactions contemplated
by this Agreement. In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable efforts to have any such
injunction lifted.

4.3 Conditions to the Principals' Obligations. The
obligation of the Principals to consummate Closing shall be subject to the
fulfillment on or before the Closing Date of the following conditions, any of
which may be waived in writing by the Principals:

(a) The representations and warranties
made by the Investors in this Agreement shall be true and correct when made,
and shall be true and correct on the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date.

(b) The Investors shall have performed
all obligations and conditions herein required to be performed or observed by
it on or prior to the Closing Date.

(c) The Company shall have obtained, and
the Company and the Principals hereby agree to exercise diligent, good faith
efforts to obtain, all consents, permits and waivers necessary or appropriate
for the consummation of the transactions contemplated by this Agreement,
including (if necessary) the consent (or other appropriate comfort acceptable
to the parties) of the holders of all notes payable of the Company and the
lessors of equipment to the Company to permit the prepayment of all such notes
and lease obligations on or about the Closing Date without penalty or premium.

(d) Pursuant to the Shareholders'
Agreement, each of the Investors shall have voted its shares of Class A Common
Stock in favor of Hansell and Lucci as nominees to the Company's board of
directors, and such nominees shall have been elected as directors of the
Company.

(e) None of the parties hereto shall be
subject to any order or injunction of a Government Authority of competent
jurisdiction which prohibits the consummation of the transactions contemplated
by this Agreement. In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable efforts to have any such
injunction lifted.

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<PAGE> 19

(f) If a closing and funding occurs with
respect to the Recapitalization Loan, the terms of such closing and funding
shall be on terms and conditions acceptable to the Principals.

4.4 Deliveries of the Company at Closing.

(a) The Company shall make the following
deliveries to the Principals at Closing:

(i) the Principals' Note in the amount
of the Initial Principal Amount;

(ii) a certified check or one or more
wire transfers in the amount of the Cash Redemption Price, reduced by the
escrow amounts required hereunder which amounts shall be paid to Escrow Agent;

(iii) a duly executed stock certificate
registered in the name of Hansell for 750,000 shares of Class A Common Stock;

(iv) a duly executed stock certificate
registered in the name of Lucci for 750,000 shares of Class A Common Stock;

(v) a duly executed stock certificate
registered in the name of Hansell for 500,000 shares of Series A Preferred
Stock;

(vi) a duly executed stock certificate
registered in the name of Lucci for 500,000 shares of Series A Preferred Stock;
and

(vii) the Employment Agreements,
executed by the Company.

(b) The Company shall make the following
deliveries to the Investors at Closing:

(i) a duly executed stock certificate
registered in the name of AP Investor, representing 6,226,316 shares of Series
B Preferred Stock;

(ii) a duly executed stock certificate
registered in the name of Glengar Investor, representing 273,684 shares of
Series B Preferred Stock;

(iii) a duly executed stock certificate
registered in the name of AP Investor, representing 1,594,112 shares of Class A
Common Stock;

(iv) a duly executed stock certificate
registered in the name of Glengar Investor, representing 126,315 shares of
Class A Common Stock;

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<PAGE> 20

(v) a duly executed stock certificate
registered in the name of AP Investor, representing 1,279,573 shares of Class B
Common Stock;

(vi) A date-stamped copy of the
Amendment, as filed with the Secretary of State of the Commonwealth of
Pennsylvania;

(vii) Copies of resolutions adopted by
the Board of Directors and the shareholders of the Company authorizing and
approving this Agreement, the Stock Split, the Redemption, the Amendment, the
issuance of the Securities and the consummation of all other transactions
contemplated hereby, certified by the Secretary of the Company;

(viii) Copies of the Company's Articles
of Incorporation (including the Amendment) and By-laws (as amended pursuant to
this Agreement) as then in effect, certified by the Secretary of the Company;

(ix) The Management Agreement, executed
by the Company; (x A subsistence certificate for the Company issued by the
Secretary of State of the Commonwealth of Pennsylvania, dated within fifteen
(15) days prior to the Closing Date;

(xi) An opinion letter, from Eckell
Sparks Levy Auerbach Monte & Emper, a Professional Corporation, counsel to the
Company and the Principals, addressed to the Company and the Investors, dated
the Closing Date, substantially in the form of Exhibit J attached hereto; and

(xii) A certificate of incumbency
signed by the Secretary of the Company, certifying the names, titles and
signatures of the Company's officers and directors.

(c) The Company shall pay the reasonable
fees and expenses of the Investors' legal, accounting and other professional
advisors related to this transaction (or have made provisions satisfactory to
the Investors for the payment of such expenses), in the amount indicated on
bills presented to the Company at or within a reasonable time after Closing,
and shall pay to AP Investor an investment banking/advisory fee of $250,000
with respect to the Recapitalization Loan.

(d) The Company shall pay the reasonable
fees and the expenses of the Principals' legal, accounting and other
professional advisors related to this transaction (or have made provisions
satisfactory to the Principals for the payment of such expenses), in the amount
indicated on bills presented to the Company at or within a reasonable time
after Closing.

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4.5 Deliveries of the Principals at Closing.

(a) The Principals shall make the
following deliveries to the Company at Closing:

(i) Certificate No. 1 representing an
aggregate of 5,000,000 shares of Class A Common Stock (giving effect to the
Stock Split) owned by Hansell, duly endorsed for transfer or with stock powers
attached duly executed in blank; and

(ii) Certificate No. 2 representing an
aggregate of 5,000,000 shares of Class A Common Stock (giving effect to the
Stock Split) owned by Lucci, duly endorsed for transfer or with stock powers
attached duly executed in blank.

(b) The Principals shall make the
following deliveries to the Investors and the Company at Closing:

(i) A certificate, executed by the
Principals, dated the Closing Date, certifying to the fulfillment of the
conditions specified in Sections 4.2(a), 4.2(b), 4.2(c) and 4.2(e) hereof.

(ii) The Employment Agreements,
executed by the Principals.

(iii The Shareholders' Agreement,
executed by each of the Principals.

(iv) A Non-Foreign Affidavit pursuant
to the Foreign Investment in Real Property Tax Act, in customary form.

4.6 Deliveries of the Investors at Closing. At
Closing, the Investors shall: (a) pay the Investors' Purchase Price, by wire
transfer to an account designated by the Company, (b) deliver the Shareholders'
Agreement, duly executed by the Investors, and the Management Agreement, duly
executed by AP Investor, (c) deliver a certified resolution of the Board of
Directors of AP Investor dated the Closing Date certifying the fulfillment of
the conditions specified in Sections 4.3(a) and 4.3(b) above, and (d) deliver
an opinion letter from Wolf, Block, Schorr and Solis-Cohen, counsel to AP
Investor, addressed to the Company and the Principals, substantially in the
form of Exhibit K attached hereto.

5. Representations, Warranties and Agreements of the
Principals as to the Company. As material inducement to the Investors to enter
into this Agreement and consummate the purchase of the Securities hereunder,
the Principals, jointly and severally, make the following representations,
warranties and covenants to the Investors:

5.1 Corporate Status; Outstanding Stock. The
Company is a corporation duly organized and validly subsisting under the laws
of the Commonwealth of Pennsylvania, has the power and authority to own,
operate and lease its properties and to carry on its business as it is now

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being conducted, and is duly qualified to do business as a foreign corporation
in the jurisdictions specified on Schedule 5.1, which constitute all the
jurisdictions in which such qualification is required, or in which the failure
to qualify would have a Material Adverse Effect on the ability of the Company
to do business in such jurisdiction or would result in the Company being liable
for material fines or penalties. As of the date of this Agreement, the Company
has an authorized capital consisting of 1,000 shares of Common Stock, no par
value; and no other shares of any class or series of capital stock in the
Company are outstanding or authorized. Upon the effectiveness of the Amendment,
the Company will have an authorized capital consisting of 20,000,000 shares of
Common Stock consisting of 10,000,000 shares each of Class A Common Stock and
Class B Common Stock, and 10,000,000 shares of Preferred Stock, consisting of
1,000,000 shares of Series A Preferred Stock, 6,500,000 shares of Series B
Preferred Stock and 2,500,000 shares subject to issuance by the Company's Board
of Directors in such classes or series containing such preferences, limitations
and special rights as the Board of Directors shall determine from time to time.
All outstanding shares are, and the Securities when issued in accordance with
the terms of this Agreement will be, validly issued, fully paid and
non-assessable. There are not issued and outstanding any bonds, debentures,
notes or other indebtedness having the right to vote on any matter on which the
Company's shareholders may vote ("Voting Debt"). Except for the warrants being
issued in connection with the Recapitalization Loan, there are no Options,
shareholder agreements or other instruments or agreements outstanding giving
any person the right to acquire any shares of Capital Stock of the Company or
any Voting Debt nor are there any commitments to issue or execute any such
option. None of the outstanding shares of Capital Stock of the Company has been
issued in violation of any preemptive rights of any security holder of the
Company. No person has any rights for or relating to the registration of any
capital stock of the Company or any successor thereto. The minute books and
stock records of the Company are complete and accurate in all material respects
and all signatures included therein are the genuine signatures of the persons
whose signatures are required. True, correct and complete copies of the
Company's Articles of Incorporation and By-Laws, and all amendments to both
(including the Amendment), have been delivered to AP Investor (on behalf of
Investors).

5.2 Authority; No Conflict; Binding Agreement. The
Company has all requisite corporate power and has taken all necessary and
proper corporate action to authorize and approve this Agreement, the Amendment,
the Stock Split, the Redemption, the sale to the Investors of the Securities
and the other transactions and agreements contemplated hereby. The execution
and delivery by the Company of this Agreement and all Ancillary Agreements to
be executed by the Company hereunder do not and, assuming the Company obtains
the consent of the lenders referred to in Section 4.2(c) of this Agreement, the
performance of its obligations under this Agreement and such Ancillary
Agreements will not, violate or conflict with either the Articles of
Incorporation (including the Amendment) or Amended and Restated By-laws of the
Company, result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under or conflict
with any Company Agreement (as hereinafter defined) or under any agreement,
instrument or other document to which the Company is a party or any of its
assets are bound or affected or, to the Best Knowledge of the Company and the
Principals, without having made any independent inquiry, conflict with or
violate any law, regulation, court order, judgment or decree applicable to the
Company. This Agreement constitutes, and each of the Ancillary

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Agreements when delivered will constitute the valid and binding obligation of
the Company, enforceable against it in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws relating to or effecting the rights of
creditors generally, and to the limitations imposed by general principles of
equity, regardless of whether enforcement is considered in proceedings at law
or in equity.

5.3 Officers; Directors; Bank Accounts. Schedule
5.3 is a correct and complete list of all directors and officers of the
Company, all bank accounts and safe deposit boxes of the Company and all
persons authorized to sign checks drawn on such accounts and to have access to
such safe deposit boxes.

5.4 Subsidiaries and Joint Ventures. The Company
has no subsidiaries and does not own any capital stock, security, partnership
interest or other interest of any kind in any corporation, partnership, joint
venture, association or other entity.

5.5 Financial Statements. The Balance Sheets of the
Company as of September 30, 1994 and 1995 and the related Statements of
Operations, Shareholders' Equity and Cash Flows as of and for the fiscal years
ended September 30, 1994 and 1995, and all related schedules and notes to the
foregoing, copies of all of which constitute part of Schedule 5.5, were
prepared and audited by Asher and Company, Ltd, certified public accountants,
in accordance with GAAP, and fairly and accurately present, in all material
respects, the financial position of the Company, and the results of the
operations and cash flows of the Company for the periods reported upon. Also
included as part of Schedule 5.5 is a Balance Sheet as of and for the period
ending April 30, 1996 (the "Preliminary Closing Balance Sheet") and the related
Statements of Operations and Cash Flows for the period ended April 30, 1996,
and all related notes thereto. The Preliminary Closing Balance Sheet and the
related Statements of Operations and Cash Flows were prepared by management of
the Company in accordance with generally accepted accounting principles and
practices consistently applied throughout the period reported upon and with
past periods (except that such financial statements do not contain all notes
that would be required under GAAP), and fairly and accurately present, in all
material respects, the financial position of the Company as of the date of the
Preliminary Closing Balance Sheet, and the results of the operations and cash
flows of the Company for the period reported upon. Included as part of Schedule
5.5 are true and correct copies of all correspondence sent by all legal counsel
to the auditors which prepared such financial statements in response to letters
from the Company to such counsel requesting that the auditors be supplied with
certain information regarding pending or threatened litigation, unasserted
claims and other matters in connection with such financial statements. The
Principals shall use their best efforts to obtain, and deliver at Closing, a
commitment from Asher and Company, Ltd. to certify the Company's financial
statements included in any registration statement filed under the Securities
Act in connection any public offering of the Company's capital stock.

5.6 Real Estate. The Company owns no real estate
and has no interest in any real estate except that the Company leases, as
tenant, the premises described on Schedule 5.6 pursuant to the lease agreements
listed on said Schedule. Except as shown on such Schedule, to the Best
Knowledge of the Principals, without having made an independent inquiry, all of
the Facilities

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leased by the Company and all heating and air conditioning equipment, plumbing,
electrical and other mechanical facilities which are part of, or located in,
such Facilities are in operating condition and repair, and do not require any
repairs other than normal routine maintenance to maintain them in operating
condition and repair.

5.7 Personal Property.

(a) Except as shown on Schedule 5.7(a)
and subject to liens of lessors under the equipment leases described in
Schedule 5.11(a) (all of which will be satisfied and released at or prior to
Closing pursuant to Section 2.3 hereof): (i) the Company has good, valid and
marketable title to all personal property, tangible and intangible, reflected
on the Preliminary Closing Balance Sheet, and to all other personal property
owned by it, free and clear of Encumbrances, (ii) the Company is the owner of
all the personal property now located in or upon the premises occupied by it
and of all personal property which it uses in the operation of its business and
(iii) all Fixtures and Equipment, and other tangible personal property of the
Company used or useful for the operation of the Company's business as presently
conducted or now being contemplated, are in good operating condition and repair
and do not require any repairs other than normal routine maintenance to
maintain such property in good operating condition and repair.

(b) The corporate name of the Company and
the trade names, trademarks, service marks and assumed names (the "Marks")
listed on Schedule 5.7(b) are the only Marks which are used or required to be
used by the Company in the operation of its business. No claim has been
asserted against the Company involving any conflict or claim of conflict of any
of its Marks with the tradenames, trademarks, service marks or corporate names
of others, and neither the Principals nor the Company has knowledge of any
basis for any such claim of conflict. The Company is the sole and exclusive
owner of its Marks and has the sole and exclusive right to use the Marks. The
Investors acknowledge that the Company has not registered any such Marks with
the U. S. Patent and Trademark Office.

(c) The Company is the registered owner
of no United States and foreign copyrights and patents. To the Best Knowledge
of the Company and the Principals, without having made independent inquiry, no
process used by the Company or any service sold by the Company infringes upon
any patent, patent application, trademark, copyright, trade name or service
mark of any other party. Within the past five years, the Company has not done
business under and has not been known by any name other than its current
corporate name and the names "RMH Telemarketing", "RMH Insurance Agency" (in
Utah only), and "RMH Sales and Marketing" (in Idaho only), and has not done
business at any address other than the premises identified in the Leases listed
on Schedule 5.6 and 300 E. Lancaster Avenue, Wynnewood, PA 19096.

5.8 Accounts Receivable. Each of the accounts
receivable of the Company as shown on the Preliminary Closing Balance Sheet
constitutes a valid claim in the full amount thereof against the debtor charged
therewith on the books of the Company and has been acquired in the ordinary
course of the Company's business. Each such account receivable is fully
collectible on or before the maturity date thereof (or, with respect to
accounts receivable without a

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maturity date, within 180 days after Closing), to the extent of the face value
thereof (less the amount of the reserve for doubtful accounts, if any,
reflected on the books of the Company with respect to such account). No account
debtor has any valid set-off, deduction or defense with respect thereto and no
account debtor has asserted any such set-off, deduction or defense.

5.9 Insurance. The Company maintains insurance
policies bearing the numbers, for the terms, with the companies, in the
amounts, and providing the general coverage, set forth on Schedule 5.9. All of
such policies are in full force and effect and the Company is not in default of
any material provision thereof. The Company has not received notice of the
intention of any issuer of any policy to cancel or refusal to renew any policy
or to require any material increase in premiums thereunder.

5.10 Liabilities. The Company has no liabilities,
whether related to tax or non-tax matters, known or unknown, due or not yet
due, liquidated or unliquidated, direct or indirect, fixed or contingent, or
otherwise, except as and to the extent reflected in the Preliminary Closing
Balance Sheet or as set forth on Schedule 5.10. The disclosure in any other
schedule hereto of any claim, potential claim or other matter shall not affect
the generality of the foregoing representation, except to the extent such claim
or other matter is set forth on Schedule 5.10 or reserved against in the
Preliminary Closing Balance Sheet. Notwithstanding the disclosure thereof in
Schedule 5.10, the Principals represent and warrant that none of the Investor
Indemnified Parties shall suffer any Investor Losses, subject to the
limitations of Section 10.6 below, arising in any way from any of the
following: (a) the claim of Kenneth Mugler described on Schedule 5.12; (b) the
claim of Brian Jenkins described on Schedule 5.12; and any liabilities for
taxes imposed by localities on the gross receipts or income of the Company's
business prior to the closing date as described more fully in item 8 on
Schedule 5.10.

5.11 Contracts, Leases, Agreements and Other
Commitments.

(a) With the exception of agreements
involving a maximum possible liability or obligation on the part of the Company
of less than $10,000 each and less than $100,000 in the aggregate, the Company
is not a party to or bound by any written, oral or implied contract, agreement,
lease, power of attorney, guaranty, surety arrangement, or other commitment,
including but not limited to any contract or agreement for the purchase or sale
of merchandise or for the rendition of services, except for the following
(which are hereinafter collectively called the "Company Agreements"):

(i) The leases set forth on Schedule
5.6 and the employment agreements set forth on Schedule 5.12(a); and

(ii) The agreements listed on Schedule
5.11(a).

(b) True, correct and complete copies of
all of the Company Agreements (including all amendments, modifications and
supplements thereto) have been delivered to AP Investor (on behalf of both
Investors) (with the exception of confidentiality agreements and

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<PAGE> 26

similar agreements with employees, as referenced in Item 1 of Schedule
5.12(a)). All of the Company Agreements are valid, binding and enforceable
against the respective parties thereto in accordance with their respective
terms, subject to bankruptcy and other laws of general application affecting
the rights of creditors and to general equitable principles. The Company has
not assigned, pledged, mortgaged or hypothecated any of its rights under the
Company Agreements or waived or released any material rights thereunder. Except
as shown on Schedule 5.11(b): (i) the Company and all other parties to all of
the Company Agreements have performed all material obligations required to be
performed to date under such agreements and neither the Company nor any such
other party is in material default or in arrears under the terms thereof, and
no condition exists or event has occurred which, with the giving of notice or
lapse of time or both, would constitute a default thereunder, and (ii) the
consummation of this Agreement and the transactions contemplated hereby will
not result in any default on the part of the Company or an impairment or
termination of any of the Company's rights under any Company Agreement.

(c) Schedule 5.11(c) contains a complete
and correct listing of all outstanding written and oral proposals, bids, offers
or guaranties made by the Company, which, if accepted, would or could impose
any debts, obligations or liabilities upon the Company, and all unexpired
warranties or guarantees relating to the Company's services.

5.12 Employment Matters. Except as set forth on
Schedule 5.12, (i) there is no labor strike, dispute, slow down or stoppage
pending or, to the knowledge of the Company or the Principals, threatened
against or affecting the Company or its business, (ii) none of the Company's
employees are represented by a union and no union organizational activity
exists respecting the Company's employees and (iii) no collective bargaining
agreement exists or is under negotiation which is or would be binding on the
Company nor has the Company been a party to any collective bargaining
agreement. The Company's payroll and other employee records are maintained in
accordance with applicable law. No Government Authority or other Person has
asserted or threatened to assert any deficiency, violation or Action related to
employment matters including but not limited to wage payment, wage/hour,
overtime compensation, employee benefits, leave, occupational safety and
health, discrimination, retaliation, labor relations, whistleblower or other
laws and regulations, or any common law claims including, but not limited to,
breach of contract, estoppel, fraud, misrepresentation, wrongful discharge,
invasion of privacy, discharge in violation of public policy, breach of implied
covenant of good faith and fair dealing or defamation, and to the Best
Knowledge of the Company and the Principals, no audit or investigation by any
Government Authority with respect to any such matters is threatened or pending.
Without limiting the generality of Paragraph 5.11 hereof, the Company is not a
party to any employment agreement, consulting agreement or confidentiality
agreement, except as shown on Schedule 5.12(a). All employees of the Company
are listed on Schedule 5.12(b), which also shows for each employee his or her
starting date, salary and other compensation, date of last income adjustment,
accrued vacation pay or compensation in lieu of vacation, and accrued sick pay.
There is no employee of the Company whose employment is not terminable at will,
except as shown in Schedule 5.12(a). There are no handbooks, policies or
procedures relating to employment, compensation or benefits except as described
on Schedule 5.12(c).

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5.13 Employee Benefit Plans.

(a) Definitions.

"Code" means the Internal Revenue Code
of 1986 (or any successor statute), as amended from time to time.

"ERISA Affiliate" means all persons
which are treated as being under common control or as a single employer with
the Company or any of its subsidiaries under Section 414(b), (c), (m) or (o) of
the Code.

"ERISA" means the Employee Retirement
Income Security Act of 1974 (or any successor statute), as amended from time to
time.

"Multiemployer Plan" means a
multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which any
ERISA Affiliate makes, is obligated to make, or has made or been obligated to
make contributions.

"Pension Plan" means a pension plan (as
defined in Section 3(2) of ERISA) which the Company or any of its subsidiaries
sponsors, maintains, or makes or is obligated to make contributions.

"Plan" means any employee benefit plan
(as defined in Section 3(3) of ERISA), severance, bonus or other incentive
compensation, vacation, change of control, stock option, stock appreciation
right, service award, company car, club membership, relocation, educational
assistance, patent award, employee loan, employment or consultancy policy,
practice or arrangement as to which the Company, or any of its subsidiaries
sponsors, maintains or makes or is obligated to make contributions or payments.

"412 Plan" means a pension plan (as
defined in Section 3(2) of ERISA) which the Company, or its subsidiaries, or
any ERISA Affiliate sponsors or maintains, and is covered under Section 412 of
the Code.

"Reportable Event" means any of the
events described in Section 4043(b)(1)-(6), (8) or (9) of ERISA.

"Unfunded Pension Liability" means, as
of any determination date, the amount, if any, by which the present value of
all accrued benefits under a Plan subject to Title IV of ERISA exceeds the fair
market value of all assets of such plan, all determined using the actuarial
assumptions that would be used by the Pension Benefit Guaranty Corporation in
the event of a termination of the plan on such determination date.

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<PAGE> 28

"Withdrawal Liabilities" means the
amount of liability determined or which may be determined pursuant to Section
4201 of ERISA with respect to a Multiemployer Plan.

(b) Representations and Warranties.

(i) Schedule 5.13 separately lists all
Plans, 412 Plans, Multiemployer Plans and separately identifies all Plans
providing retiree benefits.

(ii) Neither the Company nor any ERISA
Affiliate has ever maintained, contributed to or sponsored, or does now
maintain, contribute to or sponsor, any Plans that are Section 412 Plans,
Multiemployer Plans or that are Plans covered by Title IV of ERISA in
accordance with Section 4021 of ERISA.

(iii) True and complete copies of the
following documents with respect to any Plan (as applicable) have been
delivered to AP Investor (on behalf of both Investors) (1) most recent plan
document and trust agreement (including any amendments thereto and prior plan
documents, if amended within the last two years); (2) the two most recent Form
5500 and schedules thereto; (3) the most recent Internal Revenue Service
("IRS") determination letter; (4) all of the summary plan descriptions; (5) a
written description of each material non-written Plan, if any; and (6) each
written communication to employees intended to describe a Plan or any benefit
provided by a Plan. All IRS form 5500's required for any Plan have been timely
filed. Other than under the terms of the Plans themselves and the requirement
of applicable law, each Plan can be terminated at any time without penalty or
the incurrence of any material liability.

(iv) Each Plan is and has been
maintained in compliance in all material respects with applicable law,
including but not limited to ERISA and the Code and with any applicable
collective bargaining agreements or other contractual obligations.

(v) Each Plan intended to be tax
qualified under Section 401(a) of the Code has been determined by the IRS to so
qualify or a request for such a determination has been filed, and the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the Code or a request for such a determination has
been filed, and to the Best Knowledge of the Company and the Principals,
nothing has occurred which would cause the loss of such qualification or
tax-exempt status.

(vi) Schedule 5.13 sets forth the
present value of the liability of each Plan which is a welfare plan (as defined
in Section 3(1) of ERISA) that provides benefits or coverage extending beyond a
participant's termination of employment with the Company and its subsidiaries,
excluding the liability for those benefits required by Section 4980B of the
Code or those which are provided at the sole expense of the participant or the
beneficiary of the participant. The Company, its subsidiaries and each ERISA
Affiliate have complied in all material respects with the notice and
continuation coverage requirements of Section 4980B of the Code.

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<PAGE> 29

(vii) There are no pending or, to the
best knowledge of the Company, threatened claims, actions or lawsuits, other
than routine claims for benefits in the ordinary course, asserted or instituted
against any Plan or its assets, or against any fiduciary with respect to any
Plan or Pension Plan for which the Company or its subsidiaries may be directly
or indirectly liable, through indemnification obligations or otherwise.

(viii) Neither the Company, nor any of
its subsidiaries has engaged, directly or indirectly, in a non-exempt
prohibited transaction (as defined in Section 4975 of the Code or Section 406
of ERISA) in connection with any Plan.

(ix) Except as disclosed on Schedule
4.13, during the last two years there have been no amendments to any Plan, nor
has any Plan been established, which resulted in a material increase in the
accrued or promised benefits of any employee of the Company or its
subsidiaries.

(x) Neither the Company, nor its
subsidiaries sponsors, maintains or has obligations, direct, contingent or
otherwise, with respect to any Plan that is subject to the laws of any country
other than the United States.

(xi) None of the ERISA Affiliates
maintains an employee stock ownership plan or other plan holding securities of
the Company or any of its subsidiaries.

5.14 Litigation. Except for the matters set forth
on Schedule 5.14, the Company is not a party to or, to the Company's knowledge,
threatened with any Action, there is no judgment, decree, award or order
outstanding against the Company, and the Company is not contemplating the
institution of any Action.

5.15 Environmental Matters.

(a) To the Best Knowledge of the
Principals and the Company, without having made an independent inquiry, each of
the Facilities and all activities thereon or relating thereto are in compliance
with all Environmental Laws.

(b) To the Best Knowledge of the
Principals and the Company, without having made an independent inquiry, no
Contamination is present in, on or under any of the Facilities. "Contamination"
shall mean the presence of Hazardous Substances which may require remediation
under any Environmental Statute.

(c) To the Best Knowledge of the
Principals and the Company, without having made an independent inquiry, none of
the following is present at any of the Facilities: (A) polychlorinated
biphenyls ("PCBs") or substances containing PCBs; (B) asbestos or materials
containing asbestos; (C) radon at levels deemed unacceptable by the U.S.
Environmental Protection Agency; (d) urea formaldehyde foam insulation; or (e)
storage tanks.

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<PAGE> 30

(d) The Company has not received
notification from any governmental authority, agency or third party, and
neither the Company or the Principals has any knowledge of, any violation,
either existing or future due to lapse of time or failure to take curative
action, by the Company of, or any liability of or any condition that could give
rise to any liability of any shareholder of the Company or the Company under
any Environmental Law. No civil, criminal or administrative action, claim, or
other legal proceeding pursuant to any Environmental Law has been filed against
the Company or any of its shareholders, or is anticipated or, to the Company's
knowledge, threatened. Neither the Company nor, either of the Principals has
entered into any consent order, consent decree, administrative order, judicial
order or settlement pursuant to any Environmental Law.

(e) Schedule 5.15 includes a correct and
complete list of all of the registrations by the Company with, licenses from,
or permits or other approvals issued by, governmental agencies pursuant to
Environmental Statutes (collectively, "Approvals"), copies of which have been
provided to Investors. The Approvals listed on Schedule 5.15 are all that are
necessary to conduct the business of the Company in compliance with
Environmental Laws, are in full force and effect, and all fees payable in
connection therewith have been paid.

(f) The Company has provided to AP
Investor (on behalf of both Investors) copies of all of the following, to the
extent within the possession, custody or control of the Principals or the
Company:

(i) applications, reports or other
materials submitted to any governmental agency by or on behalf of the Company
in compliance with Environmental Laws;

(ii) records or manifests required to
be maintained pursuant to Environmental Laws;

(iii) notices of violation, summonses,
orders, complaints or other documents received by or on behalf of the Company
relating to compliance with or liability under Environmental Laws or the
discharge, emission or release of any Hazardous Substances at, affecting or in
any way relating to the Facilities; and

(iv) records or analyses of any
environmental tests pertaining to the Facilities, including, without
limitation, the results of any air, water or soil analyses, tank integrity
testing, or radon testing of which the Company knows or has possession.

(g) The Company is not required to obtain
any consent or approval or record any environmental disclosure statement under
any Environmental Laws in connection with the transactions contemplated by this
Agreement for any of the Facilities.

(h) The Company is not aware of any
injuries or alleged injuries to employees or former employees resulting from
exposure to Hazardous Substances in the Company's workplace.

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5.16 Conflicting Interests. Except as shown on
Schedule 5.16, no director, officer or employee of the Company and no Principal
or any relative or any affiliate of any director or officer of the Company or
any Principal (a) has any pecuniary interest (other than holding for investment
no more than one percent (1%) of the equity securities of a company whose
securities are publicly traded on a national securities exchange or in a
national network system) in any supplier or customer of the Company or in any
other business enterprise with which the Company conducts business or with
which the Company is in competition or (b) is indebted to the Company for money
borrowed.

5.17 Compliance with Law and Regulations. Except as
shown on Schedule 5.17, to the Best Knowledge of the Company and Principals,
the Company is in compliance with all requirements of law, federal, state,
local and foreign, and all requirements of all governmental bodies or agencies
having jurisdiction over it, the conduct of its business, the use of its
properties and assets, and all premises occupied by it, and, without limiting
the foregoing, the Company has paid all monies and obtained all licenses,
permits, certificates, and authorizations needed or required for the conduct of
its business and the use of its properties and the premises occupied by it. The
Company has properly filed all reports and other documents required to be filed
with any federal, state, local or foreign government or subdivision or agency
thereof. The Company has not received any notice, not heretofore complied with,
from any federal, state, municipal or foreign authority or any insurance or
inspection body that any of its properties, facilities, equipment, or business
procedures or practices, fails to comply with any applicable law, ordinance,
regulation, building or zoning law, or requirement of any public authority or
body. All licenses, permits, orders and approvals issued by any governmental
body or agency currently in effect and pertaining to the property, assets or
business of the Company, other than those otherwise listed on Schedule 5.15,
are listed on Schedule 5.17.

5.18 Taxes.

(a) For purposes of this Agreement: "Tax"
and "Taxes" shall mean any federal, state (including the District of Columbia),
local, foreign (including possessions or territories of the United States) or
other tax (whether income, excise, sales or use, ad valorem, franchise, real or
personal property, license, transfer, employment, social security or any other
kind of tax no matter how denominated), or any assessment, customs duty, levy,
impost, withholding, or other governmental charge in the nature of a tax, and
shall include all additions to tax, interest, penalties and fines with respect
thereto. "Return" and "Returns" shall mean all reports, estimates, information
statements (including with respect to back up withholding and payments to third
parties) and returns of any nature, including amended versions of any of the
foregoing, relating to or required to be filed in connection with any Taxes.

(b) The Company has not been included in
a consolidated federal income tax return filed by a common parent of an
affiliated group of corporations under Section 1501 of the Code or a unitary,
consolidated or combined state or foreign tax return.

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(c) There have been or will be timely
filed all Returns that are required to be filed on or before the Closing Date
(giving regard to valid extensions) by the Company. All of such Returns are or
will be true, accurate and complete. Schedule 5.18 contains a list of all
material Returns required to be filed since January 1, 1993; true and correct
copies of such Returns as filed (including any amended Returns) have been
provided to AP Investor (on behalf of both Investors). None of such Returns
contains (or is required to contain) a disclosure statement under Section
6662(d) of the Code (or any predecessor provision) or any similar provision of
state, local or foreign law which is necessary to avoid penalties under
Sections 6662(b) or 6662(d) of the Code or similar penalties under state, local
or foreign law.

(d) All Taxes for which the Company is or
will be liable (or that are imposed in respect of the Company) and that are due
on or before the Closing Date (including without limitation Taxes shown to be
due on all Returns filed on or before the Closing Date and any Taxes for which
the Company is liable in relation to the transactions contemplated herein) have
been paid or will be paid in full and on a timely basis on or before the
Closing Date, and all Taxes which are required to be withheld or collected by
the Company have been duly withheld and collected and, to the extent required,
have been paid to the appropriate governmental authority or properly deposited
as required by applicable law, except in cases in which the validity of Taxes
is being contested in good faith by appropriate action diligently pursued. The
Taxes so being contested as of the date of this Agreement are set forth on
Schedule 5.18. The Company has complied and through the Closing Date will
comply with all information reporting and backup withholding requirements
including maintenance of required records with respect thereto, in connection
with amounts paid to any employee, creditor, independent contractor or other
third party. The Preliminary Closing Balance Sheet accurately reflects accruals
or reserves for all current and deferred liabilities for Taxes accrued by the
Company on or prior to the date of the Preliminary Closing Balance Sheet. Since
the date of the Preliminary Closing Balance Sheet, the Company has not incurred
or accrued any liability for Taxes other than in connection with transactions
in the ordinary course of business, and it has not changed its method of
accounting for Taxes or any method of accounting used in calculating Taxes.

(e) The Returns of the Company have never
been audited by a taxing authority and no taxing authority has asserted or
threatened to assert any deficiency or assessment, or proposed (formally or
informally) any adjustment, for any Taxes against or in respect of the Company,
except for the Taxes listed on Schedule 5.18, and neither the Principals nor
the Company knows of any audit or investigation by any taxing authority with
respect to any Tax liability of the Company except as set forth on Schedule
5.18. In the event the Company or any of the Principals becomes aware of any
such asserted or threatened deficiency or assessment, or any investigation or
audit, after the date of this Agreement, the Principals will immediately notify
the Investors of same.

(f) The Company has not held and does not
hold an interest in any partnership, limited liability company, trust or other
entity or arrangement with respect to which items of income, gain, loss
deduction or credit are included in the Company's Returns.

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<PAGE> 33

(g) None of the Principals nor the
Company has entered into, or will, at any time through the Closing Date, enter
into any contract or arrangement with any "disqualified individual" within the
meaning of Section 280G(c) of the Code with respect to the Company which may
result in the making of any "parachute payment" within the meaning of Section
280G(b)(2) of the Code to any such "disqualified individual."

(h) Schedule 5.18 sets forth the amount,
as of the Balance Sheet Date, of (A) all federal, state or local net operating
loss, tax credit or charitable contribution carryovers available to the Company
and (B) the adjusted tax basis of the Company's assets, by reasonable category,
reflected in the Preliminary Closing Balance Sheet, and includes an explanation
of how such items are reflected in the Preliminary Closing Balance Sheet. The
Company has provided to the Investors complete and accurate work papers
supporting the "deferred taxes" or similar account on the Preliminary Closing
Balance Sheet.

(i) Schedule 5.18 sets forth all federal
income tax elections that have been made or will be made by the Company or by
the Shareholders of the Company with respect to the Company with respect to any
period ending on or prior to the Closing Date that will apply to any subsequent
period.

(j) The Company is not a party to nor has
it assumed (A) any "safe harbor" lease described in Section 168(f)(8) of the
Internal Revenue Code of 1954; (B) any "corporate acquisition indebtedness" as
defined in Section 279(b) of the Code or any obligations described in Section
279(a) of the Code; (C) any agreement with respect to industrial development
bonds or similar tax-exempt obligations the tax characteristics of which may be
affected by the transactions contemplated by this Agreement; (D) any waiver or
agreement extending the statute of limitations with respect to any Tax; (E) any
tax sharing or similar agreement; or (F) any power of attorney currently in
force with respect to Taxes.

(k) None of the following has been filed
with respect to the Company: (A) a consent described in Section 341(f) of the
Code; (B) any deemed or actual elections under Section 338 of the Code; or (C)
any request for a ruling or determination by a Tax authority or similar matter.

(l) After Closing, the Company will
provide to the Investors such information as the Investors may reasonably
request with respect to (A) the procedures followed for filing state and local
sales and use Tax Returns by or on behalf of the Company; (B) the procedures
followed for filing real, personal and intangible property Tax Returns by or on
behalf of the Company; and (C) the method used by or on behalf of the Company
for determining whether a nexus exists in a particular jurisdiction for
purposes of income, franchise, sales and use Taxes, including the manner in
which the Company solicits and maintains business in each jurisdiction in which
it has or does business.

(m) Except as disclosed in Schedule 5.18,
the Company does not have any taxable income or gain that may be reportable for
a period ending on or after the Closing

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<PAGE> 34

Date and which is attributable to a transaction or event occurring in or a
change in accounting method made for a period ending on or prior to the Closing
Date.

(n) Each Principal is a United States
person within the meaning of Section 7701(a)(30) of the Code, and each
Principal shall deliver at Closing a "Nonforeign Certification" meeting the
requirements of Code Section 1445(b)(2).

(o) The Company is currently, has been at
all times since April 1, 1990 and will be until the day prior to the Closing
Date, qualified as an "S corporation" under the Code and under comparable laws
of states listed on Schedule 5.18. The Company has a valid election under Code
Section 444 in effect and has made the required payments under Code Section
7519. It shall be a condition to Closing that the Investors shall have received
an opinion from counsel for the Principals reasonably acceptable to the
Investors, in form and substance satisfactory to the Investors, that based on
such counsel's review and analysis of all the relevant facts and circumstances,
the representations set forth in the first sentence of this paragraph (o) are
true and accurate.

(p) The Company is not, and has not been
at any time during the five-year period ending on the Closing Date, a "United
States real property holding corporation" as defined in Section 897(c) of the
Code and applicable regulations thereunder.

5.19 No Payments to Principals or Others. Except
for the Permitted Distribution and as set forth on Schedule 5.19, since the
Balance Sheet Date, there has not been any purchase or redemption of any shares
of stock of the Company or any transfer, distribution or payment by it,
directly or indirectly, of any money or other property or assets to any
Principal or to any other person, other than payment of liabilities shown on
the Balance Sheet dated as of the Balance Sheet Date and included as part of
Schedule 5.5, payment of compensation for services actually rendered, payments
due under the Company Agreements, and payments in the ordinary course of
business for goods and services in arm's length transactions.

5.20 Actions since Balance Sheet Date. Except as
shown on Schedule 5.20, since the Balance Sheet Date, the Company:

(a) has not taken any action outside of
the ordinary and usual course of business;

(b) has not borrowed any money or become
contingently liable for any obligation or liability of others;

(d) has not incurred any debt, liability
or obligation of any nature to any party except for obligations arising from
the purchase of goods or the rendition of services in the ordinary course of
business;

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<PAGE> 35

(e) has not knowingly waived any right of
substantial value;

(f) has used its best efforts to preserve
its business organization intact, to keep available the services of its
employees, and to preserve its relationships with its customers, suppliers and
others with whom it deals; and

(g) has not sold or otherwise issued any
shares of its capital stock.

5.21 No Material Adverse Change. Since the Balance
Sheet Date, there has not occurred and there is not threatened any event or
circumstance which has resulted in, or may reasonably be expected to result in,
a Material Adverse Effect or any material physical damage or loss to any of its
properties or assets or to the premises occupied by it (whether or not such
damage or loss is covered by insurance).

5.22 Statements and Other Documents Not Misleading.
Neither this Agreement, including all Schedules, nor the closing documents, nor
any other financial statement, document or other instrument heretofore or
hereafter furnished by the Company or the Principals to the Investors in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of any material fact or omits or will omit to state any
material fact required to be stated in order to make such statement, document
or other instrument not misleading. There is no fact known to the Principals
which has, or will have, a Material Adverse Effect which has not been set forth
in this Agreement, the Schedules or the other documents furnished to the
Investors on or prior to the date hereof in connection with the transactions
contemplated hereby.

6. Additional Representations, Warranties and Covenants of
Principals. As material inducement to the Investors to enter into this
Agreement and to consummate the transactions provided for herein, each of the
Principals jointly and severally makes the following representations,
warranties and covenants to the Investors:

6.1 Ownership of Capital Stock of the Company. Each
of the Principals owns 500 shares of Common Stock (without giving effect to the
Stock Split). The Principals each have good, marketable and unencumbered title
to such shares, free and clear of all Encumbrances and Options. No transfer of
record ownership of, or beneficial interest in, any of such shares will be made
between the date hereof and the Closing Date. Each Principal will vote all of
its shares of capital stock of the Company in favor of the Amendment.

6.2 Agreement Not in Breach of Other Instruments
Affecting Principal. Each Principal has all requisite power and legal capacity
to authorize and approve this Agreement and the other transactions contemplated
hereby to he or she is a party. The execution and delivery of this Agreement
and all Ancillary Agreements to which one or both of them is to be a party, and
consummation of the transactions provided for herein and therein, and the
fulfillment of the terms hereof and thereof by each Principal, will not result
in the breach of any of the terms and provisions of, or constitute a default
under (or an event which with notice or lapse of time or both would become a
default), or conflict with, any agreement or other instrument by which either
Principal is

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<PAGE> 36

bound, any judgment, decree, order, or award of any court, governmental body,
or arbitrator, or any applicable law, rule or regulation.

6.3 Valid and Binding Agreement. This Agreement
constitutes, and the Ancillary Agreements when delivered will constitute, the
valid and binding obligation of each Principal, and each is enforceable against
each Principal in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws relating to or effecting the rights of creditors generally,
and to the limitations imposed by general principles of equity, regardless of
whether enforcement is considered in proceedings at law or in equity.

7. Representations, Warranties, and Agreements of the
Investors.

7.1 Representations, Warranties and Agreements of
AP Investor. As material inducement to the Company, Glengar Investor and the
Principals to enter into this Agreement and to close hereunder, AP Investor
hereby makes the following representations and warranties to the Company,
Glengar Investor and the Principals:

(a) Organizational Status and Authority.
AP Investor is a limited partnership duly organized and legally subsisting
under the laws of the Commonwealth of Pennsylvania, and has the power to
acquire the Securities to be acquired hereunder. The execution, delivery and
performance of this Agreement and the other Ancillary Agreements to which it is
to be a party have been duly authorized by all necessary action on the part of
AP Investor, and this Agreement constitutes the valid and binding obligation of
AP Investor, enforceable against it in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws relating to or effecting the rights of
creditors generally, and to the limitations imposed by general principles of
equity, regardless of whether enforcement is considered in proceedings at law
or in equity.

(b) Agreement Not in Breach of Other
Instruments Affecting Investor; Governmental Consent. The execution and
delivery of this Agreement and the Ancillary Agreements, the consummation of
the transactions provided for herein and thereon, and the fulfillment of the
terms hereof and thereof by AP Investor (i) will not result in the breach of
any of the terms and provisions of, or constitute a default under, or conflict
with, or cause any acceleration of any obligation of AP Investor under, any
agreement or other instrument by which AP Investor is bound, or its Limited
Partnership Certificate or Agreement, or any judgment, decree, order, or award
of any court, governmental body, or arbitrator, or any applicable law, rule or
regulation and (ii) do not require the consent of any Government Authority.

7.2 Representations, Warranties and Agreement of
Glengar Investor. As a material inducement to the Company, AP Investor and the
Principals to enter into this Agreement and to close hereunder, Glengar
Investor hereby makes the following representations and warranties to the
Company, AP Investor and the Principals:

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(a) Organizational Status and Authority.
Glengar Investor is a limited liability company duly organized and legally
existing under the laws of the British Virgin Islands and has the power to
acquire the Securities to be acquired hereunder. The execution, delivery and
performance of this Agreement and the other Ancillary Agreements to which it is
to be a party have been duly authorized by all necessary action on the part of
Glengar Investor, and this Agreement constitutes the valid and binding
obligation of Glengar Investor, enforceable against it in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws relating to or
effecting the rights of creditors generally, and to the limitations imposed by
general principles of equity, regardless of whether enforcement is considered
in proceedings at law or in equity.

(b) Agreement Not in Breach of Other
Instruments Affecting Glengar Investor; Governmental Consent. The execution and
delivery of this Agreement and the Ancillary Agreements, the consummation of
the transactions provided for herein and thereon, and the fulfillment of the
terms hereof and thereof by Glengar Investor (i) will not result in the breach
of any of the terms and provisions of, or constitute a default under, or
conflict with, or cause any acceleration of any obligation of Glengar Investor
under, any agreement or other instrument by which Glengar Investor is bound, or
its charter or organizational documents, or any judgment, decree, order, or
award of any court, governmental body, or arbitrator, or any applicable law,
rule or regulation and (ii) do not require the consent of any Government
Authority.

8. Continuation and Survival of Representations and
Warranties. All representations and warranties made in this Agreement shall
continue to be true and correct at and as of the date of the signing of this
Agreement and the date of the Closing, as if made at each of such times;
provided, however, that at Closing the Principals may deliver to the Investors
modifications of any of the Schedules to this Agreement arising from changes
thereto arising in the ordinary course of business since the date hereof,
provided that none of such changes individually or in the aggregate are
materially adverse to the business, assets, business prospects, or financial
condition of the Company. If either party hereto shall learn of a
representation or warranty being or becoming untrue at or prior to Closing,
such party shall promptly notify the other party hereto thereof and provide to
such party Schedules or other documents amending such representation and
warranty. To the extent that the party receiving such notice waives its right
to terminate this Agreement on account of such breach, such representations and
warranties so affected shall be deemed modified. All representations,
warranties and covenants contained herein shall survive the Closing, provided
that all representations and warranties shall expire on the second anniversary
of the Closing, except for claims asserted prior to such date and except for
representations and warranties with respect to Taxes, which shall survive for
the full extent of any applicable statutes of limitations. Each representation
and warranty contained herein is independent of all other representations and
warranties contained herein (whether or not covering an identical or a related
subject matter) and must be independently and separately complied with and
satisfied. Exceptions or qualifications to any representations or warranties
contained herein shall not be construed as exceptions or qualifications to any
other warranty or representation. No warranty or representation shall be deemed
to have been waived, affected or impaired by any investigation made by any
party to this Agreement.

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9. Additional Covenants

9.1 Access Rights Prior to Closing. The provisions
of this Section 9.1 shall apply between the date of this Agreement and the
Closing Date except for the last sentence hereof, which shall survive the
Closing. The Principals and the Company shall (a) furnish to the Investors such
available information concerning the Company and its assets in business as the
Investors shall reasonably request and (b) grant reasonable access to the
Investors during normal business hours, at the Company's headquarters or such
other site as the Investors might reasonably request to the Company's
properties, books and records (including financial operating data and
information); provided, however that the Company shall have no obligation
hereunder to take any action which might result in (x) interference with or
disruption of the Company's normal business operations or (y) the violation of
any of the Company's obligations under Agreements with third parties including,
without limitation, confidentiality agreements which the Company has executed
for the benefit of its customers. The Investors may inspect the Company's
properties, books and records solely for the purpose of evaluating the
transaction proposed herein, but in so doing shall not interfere or disrupt the
Company's normal business operations. Other due diligence activities will
include meeting with the Company's attorneys, accountants, customers, suppliers
and employees, and the Company shall assist Investors in establishing these
meetings. The Investors may interview employees, suppliers and customers
provided that each interview is (i) conducted on a confidential basis, (ii)
arranged through and with advance approval of the Principals and (iii)
conducted at the latter stages of the Investors due diligence review.
Notwithstanding the foregoing, the Investors will not need advance approval to
interview on a confidential basis those parties known to the Investors prior to
the date of the Letter of Intent between AP Investor, the Principals and the
Company dated January 29, 1996, and such interviews may be conducted at any
stage of the Investors due diligence review. The Investors will not reveal any
confidential data and/or information supplied by the Principals or the Company
except, upon consultation with the Principals and receipt of the Principal's
approval, to their partners, principals, management, affiliates, counsel,
accountants, insurance representatives, investment bankers and like agents and,
in any event, only for purposes relating to the evaluation and consummation of
the transactions contemplated by this Agreement; and, whether or not the
transactions are consummated, such data and information will not be used by the
Investors except for that explicit purpose and will never (while otherwise
continuing to be confidential), without the Principals' prior written
permission, be otherwise used or disseminated and, in the event the
transactions contemplated by this Agreement are not consummated, such data and
information will be returned to the Company or the Principals. No
representation, warranty or covenant shall be deemed to have been waived,
affected or impaired by any investigation made by the Investors.

9.2 Conduct of Business Pending Closing. Between
the date hereof and the Closing hereunder, the Principals and the Company
shall:

(a) Not knowingly take or suffer or
permit any action which would render untrue any of the representations or
warranties of Principals herein contained, and not omit to take any action, the
omission of which would render untrue any such representation or warranty;

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(b) Conduct the Company's business in the
ordinary and usual course consistent with Company's past practice;

(c) Not enter into any contract,
agreement, commitment or arrangement with any party except those involving a
maximum possible liability or obligation on the part of the Company of less
than $10,000 each and less than $100,000 in the aggregate or contracts for the
sale of telemarketing services and for the purchase of materials and supplies
in the ordinary and usual course of business, and not terminate, extend or
materially amend or modify any Company Agreement without the prior written
consent of the Investor, which shall not be unreasonably withheld or delayed;

(d) Use their best efforts to preserve
the business organization of the Company intact, to keep available the services
of its employees, and to preserve its relationships with customers, suppliers
and others with whom it deals;

(e) Maintain in full force and effect all
of the insurance policies listed on Schedule 5.9 and make no change in any
insurance coverage without the prior written consent of AP Investor;

(f) Keep the Facilities, the Fixtures and
Equipment and all other tangible personal property owned or leased by the
Company in good order and repair and perform all necessary repairs and
maintenance;

(g) Continue to maintain all of the
Company's usual business books and records in accordance with its past
practices;

(h) Not waive any material right or
cancel any material claim other than the granting of refunds or credits in the
ordinary course of business in accordance with the Company's past practice.

(i) Not increase the compensation or rate
of compensation payable to any of its employees other than pursuant to the
Transition Bonus Compensation;

(j) Maintain the corporate existence of
the Company and not merge or consolidate the Company with any other entity;

(k) Comply with all material provisions
of all Company Agreements and any other agreements applicable to it and all
applicable laws, rules and regulations; and

(l) Not make any capital expenditure in
excess of $25,000 without the prior written consent of AP Investor, which shall
not be unreasonably withheld or delayed.

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9.3 Tax Covenants.

(a) Certain Tax Returns of the Company.
For purposes of this Section 9.3 the "Effective Date" shall mean the day before
the day of the Closing Date. For federal income tax purposes, the Company shall
be an "S corporation" under the Code through the Effective Date and the parties
hereto acknowledge that (i) the status of the Company as an "S corporation"
under the Code will be terminated on the Closing Date, (ii) the Company's final
"S corporation" tax year will end at the close of the Effective Date, and (iii)
a new tax year for the Company will begin on the Closing Date. The Principals
and the Company shall cause to be prepared and filed all income tax Returns of
the Company (e.g., IRS Form 1120S, Schedule K-1 (1120S), and similar state
returns) for all the tax years ending on or before the Effective Date which
have not been filed by the Closing Date. The Company shall be responsible for
the preparation and filing of all income tax Returns and the payment of all
income Taxes of the Company for its tax year beginning on the Closing Date and
all subsequent periods. The Company agrees to cooperate with the Principals to
the extent reasonably required after the Closing Date in connection with (i)
the preparation, execution, and filing of all income tax Returns with respect
to any taxable year of the Company ending on or before the Effective Date, (ii)
contests concerning the application of any Tax or the amount of Tax due for any
such Tax year and (iii) audits and other proceedings conducted by any taxing
authority with respect to any such Tax period. All income tax Returns of the
Company filed after the Closing Date for tax years ending on or before the
Closing Date shall be based on the same Tax accounting methods and elections as
used for the Company's Tax year immediately preceding the period of such
Returns, except as otherwise agreed upon by the Company and the Principals.
After the Closing Date, except as required by law, the Company shall not,
without the prior written consent of the Principals (i) file any amended Return
by or on behalf of the Company for any Tax year ending on or before the
Effective Date, or (ii) take any other action affecting the Company's Taxes for
any such period if the Principals would be liable (by law or under this
Agreement) for any Taxes for such period.

(b) Payment of Tax Distribution. If the
amount of the Tax Distribution is not fully ascertainable at Closing, an
estimate thereof mutually acceptable to the parties shall be reserved as an
accrued dividend on the books of the Company at Closing. Promptly after the
actual amount of the Tax Distribution is determined the Company shall
distribute such amount as a dividend to the Principals.

(c) Payment of the Transition Tax. The
Principals shall pay the Transition Tax, and any interest, penalties or
additional sums attributable thereto, promptly when the amount thereof is
determined and when the payment thereof is due, and shall indemnify, defend and
hold harmless the Company and the Investors therefrom.

9.4 "No Shop" Covenant. Between the date of this
Agreement and the Closing Date, neither the Company nor the Principals will,
directly or indirectly, through any officer, director, agent, financial advisor
or otherwise, participate in, solicit, initiate or encourage submission of
proposals or offers from any person relating to any sale of all or any material
part of the assets of the Company or the sale or issuance of any equity
interest in the Company to any Person other

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<PAGE> 41

than the Investors, their affiliates, successors or assigns or any significant
financing or other similar transaction (collectively an "Acquisition
Proposal"), or participate in any negotiations regarding, or furnish to any
other person any confidential information with respect to the Company, its
business or assets, or otherwise facilitate or encourage, any effort or attempt
by any other person to do or seek any of the foregoing. The Company and the
Principals shall promptly notify the Investors if any such proposal or offer of
an Acquisition Proposal, or any inquiry or contact with any person or with
respect thereto, is made, and shall furnish the Investor with a copy of any
written proposal or offer.

9.5 Notices of Breach. The Company and the
Principals shall make

reasonable efforts to give prompt notice to the Investors, and the Investors
shall make reasonable efforts to give prompt notice to the Company and the
Principals, of (i) the occurrence or non-occurrence of any event of which such
party has knowledge, whose occurrence or non-occurrence does or would be likely
to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate at any time from the date hereof to the Closing Date and
(ii) any material failure, of which such party has knowledge, of the Company or
either Principal, on the one hand, or the Investors, on the other hand, or any
officer, director, employee or agent of any of the foregoing, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant to
this Paragraph 9.5 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.

10. Indemnification

10.1 Indemnification of the Investors. Subject to
Section 10.6 of this Agreement, the Principals hereby jointly and severally
indemnify and agree to hold harmless the Investors and the Company, and each of
their successors and assigns and each of their partners, shareholders,
officers, directors and agents (collectively, the "Investor Indemnified
Parties") from, against and in respect of the amount of any and all Investor
Losses (as hereinafter defined).

10.2 Indemnification of the Principals. Subject to
Section 10.6 of this Agreement, the Investors hereby individually, and not
jointly, indemnify and agree to hold harmless the Principals and their
successors and assigns, (collectively, the "Principal Indemnified Parties")
from, against and in respect of the amount of any and all Principal Losses (as
hereinafter defined).

10.3 Definitions. As used in this Article 10:

(a) "Deficiency" means any Investor
Losses or Principal Losses, as those terms are defined below.

(b) "Indemnitors" shall mean the
party(ies) required to provide indemnification and "Indemnitee" means the
party(ies) entitled to indemnification under this Article.

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<PAGE> 42

(i) any misrepresentation, breach of
warranty, or any non fulfillment of any representation, warranty, covenant or
agreement on the part of the Investor contained herein or in any other document
or instrument delivered by the Investor pursuant to this Agreement or contained
in any Exhibit or Schedule hereto or thereto, or in any statement, report,
certificate or instrument delivered to the Principals pursuant to this
Agreement;

(ii) any and all acts, suits,
proceedings, demands, assessments, judgments, reasonable attorneys' fees, costs
and expenses incident to any of the foregoing.

(d) "Investor Losses" means any and all
loss or damage suffered by the Investor Indemnified Parties (including without
limitation any diminution in value of the Company) resulting from:

(i) any misrepresentation, breach of
warranty, or any non fulfillment of any representation, warranty, covenant or
agreement on the part of the Principals contained herein or in any other
document or instrument delivered by the Investor pursuant to this Agreement or
contained in any Exhibit or Schedule hereto or thereto, or in any statement,
report, certificate or instrument delivered pursuant to this Agreement; and

(ii) any and all acts, suits,
proceedings, demands, assessments, judgments, reasonable attorneys' fees, costs
and expenses incident to any of the foregoing.

10.4 Procedures for Establishment of Deficiencies.

(a) In the event that any claim shall be
asserted by any party against Indemnitee, which, if sustained, would result in
a Deficiency, Indemnitee, within a reasonable time after learning of such
claim, shall notify the Indemnitors of such claim, and shall extend to the
Indemnitors a reasonable opportunity to defend against such claim, at the
Indemnitors' sole expense and through legal counsel acceptable to Indemnitee,
provided that the Indemnitors proceed in good faith, expeditiously and
diligently. No determination shall be made pursuant to Section 10.4(b) below
while such defense is still being made until the earlier of (i) the resolution
of said claim by the Indemnitors with the claimant, or (ii) the termination of
the defense by the Indemnitors against such claim or the failure of the
Indemnitors to prosecute such defense in good faith in an expeditious and
diligent manner. Indemnitee shall be entitled to rely upon the opinion of its
counsel as to the occurrence of either of said events. Indemnitee shall, at its
option and expense, have the right to participate in any defense undertaken by
Indemnitors with legal counsel of its own selection. No settlement or
compromise of any claim which may result in a Deficiency may be made by
Indemnitors without the prior written consent of Indemnitee unless (x) prior to
such settlement or compromise Indemnitors acknowledge in writing their
obligation to pay in full the amount of the settlement or compromise and all
associated expenses and (y) Indemnitee is furnished with security reasonably
satisfactory to Indemnitee that Indemnitors will in fact pay such amount and
expenses.

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(b) In the event that Indemnitee asserts
the existence of any Deficiency, Indemnitee shall give written notice to the
Indemnitors of the nature and amount of the Deficiency asserted. If the
Indemnitors, within a period of fifteen (15) days after the giving of
Indemnitee's notice, shall not give written notice to Indemnitee announcing
their intent to contest such assertion of Indemnitee (such notice by the
Indemnitors being hereinafter called the "Contest Notice"), such assertion of
Indemnitee shall be deemed accepted and the amount of the Deficiency shall be
deemed established. In the event, however, that a contest notice is given to
Indemnitee within said fifteen-day period, then the contested assertion of a
Deficiency shall be settled by arbitration to be held in Philadelphia,
Pennsylvania in accordance with the rules of the American Arbitration
Association then obtaining. The determination of the arbitrator(s) shall be
delivered in writing to the Indemnitors and Indemnitee and shall be final,
binding and conclusive upon all of the parties hereto, and the amount of the
Deficiency, if any, determined to exist, shall be deemed established.

(c) Indemnitee and the Indemnitors may
agree in writing, at any time, as to the existence and amount of a Deficiency,
and, upon the execution of such agreement such Deficiency shall be deemed
established.

10.5 Payment of Deficiencies; Remedies for Non-Payment.

(a) The Principals hereby agree, jointly
and severally, to pay in cash to the Investors, the amount of each established
Investor Loss within five (5) days after the establishment thereof. The
Investors hereby agree to pay to the Principals in cash the amount of each
established Principal Loss within five days after the establishment thereof.
Any amounts not paid by the Indemnitors when due under this Section 10 shall
bear interest from the due date thereof until the date paid at a rate equal to
the lesser of (i) twelve percent (12%) per annum or (ii) the highest legal rate
permitted by applicable law.

(b) In order to secure the obligation of
the Principals to pay Investor Losses, at Closing a portion of the Cash
Redemption Price in the amount of $500,000 shall be set aside in an
interest-bearing escrow account to be held by Escrow Agent for a period of six
months after Closing (which amount, plus all interest earned thereon, is
referred to as the "Escrow Account"). Upon the establishment of any Investor
Losses, the amount thereof shall be paid to the Investor up to the amount of
the Escrow Account. Upon the expiration of such six-month period, the balance
remaining in the Escrow Account, together with any interest earned thereon,
shall be released to the Principals, reduced by the amount of any then pending
claims for Investor Losses which have not yet been resolved. Such release of
funds from the escrow account shall not affect the rights of the Investors with
respect to Investor Losses which are suffered thereafter or are in excess of
the Escrow Account.

(c) If, within thirty days after the
establishment of an Investor Loss hereunder, the Principals shall not have paid
the amount thereof to the Investors, and if the amount thereof shall not have
been paid to the Investors out of the Escrow Account (or if the Escrow Account
shall have been previously released), then the Investors shall have the right,
in addition to any other rights at law or in equity, to acquire from the
Principals a portion of the then outstanding

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Principals' Notes in an amount equal to such unpaid Investor Losses. Such right
of acquisition shall be exercised by written notice given by each Investor to
the Principals and the Company. Upon the giving of such written notice, the
Principals shall be deemed, without any further act to have assigned to the
Investors a portion of the Principals' Notes in such amount. Notwithstanding
that such transfer and assignment shall be automatic, the Investors shall have
the right to cause the Company to issue substitute notes to the Principals and
to the Investors reflecting the allocated portions of the Principals Notes,
whereupon the Principals shall surrender the original Principals' Notes in
exchange for a substituted note. If the Principals' Notes shall have previously
been repaid, or if the then outstanding balance thereof is inadequate to pay
the Investor Losses (after application of the Escrow Account, if available)
then the Investors shall have the further right, in addition to its other
remedies at law or in equity, to require the Principals to transfer to the
Investors a portion of the stock held by the Principals in the Company with a
fair market value (as defined below), determined as of the date of
establishment of the Deficiency, equal to the unsatisfied amount of the
Investor Losses.

(d) If, within thirty days after the
establishment of a Principal Loss hereunder, the Investors shall not have paid
the amount thereof to the Principals, the Principals shall have the further
right, in addition to their other remedies at law or in equity, to require the
Investor to transfer to the Principals a portion of the stock held by the
Investor in the Company with a fair market value (as defined below), determined
as of the date of establishment of the Deficiency, equal to the unsatisfied
amount of the Principal Losses.

(e) All amounts paid or property assigned
or transferred to Investors pursuant to this Section 10.5 shall be allocated
between the Investors pro rata based upon the relative equity holdings of the
Investors in the Company.

(f) For the purposes of paragraphs (c)
and (d) above, the "fair market value" shall be determined on the basis of an
appraisal performed by a nationally-recognized investment banking firm
designated by mutual agreement between the Principals and the Investor or, if
they are unable to so agree within thirty (30) days, be designated by two
nationally-recognized investment banking firms, one selected by the Principals
and one selected by the Investor.

10.6 Limitations. Neither the Principals, jointly
or severally, on the one hand, nor the Investors, on the other hand, shall be
liable under this Agreement for any Deficiencies until the aggregate amount of
Deficiencies payable by the Principals or the Investors, as the case may be,
exceeds an accumulated total of $100,000 (the "Threshold Amount"), at which
time the Principals or the Investors, as the case may be, shall be liable for
Deficiencies including the Threshold Amount. Notwithstanding anything to the
contrary contained herein, the aggregate recourse to all Indemnitors with
respect to any liability of either the Principals, on the one hand, or the
Investors, on the other hand, for Deficiencies hereunder shall be limited to an
amount equal to $4,600,000, except for Deficiencies arising out of breaches of
representations, warranties and covenants with regard to Taxes which shall not
be subject to the above described limit and shall not be included in
calculating the amount of the Deficiencies for purposes of such limit.

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11. Securities Laws Compliance Procedures.

11.1 Status of Shares to be Issued. The Investors
acknowledge and confirm as follows:

(a) The Investors are acquiring the
Securities for their own account and without a view to any distribution or
resale thereof, other than a distribution or resale which, in the opinion of
counsel for the Investor proposing such resale, which opinion and counsel shall
be satisfactory in form and substance to the Company, may be made without
violating the registration provisions of the Securities Act of 1933, as amended
(the "1933 Act") or applicable blue sky laws. Each of the Investors, either
alone or with its financial advisor, has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the investment to be made by it hereunder. The Securities are
"restricted securities" within the meaning of Rule 144 under the 1933 Act and
have not been registered under the 1933 Act or any applicable state securities
act and must be held indefinitely unless they are subsequently registered under
the 1933 Act and any applicable state securities acts or an exemption from such
registration is available.

(b) AP Investor is an "institutional
investor" as that term is defined in Regulation ss. 102.111 of the Pennsylvania
Securities Act of 1972 (the "PA Securities Act"), and, accordingly, the offer
and sale of the Securities to the Investors is an exempt transaction pursuant
to ss. 203(c) of the PA Securities Act.

(c) There shall be endorsed on the
certificates evidencing the Securities delivered at Closing a legend
substantially similar to the following:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION
AND ARE "RESTRICTED SECURITIES" AS DEFINED BY RULE 144 UNDER
THE 1933 ACT. THE SHARES MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT REGISTERING THE SHARES UNDER THE 1933
ACT AND THE SECURITIES LAWS OF ANY STATE REQUIRING SUCH
REGISTRATION, OR IN LIEU THEREOF, AN OPINION OF COUNSEL,
WHICH OPINION AND COUNSEL ARE SATISFACTORY TO THE ISSUER OF
THE SHARES, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACTS.

(d) Except under certain limited
circumstances, the above restrictions on the transfer of Securities will also
apply to any and all shares of capital stock or other securities issued or
otherwise acquired with respect to such Securities, including, without
limitation, shares and securities issued or acquired as a result of any stock
dividend, stock split or exchange or

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any distribution of shares or securities pursuant to any corporate
reorganization, reclassification or similar event.

12. Further Assurances. The Company, the Principals and the
Investors agree to execute and deliver all such other instruments and take all
such other action as either party may reasonably request from time to time,
before or after Closing and without payment of further consideration, in order
to effectuate the transactions provided for herein. The parties shall cooperate
fully with each other and with their respective counsel and accountants in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, including, without limitation, the
preparation of financial statements and tax returns.

13. Indemnity Against Brokerage Commissions and Finder's
Fees. With the exception of Robert M. Haas Associates, Inc., whose fees shall
be paid by the Company, the Principals, the Company and the Investors hereby
represent and warrant that there is no corporation, firm or person entitled to
receive from the Principals, the Company or the Investors any brokerage
commission or finder's fee in connection with this Agreement or the
transactions provided for herein, and each hereby indemnifies and agrees to
save the other party hereto harmless from and against any claim for brokerage
commission or finder's fee based on any retention or alleged retention of a
broker or finder by any of them.

14. Miscellaneous.

14.1 Costs and Expenses. All costs and expenses of
the Principals and the Investors (including the reasonable fees and expenses of
attorneys, accountants and other professional advisors) incurred in connection
with this Agreement, the Ancillary Agreements and the transactions contemplated
hereby and thereby, including, without limitation, the Investors' due diligence
and investment investigations and analyses in connection herewith and therewith
and all costs, if any, incurred in connection with the formation of a two-tier
holding/operating company as contemplated in Section 15 of the Shareholders'
Agreement (collectively, the "Expenses") shall be paid by the Company to the
extent incurred by the Company and, to the extent the Expenses are reasonable
out-of-pocket expenses of the Investors or the Principals, such the Expenses
shall be paid by the Company at the Closing (or, at an Investor's request, to
the extent incurred directly by such Investor, such Investor may direct that it
be reimbursed for the Expenses subsequent to the Closing). In the event a
Closing does not occur, the Investors shall be responsible for their own
Expenses; provided, however, that if prior to Closing the Company enters into a
binding letter of intent or other agreement on or before December 31, 1996 with
respect to an Acquisition Proposal involving the payment of a purchase price
based on the prospective purchaser valuing the Company at an amount in excess
of $30,000,000.00, the Principals and the Company shall be jointly and
severally liable for all Expenses, including Expenses of the Investors.

14.2 Indulgences, Etc. Neither the failure nor any
delay on the part of any party hereto to exercise any right, remedy, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or of any other right, remedy, power
or privilege,

-42-

<PAGE> 47

nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence.

14.3 Controlling Law. This Agreement and all
questions relating to its validity, interpretation, performance and enforcement
(including without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, and without the aid of any canon, custom or rule
of law requiring construction against the drafting party.

14.4 Notices. All notices, requests, demands and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received only
when personally delivered, or on the day specified for delivery when deposited
with a nationally recognized courier service such as Federal Express for
delivery to the intended addressee, or four (4) days following the day when
deposited in the United States mails, registered or certified mail, postage
prepaid, return receipt requested, addressed as set forth below:

(i) If to the Company:

RMH Sales and Marketing Consulting, Inc.
40 Morris Avenue
Bryn Mawr, PA 19010
Attention: Raymond J. Hansell, CEO

with a copy, given in the manner prescribed
above, to:

Advanta Partners LP
Five Horsham Business Center
300 Welsh Road
Horsham, PA 19044-2296
Attention: Anthony P. Brenner,
Senior Managing Director

(ii) If to the Principals:

Raymond J. Hansell
MarySue Lucci Hansell
506 Chaumont Drive
Villanova, PA 19085

-43-

<PAGE> 48

with a copy, given in the manner prescribed
above, to:

Eckell Sparks Levy Auerbach
Monte & Emper, a Professional Corporation
Legal Arts Building
344 W. Front Street
P.O. Box 319
Media, PA 19063
Attention: G. Bradley Rainer, Esquire

(iii) If to AP Investor:

Advanta Partners LP
Five Horsham Business Center
300 Welsh Road
Horsham, PA 19044-2296
Attention: Anthony P. Brenner,
Senior Managing Director

with a copy, given in the manner prescribed
above, to:

Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor Packard Building
S.E. Corner 15th and Chestnut Streets
Philadelphia, PA 19102
Attention: Herman C. Fala, Esquire

(iv) If to Glengar Investor:

Glengar International Investments Limited
P.O. Box 146
Road Town, Tortola
British Virgin Islands

with a copy, given in the manner prescribed
above, to:

Derek Lubner
29 Emlyn Road
London, England W129TF
United Kingdom

In addition, notice by mail shall be by airmail if posted
outside the continental United States.

-44-

<PAGE> 49

Any party may alter the address to which communications or
copies are to be sent by giving notice of such change of address in conformity
with the provision of this Section for the giving of notice.

14.5 Schedules and Exhibits. All Schedules and
Exhibits attached hereto are hereby incorporated by reference into, and made a
part of, this Agreement.

14.6 Binding Nature of Agreement; No Assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
assigns, except that no party may assign or transfer its rights or obligations
under this Agreement without the prior written consent of the other parties
hereto; provided, however, that no such consent shall be necessary for the
assignment by AP Investor of its rights hereunder to any entity controlled by,
controlling, or under common control with, AP Investor, and provided further
that no consent shall be necessary for the collateral assignment by the
Investors of their rights hereunder to Chemical Bank, as Agent, as holder of
the Recapitalization Loan.. All obligations of the Principals under this
Agreement and the Ancillary Agreements shall be joint and several, with the
exception of their respective obligations under the Employment Agreements,
which shall be individual and not joint and several.

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

14.8 Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

14.9 Entire Agreement, Amendment, Modification and
Termination. This Agreement contains the entire understanding between the
parties hereto and with respect to the subject matter hereof, and supersedes
all prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein contained.
This Agreement may not be modified, amended or terminated other than by an
agreement in writing executed by all of the parties hereto.

14.10 Number of Days. In computing the number of
days for purposes of this Agreement, all days shall be counted, including
Saturdays, Sundays and holidays; provided, however, that if the final day of
any time period falls on a Saturday, Sunday or holiday on which federal banks
are or may elect to be closed, then the final day shall be deemed to be the
next day which is not a Saturday, Sunday or such holiday.

-45-

<PAGE> 50

IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement on the date first above written.

RMH SALES AND MARKETING
CONSULTING, INC.

By: /s/ Raymond J. Hansell
-------------------------------------
Raymond J. Hansell, Chairman

By: /s/ MarySue Lucci Hansell
-------------------------------------
MarySue Lucci Hansell, President

/s/ Raymond J. Hansell
-------------------------------------
Raymond J. Hansell, individually

/s/ MarySue Lucci Hansell
-------------------------------------
MarySue Lucci Hansell, individually

ADVANTA PARTNERS LP

By: AP Capital, Inc., general partner

By: /s/ Mitchell L. Hollin
-------------------------------
Name: Mitchell L. Hollin
Title: Vice-President

GLENGAR INTERNATIONAL INVESTMENTS LIMITED

By: /s/ Ian C. Crosby
----------------------------------
Ian C. Crosby
Director: Montblanc (Directors) Limited
Sole corporate director: Glengar
International Investments Limited

-46-

<PAGE> 51
ADVANTA PARTNERS L.P. - RMH SALES AND MARKETING CONSULTING, INC.

List of Schedules
to
Recapitalization and Stock Purchase Agreement

Schedule No. Description
- ------------ -----------
<S> <C>
5.1 Foreign Qualifications

5.3 Officers, Directors, Bank Accounts

5.5 Financial Statements

5.6 Real Estate - Lease Agreements

5.7(a) Liens and Encumbrances (Vehicle Leases and Purchase Agreements)

5.7(b) Names and Marks

5.9 Insurance Policies

5.10 Liabilities not on Projected Balance Sheet

5.11(a) Leases, Agreements, and Other Commitments - Telecommunications
Service Contracts

" Leases, Agreements, and Other Commitments - Site Service
Contracts

" Leases, Agreements, and Other Commitments - Customer Service
Contracts

" Leases, Agreements, and Other Commitments - Equipment Leases
and Service Contracts

" Leases, Agreements, and Other Commitments - MidLantic Bank Loans

5.11(b) Defaults under Company Agreements

5.11(c) Written or Oral Proposals, Offers, Guarantees, etc., Unexpired
Warranties and Guaranties

5.12 Labor Stoppages, Strikes, etc.

5.12(a) Employment, Consulting Agreements and Confidentiality
Agreements

5.12(b) List of All Employees

5.12(c) Employee Handbooks, Policies and Procedures

5.13 ERISA and Employee Benefit Matters
</TABLE>

<PAGE> 52
Schedule No. Description
- ------------ -----------

5.14 Litigation

5.15 Environmental Matters

5.16 Conflicting Interests

5.17 Conflict with Laws; Permits and Approvals

5.18 Tax Matters (includes copies of tax returns)

5.19 Payments to Principles or Others

5.20 Actions Since the Balance Sheet

<PAGE> 1
EXHIBIT 3.1

CERTIFICATE OF INCORPORATION

COMMONWEALTH OF PENNSYLVANIA

DEPARTMENT OF STATE

[SEAL]

CERTIFICATE OF INCORPORATION

OFFICE OF THE SECRETARY OF THE COMMONWEALTH

TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:

WHEREAS, Under the provisions of the Laws of the Commonwealth, the Secretary of
the Commonwealth is authorized and required to issue a "Certificate of
Incorporation" evidencing the incorporation of an entity.

WHEREAS, The stipulations and conditions of the Law have been fully complied
with by

RMH SALES AND MARKETING CONSULTING, INC.

THEREFORE, KNOW YE, That subject to the Constitution of this Commonwealth, and
under the authority of the Laws thereof, I do by these presents, which I have
caused to be sealed with the Great Seal of the Commonwealth, declare and
certify the creation, erection and incorporation of the above in deed and in
law by the name chosen hereinbefore specified.

Such corporation shall have and enjoy and shall be subject to all the
powers, duties, requirements, and restrictions, specified and enjoined in and
by the applicable laws of this Commonwealth.

GIVEN under my Hand and the Great Seal of the Commonwealth,
at the City of Harrisburg, this 6th day of June in the year
[SEAL] of our Lord one thousand nine hundred and eighty-three
and of the Commonwealth the two hundred seventh

/s/ William R. Davis
------------------------------------
Secretary of the Commonwealth
<PAGE> 2
ARTICLES OF INCORPORATION

DSCB204 (Rev. 81)

ARTICLES OF INCORPORATION
(PREPARE IN TRIPLICATE)

COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE - CORPORATION BUREAU
300 NORTH OFFICE BUILDING, HARRISBURG, PA 17120
- --------------------------------------------------------------------------------
PLEASE INDICATE (CHECK ONE) TYPE CORPORATION:
/X/ DOMESTIC BUSINESS CORPORATION

/ / DOMESTIC BUSINESS CORPORATION
A CLOSE CORPORATION - COMPLETE BACK

/ / DOMESTIC PROFESSIONAL CORPORATION
ENTER BOARD LICENSE NO.
- --------------------------------------------------------------------------------
FEE

$75.00
- --------------------------------------------------------------------------------
NAME OF CORPORATION (MUST CONTAIN A CORPORATE INDICATOR UNLESS EXEMPT UNDER
15 P.S. 2908 B)

RMH Sales and Marketing Consulting, Inc.
- --------------------------------------------------------------------------------
011 ADDRESS OF REGISTERED OFFICE IN PENNSYLVANIA (P.O. BOX NUMBER NOT
ACCEPTABLE)

407 Short Ridge Dr.
- --------------------------------------------------------------------------------
012 CITY 033 COUNTY 013 STATE 064 ZIP CODE

Wynnewood Delaware 23 Pennsylvania 19096
- --------------------------------------------------------------------------------
050 EXPLAIN THE PURPOSE OR PURPOSES OF THE CORPORATION

Business consulting services.

(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- --------------------------------------------------------------------------------
The Aggregate Number of Shares, Class of Shares and Par Value of Shares Which
the Corporation Shall have Authority to issue:

040 Number and Class of Shares
1000 shares Common Stock

041 State Par Value Per Share if Any
No Par

042 Total Authorized Capital
1,000

031 Term of Existence
Perpetual
- --------------------------------------------------------------------------------
Name and Address of Each Incorporator, and the Number and Class of Shares
Subscribed to by each Incorporator

Name
Frederick W. Kreppel, Esq.

061, 062 063, 064 Address (Street, City, State, Zip Code)
P.O. Box 312, 24 Louella Ct., Wayne, PA 19087

Number & Class of Shares
1 share common

(ATTACH 8 1/2 x 11 SHEET IF NECESSARY)
- --------------------------------------------------------------------------------

IN TESTIMONY WHEREOF, THE INCORPORATOR(S) HAS (HAVE) SIGNED AND SEALED THE
ARTICLES OF INCORPORATION THIS 23rd DAY OF May 1983

/s/ Frederick W. Kreppel, Esq.
- --------------------------------- ------------------------------------------
FREDERICK W. KREPPEL, ESQ.

- --------------------------------- ------------------------------------------
- --------------------------------------------------------------------------------
-FOR OFFICE USE ONLY-

<TABLE>

<S> <C>
030 FILED JUN 06 1983 002 CODE 003 REV BOX SEQUENTIAL NO. 100 MICROFILM NUMBER

/s/ William R. Davis /s/ 404
- ------------------------------ -------------- ----------- ------------ -----------------------
WILLIAM R. DAVIS REVIEWED BY 004 SICC AMOUNT 001 CORPORATION NUMBER

Secretary of the Commonwealth /s/ $75
Department of State -------------- ----------- ------------ -----------------------------
Commonwealth of Pennsylvania DATE APPROVED CERTIFY TO INPUT BY LOG IN LOG IN (REFILE)
JUNE 06 1983 /X/ REV.

DATE REJECTED /X/ L&I ------------ ------------------------------
VERIFIED BY LOG OUT LOG OUT (REFILE)
_________________ / / OTHER

MAILED BY DATE
</TABLE>

<PAGE> 3

PROOF OF ADVERTISING

Proof of Publication of Notice in Main Line Times
Under Act No. 587, Approved May 16, 1929.

State of Pennsylvania, )
) ss:
County of Montgomery, )

DAVID B. CARR of ACME NEWSPAPERS, INC., of the County and State aforesaid, being
duly sworn, deposes and says that the MAIN LINE TIMES, a newspaper of general
circulation published at 311 E. Lancaster Ave., Ardmore, County and State
aforesaid, was established November 1, 1930, since which date the MAIN LINE
TIMES has been regularly issued in said County, and that the printed notice or
publication attached hereto is exactly the same as was printed and published in
the regular editions and issues of the said MAIN LINE TIMES on the following
dates, viz:

July 14, 1983
- -------------------------------------------------------------------------------

A. D. 19
- --------------------------------------------------------------- -------

Affiant further deposes that he is an officer duly authorized by the ACME
NEWSPAPERS, INC., a corporation, publisher of said MAIN LINE TIMES, a newspaper
of general circulation, to verify the foregoing statement under oath, and
affiant is not interested in the subject matter of the aforesaid notice or
advertisement and that all allegations in the foregoing statements as to time,
place and character of publication are true.

- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that Articles of Incorporation have been filed with the
Department of State of the Commonwealth of Pennsylvania at Harrisburg,
Pennsylvania, for the purpose of obtaining a Certificate of Incorporation
pursuant to the provisions of the Business Corporation Law of the Commonwealth
of Pennsylvania, approved May 5, 1933, P.L. 364, as amended.
The name of the proposed corporation is RMH Sales and Marketing
Consulting, Inc.
The Articles of Incorporation have been filed on Monday, the 6th day of
June, 1983.
The purposes for which it was organized are: Business consulting services.
FREDERICK W. KREPPEL,
P.C., Solicitor,
24 Loualta Court,
Wayne, Pa. 19087
- --------------------------------------------------------------------------------

/s/ David B. Carr
---------------------------------------
Acme Newspapers Inc.

Sworn to and subscribed before me this
14th day of July, 1983.

/s/ Dorothea A. Smythe
---------------------------------------
Notary Public
DOROTHEA A. SMYTHE
Notary Public, Phila., Phila. Co.
My Commission Expires May 7, 1954

Statement of Advertising Costs

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

---------------------------------
To Acme Newspapers, Inc., Dr.

For publishing the notice or
publication attached hereto
on the above stated dates $
----------

Probating same.............. $
----------

Total..................... $
----------

Publisher's Receipt for Advertising Costs

The ACME NEWSPAPERS, INC., publisher of the MAIN LINE TIMES, a newspaper
of general circulation, hereby acknowledges receipt of the aforesaid notice and
publication costs and certifies that the same have been duly paid.

ACME NEWSPAPERS, INC., a Corporation

Publisher of MAIN LINE TIMES, a
Newspaper of General
Circulation........................

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

<PAGE> 4
PROOF OF ADVERTISING

MONTGOMERY COUNTY LAW REPORTER

PROOF OF PUBLICATION OF NOTICE

COMMONWEALTH OF PENNSYLVANIA ) SS:
COUNTY OF MONTGOMERY )

Richard S. Watt, Assistant, business manager, of the Montgomery County Law
Reporter, being duly affirmed according to law, deposes and says that the
Montgomery County Law Reporter is the duly designated legal newspaper for
Montgomery County, Pennsylvania, which legal newspaper was established in 1885,
and is published at 100 West Airy Street, Norristown, Montgomery County,
Pennsylvania; and that a copy of the printed notice of publication is attached
hereto exactly as printed or published in the issue or issues of said legal
newspaper on the following date or dates:

COPY OF NOTICE
- --------------------------------------------------------------------------------
Notice is hereby given that Articles of Incorporation have been (are to be)
filed with the Department of State of the Commonwealth of Pennsylvania at
Harrisburg, Pennsylvania, for the purpose of obtaining a Certificate of
Incorporation pursuant to the provisions of the Business Corporation Law of the
Commonwealth of Pennsylvania, approved May 5, 1933, P. L. 364, as amended.
The name of the proposed corporation is RMH SALES AND MARKETING
CONSULTING, INC.
The Articles of Incorporation have been filed on Monday, the 6th day of
June, 1983.
The purposes for which it was organized are: Business consulting services.

FREDERICK W. KREPPEL, P.C., Solicitor,
24 Louella Court,
Wayne, Pa. 19087
- --------------------------------------------------------------------------------

Thursday July 14, 1983

That affiant further states that he is the designated agent of Montgomery
Bar Association, the owner of said legal newspaper, that he is not interested
in the subject matter of the aforesaid notice or advertising, and that all the
allegations of the aforesaid statement as to time, place, and character of
publication are true.

/s/ Richard S. Watt
--------------------------------------
Affirmed and subscribed before me this
14th day of July
A.D. 1983

/s/ Elaine M. Grohoski
--------------------------------------
Notary Public

MY COMMISSION EXPIRES:

ELAINE M. GROHOSKI, NOTARY PUBLIC
NORRISTOWN, MONTGOMERY COUNTY, PA.
MY COMMISSION EXPIRES MARCH 6, 1986

William J. Mansfield, Inc.

<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
ARTICLES OF AMENDMENT OF
ARTICLES OF INCORPORATION

Microfilm Number 9407-1200 Filed with the Department of State on JAN 26 1994
---------- --------------

Entity Number 773135 /s/
---------- ----------------------------------------------------
Secretary of the Commonwealth

ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 89)

In compliance with the requirements of 15 Pa.C.S. Section 1915 (relating to articles of amendment), the
undersigned business corporation, desiring to amend its Articles, hereby states that:

1. The name of the corporation is: RMH SALES AND MARKETING CONSULTING, INC.
----------------------------------------------------------------------------

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

2. The (a) address of this corporation's current registered office in this Commonwealth or (b) commercial
registered office provider and the county of venue is (the Department is hereby authorized to correct the
following address to conform to the records of the Department):

(a) 407 Short Ridge Drive, Wynnewood, PA 19096 Delaware
------------------------------------------------------------------------------------------------------------
Number and Street City State Zip County

(b)
------------------------------------------------------------------------------------------------------------
Name of Commercial Registered Office Provider County

For a corporation represented by a commercial registered office provider, the county in (b) shall be deemed
the county in which the corporation is located for venue and official publication purposes.

Business Corporation Law of Commonwealth of Pa.,
3. The statute by or under which it was incorporated is: approved May 5, 1993, P.L. 364, as amended
-------------------------------------------------------

4. The original date of its incorporation is: June 6, 1983
------------------------------------------------------------------

5. (Check, and if appropriate complete, one of the following):

X The amendment shall be effective upon filing these Articles of Amendment in the Department of State.
---

The amendment shall be effective on:
--- --------------------------------------------------------------------

6. (Check one of the following):

X The amendment was adopted by the shareholders pursuant to 15 Pa.C.S. Section 1914(a) and (b).
---

The amendment was adopted by the board of directors pursuant to 15 Pa.C.S. Section 1914 (c).
---

7. (Check, and if appropriate complete, one of the following):

The amendment adopted by the corporation, set forth in full, is as follows:
---

X The amendment adopted by the corporation as set forth in full in Exhibit A, attached hereto and made a
--- part hereof.
</TABLE>

<PAGE> 6

ARTICLES OF AMENDMENT OF
ARTICLES OF INCORPORATION

EXHIBIT A

ARTICLES OF AMENDMENT - DOMESTIC BUSINESS CORPORATION

RMH SALES AND MARKETING CONSULTING, INC.

RESOLVED: That the Articles of Incorporation of this corporation be and they
hereby are amended. as follows:

The corporation shall have unlimited power to engage in and to do any
lawful act concerning any or all lawful business for which corporations
may be incorporated under the Pennsylvania Business Corporation Law,
under the provisions of which Act this corporation is incorporated,
such business to include but not be limited to business consulting
services and transaction of insurance.

The registered office of the corporation be changed to 300 East
Lancaster Avenue, Suite 206, Wynnewood, PA 19096.
<PAGE> 7
ARTICLES OF AMENDMENT OF
ARTICLES OF INCORPORATION

294

PENNSYLVANIA DEPARTMENT OF STATE
CORPORATION BUREAU
ROOM 308 NORTH OFFICE BUILDING
P.O. BOX 8722
HARRISBURG, PA 17105-8722

RMH SALES AND MARKETING CONSULTING, INC.

THE CORPORATION BUREAU IS HAPPY TO SEND YOU YOUR FILED DOCUMENT. PLEASE
NOTE THE FILE DATE AND SIGNATURE OF THE SECRETARY OF THE COMMONWEALTH. THE
CORPORATION BUREAU IS HERE TO SERVE YOU AND WANTS TO THANK YOU FOR DOING
BUSINESS IN PENNSYLVANIA. IF YOU HAVE ANY QUESTIONS PERTAINING TO THE
CORPORATION BUREAU CALL 717-787-1057.

ENTITIES ACTING AS PROFESSIONAL FUNDRAISING CONSULTANTS OR PROFESSIONAL
SOLICITORS ON BEHALF OF CHARITIES SOLICITING CONTRIBUTIONS WITHIN THE
COMMONWEALTH OF PENNSYLVANIA MUST REGISTER WITH THE DEPARTMENT OF STATE, BUREAU
OF CHARITABLE ORGANIZATIONS, ROOM 308, NORTH OFFICE BUILDING, HARRISBURG,
PENNSYLVANIA 17120-0029 (717)/783-1720).

ENTITY NUMBER: 0773135

MICROFILM NUMBER: 09407

1200-1202

ESQUIRE ASSIST
COUNTER
<PAGE> 8
Microfilm Number 9407-1200 Filed with the Department of State on JAN 26 1994
--------- -----------

/s/
Entity Number 773135 -------------------------------------------------
------ Secretary of the Commonwealth

ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB: 15-1915 (Rev 89)

In compliance with the requirements of 15 Pa.C.S. Section 1915
(relating to articles of amendment), the undersigned business corporation,
desiring to amend its Articles, hereby states that:

1. The name of the corporation is: RMH SALES AND MARKETING CONSULTING, INC.
---------------------------------------------

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

2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) commercial registered office provider and the county of
venue is (the Department is hereby authorized to correct the following
address to conform to the records of the Department):

(a) 407 Short Ridge Drive, Wynnewood, PA 19096 Delaware
----------------------------------------------------------------------------
Number and Street City State Zip County

(b)
----------------------------------------------------------------------------
Name of Commercial Registered Office Provider County

or a corporation represented by a commercial registered office provider, the
county in (b) shall be deemed the county in which the corporation is located
for venue and official publication purposes.

3. The statute by or under which it was incorporated is: Business Corporation
-----------------------
Law of Commonwealth of Pa., approved May 5, 1933, P.L. 364, as amended
-----------------------------------------------------------------------------

4. The original date of its incorporation is: June 6, 1983
----------------------------------

5. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

X The amendment shall be effective upon filing these Articles of Amendment
--- in the Department of State.

The amendment shall be effective on:
--- -------------------------------------

6. (CHECK ONE OF THE FOLLOWING):

X The amendment was adopted by the shareholders pursuant to 15 Pa.C.S.
--- Section 1914(a) and (b).

The amendment was adopted by the board of directors pursuant to 15
--- Pa.C.S. Section 1914(c).

7. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

The amendment adopted by the corporation, set forth in full, is as
--- follows:

X The amendment adopted by the corporation as set forth in full in Exhibit
--- A, attached hereto and made a part hereof.

<PAGE> 9
EXHIBIT A

ARTICLES OF AMENDMENT - DOMESTIC BUSINESS CORPORATION

RMH SALES AND MARKETING CONSULTING, INC.

RESOLVED: That the Articles of Incorporation of this corporation be and
they hereby are amended as follows:

The corporation shall have unlimited power to engage in and to
do any lawful act concerning any or all lawful business for
which corporations may be incorporated under the Pennsylvania
Business Corporation Law, under the provisions of which Act
this corporation is incorporated, such business to include but
not be limited to business consulting services and transaction
of insurance,

The registered office of the corporation be changed to 300
East Lancaster Avenue, Suite 206, Wynnewood, PA 19096.
<PAGE> 10
ARTICLES OF INCORPORATION
(PREPARE IN TRIPLICATE)

COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE -- CORPORATION BUREAU
300 NORTH OFFICE BUILDING, HARRISBURG, PA 17120
- --------------------------------------------------------------------------------
PLEASE INDICATE (CHECK ONE) TYPE CORPORATION:
[X] DOMESTIC BUSINESS CORPORATION
[ ] DOMESTIC BUSINESS CORPORATION
A CLOSE CORPORATION -- COMPLETE BACK
[ ] DOMESTIC PROFESSIONAL CORPORATION
ENTER BOARD LICENSE NO.
- --------------------------------------------------------------------------------
FEE:

$75.00
- --------------------------------------------------------------------------------
NAME OF CORPORATION (MUST CONTAIN A CORPORATE INDICATOR UNLESS EXEMPT UNDER
15 P.S. 2908 0)

407 Short Ridge Dr.
- --------------------------------------------------------------------------------
012 CITY 033 COUNTY 013 STATE 064 ZIP CODE

Wynnewood Delaware 23 Pennsylvania 19096
- --------------------------------------------------------------------------------
050 EXPLAIN THE PURPOSE OR PURPOSES OF THE CORPORATION

Business consulting services.

(ATTACH 8-1/2 x 11 SHEET IF NECESSARY)
- --------------------------------------------------------------------------------
THE AGGREGATE NUMBER OF SHARES, CLASSES OF SHARES AND PAR VALUE OF SHARES WHICH
THE CORPORATION SHALL HAVE AUTHORITY TO ISSUE:

010 NUMBER AND CLASS OF SHARES

1000 shares Common Stock
- --------------------------------------------------------------------------------
041 STATED PAR VALUE PER SHARE IF ANY

No Par
- --------------------------------------------------------------------------------
042 TOTAL AUTHORIZED CAPITAL

1,000
- --------------------------------------------------------------------------------
031 TERM OF EXISTENCE

Perpetual
- --------------------------------------------------------------------------------

NAME AND ADDRESS OF EACH INCORPORATOR, AND THE NUMBER AND CLASS OF SHARES
SUBSCRIBED TO BY EACH INCORPORATOR

060 NAME

Frederick W. Kreppel, Esq.
- --------------------------------------------------------------------------------
061, 062, 063, 064
ADDRESS (STREET, CITY, STATE, ZIP CODE)

P.O. Box 312, 24 Louella Ct., Wayne, PA 19087
- --------------------------------------------------------------------------------
NUMBER & CLASS OF SHARES

1 share common
- --------------------------------------------------------------------------------
(ATTACH 8-1/2 x 11 SHEET IF NECESSARY)
- --------------------------------------------------------------------------------

IN TESTIMONY WHEREOF, THE INCORPORATOR(S) HAS (HAVE) SIGNED AND SEALED THE
ARTICLES OF INCORPORATION

THIS 23rd DAY OF May 1983

/s/ Frederick W. Kreppel, Esq.
- ------------------------------------- -------------------------------------
FREDERICK W. KREPPEL, Esq.

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

- --------------------------------------------------------------------------------
- FOR OFFICE USE ONLY -
- --------------------------------------------------------------------------------
030 FILED JUN 06 1983

/s/ William R. Davis

Secretary of the Commonealth
Department of State
Commonwealth of Pennsylvania

002 CODE

/s/ AIB
- --------------------------------------------------------------------------------
REVIEWED BY

/s/
- --------------------------------------------------------------------------------
DATE APPROVED

JUN 06 1983
- --------------------------------------------------------------------------------
DATE REJECTED

- --------------------------------------------------------------------------------
MAILED BY DATE

- --------------------------------------------------------------------------------
003 REV BOX

- --------------------------------------------------------------------------------
004 SICC

- --------------------------------------------------------------------------------
CERTIFY TO
[X] REV.
[X] L & I
[ ] OTHER
- --------------------------------------------------------------------------------
SEQUENTIAL NO.

404
- --------------------------------------------------------------------------------
AMOUNT

$75
- --------------------------------------------------------------------------------
INPUT BY

- --------------------------------------------------------------------------------
VERIFIED BY

- --------------------------------------------------------------------------------
100 MICROFILM NUMBER

- --------------------------------------------------------------------------------
001 CORPORATION NUMBER

- --------------------------------------------------------------------------------
LOG IN LOG IN (REFILE)

- --------------------------------------------------------------------------------
LOG OUT LOG OUT (REFILE)

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

<PAGE> 11
Microfilm Number Filed with the Department of State on May 23, 1996
----------

Entity Number 773135
------------- -----------------------------------------------
Secretary of the Commonwealth

ARTICLES OF AMENDMENT - DOMESTIC BUSINESS CORPORATION
DSCB: 15-1915 (Rev. 91)

In compliance with the requirements of 15 Pa.C.S. Sec. 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to
amend its Articles, hereby states that:

1. The name of the corporation is: RMH Sales and Marketing Consulting, Inc.
-------------------------------------------

---------------------------------------------------------------------------
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and
the county of venue is (the Department is hereby authorized to correct
the following information to conform to the records of the Department):

(a) 40 Morris Avenue Bryn Mawr PA 19010 Delaware
-----------------------------------------------------------------------
Number and Street City State Zip County

(b) c/o:
-------------------------------------------------------------------
Name of Commercial Registered Office Provider County

For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.

3. The statute by or under
which it was incorporated is: Business Corporate Law of Commonwealth of PA,
----------------------------------------------
approved 5/5/1933, P.L. 364, as amended.

4. The date of its incorporation is: 6-6-83
-------------------------------------------
5. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

X The amendment shall be effective upon filing these Articles of
--- Amendment in the Department of State.

The amendment shall be effective on at
--- ---------------- -----------------
Date Hour

6. (CHECK ONE OF THE FOLLOWING):

X The amendment was adopted by the shareholders (or members) pursuant to
--- 15 Pa.C.S Sec. 1914(a) and (b).

The amendment was adopted by the board of directors pursuant to 15
--- Pa.C.S. Sec. 1914(c).

7. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

The amendment adopted by the corporation, set forth in full, is as
--- follows:

X The amendment adopted by the corporation as set forth in full in
--- Exhibit A attached hereto and made a part hereof.

<PAGE> 12
DSCB:15-1915 (Rev 91)-2

8. (CHECK IF THE AMENDMENT RESTATES THE ARTICLES):

___ The restated Articles of Incorporation supersede the original
Articles and all amendments thereto.

IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof
this __ day of May 1996.

RMH SALES and MARKETING CONSULTING, INC.
----------------------------------------
(Name of Corporation)

BY /s/ MarySue Lucci Hansell
--------------------------------------
(Signature)

TITLE: President
----------------------------------
<PAGE> 13
RMH SALES AND MARKETING CONSULTING, INC.

EXHIBIT A
to
Articles of Amendment

The Articles of Incorporation of the Corporation are hereby amended to
restate in their entirety the provisions as to the "Number and Class of Shares:"

The corporation shall have the authority to issue a total of Thirty
Million (30,000,000) shares of capital stock which shall be divided into Twenty
Million (20,000,000) shares of Common Stock, no par value per share (the "Common
Stock"), and Ten Million (10,000,000) shares of Preferred Stock, par value
$1.00 per share (the "Preferred Stock"), Section 1521(d) of the Pennsylvania
Business Corporation Law of 1988, as amended, shall not apply to the shares of
capital stock of this Corporation,

I. Common Stock.

(a) The Common Stock shall be divided into two classes,
consisting of Ten Million (10,000,000) shares of Class A Voting Common Stock
(the "Class A Common Stock") and Ten Million (10,000,000) shares of Class B
Non-Voting Common Stock (the "Class B Common Stock").

(b) The holders of Class A Common Stock and the holders of
Class B Common Stock shall be entitled to receive, from time to time, when and
as declared, in the discretion of the Board of Directors, such cash dividends as
the Board of Directors may from time to time determine, out of such funds as are
legally available therefor. The holders of Class A Common Stock and the holders
of Class B Common Stock shall be entitled to receive, from time to time, when
and as declared, such stock dividends as the Board of Directors may determine,
out of such funds as are legally available therefor. Stock dividends on, or
stock splits of, any class of Common Stock shall not be paid or issued unless
paid or issued on all classes of Common Stock, in which case they shall be paid
or issued only in shares of that class. Any decrease in the number of shares of
any class of Common Stock resulting from a combination or consolidation of
shares or other capital reclassification shall not be permitted unless parallel
action is taken with respect to each other class of Common Stock, so that the
number of shares of each class of Common Stock outstanding shall be decreased
proportionately.

(c) The holders of Class B Common Stock shall not be entitled
to vote, and the holders of Class A Common Stock shall be entitled to one vote
for each share of Class A Common Stock held.

(d) Each share of Class B Common Stock shall be convertible,
at the option of the holder thereof, into one share of Class A Common Stock upon
the earlier to occur
<PAGE> 14
of (i) the Corporation's receipt of proceeds from an offering by the Company of
Common Stock (alone or together with other securities of the Corporation) to the
general public for cash pursuant to an effective date of a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or any comparable document under any similar federal statute then in force, or
(ii) the fifth anniversary of the date of initial issuance of the Class B Common
Stock.

II. Preferred Stock.

The Preferred Stock shall be divided into Series A Preferred Stock (the
"Series A Preferred Stock"), as hereinafter provided, Series B Preferred Stock
(the "Series B Preferred Stock"), as hereinafter provided, and may be divided
into one or more additional series as the Board of Directors may determine as
hereinafter provided. Each series of Preferred Stock may have full, limited,
multiple or fractional or no voting rights, and such designations, preferences,
qualifications, privileges, limitations, restrictions, options, conversion
rights and other special or relative rights as determined by the Board of
Directors. The division of the Preferred Stock into series, the determination of
the designation and the number of shares of any such series and the
determination of the voting rights, preferences, qualifications, privileges,
limitations, restrictions, options, conversion rights and other special or
relative rights of the shares of any such series may be accomplished by an
amendment to this Article solely by action of the Board of Directors which shall
have the full authority permitted by law to make such divisions and
determinations.

Unless otherwise provided by law or in a resolution or resolutions
establishing any particular series of Preferred Stock, the aggregate number of
authorized shares of Preferred Stock may be increased by an amendment to the
Articles of Incorporation approved solely by the holders of Common Stock and of
any Preferred Stock which is entitled pursuant to its voting rights designated
in these Articles or by the Board to vote thereon, if at all, voting together as
a class. Any capitalized terms defined in both Part A and B below, shall be
deemed in any instance to have the specific meaning set forth in the definition
of such term contained in the Part in which such term is employed.

A. Series A Redeemable Preferred Stock. The corporation shall have the
authority to issue One Million (1,000,000) shares of Series A Preferred Stock
from among the authorized but unissued shares of the Preferred Stock. The Series
A Preferred Stock shall have the following preferences, qualifications,
privileges, limitations and special rights:

-2-
<PAGE> 15
(1) Dividends.

(a) Each holder of record of Series A Preferred Stock shall be
entitled to receive, payable out of any assets of the Corporation legally
available therefor, dividends (the "Preferred Dividends") at the rate per annum
of six percent (6%) of the Stated Value (as defined herein) per share (the
"Dividend Rate"), and no more, payable in cash quarterly in arrears on each June
30, September 30, December 31 and March 31 (each a "Dividend Payment Date")
or, if any such date is not a business day, on the next succeeding business day.
The first dividend period shall be from the date of initial issuance of the
Series A Preferred Stock to June 30, 1996 and the first Preferred Dividend shall
be payable on such date. The term "date of initial issuance" or any similar
phrase herein with respect to a share of Series A Preferred Stock shall mean the
date on which the Corporation initially issues such share of Series A Preferred
Stock, regardless of any transfer or re-issuance of share certificates
representing such share of Series A Preferred Stock, including pursuant to
Section A(8) hereof. Notwithstanding the foregoing, the Corporation shall not
pay amounts as and for Preferred Dividends in cash at any time during the
continuance of a Specified Event (as such term is defined in the 6% Subordinated
Note of the Corporation, dated as of May 23, 1996 or soon thereafter, issued in
favor of Raymond J. Hansell and MarySue Lucci Hansell (hereinafter, the "6%
Note")). Preferred Dividends shall be cumulative, shall accumulate from the date
of original issuance of the Series A Preferred Stock, and thereafter shall
accrue whether or not such dividends shall have been declared and whether they
are paid hereunder. No interest shall accrue on accumulated but unpaid Preferred
Dividends except if such amounts remain unpaid by virtue of the occurrence of a
Specified Event, in which case Preferred Dividends shall accrue additional
amounts compounded quarterly from the applicable Dividend Payment Date at the
Dividend Rate, All accumulated but unpaid dividends on Series A Preferred Stock
shall be payable upon the earlier of such time as the Corporation has Available
Cash Flow (as defined in the 6% Note) and, if, when and to the extent so
payable, shall be payable in preference to and in priority over any dividends or
distributions on Junior Stock (defined below).

(c) So long as any shares of Series A Preferred Stock shall
remain outstanding, no cash dividend shall be declared or paid upon, nor shall
any cash distribution be made upon, any Junior Stock, nor shall any shares of
Junior Stock be purchased or redeemed by the Corporation, nor shall any amounts
be paid to or made available for a sinking fund for the purchase or redemption
of any Junior Stock, nor shall the Corporation distribute to holders of any
Junior Stock securities of the Corporation which have, or which are convertible
into securities which have, a priority in liquidation or payment of dividends
that is senior to or pari passu with the Series A Preferred Stock.
Notwithstanding the foregoing, the terms hereof shall not be construed to
prohibit or otherwise restrict the redemption of the Series B Preferred Stock
upon the occurrence of a Qualifying Transaction (as defined in Part A(6) below)
nor shall anything in this subsection (c) shall be construed to prohibit the
Corporation from performing

-3-
<PAGE> 16
any of its obligations under the Shareholders' Agreement between the Corporation
and its several shareholders, dated as of May 23, 1996 or soon thereafter.

(2) Stated Value. The Stated Value of each share of Series A
Preferred Stock shall be One Dollar ($1.00), subject to adjustment from time to
time in accordance with the provisions of Section A(5).

(3) Seniority. With respect to rights to receive dividends and
to participate in distributions or payments in the event of any liquidation,
dissolution or winding up or the Corporation, the Series A Preferred Stock shall
rank senior to the Common Stock, the Series B Preferred Stock and any other
capital stock of the Corporation which does not, by its terms, rank senior to or
pari passu with, as to dividends or upon liquidation, the Series A Preferred
Stock (which Series B Preferred Stock, Common Stock and other capital stock is
referred to collectively as "Junior Stock").

(4) Rights in Liquidation: Changes in Control.

(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation (any such event being
hereinafter referred to as a "Liquidation"), before any distribution of assets
of the Corporation shall be made to or set apart for the holders of the Common
Stock or Junior Stock, the holders of the Series A Preferred Stock shall be
entitled to receive payment out of such assets of the Corporation in an amount
per share equal to the Stated Value for each share of Series A Preferred Stock
held by such holder plus any accrued or declared but unpaid dividends on such
shares of Series A Preferred Stock (such amounts per share being referred to
herein as the "Liquidation Preference"). If the assets of the Corporation
available for distribution to the holders of the Series A Preferred Stock and
any other capital stock ranking pari passu (the "Parity Stock") with the Series
A Preferred Stock shall not be sufficient to make in full the payments required
by this section, the holders of Series A Preferred Stock and the Parity Stock
shall share ratably in any distribution of assets of the Corporation in
proportion to the full respective amount of Liquidation Preference to which they
are entitled.

(b) Upon any transaction that amounts to a Change in
Control (defined herein), before any distribution of assets of the Corporation
shall be made to or set apart for the holders of the Common Stock or any other
Junior Stock, the holders of the Series A Preferred Stock shall be entitled to
receive payment out of such assets of the Corporation in an amount per share
equal to the Liquidation Preference for each share of Series A Preferred Stock
held by such holder. If the assets of the Corporation available for distribution
to the holders of the Series A Preferred Stock shall not be sufficient to make
in full the payments required by this section, such assets shall be distributed
ratably among the holders of the Series A Preferred Stock based upon the
aggregate Liquidation Preferences of the shares of Series A Preferred Stock held
by each such Holder. "Change in Control" shall mean a sale or exchange of all or

-4-
<PAGE> 17
substantially all of the assets (directly or indirectly, whether by merger
consolidation, share exchange, division or otherwise) or Common Stock of the
Corporation.

(5) Effects of Stock Splits or Combinations. In the event that
the Corporation shall, at any time, subdivide or combine its shares of
outstanding Series A Preferred Stock, by reclassification or otherwise, the
Stated Value of each share then in effect shall be reduced or increased
proportionately, as the case may be. Upon the occurrence of each such event the
Corporation shall at its expense promptly compute the appropriate adjustment to
the Stated Value in accordance with the terms hereof and furnish to each holder
of Series A Preferred Stock a certificate setting forth such adjustment and
showing in detail the facts and computations upon which such adjustment is
based.

(6) Redemption.

(a) Redemption at the Option of the Holders. Any
holder of the Series A Preferred Stock (or its assignee or successor) (a
"Holder") shall have the right, at its option, to require the Corporation to
redeem, in one or more transactions, all or any portion of the outstanding
Series A Preferred Stock held by such Holder at any time on or after the
Maturity Date of the 6% Note, as such term is defined in the 6% Note.
Notwithstanding the foregoing, the Holders shall have the right to require the
redemption of portions of the outstanding Series A Preferred Stock as follows:
(i) 500,000 shares of the outstanding Series A Preferred Stock shall be
redeemable upon the seventh anniversary of the date of initial issuance of the
Series A Preferred Stock, if not earlier redeemed in accordance with these
Articles; (ii) one-third of the Series A Preferred Stock outstanding on the date
upon the Third Party Debt Payoff Date (as defined in the 6% Note) shall be
redeemable on each of the first, second and third anniversaries of the date upon
which all Third Party Debt (as defined in the 6% Note) is retired, provided that
there is Available Cash Flow (as defined in the 6% Note) in excess of the
amounts necessary to pay amounts due under the Note (To the extent there is not
Available Cash Flow to permit redemption on such schedule in any fiscal year,
any partial redemption which is requested and not made, shall be made when and
if there is Available Cash Flow in a subsequent fiscal year to permit such
redemption); (iii) in the event of a Qualifying Transaction (as defined below),
such portion of the Series A Preferred Stock whose aggregate Redemption Price
(as defined in subparagraph (b) below) equals the amount by which the product of
the (A) Preference Allocations (as defined in the 6% Note) and (B) the
Redemption Ratio (as defined in the 6% Note) exceeds the Sellers' Redemption
Amount (as defined in the 6% Note) shall be redeemable upon the, closing of such
Qualifying Transaction; (iv) at any such other time as a substantial portion of
the principal amount of the 6% Note may be payable under the terms of the 6%
Note a proportionate share of the outstanding Series A Preferred Stock shall be
redeemable. For the purposes hereof, "Qualifying Transaction" shall mean a
Public Offering (as defined below) or any other transaction that results in the
Company, receiving from a sale of equity or debt, proceeds that are applied to
redeem or purchase any or all outstanding shares of Series B Preferred Stock. A
"Public Offering" shall mean any sale of the Corporation's equity securities

-5-
<PAGE> 18
in a public offering pursuant to an effective registration statement under the
Securities Act of 1933 (excluding any registration on Form S-8). Notwithstanding
the foregoing, the Corporation shall have no obligation to redeem any portion of
the Series A Preferred Stock at any time that a Specified Event (as defined in
the 6% Note) continues.

(b) Redemption Price. The price at which each share
of Series A Preferred Stock shall be redeemed (the "Redemption Price") shall be
equal to the sum of the Stated Value plus all accrued or declared but unpaid
dividends respecting such share as of the Redemption Date (as hereinafter
defined). The Redemption Price shall be payable in cash. Nothing herein shall be
construed to require the Corporation to make any redemption payment except out
of funds legally available therefor.

(c) Exercise of Option-to-Redeem. In order to redeem
a Holder shall provide the Corporation and each other Holder with a written
notice specifying the number of shares to be redeemed (a "Redemption Notice").
If one or more additional Holders elect to redeem wit Within 10 days of the
Redemption Notice and the total number shares submitted by all Holders for
redemption exceeds the number of shares the Corporation is obligated to redeem
under this Section A(6), each Holder shall be entitled to redeem a pro rata
portion of the shares submitted for redemption calculated based upon the ratio
of the number of shares submitted by such Holder to the total number of shares
submitted for redemption by all Holders during such 10-day period. Redemption
payments shall be made no later than 30 calendar days after the Corporation's
receipt of such notice (or the first business day thereafter), which date shall
be a "Redemption Date." The Holder shall present and surrender the certificate
or certificates representing such shares (duly endorsed for transfer) to the
Corporation at the principal executive offices of the Corporation with such
Holders' Redemption Notice. The Corporation shall pay the Redemption Price to,
or to the order of, the person whose name appears on such certificate or
certificates as the owner thereof. If the number of shares represented by the
certificate or certificates surrendered shall exceed the number of shares to be
redeemed, the Corporation shall issue and deliver on the Redemption Date to the
person entitled thereto a certificate or certificates representing the
unredeemed balance of such shares.

(d) Effect of Redemption. From and after the
Redemption Date, all dividends (if any) on such shares shall cease to accrue,
and all rights of such Holders (with respect to such redeemed shares only) as
shareholders of the Corporation, except the right to receive the Redemption
Price, shall cease and terminate. Any shares of Series A Preferred Stock that
are redeemed shall be retired and shall not be reissued as Preferred Stock of
any class or series.

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<PAGE> 19
(7) Voting Rights.

(a) Except as otherwise required by law, the holders
of Series A Preferred Stock shall not be entitled to vote; provided, however,
that such holders shall be entitled to vote as a class upon any matter submitted
to the shareholders of the Corporation for action that would create a series of
Preferred Stock ranking senior to or pari passu with the Series A Preferred
Stock as to dividends or upon liquidation, which matter shall require the
approval of holders of 66-2/3% of the outstanding shares of Series A Preferred
Stock. Holders of Series A Preferred Stock shall be entitled to receive notice
of, and to participate in, any meeting of the shareholders of the Corporation.

(b) Whenever holders of the Series A Preferred Stock,
whether as a separate class or together with the holders of any other securities
of the Corporation, are entitled by law to take any action, such action may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less thin the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.

(8) Replacement. Upon receipt of evidence of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing one or
more shares of Series A Preferred Stock, and an agreement to indemnify
reasonably satisfactory to the Corporation, the Corporation will (at its
expense) execute and deliver in replacement of such certificate a new
certificate representing the number of shares represented by such lost, stolen,
destroyed or mutilated certificate.

B. Series B Redeemable Preferred Stock. The corporation shall have the
authority to issue Six Million Five Hundred Thousand (6,500,000) shares of
Series B Redeemable Preferred Stock (the "Series B Preferred Stock") from among
the authorized and unissued shares of the Preferred Stock. The Series B
Preferred Stock shall have the following preferences, qualifications,
privileges, limitations and special rights:

(1) Dividends.

(a) Subject to the rights of holders of Series A
Preferred Stock and Senior Stock (as hereinafter defined) then outstanding, each
holder of record of Series B Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors of the Corporation, dividends
("Preferred Dividends") payable out of any assets of the Corporation legally
available therefor at the rate per annurn of eight percent (8%) of the Stated
Value (as defined herein) per share (the "Dividend Rate"), payable in cash
quarterly in arrears on each June 30, September 30, December 31 and March 31
(each a "Dividend Payment Date") or, if any

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<PAGE> 20
such date is not a business day, on the next succeeding business day. The first
dividend period shall be from the date of initial issuance of the Series B
Preferred Stock to June 30, 1996 and the first Preferred Dividend shall be
payable on such date. The term "date of initial issuance" or any similar phrase
herein with respect to a share of Series B Preferred Stock shall mean the date
on which the Corporation initially issues such share of Series B Preferred
Stock, regardless of any transfer or re-issuance of share certificates
representing such share of Series B Preferred Stock, including pursuant to
Section B(8) hereof. Preferred Dividends (whether payable in cash or stock)
shall be cumulative, shall accumulate from the date of original issuance of the
Series B Preferred Stock, and shall accrue whether or not such dividends shall
have been declared and whether or not there shall be assets of the Corporation
legally available for the payment of cash Preferred Dividends. Accrued and
unpaid cash Preferred Dividends shall accrue additional payments compounded
quarterly from the applicable dividend payment date at the Dividend Rate. All
accumulated but unpaid dividends on Series B Preferred Stock shall be payable in
preference to and in priority over any dividends or distributions on Junior
Stock (defined below).

(b) If, as determined in good faith by the Board or
Directors (i) there are insufficient assets legally available for the payment of
cash Preferred Dividends or (ii) payment of cash Preferred Dividends is
prohibited by any debt instrument by which the Corporation or its assets is
bound or by the provisions of Section A(1)(c) above, then payment of Preferred
Dividends shall be made by issuing on the applicable Dividend Payment Date an
additional number of shares (and/or fractions thereof) of Series B Preferred
Stock, such number to be computed by dividing the cash value of such Preferred
Dividend by the Stated Value. The issuance of such additional shares shall
constitute full payment of such Preferred Dividends.

(c) So long as any shares of Series B Preferred Stock
shall remain outstanding, no cash dividend shall be declared or paid upon, nor
shall any cash distribution be made upon, any Junior Stock, nor shall any shares
of Junior Stock be purchased or redeemed by the Corporation, nor shall any
amount be paid to or made available for a sinking fund for the purchase or
redemption of any Junior Stock, nor shall the Corporation distribute to holders
of any Junior Stock securities of the Corporation which have, or which are
convertible into securities which have, a priority in liquidation or payment of
dividends that is senior to or pari passu with the Series B Preferred Stock.
Nothing in this subsection (c) shall be construed to prohibit the Corporation
from performing any of its obligations under the Shareholders' Agreement between
the Corporation and several of its shareholders dated as of May 23, 1996 or
soon thereafter.

(2) Stated Value. The Stated Value of each share of Series B
Preferred Stock shall be One Dollar ($1.00), subject to adjustment from time to
time in accordance with the provisions of Section B(5).

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<PAGE> 21
(3) Seniority. With respect to rights to receive dividends and
to participate in distributions or payments in the event of any liquidation,
dissolution, change of control or winding up of the Corporation, the Series B
Preferred Stock shall rank, (i) senior to the Common Stock and any other capital
stock of the Corporation which does not, by its terms, rank senior to or pari
passu with, as to dividends or upon liquidation, the Series B Preferred Stock
(such Common Stock and other capital stock is referred to collectively as the
"Junior Stock"); and (ii) junior to the Series A Preferred Stock and any other
capital stock of the Corporation which does not, by its terms, rank junior or
pari passu with, as to dividends and upon liquidation, the Series B Preferred
Stock (the "Senior Stock").

(4) Rights in Liquidation; Changes in Control.

(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation (any such event being
hereinafter referred to as a "Liquidation"), before any distribution of assets
of the Corporation shall be made to or set apart for the holders of the Common
Stock, the holders of the Series B Preferred Stock shall be entitled to receive,
after any distribution or payment is make with respect to any shares of Senior
Stock but before any distribution or payment is made with respect to any shares
of Junior Stock, payment out of such assets of the Corporation in an amount per
share equal to the Stated Value for each share of Series B Preferred Stock held
by such holder plus any accrued or declared but unpaid dividends on such shares
of Series B Preferred Stock (such amounts per share being referred to herein as
the "Liquidation Preference"). If the assets of the Corporation available for
distribution to the holders of the Series B Preferred Stock, any Senior Stock
and any other capital stock ranking pari passu with the Series B Preferred Stock
(the "Parity Stock") shall not be sufficient to make in full the payments
required by this section, the holders of Series B Preferred Stock and the Parity
Stock shall share ratably in any distribution of assets of the Corporation in
proportion to the full respective preferential amounts to which they are
entitled.

(b) Upon any transaction that amounts to a Change in
Control (defined herein), before any distribution of assets of the Corporation
shall be made to or set apart for the holders of the Common Stock or any other
Junior Stock but after the distribution of assets to the holders Senior Stock,
the holders of the Series B Preferred Stock shall be entitled to receive payment
out of such assets of the Corporation in an amount per share equal to the
Liquidation Preference for each share of Series B Preferred Stock held by such
holder. If the assets of the Corporation available for distribution to the
holders of the Series B Preferred Stock shall not be sufficient to make in full
the payments required by this section, such assets shall be distributed ratably
among the holders of the Series B Preferred Stock based upon the aggregate
Liquidation Preferences of the shares of Series B Preferred Stock held by each
such Holder. "Change in Control" shall mean a sale or exchange of all or
substantially all of the assets (directly or indirectly, whether by merger,
consolidation, share exchange, division or otherwise) or Common Stock of the
Corporation,

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<PAGE> 22
(5) Effects of Stock Splits or Combinations. In the event that
the Corporation shall, at any time, subdivide or combine its shares of
outstanding Series B Preferred Stock, by reclassification or otherwise, the
Stated Value of each share then in effect shall be reduced or increased
proportionately, as the case may be. Upon the occurrence of each such event the
Corporation shall at its expense promptly compute the appropriate adjustment to
the Stated Value in accordance with the terms hereof and furnish to each holder
of Series B Preferred Stock a certificate setting forth such adjustment and
showing in detail the facts and computations upon which such adjustment is
based.

(6) Redemption.

(a) Redemption at the Option of the Holders. Any
holder of the Series B Preferred Stock (or its assignee or successor) (a
"Holder") shall have the right, at its option, to require the Corporation to
redeem, in one or more transactions, all or any portion of the outstanding
Series B Preferred Stock held by such Holder at any time after the earlier of
(i) the consummation of the Corporation's initial Public Offering or (ii) the
eighth anniversary of the date on which the Series B Preferred Stock is
initially issued; provided, however, that the Holders shall have the right to
require such redemption only if, prior to any such redemption payment, (x) the
entire principal amount and all accrued interest shall have been paid to the
payee under the 6% Note and (B) any and all outstanding shares of Series A
Preferred Stock have been redeemed and all Preferred Dividends that have accrued
thereon have been paid in full. In addition, upon the occurrence of a Qualifying
Transaction, the holders shall have the option to redeem a portion of the Series
B Preferred Stock whose aggregate Redemption Price equals the product of the (A)
Preference Allocations (as defined in the 6% Note) and (B) the difference of one
and the Redemption Ratio (as defined in the 6% Note). Notwithstanding the
foregoing, the Corporation shall have no obligation to redeem any portion of the
Series B Preferred Stock at any time that a Specified Event (as defined in the
6% Note) either has occurred or continues.

(b) Redemption Price. The price at which each share
of Series B Preferred Stock shall be redeemed (the "Redemption Price") shall be
equal to the sum of the Stated Value plus all accrued or declared but unpaid
dividends respecting such share as of the Redemption Date (as hereinafter
defined). The Redemption Price shall be payable in cash. Nothing herein shall be
construed to require the Corporation to make any redemption payment except out
of funds legally available therefor.

(c) Exercise of Option to Redeem. In order to redeem,
a Holder shall provide the Corporation and each other Holder with a written
notice specifying the number of shares to be redeemed (a "Redemption Notice").
If one or more additional Holders elect to redeem within 10 days of the
Redemption Notice and the total number shares submitted by all Holders for
redemption exceeds the number of shares the Corporation is obligated to

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<PAGE> 23
redeem under this Section B(6), each Holder shall be entitled to redeem a pro
rata portion of the shares submitted for redemption calculated based upon the
ratio of the number of shares submitted by such Holder to the total number of
shares submitted for redemption by all Holders during such 10-day period.
Redemptions shall be made no later than 30 calendar days after the Corporation's
receipt of such notice (or the first business day thereafter), which date shall
be a "Redemption Date." The Holder shall present and surrender the certificate
or certificates representing such shares (duly endorsed for transfer) to the
Corporation at the principal executive offices of the Corporation with such
Holders' Redemption Notice. The Corporation shall pay the Redemption Price to,
or to the order of, the person whose name appears on such certificate or
certificates as the owner thereof. If the number of shares represented by the
certificate or certificates surrendered shall exceed the number of shares to be
redeemed, the Corporation shall issue and deliver on the Redemption Date to the
person entitled thereto a certificate or certificates representing the
unredeemed balance of such shares.

(d) Effect of Redemption. From and after the
Redemption Date, regardless of whether the Holders have presented and
surrendered the certificate or certificates representing redeemed Preferred
Shares, all dividends (if any) on such shares shall cease to accrue, and all
rights of such Holders (with respect to such redeemed shares only) as
shareholders of the Corporation, except the right to receive the Redemption
Price, shall cease and terminate. Any shares of Series B Preferred Stock that
are redeemed shall be retired and shall not be reissued as Preferred Stock of
any class or series.

(7) Voting Rights.

(a) Except as otherwise required by law, the holders
of Series B Preferred Stock shall not be entitled to vote; provided, however,
that such holders shall be entitled to vote as a class upon any matter
submitted to the shareholders of the Corporation for action that would create a
class of preferred stock ranking senior to or pari passu with the Series B
Preferred Stock as to dividends or upon liquidation, which matter shall require
the approval of holders of 66-2/3% of the outstanding shares of Series B
Preferred Stock. Holders of Series B Preferred Stock shall be entitled to
receive notice of, and to participate in, any meeting of the shareholders of the
Corporation.

(b) Whenever holders of the Series B Preferred Stock,
whether as a separate class or together with the holders of any other securities
of the Corporation, are entitled by law to take any action, such action may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.

-11-
<PAGE> 24
(8) Replacement. Upon receipt of evidence of the ownership
and the loss, theft, destruction or mutilation of any certificate evidencing one
or more shares of Series B Preferred Stock, and an agreement to indemnify
reasonably satisfactory to the Corporation, the Corporation will (at its
expense) execute and deliver in replacement of such certificate a new
certificate representing the number of shares represented by such lost, stolen,
destroyed or mutilated certificate.

-12-
<PAGE> 25
STATEMENT OF CHANGE OF REGISTER OFFICE

PENNSYLVANIA DEPARTMENT OF STATE 23
CORPORATION BUREAU
ROOM 308 NORTH OFFICE BUILDING
P.O. BOX 8722
HARRISBURG, PA 17105-8722

RMH SALES AND MARKETING CONSULTING, INC.

THE CORPORATION BUREAU IS HAPPY TO SEND YOU YOUR FILED DOCUMENT. PLEASE
NOTE THE FILE DATE AND THE SIGNATURE OF THE SECRETARY OF THE COMMONWEALTH. THE
CORPORATION BUREAU IS HERE TO SERVE YOU AND WANTS TO THANK YOU FOR DOING
BUSINESS IN PENNSYLVANIA. IF YOU HAVE ANY QUESTIONS PERTAINING TO THE
CORPORATION BUREAU, CALL (717) 787-1057.

ENTITY NUMBER: 0773135

MICROFILM NUMBER: 09561

0441-0442

G BRADLEY RAINER ESQ
ECKELL PSARKS LEVY AUERBACH & MONTE
PO BOX 319
MEDIA, PA 19063
<PAGE> 26
STATEMENT OF CHANGE OF REGISTERED OFFICE

Microfilm Number 9561-441

Entity Number 773135

Filed with the Department of State on September 18, 1995

/s/
- ----------------------------------------------
Secretary of the Commonwealth

STATEMENT OF CHANGE OF REGISTERED OFFICE
DSCB:15-1507/4144/5507/6144/8506 (Rev 91)

INDICATE TYPE OF ENTITY (CHECK ONE):

X DOMESTIC BUSINESS CORPORATION (15 Pa.C.S. Section 1507)
- ---
FOREIGN BUSINESS CORPORATION (15 Pa.C.S. Section 4144)
- ---
DOMESTIC NONPROFIT CORPORATION (15 Pa.C.S. Section 5507)
- ---
FOREIGN NONPROFIT CORPORATION (15 Pa.C.S. Section 6144)
- ---
DOMESTIC LIMITED PARTNERSHIP (15 Pa.C.S. Section 8506)
- ---

In compliance with the requirements of the applicable provisions of
15 Pa.C.S. (relating to corporations and unincorporated associations) the
undersigned corporation or limited partnership, desiring to effect a change
of registered office, hereby states that:

<TABLE>
<S> <C>
1. The NAME of the corporation or limited partnership is: RMH Sales and
Marketing Consulting, Inc.

2. The (a) ADDRESS of this corporation's or limited partnership's current
registered office in this Commonwealth or (b) NAME of its commercial
registered office provider and the county of venue is: (the Department
is hereby authorized to correct the following information to conform to
the records of the Department):

(a) 300 East Lancaster Avenue, Suite 206, Wynnewood, PA 19096, Montgomery County
----------------------------------------------------------------------------
Number and Street City State Zip County

(b) c/o:
------------------------------------------------------------------------
Name of Commercial Registered Office Provider County

For a corporation or a limited partnership represented by a commercial
registered office provider, the county in (b) shall be deemed the county
in which the corporation or limited partnership is located for venue and
official publication purposes.

3. (COMPLETE PART (a) or (b)):

(a) The ADDRESS to which the registered office of the corporation or
limited partnership in this Commonwealth is to be changed is:

40 Morris Avenue, Bryn Mawr, PA 19010, Delaware County
----------------------------------------------------------------------------
Number and Street City State Zip County

(b) The REGISTERED OFFICE of the corporation or limited partnership shall
be provided by:

c/o:
------------------------------------------------------------------------
Name of Commercial Registered Office Provider County

Entity Number_____________ ____________________________________________________
SECRETARY OF THE COMMONWEALTH

ARTICLES OF AMENDMENT - DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)

In compliance with the requirements of 15 Pa.C.S. Sec. 1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that;

1. The NAME of the corporation is: RMH Sales and Marketing Consulting, Inc.
------------------------------------------

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

2. The (a) ADDRESS of this corporation's current registered office in this
Commonwealth or (b) NAME of its commercial registered office provider and
the county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):

(a) 40 Morris Avenue Bryn Mawr Pennsylvania 19010 Delaware
------------------------------------------------------------------------
Number and Street City State Zip County

(b) c/o:
-------------------------------------------------------------------
Name of Commercial Registered Office Provider County

For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.

3. The STATUTE by or under which it was incorporated is:

Pennsylvania Business Corporation Law of 1988
---------------------------------------------------------------------------

4. The DATE of its incorporation is: June 6, 1983
------------------------------------------

5. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

X The amendment shall be effective upon filing these Articles of
--- Amendment in the Department of State.

--- The amendment shall be effective on:_____________________at___________
Date Hour

6. (CHECK ONE OF THE FOLLOWING):

The amendment was adopted by the shareholders (or members) pursuant to
--- 15 Pa.C.S. Sec. 1914(a) and (b).

X The amendment was adopted by the board of directors pursuant to 15
--- Pa.C.S. Sec. 1914(c).

7. (CHECK, AND IF APPROPRIATE COMPLETE, ONE OF THE FOLLOWING):

X The amendment adopted by the corporation, set forth in full, is as
--- follows:

1. - The name of the corporation is: RMH Teleservices, Inc.
-----------------------------------------------------------------------

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

The amendment adopted by the corporation is set forth in full in
--- Exhibit A attached hereto and made a part hereof.

<PAGE> 28
DSCB: 15-1915 (Rev 90)-2

8. (CHECK IF THE AMENDMENT RESTATES THE ARTICLES):

___ The restated Articles of incorporation supersede the original Articles
and all amendments thereto.

IN TESTIMONY WHEREOF, the undersigned corporation has caused these
Articles of Amendment to be signed by a duly authorized officer thereof this
30th day of June, 1996.

RMH SALES AND MARKETING CONSULTING, INC.
----------------------------------------
(Name of Corporation)

BY: /s/ Raymond J. Hansell
------------------------------------
Raymond J. Hansell

TITLE: Chief Executive Officer

<PAGE> 1
EXHIBIT 3.2

BYLAWS

RMH SALES AND MARKETING CONSULTING, INC.

These Bylaws are adopted by this Corporation and are
supplemental to the Pennsylvania Business Corporation Law as
the same shall from time to time be in effect.

ARTICLE I. NAME AND SEAL

Section 101. Name. The name of the Corporation is RMH Sales and
Marketing Consulting, Inc.

Section 102. State of Incorporation. The Corporation has been
incorporated under the laws of the Commonwealth of Pennsylvania.

Section 103. Seal. The corporate seal of the Corporation shall have
inscribed thereon the name of the Corporation, the year of its organization, the
words "Corporate Seal", and the name of the State of Incorporation. The seal may
be used by any person authorized by the Board of Directors of the Corporation or
by these Bylaws by causing the seal or a facsimile thereof to be impressed or
affixed, or in any manner reproduced.

ARTICLE II. REGISTERED AND PRINCIPAL OFFICES.

Section 201. Registered Office. The registered office of the
Corporation in the State of Incorporation shall be 40 Morris Avenue, Bryn Mawr,
PA 19010.

Section 202. Offices. The principal office of the Corporation and any
other offices of

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<PAGE> 2
the Corporation shall be located at such places, within and without the
Commonwealth of Pennsylvania, as the Board of Directors may from time to time
determine or as the business of the Corporation may require.

ARTICLE III. MEETINGS OF SHAREHOLDERS.

Section 301. Place of Meetings. All meetings of the shareholders shall
be held at such place or places, within or without the Commonwealth of
Pennsylvania, as shall be determined by the Board of Directors from time to
time.

Section 302. Annual Meetings. The annual meeting of the shareholders
for the election of directors and the transaction of such other business as may
properly come before the meeting shall be held on the third Tuesday of January,
if not a legal holiday, and if a legal holiday, then on the next secular day
following. Any business which is a proper subject for shareholder action may be
transacted at the annual meeting, irrespective of whether the notice of said
meeting contains any reference thereto, except as otherwise provided by
applicable statute or regulation.

Section 303. Special Meetings. Special meetings of the shareholders may
be called at any time by the Board of Directors, the President, or by the
shareholders entitled to cast at least five percent (5%) of the vote which all
shareholders are entitled to cast at the particular meeting .

Section 304. Conduct of Shareholders' Meetings. Subject to Section 903
hereof, the Chair shall preside at all shareholders' meetings, or, in his or her
absence, the Vice-Chair or President. The officer presiding over the
shareholders' meeting may establish such rules and regulations for the conduct
of the meeting as he or she may deem to be reasonably necessary or

2
<PAGE> 3
desirable for the orderly and expeditious conduct of the meeting. The revocation
of a proxy shall not be effective until written notice thereof has been given to
the Secretary of the Corporation.

ARTICLE IV. DIRECTORS AND BOARD MEETINGS.

Section 401. Management by Board of Directors. The business and affairs
of the Corporation shall be managed by its Board of Directors. The Board of
Directors may exercise all such powers of the Corporation and do all such lawful
acts and things as are not by statute or by the Articles of Incorporation or by
these Bylaws or by any agreement among the shareholders directed or required to
be exercised or done by the shareholders. Notwithstanding the foregoing,
pursuant to the terms and conditions of a Shareholders' Agreement among the
Corporation, Raymond J. Hansell, MarySue Lucci Hansell, Advanta Partners LP and
Glengar International Investments Limited executed or to be executed as of the
date of adoption of these Bylaws (the "Shareholders' Agreement"), the authority
of the directors of the Corporation shall be restricted as to any Fundamental
Change or Major Transaction, as defined below.

A "Fundamental Change" shall mean any of (i) the sale of all or
substantially all of the assets of the Corporation, (ii) the acquisition of a
substantial interest in the stock of, or a substantial portion of the assets of,
a third party, or committing a substantial portion of the assets of the
Corporation in connection with a joint venture with a third party, (iii) the use
of more than ten percent (10%) of the Corporation's available working capital to
initiate a new business, or (iv) the relocation of the Corporation's
headquarters from its present headquarters in Bryn

3
<PAGE> 4
Mawr, Pennsylvania. The Corporation may only implement a Fundamental Change if
such action is authorized by the Corporation's Board of Directors and approved
in writing by "AP Investor" and each of the "Principals", as required by, and
defined in, the Shareholders' Agreement.

A Major Transaction shall require the authorization of the majority of
the Board of Directors of the Corporation and the separate approval of a
majority of the "AP Directors", as required by, and defined in, the
Shareholders' Agreement. A "Major Transaction" shall mean any of the following:

(i) any Fundamental Change as described above;

(ii) any merger, consolidation, or division involving the
Corporation, or any sale of a substantial portion of the
assets of the Corporation's business;

(iii) issuance by the Corporation of any stock, options, warrants,
or other equity securities or instruments convertible into any
equity securities of the Corporation;

(iv) the declaration or payment by the Corporation of any dividends
or distributions to its shareholders, or the redemption,
purchase or acquisition by the Corporation of any of its
shares;

(v) the granting of any mortgage, pledge, or security interest on
any material assets of the Corporation, except for installment
sale agreements and equipment leases in the ordinary course of
business, or the guarantying by the Corporation of the debt of
any other person or entity;

(vi) incurring any indebtedness of the Corporation in excess of
$50,000 in any single transaction or series of related
transactions;

(vii) the expenditure of more than the budgeted amount for capital
expenditures in any fiscal year of the Corporation;

(viii) the acquisition, development, or leasing of any real estate or
any space therein;

4
<PAGE> 5
(ix) the institution or settlement of any litigation, arbitration,
or administrative proceeding involving an amount in
controversy more than $25,000;

(x) hiring any new employee of the Corporation for whom the total
annual compensation payable, including base salary, bonuses,
and incentive compensation may exceed $125,000;

(xi) entering into, amending, extending, or terminating any
contract (except contracts for telemarketing services entered
in the ordinary course of business) involving the potential
payment to or by the Corporation of more than $50,000 over the
term thereof, or any transaction with any officer, director or
shareholder of the Corporation or any affiliate of any
officer, director or shareholder of the Corporation, or any
contract having a term in excess of one (1) year (unless such
contract may be terminated on no more than thirty (30) days
notice without payment of any penalty or premium), or any
employment contract for which the total annual compensation
may exceed $125,000, or any contract materially restricting
the Corporation's ability to conduct any material business
activities, or any contract or commitment to enter into any
other Major Transaction (for the purpose of the foregoing, an
"affiliate" of a person shall mean the spouse, parents,
siblings, issue or in-laws of such person and any entity
controlled by such person or any of the foregoing family
members); or

(xii) any material change in accounting methods or accounting
practices of the Corporation.

Section 402. Nomination for Directors. Directors shall be nominated by
AP Investor, the Principals and "Glengar", as required by, and defined in, the
Shareholders' Agreement.

Section 403. Number of Directors. The Board of Directors shall consist
of seven (7) directors. The directors shall be elected by the shareholders at
the annual meeting of shareholders to serve until the next annual meeting of
shareholders. Each director shall serve until his or her successor shall have
been elected and shall qualify, even though his or her term of office as herein
provided has otherwise expired, except in the event of his or her earlier

5
<PAGE> 6
resignation or removal.

Section 404. Resignations. Any director may resign at any time. Such
resignation shall be in writing, but the acceptance thereof shall not be
necessary to make it effective.

Section 405. Vacancies. Vacancies in the Board of Directors shall be
filled by vote of the shareholders, provided that the replacement for
a director nominated by AP Investor, the Principals or Lubner shall be nominated
by the entity or person nominating the original director. Each person so
elected shall serve for the balance of the unexpired term.

Section 406. Compensation of Directors. No director shall be entitled
to any salary as such, but the Board of Directors may fix, from time to time, a
reasonable fee to be paid each director for his or her services in attending
meetings of the Board.

Section 407. Regular Meetings. Regular meetings of the Board of
Directors shall be held on such day and at such hour as the Board shall from
time to time designate. The Board of Directors shall meet for reorganization at
the first regular meeting following the annual meeting of shareholders at which
the directors are elected. Notice of regular meetings of the Board of Directors
need not be given.

Section 408. Special Meetings. Special meetings of the Board of
Directors may be called by the Chair of the Board or the President and shall be
called whenever two or more members of the Board so request in writing. Notice
of the time and place of every special meeting, which need not specify the
business to be transacted thereat and which may be either verbal or in writing,
shall be given by the Secretary to each member of the Board at least

6
<PAGE> 7
twenty-four (24) hours before the time of such meeting.

Section 409. Reports and Records. The reports of officers and
committees shall be filed with the Secretary of the Board. The Board of
Directors shall keep complete records of its proceedings in a minute book kept
for that purpose. When a director shall request it, the vote of each director
upon a particular question shall be recorded in the minutes.

Section 410. Absence or Disqualification of Committee Members. In the
absence or disqualification of any member of any committee or committees
established by the Board of Directors, the member or members thereof present at
any meeting of such committee or committees, and not disqualified from voting,
whether or not he, she or they constitute a quorum, may unanimously appoint
another director to act at the meeting in the place of any such absent or
disqualified member.

Section 411. Chair of the Board. The directors may choose a Chair of
the Board, who shall preside at the meetings of the Board and perform such other
duties as may be prescribed by the Board of Directors.

ARTICLE V. OFFICERS.

Section 501. Officers. The officers of the Corporation shall be a Chair
of the Board, Vice Chair, President, one or more Vice Presidents, a Secretary, a
Treasurer, and such other officers or assistant officers as the Board of
Directors may from time to time deem advisable. Except for the President,
Secretary and Treasurer, the Board may refrain from filling any of the said
offices at any time and from time to time. Officers shall be elected by the
Board of

7
<PAGE> 8
Directors at the time and in the manner as the Board of Directors from time to
time shall determine. Each officer shall hold office for a term extending until
the first regular meeting of the Board of Directors following the annual
meeting of shareholders and until his or her successor shall have been elected
and shall qualify, except in the event of his or her earlier resignation or
removal.

Section 502. Chair of the Board. The Chair of the Board of Directors
shall preside at all meetings of the shareholders and of the Directors at which
he or she is present, and shall have such authority and perform such duties as
the Board of Directors may from time to time designate.

Section 503. Vice Chair of the Board. The Vice Chair shall be the Chief
Executive Officer of the Corporation and shall prescribe the duties of the other
officers and employees and see to the proper performance thereof. He or she
shall be responsible for having all orders and resolutions of the Board of
Directors carried into effect. As authorized by the Board of Directors, he or
she shall execute on behalf of the Corporation and may affix or cause to be
affixed a seal to all instruments requiring such execution, except to the extent
that signing and execution thereof shall have been expressly delegated to some
other officer of the Corporation. The Vice Chair of the Board shall perform the
duties of the Chair in his or her absence and shall perform such other duties as
the Board of Directors or the Chair may from time to time designate.

8
<PAGE> 9
Section 504. President. The President shall be the Chief Operating
Officer and shall have general supervision of all the departments and business
of the Corporation. He or she shall execute on behalf of the Corporation and may
affix or cause to be affixed a seal to all instruments requiring such execution,
except to the extent that signing and execution thereof shall have been
expressly delegated to some other officer or agent of the Corporation. The
President shall perform the duties of the Chief Executive Officer in his or her
absence and shall perform such other duties as may be prescribed by the Board of
Directors, the Chair or the Chief Executive Officer.

Section 505. Vice Presidents. The Vice Presidents shall perform such
duties and do such acts as may be prescribed by the Board of Directors, the
Chief Executive Officer or the President.

Section 506. Treasurer. The Treasurer shall act under the direction of
the Chief Executive Officer. Subject to the direction of the Chief Executive
Officer, he or she shall have custody of the Corporation's funds and shall keep
full and accurate accounts of receipts and disbursements in books belonging to
the Corporation and shall deposit all moneys in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Chief Executive Officer, taking appropriate vouchers for such
disbursements, and shall on request tender to the Chief Executive Officer, the
Chair and the Board of Directors, at its meetings, an account of all his or her
transactions as Treasurer and of the financial condition of

9
<PAGE> 10
the Corporation.

Section 507. Secretary. The Secretary shall act under the direction of
the Chief Executive Officer. Unless a designation to the contrary is made at a
meeting, the Secretary shall attend all meetings of the Board of Directors and
all meetings of the shareholders and record all of the proceedings of such
meetings in a book to be kept for that purpose, and shall perform like duties
for the standing committees when required. The Secretary shall give, or cause to
be given, notice of all meetings of the shareholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Chief Executive Officer or the Board of Directors. The Secretary shall keep
in safe custody the seal of the Corporation, and, when authorized by the Chief
Executive Officer or the Board of Directors, cause it to be affixed to any
instruments requiring it.

Section 508. Assistant Officers. Any assistant officers elected by the
Board of Directors shall have such duties as may be prescribed by the Board of
Directors, the Chief Executive Officer, or the officer to whom they are an
assistant. Assistant officers shall perform the duties and have the power of
the officer to whom they are an assistant in the event of such officer's absence
or disability.

Section 509. Compensation. Unless otherwise provided by the Board of
Directors, the salaries and compensation of all officers shall be fixed by the
Board of Directors.

Section 510. General Powers. The officers are authorized to do and
perform such corporate acts as are necessary in the carrying on of the business
of the Corporation, subject

10
<PAGE> 11
always to the directions of the Board of Directors and to the restrictions
provided for in Article IV, Section 401 contained herein.

ARTICLE VI. PERSONAL LIABILITY OF DIRECTORS AND INDEMNIFICATION.

Section 601. Personal Liabilities of Directors.

(a) A director of this Corporation shall not be personally liable, as
such, for monetary damages for any action taken, or any failure to take any
action, unless:

(1) the director has breached or failed to perform the duties
of his of her office under Subchapter B of Chapter 17 of the Pennsylvania
Business Corporation Law; and

(2) the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness.

(b) This Section 601 shall not limit a director's liability for
monetary damages to the extent prohibited by the provisions of the Pennsylvania
Business Corporation Law.

Section 602. Indemnification of Directors and Officers. The Corporation
shall, to the fullest extent permitted by applicable law, indemnify its
directors and officers who were or are a party or are threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (whether or not such
action, suit or proceeding arises or arose by or in the right of the Corporation
or other entity) by reason of the fact that such director or officer is or was a
director or officer of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee, general partner, agent or
fiduciary of another corporation, partnership, joint venture,

11
<PAGE> 12
trust or other enterprise (including service with respect to employee benefit
plans), against expenses (including, but not limited to, attorneys' fees and
costs), judgments, fines (including excise taxes assessed on a person with
respect to any employee benefit plan) and amounts paid in settlement actually
and reasonably incurred by such director or officer in connection with such
action, suit or proceeding, except as otherwise provided in Section 604 hereof.
Persons who were directors or officers of the Corporation prior to the date this
Section is approved by the shareholders of the Corporation, but who do not hold
such office on or after such date, shall not be covered by this Section 602. A
director or officer of the Corporation entitled to indemnification under this
Section 602 is hereafter called a "person covered by Section 602 hereof."

Section 603. Expenses. Expenses incurred by a person covered by
Section 602 hereof in defending a threatened, pending or completed civil or
criminal action, suit or proceeding shall be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation, except as otherwise provided in Section 604.

Section 604. Exceptions. No indemnification under Section 602 or
advancement or reimbursement of expenses under Section 603 shall be provided to
a person covered by Section 602 hereof (a) with respect to expenses or the
payment of profits arising from the purchase or sale of securities of the
Corporation in violation of Section 16(b) of the Securities Exchange Act

12
<PAGE> 13
of 1934; (b) if a final unappealable judgment or award establishes that such
director or officer engaged in self-dealing, wilful misconduct or recklessness;
(c) for expenses or liabilities of any type whatsoever (including, but not
limited to, judgments, fines, and amounts paid in settlement) which have been
paid directly to or for the benefit of such person by an insurance carrier under
a policy of officers' and directors' liability insurance whose premiums are paid
for by the Corporation or by an individual or entity other than such director or
officer; and (d) for amounts paid in settlement of any threatened, pending or
completed action, suit or proceeding without the written consent of the
Corporation, which written consent shall not be unreasonably withheld. The Board
of Directors of the Corporation is hereby authorized, at any time by resolution,
to add to the above list of exceptions from the right of indemnification under
Section 602 or advancement or reimbursement of expenses under Section 603, but
any such additional exception shall not apply with respect to any event, act or
omission which has occurred prior to the date that the Board of Directors in
fact adopts such resolution. Any such additional exception may, at any time
after its adoption, be amended, supplemented, waived or terminated by further
resolution of the Board of Directors of the Corporation.

Section 605. Continuation of Rights. The indemnification and
advancement or reimbursement of expenses provided by, or granted pursuant to,
this Article shall continue as to a person who has ceased to be a director or
officer of the Corporation, and shall inure to the benefit of the heirs,
executors and administrators of such person.

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<PAGE> 14
Section 606. General Provisions.

(a) The term "to the fullest extent permitted by applicable law," as
used in this Article, shall mean the maximum extent permitted by public policy,
common law or statute. Any person covered by Section 602 hereof may, to the
fullest extent permitted by applicable law, elect to have the right to
indemnification or to advancement or reimbursement of expenses, interpreted, at
such person's option, (i) on the basis of the applicable law on the date this
Article was approved by the shareholders, or (ii) on the basis of the applicable
law in effect at the time of the occurrence of the event or events giving rise
to the action, suit or proceeding, or (iii) on the basis of the applicable law
in effect at the time indemnification is sought,

(b) The right of a person covered by Section 602 hereof to be
indemnified or to receive an advancement or reimbursement of expenses pursuant
to Section 603 (i) may also be enforced as a contract right pursuant to which
the person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Corporation and such person,
(ii) to the fullest extent permitted by applicable law, is intended to be
retroactive and shall be available with respect to events occurring prior to the
adoption hereof, and (iii) shall continue to exist after the rescission or
restrictive modification (as determined by such person) of this Article with
respect to events, acts or omissions occurring before such rescission or
restrictive modification is adopted.

(c) If a request for indemnification or for the advancement or
reimbursement of expenses pursuant hereto is not paid in full by the Corporation
within thirty days after a written

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<PAGE> 15
claim has been received by the Corporation together with all supporting
information reasonably requested by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim (plus interest at the prime rate announced from time to time by the
Corporation's primary banker) and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses (including, but not
limited to, attorney's fees and costs) of prosecuting such claim. Neither the
failure of the Corporation (including its Board of Directors, independent legal
counsel, or its shareholders) to have made a determination prior to the
commencement of such action that indemnification of or the advancement or
reimbursement of expenses to the claimant is proper in the circumstances, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) that the claimant is not
entitled to indemnification or to the reimbursement or advancement of expenses,
shall be a defense to the action or create a presumption that the claimant is
not so entitled.

(d) The indemnification and advancement or reimbursement of expenses
provided by, or granted pursuant to, this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement or
reimbursement of expenses may be entitled under any by-law, agreement, vote of
shareholders or directors or otherwise, both as to action in such director or
officer's official capacity and as to action in another capacity while holding
that office.

(e) Nothing contained in this Article shall be construed to limit the
rights and powers

15
<PAGE> 16
the Corporation possesses under Section 1741 to Section 1750 inclusive of the
Pennsylvania Business Corporation Law, including, but not limited to, the
powers to purchase and maintain insurance, create funds to secure or insure its
indemnification obligations, and any other rights or powers the Corporation may
otherwise have under applicable law.

(f) The provisions of this Article may, at any time (and whether before
or after there is any basis for a claim for indemnification or for the
advancement or reimbursement of expenses pursuant hereto), be amended,
supplemented, waived, or terminated, in whole or in part, with respect to any
person covered by Section 602 hereof by a written agreement signed by the
Corporation and such person.

(g) The Corporation shall have the right to appoint the attorney for a
person covered by Section 602 hereof, provided such appointment is not
unreasonable under the circumstances, and such appointment is subject to the
approval of the indemnified person, which shall not be unreasonably withheld or
delayed.

Section 607. Optional Indemnification. The Corporation may, to the
fullest extent permitted by applicable law, indemnify, and advance or reimburse
expenses for, persons in all situations other than that covered by this Article.

ARTICLE VII. SHARES OF CAPITAL STOCK.

Section 701. Authority to Sign Share Certificates. Every share
certificate shall be signed by the President or one of the Vice Presidents and
by the Secretary or one of the Assistant Secretaries.

16
<PAGE> 17
Section 702. Lost or Destroyed Certificates. Any person claiming a
share certificate to be lost, destroyed or wrongfully taken shall receive a
replacement certificate if said shareholder shall have: (a) requested such
replacement certificate before the Corporation has notice that the shares have
been acquired by a bona fide purchaser; (b) provided the Corporation with an
indemnity agreement satisfactory in form and substance to the Board of
Directors, or President or the Secretary, and (c) satisfied any other reasonable
requirements (including, without limitation, providing a surety bond) fixed by
the Board of Directors, or the President or the Secretary.

ARTICLE VIII. RESTRICTION ON TRANSFER OF SHARES.

Section 801. General Rule. A shareholder shall not sell, transfer, or
otherwise dispose of the shareholder's shares, except as expressly permitted in
the Shareholders' Agreement.

Section 802. Certificate Legend. All certificates for shares of this
Corporation shall have the following legend printed or stamped thereon:

"This certificate and the shares represented hereby are held subject to
the terms, covenants and conditions of an agreement dated May 24,
1996 by and among this Corporation and its then shareholders, as it may
be amended from time to time, and neither this certificate, the shares
represented hereby, nor any interest in this certificate, or in such
shares, may be transferred or disposed of voluntarily, by operation of
law or otherwise, except in accordance with the terms and provisions
thereof. A copy of said agreement and all amendments thereto is on file
and may be inspected at the principal executive offices of the
Company."

17
<PAGE> 18
ARTICLE IX. GENERAL.

Section 901. Fiscal Year. The fiscal year of the Corporation shall
begin on October 1 of each year.

Section 902. Signing Checks. All checks or demands for money and notes
of the Corporation shall be signed by such officer, officers, or other person or
persons as the Board of Directors may from time to time designate.

Section 903. Designation of Presiding and Recording Officers. The
directors or shareholders, at any meeting of directors or shareholders, as the
case may be, shall have the right to designate any person, whether or not an
officer, director or shareholder, to preside over or record the proceedings of
such meeting.

Section 904. Record Date. The Board of Directors may fix any time
whatsoever (provided the date is not more than sixty (60) days, except in the
case of an adjourned meeting) prior to the date of any meeting of shareholders,
as a record date for the determination of the shareholders entitled to notice
of, or to vote at any such meeting. The Board of Directors may fix any time
whatsoever (whether or not the same is more than sixty (60) days) prior to the
date fixed for the payment of any dividend or distribution, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
shares will be made or will go into effect, as a record date for the
determination of shareholders entitled to receive payment of any such dividend
or distribution, or to receive any such allotment of rights, or to exercise the
rights in respect to any such change, conversion or exchange of shares.

18
<PAGE> 19
Section 905. Text of Proposed Resolution in Written Notice. Whenever
the language of a proposed resolution is included in a written notice to
shareholders, the shareholders' meeting considering the resolution may adopt it
with such clarifying or other amendments as do not enlarge its original purpose,
without further notice to shareholders not present in person or by proxy.

Section 906. Absentee Participation in Meetings. One or more directors
or shareholders may participate in a meeting of the Board of Directors, or of a
committee of the Board, or a meeting of the shareholders, by means of a
conference telephone or similar communications equipment, by means of which all
persons participating in the meeting can hear each other.

Section 907. Emergency Bylaws. In the event of any emergency resulting
from warlike damage or an attack on the United States or any nuclear or atomic
disaster, and until the termination of such emergency, the following Bylaw
provisions shall be in effect, notwithstanding any other provisions of these
Bylaws:

(a) A special meeting of the Board of Directors may be called by any
officer or director upon one (1) hour's notice, and

(b) The director or directors in attendance at the meeting shall
constitute a quorum.

Section 908. Severability. If any provision of these Bylaws is illegal
or unenforceable as such, such illegality or unenforceability shall not effect
any other provision of these Bylaws and such other provisions shall continue in
full force and effect.

19
<PAGE> 20
ARTICLE X. AMENDMENT OR REPEAL.

Section 1001. Amendment or Repeal by Shareholers. These Bylaws are
subject to the Shareholders' Agreement. No amendment to these Bylaws which would
be contrary to said Shareholders' Agreement as then in effect shall be valid or
effective.

Section 1002. Recording Amendments and Repeals. The text of all
amendments and repeals to these Bylaws shall be attached to the Bylaws with a
notation of the date of each such amendment or repeal and a notation of whether
such amendment or repeal was adopted by the shareholders or the Board of
Directors.

ARTTCLE XI. ADOPTION OF BYLAWS AND RECORD OF AMENDMENTS AND REPEALS.

Section 1101. Adoption and Effective Date. These Bylaws have been
adopted as the Bylaws of the Corporation as of the 24th day of May, 1996, and
shall be effective as of said date.

Section 1102. Amendments or Repeals.

Date Ammended
Section Involved or Repealed Adopted By
- ---------------- ------------- ----------

<PAGE> 21
RMH SALES AND MARKETING CONSULTING, INC.

UNANIMOUS CONSENT IN WRITING IN LIEU
OF A SPECIAL MEETING OF SHAREHOLDERS

The undersigned, being all the shareholders of RMH Sales and Marketing
Consulting, Inc. (the "Corporation"), do hereby waive notice, and consent to
the resolution set forth below:

RESOLVED, that the following be and they hereby are elected as
Directors, each to serve until the next annual meeting of shareholders and
until his or her successor shall be elected and shall qualify.

Anthony P. Brenner

Mitchell L. Hollin

Raymond J. Hansell

MarySue Lucci Hansell

Derek Lubner

WITNESS, the signatures of the undersigned as evidence of their
unanimous consent in writing to the action taken in the foregoing resolutions
as of the 24th day of May. 1996.

ADVANTA PARTNERS LP
By AP CAPITAL, INC., general partner

By: /s/ Mitchell L. Hollin /s/ Raymond J. Hansell
-------------------------------- -----------------------------------
Name: Mitchell L. Hollin RAYMOND J. HANSELL
Title: Vice President

GLENGAR INTERNATIONAL INVESTMENTS
LIMITED

By: /s/ Ian C. Crosby /s/ MarySue Lucci Hansell
-------------------------------- -----------------------------------
Ian C. Crosby MARYSUE LUCCI HANSELL
Director: Montblanc (Director) Limited
Sole corporate director: Glengar
International Investments Limited

<PAGE> 1
EXHIBIT 9

VOTING AGREEMENT

AGREEMENT, made as of this 2nd day of July, 1996, among
Raymond J. Hansell ("Hansell"), MarySue Lucci Hansell ("Lucci") and Advanta
Partners LP ("Advanta Partners").

WHEREAS Hansell and Lucci each own 750,000 shares of the
Common Stock, no par value (the "Common Stock "), of RMH Teleservices, Inc., a
Pennsylvania corporation (the "Company");

WHEREAS Advanta Partners owns 2,873,685 shares of Common
Stock, consisting of 1,594,112 shares of Class A Common Stock and 1,279,573
shares of Class B Common Stock. Collectively, Hansell, Lucci and Advanta
Partners are referred to herein as the "Shareholders";

WHEREAS, the Company intends to complete an initial public
offering of shares of its Common Stock pursuant to a Registration Statement
expected to be filed with the United States Securities and Exchange Commission
on or about July 3, 1996 (the "IPO");

WHEREAS, upon completion of the IPO, Advanta Partners intends
to convert all of its shares of Class B Common Stock into Class A Common Stock,
which will be redenominated as Common Stock;

WHEREAS, the parties hereto wish to enter an agreement to
govern, after the completion of the IPO, the voting of their shares of Common
Stock for members of the Board of Directors of the Company;

NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Shareholders, intending to be legally bound,
hereby agree as follows:
<PAGE> 2
Section 1. VOTING OF SHARES.

Subject to the terms and conditions of this Agreement, each of
the Shareholders hereby agree that after the date of the IPO they shall vote all
of the shares of Common Stock owned by them in accordance with the following:

(a) Hansell and Lucci shall vote all of their shares of Common
Stock, whether presently owned or hereafter acquired, for one person nominated
by Advanta Partners in any election of a Class II or Class III director to the
Board of Directors of the Company, for so long as Advanta Partners beneficially
owns (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934
(the "Rule 13d-3")) at least 25% of the number of shares of Common Stock owned
by Advanta Partners on the closing date of the IPO, including without limitation
shares issued upon conversion of Class B Common Stock.

(b) Advanta Partners shall vote all of its shares, whether
presently owned or hereafter acquired, of Common Stock for one person nominated
jointly by Hansell and Lucci in any election of a Class II or Class III director
to the Board of Directors of the Company, for as long as Hansell and Lucci
collectively beneficially own (within the meaning of Rule 13d-3) at least 25% of
the shares of Common Stock owned by Hansell and Lucci on the closing date of the
IPO, including, without limitation, shares to be issued upon exchange of a note
issued by the Company to Hansell and Lucci and of Series A Preferred Stock of
the Company issued to Hansell and Lucci.

Section 2. COPY OF AGREEMENT TO BE KEPT ON FILE.

The Shareholders shall keep on file at the Company's principal
executive offices, and will exhibit to any other Shareholder or his duly
authorized representative at any and all reasonable times, an executed copy of
this Agreement and all amendments thereto.

2
<PAGE> 3
Section 3. TERMINATION OF THIS AGREEMENT.

If the IPO does not close by September 30, 1996, this
Agreement shall be void ab initio and all of the rights and obligations of the
parties shall be wholly without force and effect.

Section 4. RIGHTS. OBLIGATIONS AND REMEDIES.

The rights and obligations under, and the remedies to enforce
this Agreement are joint and several as to the Shareholders, each being
completely free to enforce any or all of the rights or obligations under this
Agreement against any of the others, with or without the concurrence or joinder
of any of the others. The parties hereto agree that in the event of any breach
or threatened breach of any such covenant or agreement, in addition to any and
all other legal and equitable remedies that may be available, any party hereto
may specifically enforce the terms of this Agreement and may obtain temporary
and/or permanent injunctive relief without the necessity of proving actual
damages by reason of breach or threatened breach hereof and, to the extent
permissible under the applicable statutes and rules of procedure, a temporary
injunction may be granted immediately upon the commencement of any such suit and
without notice to any other party.

Section 5. ENTIRE AGREEMENT; AMENDMENT; MODIFICATION AND
TERMINATION.

This Agreement contains the entire understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein contained. The
express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement may
be amended, modified or terminated at any time or times by the unanimous
agreement in writing of the Shareholders.

3
<PAGE> 4
Section 6. MISCELLANEOUS.

(A) Indulgences, Etc. Neither the failure nor any
delay on the part of any party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof. Nor shall any single or
partial exercise of any right, remedy, power or

4
<PAGE> 5
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege. Nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence.

(B) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.

(C) Binding Nature of Agreement; No Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns,
except that no party may assign or transfer its rights or obligations under this
Agreement without the prior written consent of the other parties.

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

(E) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement on the date first above written.

5
<PAGE> 6
/s/ Raymond J. Hansell
---------------------------------------
Raymond J. Hansell

/s/ MarySue Lucci Hansell
---------------------------------------
MarySue Lucci Hansell

ADVANTA PARTNERS LP

By: AP CAPITAL, INC., general partner

By: /s/ Mitchell L. Hollin
----------------------------------
Mitchell L. Hollin, Vice President

<PAGE> 1

EXHIBIT 10.2

SHAREHOLDERS' AGREEMENT

RMH SALES AND MARKETING CONSULTING, INC.

dated

May 24, 1996
<PAGE> 2

SHAREHOLDERS' AGREEMENT

AGREEMENT made this 24th day of May, 1996, by and among RMH
SALES AND MARKETING CONSULTING, INC., a Pennsylvania corporation trading as RMH
Telemarketing (hereinafter called the "Company"), RAYMOND J. HANSELL
(hereinafter called "Hansell"), MARYSUE LUCCI HANSELL (hereinafter called
"Lucci"), ADVANTA PARTNERS LP, a Pennsylvania limited partnership (hereinafter
called "AP Investor") and GLENGAR INTERNATIONAL INVESTMENTS LIMITED, a limited
liability company organized in the British Virgin Islands (hereinafter called
"Glengar").

BACKGROUND

A. Hansell, Lucci, AP Investor and Glengar, respectively,
own 750,000, 750,000, 1,594,112 and 126,315 shares of the Company's Class A
Voting Common Stock, no par value (the "Class A Common Stock"). AP Investor owns
1,279,573 shares of Class B Non-Voting Common Stock of the Company, no par value
(the "Class B Common Stock") (the Class A Common Stock and the Class B Common
Stock are collectively referred to herein as the "Common Stock"). Hansell and
Lucci each own 500,000 shares of Series A Preferred Stock of the Company par
value $1.00 per share (the "Series A Preferred Stock"). AP Investor and Glengar
own, respectively, 6,226,316 and 273,684 shares of Series B Preferred Stock of
the Company, par value $1.00 per share (the "Series B Preferred Stock") (the
Series A Preferred Stock and Series B Preferred Stock are collectively referred
to herein as the "Preferred Stock"). The Common Stock and the Preferred Stock
constitute all of the authorized capital stock of the Company (the "Capital
Stock") and the holdings of Capital Stock by Hansell, Lucci, AP Investor and
Glengar collectively constitute all of the outstanding shares of the Capital
Stock. The outstanding Common Stock, together with any other shares of the
Company's Common Stock which hereinafter may be owned by Shareholders, are
hereinafter called the "Common Shares". The outstanding Capital Stock, together
with any other shares of the Company's Capital Stock which hereafter may be
owned by Shareholders, are hereinafter called the "Shares".

B. Hansell, Lucci, AP Investor and Glengar, together with
any other person or entity which hereafter may become a shareholder of the
Company and who is bound by this Agreement, as long as they are shareholders of
the Company, are sometimes hereinafter collectively called the "Shareholders" or
individually called a "Shareholder". Hansell and Lucci are sometimes referred
to herein collectively as the "Principals," and individually as a "Principal".

C. The Shareholders and the Company desire to agree to
certain provisions as hereinafter set forth (i) relating to the rights of the
Shareholders to purchase, transfer,
<PAGE> 3

encumber or otherwise acquire or dispose of the Shares which they may own or may
hereafter acquire and the rights of the Company to permit the transfer of or to
issue Shares and (ii) relating to certain other matters.

NOW, THEREFORE, in consideration of the premises and of the
mutual covenants, conditions and agreements herein contained, the parties
hereto, each intending to be legally bound hereby, agree as follows:

1. Restrictions on Transfer.

(a) General Rule. No Shareholder shall sell,
assign, transfer, give, bequeath, devise, donate or otherwise dispose of, or
pledge, deposit or otherwise encumber, in any way or manner whatsoever, whether
voluntary or involuntary (a "Transfer"), any of the Shares now or hereafter
owned (of record or beneficially) by such Shareholder except as expressly
provided in this Agreement and in accordance with its terms and conditions, with
the exception of (i) the pledge of the Shares to Chemical Bank, as Agent
("Chemical"), or its successors or assigns, as security for certain debt
obligations of the Company (the "Chemical Loan") being issued on or about the
date hereof, and any exercise of remedies by Chemical with respect to such
pledges, and (ii) any Exempt Transfer (as such term is defined in subparagraph
1(b) of this Agreement). A "Transfer" shall include any change of control of a
Shareholder that is a corporation or other entity. Without limiting the previous
sentence, any transferee with respect to any Transfer (including, but not
limited to, Exempt Transfers but specifically excluding any Transfers to
Chemical as described above) shall be bound by all of the provisions of this
Agreement applicable to such transferee's transferor.

(b) Exempt Transfers. The following transactions
shall constitute "Exempt Transfers" as that term is used in this Agreement: (i)
as to any individual Shareholder, a Transfer by will or intestate succession to
a Shareholder's executors, administrators, testamentary trustees, legatees or
beneficiaries, (ii) a Transfer in a public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), and (iii) a Transfer by a Shareholder to one or more Related
Parties of such Shareholder; provided, however, that any transfer to a Related
Party shall be subject to all of the terms and conditions of this Agreement and
the transferee and the transferred Shares shall be bound by all the terms hereof
to the same extent as the transferor. As used herein, the term "Related Party"
means: (x) with respect to AP Investor, any entity wholly owned, directly or
indirectly through one or more intermediaries, by Advanta Partners LP or Advanta
Corporation (y), with respect to Glengar, an entity owned for the benefit of
Derek Lubner (or, after the death or disability of Mr. Lubner by a person or
persons acceptable to the then holders of a majority of the Shares of the Class
A Common Stock other than Glengar) and (z) with respect to the Principals, any
trust for the benefit of such Principal or his or her spouse or issue, provided
that the Principals individually shall at all times retain

-2-

<PAGE> 4

legal and beneficial ownership of at least 51% of all Shares held collectively
by the Principals and all such trusts.

(c) Restrictions on Transfer by AP Investor. With
the exception of Exempt Transfers, AP Investor shall not make any Transfers of
any Preferred Stock or Common Shares before the date (the "Principal Redemption
Date") on which the Company has redeemed all outstanding shares of the Series A
Preferred Stock and paid all accrued dividends with respect thereto and has
repaid in full all outstanding principal and interest with respect to the 6%
Junior Subordinated Note of the Company in favor of the Principals (the
"Sellers' Note"). Thereafter, AP Investor may Transfer its Preferred Stock
without restriction, and may Transfer all, but not less than all, of its Common
Shares, but only upon complying with the provisions of Paragraphs 3 and 4 below
with respect to the Transfer of any Common Shares and the other terms of this
Agreement. Paragraphs 3 and 4 below shall not be applicable to any Transfer by
AP Investor of Preferred Stock.

(d) Restrictions on Transfers by the Principals.
With the exception of Exempt Transfers and a transfer pursuant to Section 9
below, the Principals shall not make any Transfers of their Common Shares
before the later to occur of: (i) the second anniversary of this Agreement, or
(ii) the date on which the Company has redeemed all outstanding shares of the
Series B Preferred Stock and paid all accrued dividends with respect thereto
(such later date being hereinafter called the "AP Investor Redemption Date").
Thereafter, the Principals may Transfer all, but not less than all, of their
Common Shares, but only upon complying with the provisions of Paragraphs 2 and
4 below with respect to the Transfer of any Common Shares and the other
provisions of this Agreement. Without limiting the foregoing, the Principals
shall not make any Transfer of the Sellers' Note or the Series A Preferred
Stock other than Exempt Transfers without the consent of AP Investor, which may
be withheld in AP Investor's sole discretion.

(e) Restrictions on Transfer by Glengar.
Notwithstanding any other provisions of this Agreement, Glengar shall not make
any Transfers other than Exempt Transfers and Transfers expressly authorized by
a majority of the Board of Directors of the Company.

(f) Licensing Requirements. With respect to any
Transfer (including, but not limited to, any "Exempt Transfer"), the transferee
shall promptly file any applications or provide any information as and when
necessary or desirable to comply with licensing requirements applicable to the
Company in any jurisdiction in which it conducts business. If any such
transferee is not acceptable to the relevant licensing authorities and if any
licenses or permits held by the Company would be materially adversely affected
by such person's holding Shares, then upon written notice by the Company to the
transferor and the transferee such Transfer shall be voidable ab initio.

-3-
<PAGE> 5

(g) Prohibited Transfers are Void. Any Transfer
or attempted Transfer prohibited under this Agreement shall be null and void
and shall vest no rights in the purported transferee.

2. The Principals' First Refusal Obligation.

(a) Offer. If after the AP Investor Redemption
Date the Principals desire to sell all of the Principals' Common Shares (other
than in connection with an Exempt Transfer), the Principals shall first obtain a
bona fide written offer which the Principals desire to accept (hereinafter
called the "Offer") to purchase all, but not less than all, of both Principals'
Common Shares for a fixed cash price (which may be payable over time). The Offer
shall set forth its date, the proposed price per share, and the other terms and
conditions upon which the purchase is proposed to be made (which terms shall
include, without limitation, the purchaser's agreement to purchase the Common
Shares subject to the terms of this Agreement), as well as the name and address
of the Prospective Purchaser. "Prospective Purchaser" as used herein shall mean
the single prospective record and beneficial owner (which shall be the same
person or entity) of the Common Shares subject to the Offer. The Prospective
Purchaser must, in all cases, be one person or one entity. The Principals shall
transmit copies of the Offer to AP Investor within seven (7) days after receipt
of the Offer.

(b) Option of AP Investor and the Company.
Transmittal of the Offer to AP Investor shall constitute an offer by the
Principals to sell all, but not less than all, of their Common Shares to AP
Investor or any nominee of AP Investor at the price and upon the terms set forth
in subparagraph 6(a). For a period of thirty (30) days after the submission of
the Offer to AP Investor, AP Investor (or its nominee) shall have the option,
exercisable by written notice to the Principals with a copy to the Company, to
accept the Principals' offer as to all of the Principals' Common Shares. If AP
Investor does not accept the Principals' offer within such 30-day period, the
Company may do so on its own behalf within such 30-day period.

(c) Acceptance of Offer. If, at the end of the
option period described in subparagraph 2(b), the option has not been exercised
to purchase all of the Principals' Common Shares, the Principals shall be free
for a period of one hundred twenty (120) days thereafter to sell all, but not
less than all, of their Common Shares to the Prospective Purchaser at the price
and upon the terms and conditions set forth in the Offer. If such Shares are not
so sold within the aforesaid one hundred twenty (120) day period, the Principals
shall not be permitted to sell such Common Shares without again complying with
this Paragraph 2.

(d) Settlement. Settlement of any offer accepted
by AP Investor or the Company shall be pursuant to Paragraph 6 below.

3. AP Investor's First Refusal Obligations; Bring-Along
Rights.

(a) First Refusal Obligations.

-4-
<PAGE> 6

(i) Offer. If, after the Principal
Redemption Date, AP Investor desires to sell all of AP Investor's Common Shares
(other than in connection with an Exempt Transfer), AP Investor shall first
obtain a bona fide written offer which AP Investor desires to accept
(hereinafter called the "AP Investor Offer") to purchase all, but not less than
all, of AP Investor's Common Shares for a fixed cash price (which may be payable
over time). The AP Investor Offer shall set forth its date, the proposed price
per share, and the other terms and conditions upon which the purchase is
proposed to be made (which shall include, without limitation, the purchaser's
agreement to purchase the Common Shares subject to the terms of this Agreement),
as well as the name and address of AP Investor Prospective Purchaser. "AP
Investor Prospective Purchaser" as used herein shall mean the single prospective
record and beneficial owner (which shall be the same person or entity) of the
Common Shares subject to the AP Investor Offer. AP Investor Prospective
Purchaser must, in all cases, be one person or one entity. AP Investor shall
transmit copies of the AP Investor Offer to the Principals within seven (7) days
after receipt of the AP Investor Offer.

(ii) Option of the Principals. Transmittal
of the AP Investor Offer to the Principals shall constitute an offer by AP
Investor to sell all, but not less than all, of its Common Shares to the
Principals or any nominee of the Principals at the price and upon the terms set
forth in subparagraph 6(a). For a period of thirty (30) days after the
submission of the AP Investor Offer to the Principals, the Principals (or their
nominee) shall have the option, exercisable by written notice to AP Investor
with a copy to the Company, to accept AP Investor's offer as to all of its
Common Shares.

(iii) Acceptance of the AP Investor's Offer.
If, at the end of the option period described in subparagraph 3(a)(ii), the
option has not been exercised to purchase all of AP Investor's Common Shares,
then AP Investor shall be free for a period of one hundred twenty (120) days
thereafter to sell all, but not less than all, of its Common Shares to AP
Investor Prospective Purchaser at the price and upon the terms and conditions
set forth in AP Investor Offer. If such Common Shares are not so sold within the
aforesaid one hundred twenty (120) day period, AP Investor shall not be
permitted to sell such Common Shares without again complying with this
subparagraph 3(a).

(iv) Settlement. Settlement of any offer
accepted by the Principals shall be pursuant to Paragraph 6 below.

(b) Bring-Along Rights.

(i) Applicable Transfers. If, after the
second anniversary of this Agreement, holders of a majority of outstanding
Common Shares including AP Investor (the "Majority Holders") propose to Transfer
(in a single Transfer or a series of related Transfers) all of the Majority
Holders' Common Shares to anyone other than a Related Party ("Qualifying
Transfer"), then, provided that the Principals have not accepted the AP Investor
Offer with

-5-
<PAGE> 7

respect to such Transfer within the time period set forth in Paragraph 3(a)(ii)
above, the Majority Holders shall have the right ("Bring-Along Right"), but not
the obligation, to cause each of the other Shareholders to tender to the third
party purchaser (a "Third Party") such Shareholders' Common Shares for purchase,
at the same price per Share and on the same terms of payment and conditions as
apply to the Majority Holders' Common Shares.

(ii) Bring-Along Notice. If the Majority
Holders elect to exercise their Bring-Along Right under this Paragraph, then the
Majority Holders shall notify the Company and the other Shareholders in writing
("Bring-Along Notice"). Each Bring-Along Notice shall set forth (i) the name of
the Third Party to which the Majority Holders propose to Transfer Common Shares
and the number of Common Shares proposed to be transferred, (ii) the address of
the Third Party, (iii) the proposed amount and form of consideration and terms
and conditions of payment offered by the Third Party, and any other material
terms pertaining to the Transfer ("Third Party Terms"), and (iv) that the Third
Party has been informed of the rights provided for in this subparagraph 3(b) and
has agreed to purchase Shares in accordance with the terms hereof. The Third
Party Terms must specify that the price per share of the Series A Common Stock
shall be equal to the price per share of the Series B Common Stock (subject to
appropriate adjustment in the event there shall have been any stock splits,
stock dividends or similar transactions affecting one class in a manner
differently from the other). If in connection with the proposed transfer to the
Third Party, there is consideration proposed to be paid to the Majority Holders
for assets or rights other than the Common Shares (such as, without limitation,
a non-competition covenant), the total consideration so offered shall be
allocated in a fair and equitable manner as between the price being paid for the
Common Shares and the consideration being paid for such other assets or rights,
whereupon the "price" for the purpose of this paragraph shall be the amount so
allocated to the Common Shares. In the event of any dispute between the parties
regarding such allocation, the matter shall be resolved by prompt and binding
arbitration by an investment banking firm or other experienced business
appraiser mutually acceptable to the disputing parties, and the parties shall
exercise all diligent efforts to cause such arbitration to be concluded within
thirty (30) days after the dispute arises. The Bring-Along Notice shall be given
at least thirty (30) days before settlement of the proposed Qualifying Transfer.
Upon the giving of a Bring-Along Notice, each Shareholder shall be obligated to
sell its Common Shares to the Third Party on the Third Party Terms.

(iii) Settlement of Bring-Along Transaction.
At the settlement of any Qualifying Transfer pursuant to this subparagraph 3(b),
the Third Party shall remit to each Shareholder the consideration for the total
sales price of the Common Shares of such Shareholder sold pursuant hereto, upon
delivery by such Shareholder of certificate(s) for such Common Shares duly
endorsed in blank for transfer or accompanied by stock power(s) duly executed in
blank, and the compliance by such Shareholder with all other conditions to
settlement generally applicable to the Majority Holders (including the provision
by the Shareholder to the Third Party of representations and warranties
substantially the same as those provided by the Majority Holders).

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<PAGE> 8

4. Tag-Along Rights.

(a) Shareholders' Tag-Along Right. Neither AP
Investor nor the Principals will accept an offer for the Transfer of its Common
Shares (other than in connection with an Exempt Transfer) unless (i) the 30-day
period following the AP Investor Offer or the Offer, as the case may be, shall
have expired, and (ii) such offer includes an offer to purchase all of the
Common Shares of the other Shareholders at the same price and upon the same
terms as the Common Shares being sold by such Shareholder ("Tag-Along Right").
The preceding sentence is not intended to limit the provisions of Paragraph 1
above.

(b) Tag-Along Notice. In the event a Shareholder
or group of Shareholders proposes to make a Transfer giving rise to the
Tag-Along Rights (collectively, the "Selling Shareholder"), the Selling
Shareholder shall promptly notify each of the other Shareholders and the Company
in writing (the "Tag-Along Notice") and shall furnish each of the other
Shareholders with (i) the name of the third party ("Third Party") to which the
Selling Shareholder proposes to Transfer its Common Shares and the number of
Common Shares proposed to the transferred, (ii) the address of the Third Party,
(iii) the proposed amount and form of consideration and terms and conditions of
payment offered by the Third Party and any other material terms pertaining to
the Transfer ("Third Party Terms"), and (iv) that the Third Party has been
informed of the rights provided for in this subparagraph 4(c) and has agreed to
purchase Common Shares in accordance with the terms hereof. The Third Party
Terms must specify that the price per share of the Series A Common Stock shall
be equal to the price per share of the Series B Common Stock (subject to
appropriate adjustment in the event there shall have been any stock splits,
stock dividends or similar transactions affecting one class in a manner
differently from the other). If, in connection with the proposed transfer to the
Third Party, there is consideration proposed to be paid to the Selling
Shareholder for assets or rights other than the Common Shares (such as, without
limitation, a non-competition covenant), the total consideration so offered
shall be allocated in a fair and equitable manner as between the price being
paid for the Common Shares and the consideration being paid for such other
assets or rights, whereupon the "price" for the purposes of this paragraph shall
be the amount so allocated to the Common Shares. In the event of any dispute
between the parties regarding such allocation, the matter shall be resolved by
prompt and binding arbitration by an investment banking firm or other
experienced business appraiser mutually acceptable to the disputing parties, and
the parties shall exercise all diligent efforts to cause such arbitration to be
concluded within thirty (30) days after the dispute arises. The Tag-Along Notice
shall be given at least 30 days before settlement of the relevant Transfer.

(c) Exercise of Tag-Along Rights. The Tag-Along
Right may be exercised by the other Shareholders by delivering to the Selling
Shareholder and the Company written notice (the "Tag-Along Acceptance Notice")
within 15 days following the other Shareholders receipt of the Tag-Along Notice,
proposing to sell all of such Shareholders' Shares. Upon delivery of the
Tag-Along Acceptance Notice by such other Shareholders, the other

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<PAGE> 9

Shareholders shall be obligated to sell all of their Shares to the Third Party
on the Third Party Terms.

(d) Settlement of Tag-Along Transaction. At the
settlement of any Transfer in which the other Shareholders have exercised their
Tag-Along Rights, the Third Party shall remit to each Shareholder the
consideration for the total sales price of the Common Shares of such Shareholder
sold pursuant hereto, upon delivery by such Shareholder of certificate(s) for
such Common Shares duly endorsed in blank for Transfer or accompanied by a stock
power(s) duly executed in blank, and the compliance by such Shareholder with all
of their conditions to settlement generally applicable to the Selling
Shareholder (including the provision by each Shareholder to the Third Party of
representations and warranties substantially the same as those provided by the
Selling Shareholder).

5. Approval of Certain Transactions.

(a) Fundamental Changes. If at any time prior to
the second anniversary of this Agreement the Company proposes to (i) sell all or
substantially all of the assets of the Company (a "Sale Transaction"), (ii)
acquire a substantial interest in the stock of, or a substantial portion of the
assets of, a third party, or commit substantial portion of the assets of the
Company in connection with a joint venture with a third party (any of the above
being referred to as an "Asset Acquisition"), (iii) employ in excess of 10% of
the Company's available working capital (as defined under generally accepted
accounting principles) to initiate a new business (a "Diversification") or (iv)
move the Company's headquarters from its present headquarters in Bryn Mawr,
Pennsylvania (a "Relocation") (any such Sale Transaction, Asset Acquisition,
Diversification or Relocation hereinafter shall be called a "Fundamental
Change"), then the Company may implement such Fundamental Change only if such
action is authorized by the Company's Board of Directors and approved in writing
by AP Investor and each of the Principals. The rights of the Principals under
this paragraph are personal to the Principals and are not transferable, whether
in an Exempt Transfer, to a Related Party or otherwise.

(b) Major Transactions. The Company shall not be
authorized to enter into any Major Transaction (as defined below) without the
authorization of a majority of the Board of Directors of the Company and the
separate approval of a majority of the Directors designated by AP Investor (as
set forth in Section 8(a) below). A "Major Transaction" shall mean any of the
following:

(i) any Fundamental Change, as defined in
paragraph (a) above;

(ii) any merger, consolidation or division
involving the Company, or any sale of
a substantial portion of the assets of
the Company;

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<PAGE> 10

(iii) issuance by the Company of any stock,
options, warrants or other equity
securities or instruments convertible
into any equity securities of the
Company;

(iv) the declaration or payment by the
Company of any dividends or
distributions to its shareholders, or
the redemption, purchase or
acquisition by the Company of any of
its Shares;

(v) the granting of any mortgage, pledge
or security interest on any material
assets of the Company, except for
installment sale agreements and
equipment leases in the ordinary
course of business, or the guarantying
by the Company of the debt of any
other person or entity (or any other
arrangement whereby the Company
becomes directly or contingently
liable therefor);

(vi) incurring any indebtedness, finance
lease or capital lease of the Company
in excess of $50,000 in any single
transaction or series of related
transactions;

(vii) the approval of the annual budget for
capital expenditures, or the
expenditure for capital expenditures in
any fiscal year of the Company of more
than the amount approved in such
budget;

(viii) the acquisition, development or leasing
of any real estate or any space
therein;

(ix) the institution or settlement of any
litigation, arbitration or
administrative proceeding involving an
amount in controversy of more than
$25,000;

(x) hiring any new employee of the Company
for whom the total annual compensation
payable, including base salary, bonuses
and incentive compensation may exceed
$125,000;

(xi) entering into, amending, extending or
terminating any contract (except
contracts for telemarketing services
entered in the ordinary course of
business) involving the actual,
contingent or potential payment to or
by the Company of more than $50,000
over the term thereof, or any
transaction

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<PAGE> 11

with any officer, director or
shareholder of the Company or any
affiliate of any officer, director or
shareholder of the Company, or any
contract having a term in excess of one
(1) year (unless such contract may be
terminated on no more thirty (30) days
notice without payment of any penalty
or premium), or any employment contract
for which the total annual compensation
may exceed $125,000, or any contract
materially restricting the Company's
ability to conduct any material
business activities, or any contract or
commitment to enter into any other
Major Transaction (for the purpose of
the foregoing, an "affiliate" of a
person shall mean the spouse, parents,
siblings, issue or in-laws of such
person and any entity controlled by
such person or any of the foregoing
family members, or of which they hold
more than 10% of the equity interests);

(xii) any material change in accounting
methods or accounting practices of the
Company;

(xiii) taking or consenting to any action or
election to liquidate or dissolve the
Company or to submit the Company to
any bankruptcy or reorganization
proceedings or any similar federal or
state proceedings;

(xiv) entering any business involving the
underwriting of insurance; or

(xv) the creation of any employee
compensation plan or retirement plan.

(c) Notwithstanding the provisions of (a) and (b)
above, no consent of any Shareholder shall be required, which has not already
been obtained, for the execution of the Credit Agreement and related documents
dated on or about the date hereof evidencing and securing the Chemical Loan,
including (without limitation) the issuance of the warrants of the Company to
Chemical Bank.

6. First Refusal Purchase Price and Terms; Settlement.

(a) Settlement for the purchase of Shares pursuant
to the offers made in subparagraphs 2(a) or 3(a)(i) shall be made within sixty
(60) days following the date of acceptance of the relevant offer. The purchase
price per Share and the terms of payment shall be the price per Share and terms
of payment contained in the Offer referred to in subparagraph 2(a)

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<PAGE> 12

(in the case of an offer accepted pursuant to subparagraph 2(b)) or AP Investor
Offer referred to in subparagraph 3(a)(i) (in the case of an offer accepted
pursuant to subparagraph 3(a)(ii)). With respect to the purchase of Shares at
the price and upon the terms of payment contained in the Offer or AP Investor
Offer (for the purposes of this paragraph referred to collectively as the
"Offer"), "terms of payment" shall mean the times of payments of principal and
interest subsequent to settlement, the interest rate with respect to the
deferred purchase price, and any collateral security for the payment of deferred
purchase price. Any collateral security to be provided by the purchaser for
deferred portions of the purchase price need not be of the same character as the
collateral security provided for in the Offer if such collateral security is
unique, but shall reasonably approximate the value of the collateral security
provided for in the Offer.

(b) All settlements for the purchase and sale of
Shares shall, unless otherwise agreed to by all of the purchasers and sellers,
be held at the principal executive offices of the Company during regular
business hours. The precise date and hour of settlement shall be fixed by the
purchaser or purchasers (within the time limits allowed by the provisions of
this Agreement) by notice in writing to the seller given at least five (5) days
in advance of the settlement date specified. In the event that more than one (1)
purchaser is involved in a settlement and the purchasers cannot agree on a
precise time of settlement, the precise time of settlement (within the time
limits allowed by the provisions of this Agreement) shall be fixed by a majority
of the Board of Directors of the Company by five (5) or more days' written
notice to the purchasers and seller.

(c) At settlement, the stock certificate or
certificates representing the Shares being sold shall be delivered by the seller
to the purchaser or purchasers, duly endorsed for transfer or with executed
stock powers attached, with any necessary documentary and transfer tax stamps
affixed by the seller. Payments made at settlement shall be by wire transfer of
immediately available funds. The seller, if a personal representative of a
Shareholder, shall, upon request of a purchaser, provide prior to the date of
settlement evidence reasonably satisfactory to the purchaser of the seller's
legal status as personal representative of such Shareholder.

(d) Any purchaser may take title to the Shares
being transferred in the name of a designee or assignee.

7. Preemptive Rights Under Certain Circumstances. If the
Board of Directors of the Company determines it is in the interest of the
Company to sell or issue additional shares of common stock of any type or class,
whether voting or non-voting, ("Additional Shares"), it may do so only in
accordance with the provisions of this Paragraph 7 and Paragraph 5(b)(iii)
above. If the Company proposes to sell Additional Shares other than (a) upon
exercise of options granted to employees of the Company pursuant to a written
stock option plan or (b) pursuant to a duly authorized Sale Transaction, Asset
Acquisition, consolidation or merger, or (c) in a duly authorized public
offering pursuant to an effective registration statement

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<PAGE> 13

under the Securities Act, each of the Shareholders shall have the right to
purchase up to his or her "pro rata share" of such Additional Shares on the same
price, terms and other conditions as in such proposed sale. A Shareholder's "pro
rata share" shall be that number of Additional Shares such that, immediately
after the issuance of the Additional Shares (the "Issuance"), the percentage of
(i) the total number of shares of common stock of the Company of any type or
class, whether voting or non-voting, held by such Shareholder, to (ii) the total
number of shares of common stock of the Company of any type or class, whether
voting or non-voting, then issued and outstanding, would be equal to the same
percentage as existed immediately prior to the Issuance. In the event of a
proposed Issuance, the Company shall deliver to each Shareholder written notice
describing the proposed Issuance, specifying such Shareholder's pro rata share
and stating the purchase price for the Additional Shares, and the date, time and
place of settlement for payment for the Additional Shares (which shall be no
sooner than twenty (20) days following the date of the notice). For a period of
ten (10) days following such notice, each Shareholder shall have the right to
subscribe, by written notice to the Company, to purchase all or any portion of
his or her pro rata share of the Additional Shares. If any Shareholder elects to
purchase less than all of his or her pro rata share of the Additional Shares,
then each Shareholder who subscribed to purchase all of his or her pro rata
share of the Additional Shares shall have the further right, during the five (5)
day period following expiration of the foregoing ten (10) day period, to
subscribe to purchase some or all of those Additional Shares not subscribed for
in the initial ten (10) day period; if more than one Shareholder can subscribe
to purchase Additional Shares in the succeeding five (5) day period, they shall
be entitled to subscribe pro rata in proportion to their respective holdings or
on such other basis as they may mutually agree. If the foregoing process does
not result in all of the Additional Shares being subscribed for by the
Shareholders, the Company shall be free for a period of ninety (90) days
thereafter to sell all or any part of the unsubscribed for additional shares to
third parties at a price no more favorable to the third parties than the price
offered to the Shareholders. If the shares to be issued in the Issuance are
voting shares and if, after application of the above procedures, the Additional
Shares are not subscribed by the Shareholders in the same proportion as the
voting stock of the Company is held prior to such Issuance, then the
Shareholders so subscribing to purchase Additional Shares shall have the right
to cause all or any portion of such shares to be issued as non voting shares.
Subparagraph 6(c) hereof shall be applicable to settlements hereunder.
Notwithstanding anything to the contrary contained herein, the provisions of
this paragraph 7 shall not apply to the issuance or exercise of the warrants
granted to Chemical in connection with the Chemical Loan.

8. Board of Directors.

(a) Designation. The board of directors of the
Company will be composed of seven directors. Three of the directors shall be
designated by AP Investor, subject to the reasonable approval of the Principals
(which approval will not be withheld as to any designee who is an employee of AP
Investor or of Advanta Corporation). Three of the directors shall be designated
by the Principals, subject to the reasonable approval of AP Investor. One

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<PAGE> 14

director shall be designated by Glengar. As of the date of this Agreement, five
of the seven potential director seats shall be filled with the following five
individuals, who are acknowledged to be acceptable to the Shareholders: Anthony
P. Brenner and Mitchell L. Hollin as designees of AP Investor; Hansell and Lucci
as designees of the Principals; and Derek Lubner as the initial designee of
Glengar. Within 180 days after the date hereof, AP Investor will designate one
additional director (subject to the reasonable approval of Principals) and the
Principals will designate one additional director (subject to the approval of AP
Investor), whereupon the two mutually approved designees shall be elected to
office simultaneously. Notwithstanding the foregoing, the Principals shall no
longer have the power to designate representatives of the Board of Directors if
a "Trigger Event" has occurred. For the purposes hereof a "Trigger Event" shall
be deemed to have occurred if (i) the Principals (or their Related Parties)
collectively own less than 5% of the outstanding Common Shares of Company, or
(ii) if neither of the Principals is still employed by the Company pursuant to
those certain Employment Agreements of even date herewith among the Company and
Principals because such Principal has voluntarily resigned or has been
discharged for Cause (as defined in such Employment Agreements). At such time
as a Trigger Event has occurred, the Principals and their designees shall
immediately resign from their positions as directors, and shall be deemed to
have so resigned if they have not done so within five (5) days after a Trigger
Event. The rights of the Principals under this paragraph are personal to the
Principals and are not transferable, whether in an Exempt Transfer, to a Related
Party or otherwise.

(b) Obligation to Vote Shares. Glengar and AP
Investor shall vote their voting Common Shares for the election of directors
designated by the Principals as permitted pursuant to this Paragraph. The
Principals and Glengar shall vote their voting Common Shares for the directors
designated by AP Investor as permitted pursuant to this Paragraph. Principals
and AP Investor shall vote their voting Common Shares for the director
designated by Glengar as permitted pursuant to this Paragraph.

9. Principals' Put Option and Company's Call Option.

(a) Election to Exercise.

(i) During any Option Notice Period (as
defined in clause (iii) below), the Principals shall jointly have the right to
sell all, but not less than all, of their Common Shares to the Company at the
Agreed Value (as defined in subparagraph 9(b)(i) below) (the "Put Option"). If
the Principals desire to exercise the Put Option, the Principals shall transmit
to the Company written notice of their joint intent to exercise the Put Option
(the "Put Option Notice").

(ii) During any Option Notice Period, the
Company or its designee shall have the right to purchase all, but not less than
all, of the Principal's Common Shares at the Agreed Value (as defined in
subparagraph 9(b)(i) below) (the "Call Option"). If

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<PAGE> 15

the Company desires to exercise the Call Option, the Company shall transmit to
each Principal written notice of Company's intent to exercise the Call Option
(the "Call Option Notice").

(iii) For the purposes hereof, the term
"Option Notice Period" shall mean (A) the thirty-day period immediately
preceding the sixth anniversary of the date of this Agreement (the "Initial
Period"), (B) each thirty-day period immediately preceding any anniversary of
the date of this Agreement subsequent to such sixth anniversary and (C) the one
hundred twenty (120) day period immediately following the death of the last to
survive of Hansell or Lucci (the death of the last survivor being hereinafter
called a "Death Event").

(b) Procedures for Exercise of Puts and Calls.

(i) Upon the giving of either a Put Option
Notice or a Call Option Notice pursuant to the previous subparagraph (the
"Notice Date"), the Principals and the Company shall endeavor in good faith to
agree upon a Fair Market Value of the Common Shares. "Fair Market Value of the
Common Shares" shall mean the fair market value of the Common Shares which are
the subject of the Put Option Notice or the Call Option Notice in a transaction
between a willing seller and a willing buyer with neither being compelled to
act. If after a period of thirty (30) days after the Notice Date the Principals
and the Company are unable to so agree, the Fair Market Value of the Common
Shares shall be determined in accordance with the following appraisal
procedures. The Principals and a majority of the Board of Directors (other than
the Principals) of the Company shall choose a qualified third party with at
least 10 years of experience in the valuation of business enterprises (an
"Appraiser") to appraise the Fair Market Value of the Common Shares and whose
determination will be final, binding, and conclusive on the parties. If the
Principals and a majority of the Board of Directors of the Company (other than
the Principals) are unable to agree upon an Appraiser within twenty (20) days
after the Notice Date, then not later than thirty (30) days after the Notice
Date, each party shall select an Appraiser. Each of such Appraisers shall
determine the Fair Market Value of the Common Shares as of the Notice Date.
Each Appraiser shall deliver its written appraisal to the parties within sixty
(60) days following the date of the selection of the appraisers. If the
appraisers agree, the agreed-upon value shall be the Fair Market Value of the
Common Shares. If the appraisers do not agree on the Fair Market Value of the
Common Shares, (A) if the higher of the two values is not more than 110% of the
lower value, the Fair Market Value of the Common Shares shall be the mean of
the two values, and (B) if the higher of the two values is greater than 110% of
the lower value, the Appraisers shall jointly select a third appraisal firm
that has not performed services for either party who independently shall
calculate the Fair Market Value of the Common Shares within forty-five (45)
days of such selection. The Fair Market Value of the Common Shares determined
by the third appraiser will be arithmetically averaged with the two values
determined by the original Appraisers, and the value farthest from the average
of the three will be disregarded. The Fair Market Value of the Common Shares
shall be the average of the two remaining values. The Appraisers shall be
instructed to notify the Shareholders promptly of their determination. The date
on which the Fair Market Value of the

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<PAGE> 16

Common Shares, as finally determined in accordance with this subparagraph, is
communicated to the Shareholders shall be called the "Determination Date" and
such price once it has been so determined shall be called the "Agreed Value."
The costs of appraisal shall be borne by the party who tendered the first
notice pursuant to subparagraph 9(a) of this Agreement during an Option Notice
Period.

(ii) Within twenty (20) days after the
Determination Date, the party (or parties) which has sent the Put Option Notice
or the Call Option Notice shall have the right to elect, by giving written
notice to the other party (the "Exercise Notice"), to consummate the exercise
of such Put Option or Call Option. Upon delivery by the Principals of the
Exercise Notice with respect to the Put Option or delivery by the Company of
the Exercise Notice with respect to the Call Option, the Principals shall be
obligated to sell to the Company all of their Common Shares and the Company
shall be obligated to purchase all of the Principals' Common Shares each at the
Agreed Value of the Common Shares (as determined in the previous subparagraph).
Notwithstanding the foregoing, the Company may elect, at its option, to
postpone the purchase of up to 50% of the Principals' Common Shares until the
first anniversary of the giving of the Exercise Notice (the "Postponement
Election"). In such event, the purchase price payable for the second 50% of the
Principals' Common Shares at the first anniversary shall be increased by an
amount equal to interest on 50% of the Agreed Value from the closing of the
purchase of the first 50% of the Principals' Common Shares until the closing of
the purchase of the second 50% thereof, calculated at the interest rate then
being paid by the Company on its primary line of credit (or if more, at the
prime rate as quoted in the Wall Street Journal).

(iii) The settlement of the purchase and
sale of the Principal's Common Shares shall take place at 10:00 a.m. at the
chief executive offices of the Company, or at such other place as the
Principals and the Company may mutually determine, on the 30th day after the
giving of the Exercise Notice and, if the Company makes a Postponement
Election, on the first anniversary of the Exercise Notice (or, in either case,
on the next business day, if such day is not a business day in the Commonwealth
of Pennsylvania), or on such earlier date as the Company shall elect. At
settlement, the Principals shall deliver original stock certificates
representing the Common Shares, together with appropriate stock powers executed
in blank, and the Company shall pay the purchase price determined as aforesaid
(or portion thereof if the Company has made a Postponement Election), by or
wire transfer of immediately available funds, except that in the case of an
Exercise Notice given prior to the commencement of the Initial Period by reason
of a Death Event, the Company shall have the right to defer full payment of up
to 75% of such purchase price until the third anniversary of the initial
settlement, with 1/3 of the deferred purchase price being payable on each of
the first, second and third anniversaries of the initial settlement with
interest on the outstanding portion of the deferred purchase price at the
interest rate determined as stated in the last sentence in subparagraph (ii)
above; provided, however, that, with respect to such a purchase after a Death
Event, any remaining balance of such deferred purchase price and interest
thereon shall be payable, at the option of personal representatives of the
Principals, no later than the seventh anniversary of the date hereof.

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<PAGE> 17

(iv) In the event that within twelve months
following the settlement of the Company's purchase of Common Shares pursuant to
the exercise of a Call Option (which shall be deemed to mean the initial
settlement if the Company exercises a Postponement Election or defers payment
of a portion of the purchase price pursuant to a Death Event), the Company (A)
sells shares of Common Stock at a price in excess of the Agreed Value in an
initial public offering pursuant to an effective registration statement under
the Securities Act (excluding any registration on Form S-8) or (B) realizes
proceeds (net of underwriting discounts and transaction costs) from a Sale
Transaction in an amount in excess of the Agreed Value per Share, the Company
shall upon the closing of such transaction pay to the Principals additional
consideration, in cash in an amount per Common Share sufficient equal to the
difference between the Agreed Value per Common Share and the value of the
consideration per Common Share that the Principals would have received in such
transaction had the Company not exercised the Call Option.

(c) Limitations on Company's Obligation to
Purchase.
(i) Any election by the Company to
exercise its rights under the terms of this Paragraph 9 shall be valid only if
authorized by the Company's Board of Directors in writing.

(ii) Notwithstanding anything contained in
this Paragraph 9 to the contrary, the Company's obligation to purchase the
Principal's Common Shares are subject to the following conditions:

(A) The holders of the Senior Debt (as
defined below) shall have approved the Company's proposed purchase of the
Principal's Common Shares and do not contest the determination of the Agreed
Value of the Common Shares (to the extent the holders of the Senior Debt have
the right to approve the proposed purchase and/or the determination of Agreed
Value; provided, however, that from and after such time when all amounts
payable under the Chemical Loan have been fully paid, the provisions of this
paragraph (A) shall be deemed to be satisfied if the ratio, as of the date of
the proposed closing of such purchase, of all outstanding debt of the Company
(including for this purpose capital leases, all contingent guarantees, letters
of credit and similar liabilities of the Company and the Series A Preferred
Stock) to all equity of the Company (including the Common Stock, the Series B
Preferred Stock and all other equity interests then outstanding, but excluding
the Series A Preferred Stock), each determined on a book value basis in
accordance with generally accepted accounting principals, shall be no greater
than 1:2; and

(B) If the Board of Directors
determines in good faith that the Company does not have sufficient cash
available to pay to the Principals the Agreed Value of the Common Shares without
impairing the Company's ability to pay the other current and anticipated
obligations of the Company, on a timely basis, after taking into account the

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<PAGE> 18

amount of the Company's then current working capital and projections of the
Company's cash needs for such future periods as the Board of Directors deems
appropriate and after making deductions for such reserves as the Board of
Directors deems appropriate, then the Board of Directors shall have the right
to defer the payment of the Agreed Value over a period of five (5) equal annual
installments with interest thereon at the rate set forth in the last sentence
of paragraph 9(b)(ii) above; provided, however, that the provisions of this
paragraph shall not apply if the debt to equity ratio of the Company at the
time of the proposed closing of the purchase, determined as set forth in (A)
above, is no greater than 1:2.

(iii) For the purposes of this subparagraph
9(c), "Senior Debt" means all debt obligations of the Company made or issued at
any time and from time to time to one or more banks, thrift institutions,
insurance companies, pension funds, trustees under an indenture of trust for
the holders of debt instruments, finance companies or other lending or
financial institutions or their affiliates or other individuals or entities
which are not Related Parties to the Company, whether term loan, revolving
credit loan or other facility, whether secured or unsecured, and all advances,
re-advances, extensions, renewals, refundings, refinancings and modifications
thereof and thereunder, and all payment and performance obligations of the
Company under all documents and instruments evidencing and securing such
obligations, as such documents and instruments may be extended, renewed,
refunded, refinanced or modified.

(d) Termination of Options. The Put Option and
the Call Option each shall: (i) be suspended upon the filing by the Company of
a registration statement under the Securities Act (excluding any registration
on Form S-8) with respect to an initial public offering; and (ii) terminate
immediately upon the consummation of a Sale Transaction as described in
Paragraph 5 or upon receipt by the Company of the net proceeds from the sale of
its equity securities in an initial public offering pursuant to an effective
registration statement under the Securities Act (excluding any registration on
Form S-8).

10. Copy of Agreement to Be Kept on File. The Company
shall keep on file at its principal executive offices, and will exhibit to any
Shareholder or his or her duly authorized representative at any and all
reasonable times, an executed copy of this Agreement and all amendments thereto
and a copy of its most recent fiscal year end financial statements.

11. Stock Certificates to Be Marked with Legend. All
certificates representing Shares now outstanding or hereafter issued by the
Company to the Shareholders shall be marked with the following legend:

"This certificate and the shares represented
hereby are held subject to the terms,
covenants and conditions of an agreement
dated May 24, 1996 by and among this

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<PAGE> 19

Company and its then shareholders, as it may be
amended from time to time, and neither this
certificate, the shares represented hereby, nor any
interest in this certificate or in such shares may be
transferred or disposed of voluntarily, by operation
of law or otherwise, except in accordance with the
terms and provisions thereof. A copy of said
agreement and all amendments thereto is on file and
may be inspected at the principal executive offices
of the Company."

The Company shall issue replacement stock certificates without the foregoing
legend to any Shareholder upon request following termination of this Agreement.

12. Rights, Obligations and Remedies. The rights and
obligations under, and the remedies to enforce, this Agreement are joint and
several as to the Company and each of its Shareholders with each being
completely free to enforce any or all of the rights or obligations under this
Agreement against any of the others with or without the concurrence or joinder
of any of the others. The Shares are unique, and recognizing that the remedy at
law for any breach or threatened breach by a party hereto of the covenants and
agreements set forth in this Agreement would be inadequate and that any such
breach or threatened breach would cause such immediate and permanent damage as
would be irreparable and the exact amount of which would be impossible to
ascertain, the parties hereto agree that in the event of any breach or
threatened breach of any such covenant or agreement, in addition to any and all
other legal and equitable remedies which may be available, any party hereto may
specifically enforce the terms of this Agreement and may obtain temporary and/or
permanent injunctive relief without the necessity of proving actual damage by
reason of any breach or threatened breach hereof and, to the extent permissible
under the applicable statutes and rules of procedure, a temporary injunction may
be granted immediately upon the commencement of any such suit and without
notice.

13. Entire Agreement; Amendment, Modification and
Termination. This Agreement contains the entire understanding among the parties
hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may be amended,
modified or terminated at any time or times by the unanimous agreement in
writing of the Company and the Shareholders. No such amendment, modification or
termination shall affect the right of any person or entity to receive, or the
obligation of any person or entity to pay, on the terms and conditions of this
Agreement, the purchase price for Shares sold pursuant to this Agreement

-18-
<PAGE> 20

prior to such amendment, modification or termination, or the right or
obligation of any person or entity to sell or purchase Shares, on the terms and
conditions of this Agreement, if the event giving rise to such right or
obligation to sell or purchase Shares has in fact taken place prior to such
amendment, modification or termination. Unless sooner terminated by mutual
agreement as set forth above, this Agreement shall automatically terminate (i)
upon receipt by Company of net proceeds from the sale of its equity securities
in an initial public offering pursuant to an effective registration statement
under the Securities Act (hereinafter called an "IPO") resulting in Hansell,
Lucci and AP Investor (and any of their Special Related Parties (as defined
below)) owning, in the aggregate, less than 50% of the Common Shares of the
Company, or (ii) thereafter, at such time as the aggregate ownership of Common
Shares by AP Investor, Hansell and Lucci (and any of their Special Related
Parties) does not at least equal or exceed 50% of the total ownership of the
Common Shares of the Company. Following an IPO in which this entire Agreement
has not been terminated pursuant to the previous sentence, the provisions of
subparagraphs 1(c), (d) and (e) and the provisions of Paragraphs 2, 3, 4, 5, 6,
7, 8 and 9 of this Agreement will terminate and the provisions of Paragraph 14
below will become effective. For the purposes hereof, the term "Special Related
Parties" shall mean with respect to any person or entity, the Related Parties
of such person or entities, and, additionally, with respect to any natural
person, such person's executors, administrators, testamentary trustees,
legatees or beneficiaries to whom Common Shares are transferred by will or
intestate succession upon the death of such person.

14. Limitations on Sale and Right of First Offer after
Occurrence of IPO. Following an IPO in which this entire Agreement has not
been terminated pursuant to Paragraph 13 above, and for as long thereafter as AP
Investor, Hansell and Lucci (and any of their Special Related Parties) continue
to own, in the aggregate, at least 50% of the Common Shares of the Company, the
following provisions shall apply:

(a) Restriction on Number of Shares Transferred.
None of Hansell, Lucci or AP Investor (or their respective Special Related
Parties) may Transfer in any one year more than 15% of the Common Shares which
it respectively owned at the beginning of such year (for the purposes of this
Paragraph 14, the relevant years will begin on the date of the occurrence of
the IPO and on each successive anniversary of the date of occurrence of the
IPO), except pursuant to an effective registration statement under the
Securities Act (it being understood that nothing herein is intended to imply
that the Company has any obligation to file such registration statement) or
pursuant to a Transfer described in clause (A) or (B) of the defined term
"Special Exempt Transfer" (as defined in subparagraph (b)(v) below);

(b) First Offer Obligations. Any Transfers by
Hansell, Lucci or AP Investor (or their respective Special Related Parties)
following the occurrence of an IPO (including, without limitation, those
transfers of less than 15% of the Common Shares held by such Shareholder at the
beginning of the relevant year, as permitted pursuant to subparagraph (a)
above), other than Special Exempt Transfers, shall be subject to the right of
first offer set forth below.

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<PAGE> 21

(i) First Offer. If any of Hansell, Lucci
or AP Investor (or their respective Special Related Parties) shall at any time
desire to sell all or any of its Common Shares other than in connection with a
Special Exempt Transfer (the person or entity desiring to sell being
hereinafter called an "Offeror"), Offeror shall first offer (hereinafter call
the "First Offer") to sell to Offeree (for purposes hereof, the term "Offeree"
shall mean AP Investor (or its Special Related Parties) in the case of any
proposed Transfer by Hansell or Lucci (or their Special Related Parties), and
shall mean Hansell and Lucci (or their Special Related Parties), jointly and
collectively, in the event of any proposed Transfer by AP Investor (or its
Special Related Parties) such Common Shares for a fixed cash price (which may
be payable over time). The First Offer shall set forth the proposed price per
Share, and the other terms and conditions upon which the sale is proposed to be
made.

(ii) Option of Offeree. For a period of ten
(10) days after the submission of the First Offer, Offeree shall have the
option, exercisable by written notice to the Offeror with a copy to the
Company, to accept the Offeror's offer. If the Offeree does not accept such
offer within such 10 day period, then Company may do so on its own behalf.

(iii) Acceptance of First Offer. If, at the
end of the option period described in subparagraph (b)(ii) above, the option
described therein has not been exercised, then Offeror shall be free for a
period of one hundred twenty (120) days thereafter to sell all, but not less
than all, of the Common Shares which were the subject of the First Offer to a
party other than Offeree at a price, and on terms and conditions, not less
favorable to the Seller than that set forth in the First Offer. If such Common
Shares are not so sold within the aforesaid one hundred twenty (120) day
period, the Offeror shall not be permitted to sell such Common Shares without
again complying with this Paragraph 14.

(iv) Settlement. Settlement of any offer
accepted by an Offeree pursuant to this Paragraph 14 shall be made within sixty
days following the date of acceptance of the relevant offer. The purchase price
per Share and the terms of payment shall be the price per Share and the terms of
payment contained in the First Offer. With respect to the purchase of Common
Shares at the price and upon the terms of payment contained in the First Offer,
"terms of payment" shall mean the times of payment of principal and interest
subsequent to settlement, the interest rate with respect to the deferred
purchase price and any collateral security for the payment of the deferred
purchase price. Any collateral security to be provided by the purchaser need
not be of the same character as the collateral security provided for in the
First Offer if such collateral security is unique, but shall reasonably
approximate the value of the collateral security provided for in the First
Offer. The terms of subparagraphs 6(b), (c) and (d) above shall be applicable to
the settlement of any offers accepted pursuant to this Paragraph 14.

(v) Special Exempt Transfers. For the
purposes hereof, the term "Special Exempt Transfer" shall mean (A) a Transfer by
will or intestate succession to a Shareholder's executors, administrators,
testamentary, trustees, legatees or beneficiaries, (B) a

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<PAGE> 22

Transfer to one or more Related Parties of such Shareholder or (C) a Transfer
in any one year of less than 5% (in the aggregate) of the Common Shares which
the transferring Shareholder owned at the beginning of such year.

15. Formation of Two-Tier Corporate Structure. The
parties contemplate that after the date hereof the Majority Holders may elect to
form a new wholly-owned subsidiary of the Company (the "Operating Company") into
which the Company will contribute all or substantially all of its assets. If the
Majority Holders elect to organize the Operating Company, they will so notify
all Shareholders in writing, whereupon the Shareholders shall, acting promptly,
reasonably and in good faith, take the following steps in order to organize and
capitalize the Operating Company and to recapitalize the Company:

(a) The Operating Company will be duly formed in such
jurisdiction as the Board of Directors of the Company shall determine and it
shall be capitalized with a single class of stock, all of whose issued shares
will be held by the Company. The Articles of Incorporation and the Bylaws of
the Holding Company shall be substantially identical to those of the Company
except as necessary to delete all references to multiple classes of stock and
to reflect the sole corporate shareholder of the Operating Company.

(b) The Company shall assign or convey to the Operating
Company all or substantially all of the assets, rights and contracts of the
Company, and the Operating Company shall assume all obligations and liabilities
of the Company, by such instruments as shall be acceptable to the Board of
Directors, and the Company shall diligently seek all third-party consents, if
any, as shall be required in order to effectuate such assignment and
assumption.

(c) The Shareholders shall mutually execute and deliver
an amendment to this Agreement as necessary to adapt Paragraph 5 of this
Agreement to a two-tier holding/operating company structure.

(d) The transaction shall be structured in the most
tax-efficient manner for the Company and the Shareholders, as determined by the
Board of Directors.

(e) All Shareholders shall take, and shall cause the
Operating Company and the Company to take, such actions as may be required
under the documents evidencing and securing all Third Party Debt then
outstanding with respect to the above transactions, including the granting of a
pledge by the Company of its shares in the Operating Company, and shall take
further actions and execute such further instruments as made be reasonably
required in order to effectuate fully the purposes of this Paragraph 15;
provided that no actions shall be required of the Principals if the net result
thereof would diminish their rights as holders of the Series A Preferred Stock
or if the 6% Junior Subordinated Note.

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<PAGE> 23

16. Miscellaneous.

(a) Indulgences, Etc. Neither the failure nor any
delay on the part of any party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence.

(b) Controlling Law. This Agreement and all
questions relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.

(c) Notices. All notices, requests, demands and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given, made and received only
when delivered (personally, by a recognized courier service, or by other
messenger, for delivery to the intended addressee) or two (2) days following
the day when deposited in the United States mails, registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below:

(i) If to the Company:

RMH Sales and Marketing Consulting, Inc.
40 Morris Avenue
Bryn Mawr, PA 19010

Attention: Raymond J. Hansell, CEO

with a copy, given in the manner prescribed
above, to:

Advanta Partners LP
Five Horsham Business Center
300 Welsh Road
Horsham, PA 19044-2296

Attention: Anthony P. Brenner,
Senior Managing Director

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<PAGE> 24

(ii) If to AP Investor:
Advanta Partners LP
Five Horsham Business Center
300 Welsh Road
Horsham, PA 19044-2296
Attention: Anthony P. Brenner,
Senior Managing Director

with a copy, given in the manner prescribed
above, to:

Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor, Packard Building
S.E. Corner 15th and Chestnut Streets
Philadelphia, PA 19102

Attention: Herman C. Fala, Esquire

(iii) If to Principals:

Raymond J. Hansell
Mary Sue Lucci Hansell
506 Chaumont Drive
Villanova, PA 19085

with a copy, given in the manner prescribed
above, to:

Eckell Sparks Levy Auerbach Monte & Emper,
a Professional Corporation
Legal Arts Building
344 W. Front Street
P. O. Box 319
Media, PA 19063

Attention: G. Bradley Rainer, Esquire

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<PAGE> 25

(iv) If to Glengar:

Glengar International Investments Limited
P.O. Box 146
Road Town, Tortola
British Virgin Islands

with a copy, given in the manner prescribed
above, to:

Derek Lubner
29 Emlyn Road
London, England W129TF
United Kingdom

In addition, notice by mail shall be by air
mail if posted outside of the continental United States. Any party may alter the
address to which communications or copies are to be sent by giving notice of
such change of address in conformity with the provisions of this paragraph for
the giving of notice. Any notice may be given by counsel for a party.

(d) Subrogation Rights. If, pursuant to any
guaranty, security interest or similar instrument, any of the Shareholders shall
at any time pay an obligation of the Company to a third-party creditor or any
assets of any Shareholder shall at any time be used to satisfy an obligation of
the Company to a third-party creditor, such Shareholder shall be subrogated to
the rights of such creditor to the extent of the amount so paid (or the value of
the assets so used), subject, however, to the provisions of any documents
evidencing or securing such third-party debt. Nothing herein shall give any
rights to any third party creditor to demand payment from or to pursue a
Shareholder individually for any obligation of the Company.

(e) Binding Nature of Agreement; No Assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
assigns; provided, however, that nothing in this subparagraph (d) is intended
to limit any restrictions on Transfer set forth in this Agreement.

(f) Execution in Counterparts. This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original as against any party whose signature appears thereon, and all of
which shall together constitute one and the same instrument. This Agreement
shall become binding when one (1) or more counterparts hereof, individually or
taken together, shall bear the signatures of all of the parties reflected
hereon as the signatories.

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<PAGE> 26

(g) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

(h) Paragraph Headings. The paragraph headings in
this Agreement are for convenience only; they form no part of this Agreement
and shall not affect its interpretation.

(i) Gender, Etc. Words used herein, regardless of
the number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context indicates is appropriate.

(j) Number of Days. In computing the number of
days for purposes of this Agreement, all days shall be counted, including
Saturdays, Sundays and holidays; provided, however, that if the final day of
any time period falls on a Saturday, Sunday or holiday on which Federal banks
are or may elect to be closed, then the final day shall be deemed to be the
next day which is not a Saturday, Sunday or such holiday.

(k) Joint and Several. The Principals shall have
joint and several liability with respect to all of their obligations hereunder.

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<PAGE> 27

IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement on the date first above written.

RMH SALES AND MARKETING
CONSULTING, INC.

By: /s/ Raymond J. Hansell
---------------------------------------
Raymond J. Hansell, Chairman

By: /s/ MarySue Lucci Hansell
---------------------------------------
MarySue Lucci Hansell, President

/s/ Raymond J. Hansell
-------------------------------------------
Raymond J. Hansell, individually

/s/ MarySue Lucci Hansell
-------------------------------------------
MarySue Lucci Hansell, individually

ADVANTA PARTNERS LP

By: AP Capital, Inc., general partner

By: /s/ Anthony P. Brenner
-----------------------------------
Name: Anthony P. Brenner
Title: President

GLENGAR INTERNATIONAL INVESTMENTS LIMITED

By: /s/ Ian C. Crosby
----------------------------------------
Ian C. Crosby
Director: Montblanc (Directors) Limited
Sole corporate director: Glengar
International Investments Limited

-26-

<PAGE> 1
EXHIBIT 10.3

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made this 24th day of May, 1996, by and between RMH
Sales and Marketing Consulting, Inc., a Pennsylvania corporation trading as RMH
Telemarketing (hereinafter called "Company"), and Raymond J. Hansell, an
individual residing at 506 Chaumont Drive, Villanova, Pennsylvania, 19085
(hereinafter called "Employee").

W I T N E S S E T H:

Employee and Employee's spouse historically have been the holders of
all of the issued and outstanding capital stock of Company.

Pursuant to a Recapitalization and Stock Purchase Agreement, dated of
even date herewith (the "Recapitalization Agreement"), the Company will effect
a recapitalization, pursuant to which the Company will make a distribution as
set forth therein to Employee and Employee's spouse in partial redemption of
their equity holdings in Company financed with the proceeds of a
Recapitalization Loan and an equity investment of $9,500,000 by two third-party
investors (the "Investors")

Employee's execution of this Agreement, including without limitation
the provisions of Section 12 and 13 of this Agreement, is a condition to the
Company's and the Investors' obligations to close under the Recapitalization
Agreement.

Company wishes to continue to employ Employee and Employee wishes to
continue in the employ of Company on the terms and conditions contained in this
Agreement.

NOW, THEREFORE, in consideration of the facts, mutual promises and
covenants contained herein and intending to be legally bound hereby, Company
and Employee agree as follows:

1. Definitions. As used herein, the following terms shall have
the meanings set forth below unless the contexts otherwise requires.

"Affiliate" shall mean a person who (i) with respect to any
entity, directly or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such entity; or (ii) with
respect to Employee, is a parent, spouse or issue of Employee, including
persons in an adopted or step relationship.

"Annual Bonus" shall mean the bonus payments set forth in
Section 5(b), as such amount may be adjusted from time to time.

<PAGE> 2

"Base Compensation" shall mean the annual rate of compensation
set forth in Section 5(a), as such amount may be adjusted from time to time.

"Board" shall mean the Board of Directors of Company.

"Business" shall mean the business conducted by Company in the
past and on the date of execution of this Agreement, including business
activities in developmental stages, business activities which may be developed
by Company, or any Subsidiary or corporate parent thereof or entity sharing a
common corporate parent with the Company, during the period of Employee's
employment by Company, and all other business activities which flow from a
reasonable expansion of any of the foregoing.

"Cause" shall mean any one or more of the following:

(a) if Employee is convicted of a felony
or a crime involving moral turpitude or has entered a plea of nolo contendere
(or similar plea) to a charge of such an offense;

(b) if Employee uses alcohol or any
unlawful controlled substance to an extent that it materially interferes with
the performance of Employee's duties under this Agreement;

(c) if Employee breaches or neglects the
material duties that Employee is required to perform under the terms of this
Agreement after having been warned, in writing, by Company of the consequences
of such specific actions;

(d) if Employee commits any act of
fraud, personal dishonesty or deliberate misappropriation relating to or
involving Company;

(e) if Employee repeats the violation of
reasonable and material rule(s), regulation(s), policy(ies) or plan(s)
governing employee performance or express direction(s) of the Board after
having been warned, in writing, by company of the consequences of such specific
violations; or

(f) if Employee engages in the willful,
unauthorized disclosure of material Confidential Information;

"Commencement Date" shall have the meaning specified in Section
4 hereof.

"Confidential Information" shall have the meaning specified in
Section 13(b) hereof.

2
<PAGE> 3

"Disability" shall mean Employee's inability, for a period of
six consecutive months, or a cumulative period of 180 business days (i.e.,
Mondays through Fridays, exclusive of days on which Company is generally closed
for a holiday) out of a consecutive period of twelve months, to perform the
essential duties of Employee's position, with or without any reasonable
accommodation required by law, due to a mental or physical impairment which
substantially limits one or more major life activities.

"IPO" shall mean Company's receipt of the net proceeds from
the sale of its equity securities in an initial public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(excluding any registration of Form S-8).

"IPO Bonus" shall have the meaning specified to it in Section
5(c).

"Restricted Area" shall have the meaning specified in Section
13(a) hereof.

"Restricted Period" shall have the meaning specified in Section
13(a) hereof.

"Subsidiary" shall mean any corporation in which Company owns
directly or indirectly 50% or more of the Voting Stock or 50% or more of the
equity; or any other venture in which it owns either 50% or more of the voting
rights or 50% or more of the equity.

"Term of Employment" shall mean the period specified in
Section 4 hereof as the same may be terminated in accordance with this
Agreement.

"Voting Stock" shall mean capital stock of any class or
classes having general voting power under ordinary circumstances, in the
absence of contingencies, to elect the directors of a corporation.

2. Employment. Company hereby employs Employee and Employee
hereby accepts employment by Company for the period and upon the terms and
conditions specified in this Agreement.

3. Office and Duties.

(a) Employee shall serve as the Chief Executive Officer
of Company. In such capacity, Employee shall render such services as are
necessary and desirable to protect and advance the best interests of Company,
acting, in all instances, under the supervision of and in accordance with the
policies set by the Board. As Chief Executive Officer, Employee shall have,
subject to policies set by and with the approval of the Board, the
responsibility and authority to employ and terminate employees, sign agreements
and otherwise to oversee the business affairs of Company and implement the
policies and directives of the Board, all subject to the provisions of any
operating budget or budgets as may be approved from

3
<PAGE> 4

time to time by the Board and subject to the By-Laws of the Company. Employee
shall perform any other duties reasonably required by the Board and, if
requested by the Board, shall serve as an officer or director of Company or any
Subsidiary without additional compensation.

(b) For as long as Employee shall remain an employee of
Company, Employee's entire working time, energy, skill and best efforts shall
be devoted to the performance of Employee's duties hereunder in a manner which
will faithfully and diligently further the business and interests of Company.
Employee may engage in charitable, civic, fraternal, trade and professional
association activities that do not interfere with Employee's obligations to
Company, but Employee shall not work for any other for-profit business.

4. Term. Employee shall be employed by Company for an initial
Term of Employment (the "Initial Term"), commencing on the date hereof (the
"Commencement Date"), and ending on May 31, 1999, unless sooner terminated as
hereinafter provided. Unless either party elects to terminate this Agreement at
the end of the Initial Term by giving the other party written notice of such
election at least one hundred eighty (180) days before the expiration of the
Initial Term, the Term of Employment shall be deemed to have been extended for
an additional term of two (2) years (the "Additional Term") commencing on the
day after the expiration of the Initial Term. At any time during the Additional
Term, either party may terminate this Agreement by giving the other party
written notice of such election at least one hundred eighty (180) days prior to
such termination.

5. Compensation and Benefits.

(a) For all of the service rendered by Employee to
Company, Employee shall receive Base Compensation at the gross annual rate of
Two Hundred Thousand Dollars ($200,000), payable in installments in accordance
with Company's regular payroll practices in effect from time to time. The
amount of Base Compensation payable hereunder shall be adjusted on the first
anniversary of the Commencement Date and each subsequent anniversary to reflect
the annualized increase in the consumer price index as reported by the U.S.
Department of Labor for the last three (3) month period prior to such
anniversary for which statistics are available.

(b) In addition to the foregoing compensation, Employee
shall be eligible to receive an annual bonus (the "Annual Bonus") in an amount,
if any, as shall be determined by the Board of Directors in its sole
discretion. The Annual Bonus, to the extent earned, shall be payable in a
single lump-sum payment within ninety (90) days after the end of each calendar
year.

(c) As additional compensation for Employee's agreement
to continue in the employ of Company and for the services to be rendered by
Employee, if within fifty-six (56) months after the Commencement Date any
equity interests of Company are sold in IPO, Company shall make a further
payment to Employee (the "IPO Bonus") from the net proceeds to Company of such
IPO, in an amount equal to: (i) if the IPO occurs within six months after the

4
<PAGE> 5

Commencement Date, the sum of $3,000,000; or (ii) if the IPO occurs between six
months and 56 months after the Commencement Date, a sum equal to $3,000,000
reduced by $60,000 for each month (prorated on a per diem basis for partial
months) from the date which is six months after the Commencement Date through
the date of the occurrence of the IPO. For the purposes of calculating the IPO
Bonus, an IPO shall be deemed to occur when the registration statement prepared
in connection with the IPO is declared effective by the U.S. Securities and
Exchange Commission. The IPO Bonus shall be payable by Company in a single
lump-sum payment within thirty (30) days after Company's receipt of proceeds
from an IPO.

6. Fringe Benefits As an inducement to Employee to commence
employment hereunder, and in consideration of Employee's covenants under this
Agreement, Employee shall be entitled to the benefits set forth below (the
"Fringe Benefits") during the Term of Employment:

(a) Employee shall be eligible to participate in any
health, life, accident or disability insurance, sick leave or other benefit
plans or programs made available to other similarly situated employees of
Company as long as they are kept in force by Company and provided that Employee
meets the eligibility requirements and other terms, conditions and restrictions
of the respective plans and programs.

(b) Employee shall be entitled to four (4) weeks paid
vacation during each year, subject to Company's generally applicable policies
relating to vacations. Employee shall give the Chair of the Board of Directors
(or his or her designee) written notice at least seven (7) days prior to the
commencement of any vacation in excess of five (5) business days.

(c) Company will reimburse Employee for all reasonable
and necessary expenses incurred by Employee in connection with the performance
of Employee's duties hereunder upon receipt of documentation therefor in
accordance with Company's regular reimbursement procedures and practices in
effect from time to time.

(d) Company will pay the premiums on a life insurance
policy to be owned by Employee, in the face amount of $3,000,000, insuring the
life of Employee (the "Policy"). The face amount of Policy for which the
Company shall pay premiums (the "Company Paid Amount") shall decrease as
follows. After the sixth-month anniversary of the Commencement Date, the
Company Paid Amount shall decrease by $60,000 for each month (prorated on a per
diem basis for partial months) that elapses after the six-month anniversary of
the Commencement Date. Upon the occurrence of an IPO: (i) the Company shall
have no further obligation to pay any premiums with respect to the Policy (the
Company Paid Amount thereupon being reduced to zero); and (ii) as a condition
to Employee's right to receive the IPO Bonus, Employee shall either assign the
policy to the Company and deliver an irrevocable beneficiary designation naming
the Company or, if Employee so elects, assume payment obligations with respect
to the Policy and refund to Company any premiums prepaid by Company with
respect to periods after the IPO. Employee shall at all times have the option
to pay any premiums to acquire additional coverage beyond the Company Paid
Amount.

5
<PAGE> 6

7. Disability. If Employee suffers a Disability, Company may
terminate Employee's employment relationship with Company at any time
thereafter by giving Employee ten (10) days written notice of termination.
Thereafter, Company shall have no obligation to Employee for Base Compensation,
Annual Bonus, Fringe Benefits or any other form of compensation or benefit to
Employee, except as otherwise required by law or by benefit plans provided at
Company expense, other than (a) amounts of Base Compensation accrued through
the date of termination, (b) the IPO Bonus, to the extent payable hereunder,
and (c) reimbursement of appropriately documented expenses incurred by Employee
before the termination of employment, to the extent that Employee would have
been entitled to such reimbursement but for the termination of employment.

8. Death. If Employee dies during the Term of Employment, the
Term of Employment and Employee's employment with Company shall terminate as of
the date of Employee's death. Company shall have no obligation to Employee or
Employee's estate for Base Compensation, Annual Bonus, the IPO Bonus, Fringe
Benefits or any other form of compensation or benefit, except as otherwise
required by law or by benefit plans provided at Company expense, other than (a)
amounts of Base Compensation that have accrued through the date of Employee's
death, and (b) reimbursement of appropriately documented expenses incurred by
Employee before the termination of employment, to the extent that Employee
would have been entitled to such reimbursement but for the termination of
employment.

9. Termination for Cause. Company may terminate Employee's
employment relationship with Company at any time for Cause. Upon termination of
Employee under this Section 9, Company shall have no obligation to Employee for
Base Compensation, Annual Bonus, Fringe Benefits, the IPO Bonus or other form
of compensation or benefits other than (a) amounts of Base Compensation accrued
through the date of termination, and (b) reimbursement of appropriately
documented expenses incurred by Employee before the termination of employment,
to the extent that Employee would have been entitled to such reimbursement but
for the termination of employment.

10. Termination without Cause. Company may terminate Employee's
employment relationship with Company at any time without Cause. Notwithstanding
termination of Employee under this Section 10, Employee shall continue to be
eligible to receive the IPO Bonus and Company shall continue to pay Employee's
Base Compensation, Fringe Benefits and all other compensation and benefits
other than the Annual Bonus, as such amounts would have accrued through the end
of the Initial Term or, if such termination occurs during the Extension Period,
through the end of the Extension Period.

11. Consideration. Employee agrees and acknowledges that Employee
is agreeing to be bound by the terms of this Agreement, including without
limitation the provisions of Sections 12 and 13, in consideration of (i) the
benefits Employee will receive from the partial redemption of Employee's equity
interest in Company pursuant to the Recapitalization Agreement and (ii)
Company's agreement to pay in full all amounts due as Base Compensation

6
<PAGE> 7

and other amounts due after Employee's termination without Cause in accordance
with Section 10 of this Agreement; and Employee further agrees and acknowledges
that each of the benefits described in clause (i) or (ii) alone constitutes
full, complete and adequate consideration for Employee's obligations hereunder.

12. Company Property. All advertising, sales, manufacturers' and
other materials or articles or information, including without limitation data
processing reports, computer programs, software, customer information and
records, business records, price lists or information, samples, or any other
materials or data of any kind furnished to Employee by Company or developed by
Employee on behalf of Company or at Company's direction or for Company's use or
otherwise in connection with Employee's employment hereunder, are and shall
remain the sole property of Company, including in each case all copies thereof
in any medium, including computer tapes and other forms of information storage.
If Company requests the return of such materials at any time during or at or
after the termination of Employee's employment, Employee shall deliver all
copies of the same to Company immediately. Notwithstanding the foregoing,
Employee may retain records relevant to the filing of Employee's personal
income taxes and Company shall grant Employee reasonable access during normal
business hours, to business records of Company relevant to Employee's discharge
of Employee's duties as a director of Company or any other legitimate
non-competitive business purpose.

13. Noncompetition, Trade Secrets, Etc. Employee hereby
acknowledges that, during and solely as a result of his employment by Company,
Employee will have access to confidential information and business and
professional contacts. In consideration of such special and unique
opportunities afforded by Company to Employee as a result of Employee's
employment and the other benefits referred to in Section 11 of this Agreement,
the Employee hereby agrees as follows:

(a) From the date hereof until the later to occur of (i)
the seventh anniversary of the date hereof or (ii) the second anniversary of
the termination of Employee's employment with Company for any reason, as such
period may be extended as hereinafter set forth (the "Restricted Period"),
Employee shall not directly or indirectly (A) engage in (as a principal,
shareholder, partner, director, officer, agent, employee, consultant or
otherwise) or be financially interested in any business operating within the
United States or Canada (the "Restricted Area"), which is involved in providing
telemarketing services to third parties or any other business activities which
are the same as, similar to or in competition with the Business, or with any
business activities carried on by Company, or being definitely planned by
Company, at the time of the termination of Employee's employment; provided
however, nothing contained in this Section 13 shall prevent Employee from
holding for investment no more than five percent (5%) of any class of equity
securities of a company whose securities are publicly traded on a national
securities exchange or in a national market system; or (B) induce or attempt to
influence any employee, customer, independent contractor or supplier of Company
to terminate employment or any other relationship with Company. During the
Restricted Period, Employee shall not, directly or indirectly, disclose or
otherwise communicate to any of the clients,

7
<PAGE> 8

customers or accounts of Company, its Affiliates or any Subsidiary thereof that
he has been terminated, is considering terminating, or has decided to
terminate, employment with Company. Company shall have sole discretion to
determine who may notify the clients, customers or accounts of Company of the
termination of Employee's employment, and the form, substance and timing of
such notification; provided, however that Company shall send to Employee a copy
of any written notice to such persons prior to its dissemination.

(b) Employee shall not use for Employee's personal
benefit, or disclose, communicate or divulge to, or use for the direct or
indirect benefit of any person, firm, association or company other than
Company, any "Confidential Information" which term shall mean any information
regarding the business methods, business policies, policies, procedures,
techniques, research or development projects or results, historical or
projected financial information, budgets, trade secrets, or other knowledge or
processes of or developed by Company or any names and addresses of customers or
clients or any data on or relating to past, present or prospective Company
customers or clients or any other confidential information relating to or
dealing with the business operations or activities of Company, made known to
Employee or learned or acquired by Employee while in the employ of Company, but
Confidential Information shall not include information otherwise lawfully known
generally by or readily accessible to the trade or the general public. All
memoranda, notes, lists, records, files, documents and other papers and other
like items (and all copies, extracts and summaries thereof) made or compiled by
Employee or made available to Employee concerning the business of Company shall
be Company's property and shall be delivered to Company promptly upon the
termination of Employee's employment with Company or at any other time on
request. The foregoing provisions of this Subsection 13(b) shall apply during
and after the period when Employee is an employee of Company and shall be in
addition to (and not a limitation of) any legally applicable protections of
Company's interest in confidential information, trade secrets and the like. At
the termination of Employee's employment with Company, Employee shall return to
Company all copies of Confidential Information in any medium, including
computer tapes and other forms of data storage. Notwithstanding the foregoing,
Employee may retain records relevant to the filing of Employee's personal
income taxes and Company shall grant Employee reasonable access during normal
business hours, to business records of Company relevant to Employee's discharge
of Employee's duties as a director of Company or other legitimate
non-competitive business purpose.

(c) Any and all writings, inventions, improvements,
processes, procedures and/or techniques which Employee may make, conceive,
discover or develop, either solely or jointly with any other person or persons,
at any time when Employee is an employee of Company, whether or not during
working hours and whether or not at the request or upon the suggestion of
Company, which relate to or are useful in connection with the Business or with
any business now or hereafter carried on or contemplated by Company, including
developments or expansions of its present fields of operations, shall be the
sole and exclusive property of Company. Employee shall make full disclosure to
Company of all such writings, inventions, improvements, processes, procedures
and techniques, and shall do everything necessary or desirable to vest the
absolute title thereto in Company. Employee shall write and prepare all

8
<PAGE> 9

specifications and procedures regarding such inventions, improvements,
processes, procedures and techniques and otherwise aid and assist Company so
that Company can prepare and present applications for copyright or Letters
Patent therefor and can secure such copyright or Letters Patent wherever
possible, as well as reissues, renewals, and extensions thereof, and can obtain
the record title to such copyright or patents so that Company shall be the sole
and absolute owner thereof in all countries in which it may desire to have
copyright or patent protection. Employee shall not be entitled to any
additional or special compensation or reimbursement regarding any and all such
writings, inventions, improvements, processes, procedures and techniques.

(d) Employee acknowledges that the restrictions contained
in the foregoing Subsections (a), (b) and (c), in view of the nature of the
business in which Company is engaged, are reasonable and necessary in order to
protect the legitimate interests of Company, that their enforcement will not
impose a hardship on Employee or significantly impair Employee's ability to
earn a livelihood, and that any violation thereof would result in irreparable
injuries to Company. Employee therefore acknowledges that, in the event of
Employee's violation of any of these restrictions, Company shall be entitled to
obtain from any court of competent jurisdiction preliminary and permanent
injunctive relief as well as damages and an equitable accounting of all
earnings, profits and other benefits arising from such violation, which rights
shall be cumulative and in addition to any other rights or remedies to which
Company may be entitled.

(e) If the Restricted Period or the Restricted Area
specified in Subsection (a) above should be adjudged unreasonable in any
proceeding, then the period of time shall be reduced by such amount or the area
shall be reduced by the elimination of such portion or both such reductions
shall be made so that such restrictions may be enforced for such time and in
such area as is adjudged to be reasonable. If Employee violates any of the
restrictions contained in the foregoing Subsection (a), the Restricted Period
shall be extended by a period equal to the length of time from the commencement
of any such violation until such time as such violation shall be cured by
Employee to the satisfaction of Company. Company shall have the right and
remedy to require Employee to account for and pay over to Company all
compensation, profits, monies, accruals, increments or other benefits derived
or received by Employee as the result of any transactions constituting a breach
of this Section 13, and Employee shall account for and pay over such amounts to
Company upon Company's request therefor. Employee hereby expressly consents to
the jurisdiction of any court within the Eastern District of Pennsylvania to
enforce the provisions of this Section 13, and agrees to accept service of
process by mail relating to any such proceeding. Company may supply a copy of
Section 13 of this Agreement to any future or prospective employer of Employee
or to any person to whom Employee has supplied information if Company
determines in good faith that there is a reasonable likelihood that Employee
has violated or will violate such Section.

14. Prior Agreements. Employee represents to Company that there
are no restrictions, agreements or understandings, oral or written, to which
Employee is a party or by

9
<PAGE> 10

which Employee is bound that prevent or make unlawful Employee's execution or
performance of this Agreement.

15. Miscellaneous.

(a) Indulgences, Etc. Neither the failure nor any delay
on the part of either party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.

(b) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, notwithstanding any conflict-of-laws doctrines of
such jurisdiction to the contrary, and without the aid of any canon, custom or
rule of law requiring construction against the draftsman.

(c) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
personally delivered, on the day specified for delivery when deposited with a
recognized national or regional courier service for delivery to the intended
addressee or two (2) days following the day when deposited in the United States
mails, first class postage prepaid, addressed as set forth below:

(i) If to Employee:

Raymond J. Hansell
506 Chaumont Drive
Villanova, PA 19085

with a copy, given in the manner prescribed
above, to:

G. Bradley Rainer, Esquire
Eckell, Sparks, Levy, Auerbach, Monte & Emper,
a Professional Corporation
Legal Arts Building
344 Front Street
P. O. Box 319
Media, PA 19063

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<PAGE> 11

(ii) If to Company:

RMH Sales and Marketing Consulting, Inc.
40 Morris Avenue
Bryn Mawr, PA 19010
Attention: Chief Financial Officer

with a copy, given in the manner prescribed
above, to:

Advanta Partners LP
Five Horsham Business Center
300 Welsh Road
Horsham, PA 19044-2296
Attention: Anthony P. Brenner, Senior
Managing Director

with an additional copy, given in the manner
prescribed above to:

Herman C. Fala, Esquire
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor Packard Building
S.E. Corner 15th and Chestnut Streets
Philadelphia, PA 19102-2678

In addition, notice by mail shall be by air mail if
posted outside of the continental United States. Any party may alter the address
to which communications or copies are to be sent by giving notice of such change
of address in conformity with the provisions of this Section for the giving of
notice.

(d) Binding Nature of Agreement. This Agreement shall be
binding upon Company and shall inure to the benefit of Company, its present and
future Subsidiaries, Affiliates, successors and assigns including any
transferee of the business operation, as a going concern, in which Employee is
employed and shall be binding upon Employee, Employee's heirs and personal
representatives. None of the rights or obligations of Employee hereunder may be
assigned or delegated, except that in the event of Employee's death or
Disability, any rights of Employee hereunder shall be transferred to Employee's
estate or personal representative, as the case may be. Company may assign its
rights and obligations under this Agreement in whole or in part to any one or
more Affiliates or successors, but no such assignment shall relieve Company of
its obligations to Employee if any such assignee fails to perform such
obligations.

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<PAGE> 12

instrument. This Agreement shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.

(f) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

(g) Entire Agreement. This Agreement contains the entire
understanding among the parties hereto with respect to the employment of
Employee by Company, and supersedes all prior and contemporaneous agreements
and understandings, inducements or conditions, express or implied, oral or
written, except as herein contained. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other
than by an agreement in writing. Notwithstanding the foregoing, nothing herein
shall limit the application of any generally applicable Company policy,
practice, plan or the terms of any manual or handbook applicable to Company's
employees generally, except to the extent the foregoing directly conflict with
this Agreement, in which case the terms of this Agreement shall prevail.

(h) Section Headings. The Section headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.

(i) Number of Days. Except as otherwise provided herein,
in computing the number of days for purposes of this Agreement, all days shall
be counted, including Saturdays, Sundays and holidays; provided, however, that
if the final day of any time period falls on a Saturday, Sunday or holiday on
which federal banks are or may elect to be closed, then the final day shall be
deemed to be the next day which is not a Saturday, Sunday or such holiday.

(j) Gender, Etc., Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context indicates is appropriate.

(k) Jurisdiction of Courts. Any legal suit, action,
claim, proceeding or investigation arising out of or relating to this Agreement
may be instituted in any state or federal court in the Eastern District of
Pennsylvania, and each of the parties hereto waives any objection which party
may now or hereafter have to such venue of any such suit, action, claim,
proceeding or investigation, and irrevocably submits to the jurisdiction of any
such court. Any and all service of process and any other notice in any such
suit, action, claim, proceeding or investigation shall be effective against any
party if given by registered or certified mail, return receipt requested, or by
any other means of mail which requires a signed receipt, postage prepaid,
mailed to such party as herein provided. If for any reason such service of
process by

12
<PAGE> 13

mail is ineffective, then (i) Company shall be deemed to have appointed Advanta
Partners LP, 5 Horsham Business Center, 300 Welsh Road, Horsham, PA 19044-2296
or any successor entity, Attention: Anthony P. Brenner, or at its office at
such other address as it hereafter furnishes to the parties hereto, as the
authorized agent of Company to accept and acknowledge, on behalf of Company
service of any and all process which may be served in any such suit, action,
claim, proceeding or investigation; and (ii) Employee shall be deemed to have
appointed G. Bradley Rainer, Esquire, Eckell, Sparks, Levy, Auerbach, Monte &
Emper, a Professional Corporation Legal Arts Building, 344 Front Street, P. O.
Box 319, Media, PA 19063, or at its office at such other address as it
hereafter furnishes to the parties hereto, as Employee's authorized agent to
accept and acknowledge, on Employee's behalf, service of any and all process
which may be served in any such suit, action, claim, proceeding or
investigation. Nothing herein contained shall be deemed to affect the right of
any party to serve process in any manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party in any jurisdiction
other than Pennsylvania.

(l) Survival. All provisions of this agreement which by
their terms survive the termination of Employee's employment with Company,
including without limitation the covenants of Employee set forth in Sections 12
and 13 and the obligations of Company to make any post-termination payments
under this Agreement, shall survive termination of Employee's employment by
Company and shall remain in full force and effect thereafter in accordance with
their terms.

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<PAGE> 14

IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement in Philadelphia, Pennsylvania as of the date first above written.

RMH SALES AND MARKETING CONSULTING, INC.

By: /s/ Anthony P. Brenner
--------------------------------------
Name: Anthony P. Brenner
Title: Chairman

/s/ Raymond J. Hansell (SEAL)
---------------------------------------
Raymond J. Hansell, Employee

<PAGE> 1
EXHIBIT 10.4

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made this 24th day of May, 1996, by and between RMH
Sales and Marketing Consulting, Inc., a Pennsylvania corporation trading as RMH
Telemarketing (hereinafter called "Company"), and MarySue Lucci Hansell, an
individual residing at 506 Chaumont Drive, Villanova, Pennsylvania, 19085
(hereinafter called "Employee").

W I T N E S S E T H:

Employee and Employee's spouse historically have been the holders of
all of the issued and outstanding capital stock of Company.

Company wishes to continue to employ Employee and Employee wishes to
continue in the employ of Company on the terms and conditions contained in this
Agreement.

NOW, THEREFORE, in consideration of the facts, mutual promises and
covenants contained herein and intending to be legally bound hereby, Company
and Employee agree as follows:

1. Definitions. As used herein, the following terms shall have
the meanings set forth below unless the contexts otherwise requires.

"Annual Bonus" shall mean the bonus payments set forth in
Section 5(b), as such amount may be adjusted from time to time.
<PAGE> 2

"Base Compensation" shall mean the annual rate of compensation
set forth in Section 5(a), as such amount may be adjusted from time to time.

"Board" shall mean the Board of Directors of Company.

"Cause" shall mean any one or more of the following:

(a) if Employee is convicted of a felony
or a crime involving moral turpitude or has entered a plea of nolo contendere
(or similar plea) to a charge of such an offense;

(b) if Employee uses alcohol or any
unlawful controlled substance to an extent that it materially interferes with
the performance of Employee's duties under this Agreement;

(d) if Employee commits any act of
fraud, personal dishonesty or deliberate misappropriation relating to or
involving Company;

(f) if Employee engages in the willful,
unauthorized disclosure of material Confidential Information;

"Commencement Date" shall have the meaning specified in Section
4 hereof.

"Confidential Information" shall have the meaning specified in
Section 13(b) hereof.

2
<PAGE> 3

"IPO Bonus" shall have the meaning specified to it in Section
5(c).

"Restricted Area" shall have the meaning specified in Section
13(a) hereof.

"Restricted Period" shall have the meaning specified in Section
13(a) hereof.

"Term of Employment" shall mean the period specified in
Section 4 hereof as the same may be terminated in accordance with this
Agreement.

"Voting Stock" shall mean capital stock of any class or
classes having general voting power under ordinary circumstances, in the
absence of contingencies, to elect the directors of a corporation.

2. Employment. Company hereby employs Employee and Employee
hereby accepts employment by Company for the period and upon the terms and
conditions specified in this Agreement.

3. Office and Duties.

(a) Employee shall serve as the President and Chief
Operating Officer of Company. In such capacity, Employee shall render such
services as are necessary and desirable to protect and advance the best
interests of Company, acting, in all instances, under the supervision of and in
accordance with the policies set by the Board. As Chief Operating Officer,
Employee shall be responsible for managing the day-to-day operations of the
business and shall have the responsibility and authority, subject to policies
set by and with the approval of the Board, to employ and terminate employees,
sign agreements and otherwise to implement the

3
<PAGE> 4

policies and directives of the Board, all subject to the provisions of any
operating budget or budgets as may be approved from time to time by the Board
and subject to the By-Laws of the Company. Employee shall perform any other
duties reasonably required by the Board and, if requested by the Board, shall
serve as an officer or director of Company or any Subsidiary without additional
compensation.

5. Compensation and Benefits.

4
<PAGE> 5

Company shall make a further payment to Employee (the "IPO Bonus") from the net
proceeds to Company of such IPO, in an amount equal to: (i) if the IPO occurs
within six months after the Commencement Date, the sum of $3,000,000; or (ii)
if the IPO occurs between six months and 56 months after the Commencement Date,
a sum equal to $3,000,000 reduced by $60,000 for each month (prorated on a per
diem basis for partial months) from the date which is six months after the
Commencement Date through the date of the occurrence of the IPO. For the
purposes of calculating the IPO Bonus, an IPO shall be deemed to occur when the
registration statement prepared in connection with the IPO is declared
effective by the U.S. Securities and Exchange Commission. The IPO Bonus shall
be payable by Company in a single lump-sum payment within thirty (30) days
after Company's receipt of proceeds from an IPO.

5
<PAGE> 6

Company with respect to periods after the IPO. Employee shall at all times have
the option to pay any premiums to acquire additional coverage beyond the
Company Paid Amount.

6
<PAGE> 7

redemption of Employee's equity interest in Company pursuant to the
Recapitalization Agreement and (ii) Company's agreement to pay in full all
amounts due as Base Compensation and other amounts due after Employee's
termination without Cause in accordance with Section 10 of this Agreement; and
Employee further agrees and acknowledges that each of the benefits described in
clause (i) or (ii) alone constitutes full, complete and adequate consideration
for Employee's obligations hereunder.

7
<PAGE> 8

employment or any other relationship with Company. During the Restricted
Period, Employee shall not, directly or indirectly, disclose or otherwise
communicate to any of the clients, customers or accounts of Company, its
Affiliates or any Subsidiary thereof that he has been terminated, is
considering terminating, or has decided to terminate, employment with Company.
Company shall have sole discretion to determine who may notify the clients,
customers or accounts of Company of the termination of Employee's employment,
and the form, substance and timing of such notification; provided, however that
Company shall send to Employee a copy of any written notice to such persons
prior to its dissemination.

8
<PAGE> 9

improvements, processes, procedures and techniques, and shall do everything
necessary or desirable to vest the absolute title thereto in Company. Employee
shall write and prepare all specifications and procedures regarding such
inventions, improvements, processes, procedures and techniques and otherwise
aid and assist Company so that Company can prepare and present applications for
copyright or Letters Patent therefor and can secure such copyright or Letters
Patent wherever possible, as well as reissues, renewals, and extensions
thereof, and can obtain the record title to such copyright or patents so that
Company shall be the sole and absolute owner thereof in all countries in which
it may desire to have copyright or patent protection. Employee shall not be
entitled to any additional or special compensation or reimbursement regarding
any and all such writings, inventions, improvements, processes, procedures and
techniques.

9
<PAGE> 10

14. Prior Agreements. Employee represents to Company that there
are no restrictions, agreements or understandings, oral or written, to which
Employee is a party or by which Employee is bound that prevent or make unlawful
Employee's execution or performance of this Agreement.

15. Miscellaneous.

(b) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, notwithstanding any conflict-of-laws doctrines of
such jurisdiction to the contrary, and without the aid of any canon, custom or
rule of law requiring construction against the draftsman.

(c) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
personally delivered, on the day specified for delivery when deposited with a
recognized national or regional courier service for delivery to the intended
addressee or two (2) days following the day when deposited in the United States
mails, first class postage prepaid, addressed as set forth below:

(i) If to Employee:

MarySue Lucci Hansell
506 Chaumont Drive
Villanova, PA 19085

with a copy, given in the manner prescribed
above, to:

G. Bradley Rainer, Esquire
Eckell, Sparks, Levy, Auerbach, Monte &
Emper, a Professional Corporation
Legal Arts Building
344 Front Street
P. O. Box 319
Media, PA 19063

10
<PAGE> 11

(ii) If to Company:

RMH Sales and Marketing Consulting, Inc.
40 Morris Avenue
Bryn Mawr, PA 19010
Attention: Chief Financial Officer

with a copy, given in the manner prescribed
above, to:

Advanta Partners LP
Five Horsham Business Center
300 Welsh Road
Horsham, PA 19044-2296
Attention: Anthony P. Brenner, Senior
Managing Director

with an additional copy, given in the manner
prescribed above to:

Herman C. Fala, Esquire
Wolf, Block, Schorr and Solis-Cohen
Twelfth Floor Packard Building
S.E. Corner 15th and Chestnut Streets
Philadelphia, PA 19102-2678

In addition, notice by mail shall be by air mail if
posted outside of the continental United States. Any party may alter the
address to which communications or copies are to be sent by giving notice of
such change of address in conformity with the provisions of this Section for
the giving of notice.

11
<PAGE> 12

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

(h) Section Headings. The Section headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.

(j) Gender, Etc. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context indicates is appropriate.

12
<PAGE> 13

investigation shall be effective against any party if given by registered or
certified mail, return receipt requested, or by any other means of mail which
requires a signed receipt, postage prepaid, mailed to such party as herein
provided. If for any reason such service of process by mail is ineffective,
then (i) Company shall be deemed to have appointed Advanta Partners LP, 5
Horsham Business Center, 300 Welsh Road, Horsham, PA 19044-2296 or any
successor entity, Attention: Anthony P. Brenner, or at its office at such other
address as it hereafter furnishes to the parties hereto, as the authorized
agent of Company to accept and acknowledge, on behalf of Company service of any
and all process which may be served in any such suit, action, claim, proceeding
or investigation; and (ii) Employee shall be deemed to have appointed G.
Bradley Rainer, Esquire, Eckell, Sparks, Levy, Auerbach, Monte & Emper, a
Professional Corporation Legal Arts Building, 344 Front Street, P. O. Box 319,
Media, PA 19063, or at its office at such other address as it hereafter
furnishes to the parties hereto, as Employee's authorized agent to accept and
acknowledge, on Employee's behalf, service of any and all process which may be
served in any such suit, action, claim, proceeding or investigation. Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by law or to commence legal proceedings or
otherwise proceed against any other party in any jurisdiction other than
Pennsylvania.

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<PAGE> 14

IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement in Philadelphia, Pennsylvania as of the date first above written.

RMH SALES AND MARKETING CONSULTING, INC.

By: /s/ Anthony P. Brenner
---------------------------------------
Name: Anthony P. Brenner
Title: Chairman

/s/ MarySue Lucci Hansell (SEAL)
----------------------------------------
MarySue Lucci Hansell, Employee

<PAGE> 1
EXHIBIT 10.5

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"). THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS HOLDER PROVIDES TO THE ISSUER OF THIS WARRANT AN OPINION
OF COUNSEL ACCEPTABLE TO SUCH ISSUER THAT THE SECURITIES MAY BE TRANSFERRED IN
RELIANCE ON AN EXEMPTION FROM THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAWS.

WARRANT

FOR THE PURCHASE OF CLASS B NON-VOTING COMMON STOCK OF
RMH SALES AND MARKETING CONSULTING, INC.

1 . ISSUANCE AND EXERCISE OF WARRANT.

1.1. ISSUANCE OF WARRANT.

(A) GENERAL. For value received, Chemical Bank, or its
registered assigns (the "Warrantholder"), is entitled to purchase from RMH
Sales and Marketing Consulting, Inc., a Pennsylvania corporation trading as RMH
Telemarketing (the "Company"), upon surrender of this Warrant to the Company
and upon payment of the Exercise Price (as hereinafter defined), subject to the
terms and conditions set forth herein, 236,842 shares (the "Warrant Shares") of
the Company's Class B Non-Voting Common Stock, no par value ("Class B Common
Stock"), such number of Warrant Shares and the Exercise Price with respect
thereto being subject to adjustment as provided herein. Any Warrant Shares
purchased by exercise of this Warrant shall bear a legend substantially in the
form as set forth above. The Company represents that it has authorized two
classes of Common Stock, the Class B Common Stock and the Class A Voting Common
Stock (together, the "Common Stock") of which 1,279,573 and 3,220,427 shares
are issued and outstanding, respectively and two classes of Preferred Stock,
Series A and Series B, of which 273,684 and 6,226,316 shares are issued and
outstanding, respectively. All such issued and outstanding shares have been
duly authorized and validly issued and are fully paid and non- assessable.
Other than in connection with this Warrant or the conversion of the Class B
Common Stock referred to below, and the fact that under certain conditions, the
Series B Preferred Stock is convertible into Common Stock, there are no
outstanding options, warrants, rights or understandings issued by or binding
upon the Company requiring or providing for, and there are no outstanding debt
or equity securities of the Company which upon the conversion, exchange or
exercise thereof would require or provide for, the issuance of capital stock by
the Company of any new or additional shares of capital stock or any other
securities or which, with notice, lapse of time and/or payment of monies, are
or would be convertible
<PAGE> 2

into or exercisable or exchangeable for shares of capital stock of the Company.
Under the terms of the Company's Articles of Incorporation, each share of Class
B Common Stock is convertible into one share of Class A Voting Common Stock
upon the later to occur of (i) the effective date of a registration statement
filed in connection with an IPO (as defined herein) or (ii) the fifth
anniversary the date of first issuance of the Class B Common Stock. This
Warrant is being issued pursuant to a Credit Agreement between the Company and
Chemical Bank, as agent, dated as of even date herewith (the "Credit
Agreement"), provided however that notwithstanding anything set forth herein,
or in the Credit Agreement, to the contrary, this Warrant shall remain in full
force and effect until the Expiration Date (as herein defined) and shall not
terminate upon repayment or discharge of all Obligations (as defined in the
Credit Agreement) under the Credit Agreement or any other Loan Documents (as
defined in the Credit Agreement).

(B) REDUCTION UPON AN IPO. The number of Warrant Shares
deliverable upon exercise of this Warrant shall be reduced as follows:

(i) if an IPO occurs not later than the 12-month
anniversary of the date of initial issuance of this Warrant, the number of
Warrant Shares shall be reduced by 40%;

(ii) if an IPO occurs after the 12-month
anniversary but not later than the 15-month anniversary of the date of initial
issuance of this Warrant, the number of Warrant Shares shall be reduced by 35%;

(iii) if an IPO occurs after the 15- month
anniversary but not later than the 18-month anniversary of the date of initial
issuance of this Warrant, the number of Warrant Shares shall be reduced by 30%;

(iv) if an IPO occurs after the 18-month
anniversary but not later than the 21-month anniversary of the date of initial
issuance of this Warrant, the number of Warrant Shares shall be reduced by 25%;

(v) if an IPO occurs after the 21-month
anniversary but not later than the 24-month anniversary of the date of initial
issuance of this Warrant, the number of Warrant Shares shall be reduced by 20%;

(vi) if an IPO occurs after the 24-month
anniversary but not later than the 27-month anniversary of the date of initial
issuance of this Warrant, the number of Warrant Shares shall be reduced by 15%;

(vii) if an IPO occurs after the 27-month
anniversary but not later than the 30-month anniversary of the date of initial
issuance of this Warrant, the number of Warrant Shares shall be reduced by 10%;

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<PAGE> 3

(ix) if an IPO occurs after the 30-month
anniversary but not later than the 33-month anniversary of the date of initial
issuance of this Warrant, the number of Warrant Shares shall be reduced by 5%;
and

(x) if an IPO occurs after the 33-month
anniversary of the date of initial issuance of this Warrant, the number of
Warrant Shares shall not be reduced.

(C) CERTAIN TERMS. As used herein, an "IPO" means an
initial offering by the Company of Common Stock to the general public for cash
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "Securities Act"), or any comparable document under any
similar federal statute then in force. As used herein, a "Secondary Offering"
means any offering by the Company after the IPO of Common Stock to the general
public for cash pursuant to an effective registration statement under the
Securities Act, or any comparable document under any similar federal statute
then in force.

1.2. EXERCISE OF WARRANT; EXPIRATION.

(A) EXERCISABILITY. This Warrant shall not be exercisable
until the first to occur of (i) an IPO, (ii) the occurrence of an Acquisition
(as that term is defined in Section 7.6(a), provided, however, that for this
purpose a merger or consolidation in which the Company is the surviving entity
shall not be deemed to be an Acquisition), or (iii) the closing of a sale which
would permit the exercise of rights pursuant to the provisions of Sections
1.2(b) or 1.2(c). In addition, the Warrantholder shall be required to exercise
this Warrant, in whole or in part, if the managing underwriter in any IPO or
Secondary Offering determines, in its sole discretion, and notifies the
Warrantholder in writing (in the manner required in Section 12), that such
exercise is necessary, advisable or appropriate to the successful marketing of
the Company's Common Stock in such IPO or Secondary Offering. An exercisable
portion of this Warrant may be exercised in whole or in part at any time after
it becomes exercisable and prior to the Expiration Date.

(B) TAG-ALONG RIGHTS. If at any time prior to an IPO, the
holders of greater than 50% of the outstanding Common Stock of the Company (the
"Majority Holders") have received a bona fide offer that the Majority Holders
desire to accept to purchase all or any portion of the the Majority Holders'
Common Stock, the Company shall not be permitted to effect on its books the
transfer of such Common Stock unless (i) the Warrantholder, first, is given the
option of exercising this Warrant; and (ii) the proposed purchaser of the
Majority Holders' Common Stock (the "Proposed Purchaser") offers in writing to
purchase the same percentage of shares of Common Stock so acquired by the
Warrantholder from the Warrantholder at the same price per share and on the
same terms as the Proposed Purchaser has offered to the Majority Holders. For
example, if the Proposed Purchaser has offered to purchase 60% of the Common
Stock from the Majority Holders, then the Proposed Purchaser must offer to
purchase 60% of the Common Stock obtainable by the Warrantholder pursuant to
this Warrant from the Warrantholder on identical terms. The right of the
Warrantholder to accept such offer shall be exercisable only by providing
written notice of such acceptance to the Proposed Purchaser, to each Majority
Holder and to the Company within thirty (30) days of the date on which the
Warrantholder receives such offer from the Proposed Purchaser.

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<PAGE> 4

(C) COME-ALONG RIGHTS. If at any time prior to an IPO,
the Majority Holders have received a bona fide offer that the Majority Holders
desire to accept to purchase all or any portion of the Majority Holders' Common
Stock, and the Warrantholder has elected not to accept the offer of the
Proposed Purchaser of the Company's Common Stock to purchase the same
percentage of shares of Common Stock acquired by the Warrantholder upon
exercise of this Warrant from the Warrantholder at the same price per share and
on the same terms as the Proposed Purchaser has offered to the Company, as
required by Section 1.2(b) hereof, then the Majority Holders may, at their
election, require the Warrantholder to exercise this Warrant and accept the
Proposed Purchaser's offer to sell to the Proposed Purchaser the same
percentage of shares of Common Stock so acquired by the Warrantholder at the
same price per share and on the same terms as the Proposed Purchaser has
offered to the Majority Holders. The right of the Majority Holders to require
the Warrantholder to accept the Proposed Purchaser's offer shall be exercisable
only by providing written notice of the exercise of its right to the
Warrantholder within thirty (30) days after the expiration of the period of
thirty (30) days referred to in Section 1.2(b) hereof within which the
Warrantholder has the right to decide whether to accept the offer from the
Proposed Purchaser.

(D) EXERCISE PRICE. The price for which the Warrant
Shares may be purchased upon the exercise of this Warrant shall be $.01 per
Warrant Share (such price, as the same may be adjusted pursuant to Section
2.1(a), being referred to herein as the "Exercise Price").

(E) EXPIRATION. This Warrant shall expire at 6 p.m.,
Eastern Time, on May 31, 2006 (the "Expiration Date").

2. ADJUSTMENTS; ANTI-DILUTION PROVISIONS.

2.1. (A) ISSUANCE OF ADDITIONAL SHARES. If, at any time while
this Warrant shall be outstanding, the Company shall issue or sell, at a per
share price lower than the per share Fair Market Value of the Warrant Shares at
the time of such issue or sale, to any person who is not an employee of the
Company or any affiliate thereof (other than Raymond Hansell, Mary Sue Lucci
Hansell or any person who is also an employee of Advanta Partners, LP or any
affiliate thereof, provided that for this purpose the Company or any subsidiary
of the Company shall not be deemed to be an affiliate of Advanta Partners, LP)
on the date of such issuance, any new or additional shares of its Common Stock,
whether now or hereafter authorized, and whether issued for cash or other
consideration or by way of dividend, the number of shares of Class B Common
Stock purchasable under this Warrant shall automatically increase by the same
percentage as the number of such additional shares of Common Stock bears to the
number of shares of Common Stock of the Company outstanding immediately prior
to such issuance or sale. Notwithstanding the foregoing, to the extent such
shares of Common Stock are issued for less than the per share Fair Market Value
of the Warrant Shares, then such adjustment shall assume that only a percentage
of such shares or securities were issued which equals (i) 100%, less (ii) the
percentage of the Fair Market Value at which such shares or securities were
issued. Consequently, for example, if 100,000 shares of Common Stock were
issued for a price equal to 90% of the Fair Market Value, then for the purposes
of the adjustment set forth in this paragraph, only 10,000 of such shares shall
be deemed to have been issued. In the event of any adjustment in the number of
shares purchasable under this Warrant

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<PAGE> 5

pursuant to this Section 2.1 or Sections 2.2 or 2.3, then the Exercise Price
shall be reduced (if the adjustment results in an increase in the number of
shares which may be purchased) or increased (if the adjustment results in a
reduction in the number of shares which may be purchased) by the same
percentage.

(b) If the Company shall issue, sell, distribute or
otherwise grant in any manner (whether directly or by assumption in a merger or
otherwise) to any person who is not an employee of the Company or any affiliate
thereof (other than Raymond Hansell, Mary Sue Lucci Hansell or any person who
is also an employee of Advanta Partners, LP or any affiliate thereof, provided
that for this purpose the Company or any subsidiary of the Company shall not be
deemed to be an affiliate of Advanta Partners, LP) as of the date of such
event, any rights to subscribe for or to purchase, or any warrants or options
for the purchase of Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such rights, warrants or options being herein
called "Options" and such convertible or exchangeable stock or securities being
herein called "Convertible Securities"), whether or not such Options or the
rights to convert or exchange any such convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon
the exercise of such Options or upon conversion or exchange of such Convertible
Securities shall be less than the greater of the Exercise Price then in effect
and the Fair Market Value per share of the Warrant Shares immediately prior to
the time of such issuance, sale, distribution or grant, then the number of
Warrant Shares for which this Warrant is exercisable and the Exercise Price
shall be adjusted as provided in subsection (a) above on the basis that (i) the
maximum number of additional shares of Common Stock issuable upon the exercise
of such Options or upon conversion or exchange of such Convertible Securities
shall be deemed to have been issued and outstanding and (ii) the aggregate
consideration received for such additional shares of Common Stock shall be
deemed to be the minimum consideration received. Except as otherwise provided
in paragraph (d) below, no additional adjustment of the number of Shares
purchasable under this Warrant or the Exercise Price shall be made upon the
actual exercise of such Options or upon conversion or exchange of such
Convertible Securities.

(c) If the Company shall issue, sell or otherwise
distribute (whether directly or by assumption in a merger or otherwise) any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, to any person who is not an employee of
the Company or any affiliate thereof at the time of such event, and the price
per share for which Common Stock is issuable upon such conversion or exchange
shall be less than the greater of the Exercise Price then in effect and the
Fair Market Value per share of the Warrant Shares immediately prior to the time
of such issuance, sale or distribution, then the number of Warrant Shares for
which this Warrant is exercisable and the Exercise Price shall be adjusted as
provided in paragraph (a) above on the basis that (i) the maximum number of
additional shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued and outstanding
and (ii) the aggregate consideration received for such additional shares of
Common Stock shall be deemed to be the minimum consideration received. Except
as otherwise provided in paragraph (d) below, no additional adjustment of the
number of Shares purchasable under this Warrant or the Exercise Price shall be
made upon the actual conversion or exchange of such Convertible Securities.

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<PAGE> 6

(d) If the purchase price provided for in any Option
referred to in paragraph (b) above, the additional consideration, if any,
payable upon the conversion or exchange of any convertible Securities referred
to in paragraph (b) or (c) above, or the rate at which any Convertible
Securities referred to in paragraph (b) or (c) above are convertible into or
exchangeable for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution upon an event which
results in a related adjustment pursuant to this Section 2), the Exercise Price
then in effect shall forthwith be readjusted (effective only with respect to
any exercise of this Warrant after such readjustment) to the Exercise Price
which would then be in effect had the adjustment made upon the issue, sale,
distribution or grant of such Options or Convertible Securities been made based
upon such changed purchase price, additional consideration or conversion rate,
as the case may be; provided, however, that such readjustment shall give effect
to such change only with respect to such Options and Convertible Securities as
then remain outstanding.

2.2. STOCK SPLIT, SUBDIVISION OR COMBINATION. If the Company,
at any time while this Warrant is outstanding, shall split, subdivide or
combine its Common Stock (by reclassification or otherwise than by payment of a
dividend), the number of Warrant Shares purchasable under this Warrant (i)
shall be proportionately increased, in case of a split or subdivision of such
class, as of the effective date of such stock split or subdivision, or, if the
Company shall take a record of the holders of its shares for the purpose of so
splitting or subdividing, as at such record date, whichever is earlier, or (ii)
shall be proportionately decreased, in the case of combination of shares of
such class, as at the effective date of such combination or, if the Company
shall take a record of holders of such class for the purpose of so combining,
as at such record date, whichever is earlier, in each case to reflect the
number of Shares of Common Stock outstanding after such event as compared to
the number of such Shares outstanding immediately prior thereto. The adjustment
provisions of this paragraph shall likewise apply with respect to all other
classes of capital stock of the Company for which this Warrant may become
exercisable pursuant to the provisions of Section 2.1 hereof.

2.3. ASSET OR CAPITAL DIVIDEND. If the Company, at any time
while this Warrant is outstanding, shall make a distribution of its assets to
the holders of its Common Stock and/or any class of stock convertible into or
exchangeable for its Common Stock or as a dividend in liquidation or partial
liquidation or as a return of capital other than as a dividend payable out of
funds legally available for dividends under the laws of the Commonwealth of
Pennsylvania, the Warrantholder shall be entitled to receive, in addition to
the number of shares receivable thereupon, and without payment of any
additional consideration therefor, a sum equal to the amount of such assets as
would have been payable to such Warrantholder had such Warrantholder been the
holder of record of such shares on the record date for such distribution; and
an appropriate provision therefor shall be made for the Warrantholder to be
made a party to any such distribution. The adjustment provisions of this
paragraph shall likewise apply with respect to all other classes of capital
stock of the Company for which this Warrant may become exercisable pursuant to
the provisions of Section 2.1 hereof.

2.4. ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION OR RECLASSIFICATION. In the event the Company, at any time or
from time to time while this Warrant is outstanding, (a) shall consolidate with
or merge into any other entity and shall not be the continuing or surviving
corporation of such consolidation or merger, or (b) shall permit any other
entity to

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<PAGE> 7

consolidate with or merge into the Company and the Company shall be the
continuing or surviving entity but, in connection with such consolidation or
merger, the Common Stock shall be changed into or exchanged for capital stock
or other securities or property of any other entity, or (c) shall transfer all
or substantially all of its properties and assets to any other entity, or (d)
shall effect a capital reorganization or reclassification of the Common Stock
(other than one deemed to result in the issue of additional shares of such
class), then, and in each such event, lawful provision shall be made so that
the Warrantholder shall be entitled to receive upon the exercise hereof at any
time after the consummation of such consolidation, merger, transfer,
reorganization or reclassification, in lieu of the shares comprising the shares
issuable upon exercise of this Warrant prior to such consummation, the capital
stock and other securities and property to which the Warrantholder would have
been entitled upon such consummation if the Warrantholder had exercised this
Warrant immediately prior thereto. The adjustment provisions of this paragraph
shall likewise apply with respect to all other classes of capital stock of the
Company for which this Warrant may become exercisable pursuant to the
provisions of Section 2.1 hereof.

2.5 SPECIAL PROVISION UPON REORGANIZATION. Notwithstanding
anything to the contrary contained in this Warrant, the Warrantholder agrees
that if the Company proposes to adopt a plan of reorganization pursuant to
which the Company is to become a wholly-owned subsidiary of a new corporation
(the "Parent Corporation") and all holders of capital stock of the Company are
to receive equity interests in the Parent having substantially identical
preferences, limitations and special rights and in identical proportions to
their existing equity interests in the Company, the Warrantholder shall
surrender this Warrant (or any portion thereof that remains exercisable) and
shall be issued a Warrant of the Parent Corporation on terms similar hereto
(but any with any reference to the Company being changed to a reference to the
Parent Corporation) exercisable for an identical number of shares of Class B
Common Stock (or its equivalent) for which this Warrant (or any portion thereof
that remains exercisable) is then exercisable.

2.6. ADJUSTMENT RULES.

(a) Any adjustments pursuant to this Section 2 shall be
made successively whenever an event referred to herein shall occur.

(b) No adjustment shall be made pursuant to this Section
2 in respect of the issuance from time to time of any securities upon the
exercise of Warrants.

2.7 NOTICE OF ADJUSTMENT. Not less than 10 nor more than 90
days prior to the record date or effective date, as the case may be, of any
action which requires or might require an adjustment or readjustment pursuant
to this Section 2, the Company shall give notice to the Warrantholder of such
event, describing such event in reasonable detail and specifying the record
date or effective date, as the case may be, and, if determinable, the required
adjustment and the computation thereof. If the required adjustment is not
determinable at the time of such notice, the Company shall give notice to the
Warrantholder of such adjustment and computation promptly after such adjustment
becomes determinable.

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<PAGE> 8

2.8 DEFINITION OF FAIR MARKET VALUE. For purposes of this
Section 2, "Fair Market Value" shall mean the fair market value of the shares,
business, property or assets in question, as determined by the Board of
Directors of the Company in good faith; provided, however, that if the Common
Stock as at the time of determination is publicly traded, the Fair Market Value
of the Shares thereof shall be the closing price thereof as of the end of the
last trading day immediately prior to the issuance thereof with respect to
which the Fair Market Value is being determined. Notwithstanding the
foregoing, in the event that shares of Common Stock are issued by the Company
to any officer, director or shareholder of the Company, then the Company shall
give to the Warrantholder notice of the transaction as to which the Fair Market
Value relates and the determination by the Board of the relevant Fair Market
Value, and the Warrantholder may, within five business days thereafter,
challenge such Fair Market Value by giving notice to the Company (and if no
such notice is timely given by the Warrantholder to the Company, such Fair
Market Value shall be deemed to be final, binding and conclusive). In the event
of such timely challenge, an appraisal of the Fair Market Value shall be
effected in accordance with the provisions of Section 7.5 hereof; provided,
however, that the Warrantholder shall appoint the first appraiser and pay the
cost of the appraisal done by such appraiser (with the cost of any other
appraisals divided equally between the Warrantholder and the Company) and it
must appoint its appraiser and have the appraisal completed and delivered to
the Warrantholder within thirty days after it gives the notice of challenge to
the original Fair Market Value and provided further that the Company may, if it
disagrees with the Fair Market Value determined by the appraiser selected by
the Warrantholder, appoint an appraiser to make the second appraisal and
thereafter the other provisions of Section 7.5 shall be applicable. The Fair
Market Value shall then be deemed to be that determined by the appraiser(s)
pursuant to such procedure, unless such value is 95% or more of the Fair Market
Value initially determined by the Company's Board, in which event such latter
Fair Market Value shall control.

3 . NO FRACTIONAL SHARES. No fractional shares shall be issued in
connection with any exercise hereof. In lieu of any fractional shares that
would otherwise be issuable, the Company shall pay cash equal to the product of
such fraction multiplied by the fair market value per share, as determined in
good faith by the Company's Board of Directors, on the date of exercise.

4 . NO SHAREHOLDER RIGHTS. This Warrant shall not entitle the
Warrantholder to any of the rights of a shareholder of the Company.

5 . RESERVATION OF SHARES. The Company covenants that the shares of
Common Stock issuable upon the exercise of this Warrant have been duly
authorized and reserved and, when issued and paid for, will be validly issued,
fully paid and non-assessable. The issuance of this Warrant shall constitute
full authority to those officers of the Company who are charged with the duty
of executing stock certificates to execute and issue the necessary certificates
for shares upon the exercise of this Warrant.

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<PAGE> 9

6 . EXERCISE OF WARRANT.

6.1. MANNER OF EXERCISE. To exercise this Warrant, in whole or
in part, the Warrantholder shall deliver to the Company, at its address
specified in Section 13 below: (a) a written notice in the form of Annex A
hereto of such Warrantholder's election to exercise this Warrant, specifying
the number of shares to be purchased; (b) a wire transfer or a certified or
official bank check or checks payable to the order of the Company in an amount
equal to the product of the Exercise Price per Warrant Share and the number of
Warrant Shares to be purchased at such time pursuant to the Warrant, and (c)
the original copy of this Warrant. At the election of the Warrantholder, the
Company shall make appropriate arrangements to permit Warrantholder to exercise
this Warrant in a "cashless exercise" whereby the Company will accept the
transfer of shares of Common Stock of equal Fair Market Value in lieu of
payment of the Exercise Price. Upon receipt of such items, the Company shall,
as promptly as practicable, and in any event within 20 days thereafter, issue
or cause to be issued and delivered to such Warrantholder a certificate or, if
requested by the Warrantholder, multiple certificates representing the
aggregate number of shares of Common Stock or other capital stock of the
Company issuable upon such exercise, together with cash in lieu of any fraction
of a share, as provided in Section 3 above. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to
have been issued, and such Warrantholder or any other person so designated to
be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date that the notice provided for in Annex
A, together with said cash or check or checks and this Warrant, are received by
the Company as aforesaid. If this Warrant shall have been exercised in part,
the Company shall, at the time of delivery of said certificate or certificates,
deliver to such Warrantholder a new Warrant evidencing the rights of such
Warrantholder to purchase the unpurchased Warrant Shares, or such other
securities, capital stock and/or other property as may become subject to the
right to purchase by the Warrantholder under the terms hereof, which new
Warrant shall in all other respects be identical to this Warrant.

6.2. PAYMENT OF TAXES AND EXPENSES. All shares comprising the
Warrant Shares issuable upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable, and the Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed in respect of, the issue or delivery thereof, other than any federal,
state or local income tax or other tax based upon gross or net income, owed by
the Warrantholder on account of such issuance or delivery. The Company shall
not be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any certificate for shares in any
name other than that of the registered Warrantholder, and in such case the
Company shall not be required to issue or deliver any stock certificate until
such tax or other charge has been paid or it has been established to the
Company's reasonable satisfaction that no such tax or other charge is due.

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<PAGE> 10

7 . PUT OPTION.

7.1. PUT OPTION. Subject to Section 7.4 below, at any time
prior to an IPO and after the fifth anniversary of the date of initial issuance
of this Warrant, or upon the occurrence of a Significant Corporate Event (as
hereinafter defined), the Warrantholder shall be entitled to sell to the
Company, this Warrant at the Put Value (as hereinafter defined) of the Warrant
on that date (the "Put Option"). The "Put Value" shall be the Fair Market Value
of this Warrant as of the date when the Warrantholder gives the Company notice
of its intent to exercise the Put Option. The "Fair Market Value of this
Warrant" shall be determined in accordance with Section 7.5 hereof.

7.2. EXERCISE. The Company shall be required to purchase the
Warrant in whole, as requested by the Warrantholder, upon delivery by the
Warrantholder of (i) written notice evidencing the Warrantholder's irrevocable
offer to sell the Warrant to the Company as provided in Section 7.1, and (ii)
this Warrant, properly assigned or endorsed. The date upon which the Company
receives the items listed in clauses (i) and (ii) above shall be referred to as
the "Put Notice Date"

7.3. SETTLEMENT. Subject to Section 7.4, the Company shall, as
promptly as practicable, and in any event within 120 days after the
determination of the Fair Market Value of the Warrant as provided in Section
7.5 herein, deliver payment in immediately available funds to the Warrantholder
for the Warrant or any part thereof to be sold. The provisions of Section 6.2
herein governing payment of taxes and expenses and Section 3 governing
fractional shares shall apply to the sale of the Warrant to the Company
pursuant to this Put Option.

7.4 LIMITATIONS ON COMPANY'S OBLIGATION TO CONSUMMATE THE PUT.
The Company shall have no obligation to settle with respect to an exercise of
the Put Option if the Board of Directors of the Company determines in good
faith that the Company does not have access to sufficient funds to pay the
Warrantholder the full amount of the Put Value either from (a) cash or cash
equivalents then on hand or (b) proceeds of Company financings that (i) are
available on commercially-reasonable terms and (ii) do not violate, or would
over the passage of time result in such violation of, any then-existing credit
agreement with any bank or other financial institution who has extended credit
to the Company, including without limitation the Credit Agreement.

7.5 DETERMINATION OF PUT VALUE.

The "Fair Market Value of this Warrant" shall mean the fair market
value of this Warrant in a transaction between a willing seller and a willing
buyer with neither being compelled to act. If after a period of thirty (30)
days after the Put Notice Date the Principals and the Company are unable to so
agree, the Fair Market Value of this Warrant shall be determined in accordance
with the following appraisal procedures. The Warrantholder and the Company
shall choose a qualified third party investment bank or appraisal firm with a
national reputation and at least 10 years of experience in the valuation of
business enterprises (an "Appraiser") to appraise the Fair Market Value of the
Warrant and whose determination will be final, binding, and conclusive on the
parties. If the Warrantholder and the Company are unable to agree upon an
Appraiser within twenty (20) days after the Put Notice Date, then not later
than thirty (30)

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<PAGE> 11

days after the Put Notice Date, each party shall select an Appraiser. Each of
such Appraisers shall determine the Fair Market Value of the Warrant. Each
Appraiser shall deliver its written appraisal to the parties within sixty (60)
days following the date of the selection of the appraisers. If the appraisers
agree, the agreed-upon value shall be the Fair Market Value of the Warrant. If
the appraisers do not agree on the Fair Market Value of the Warrant, (A) if the
higher of the two values is not more than 110% of the lower value, the Fair
Market Value of the Warrant shall be the mean of the two values, and (B) if the
higher of the two values is greater than 110% of the lower value, the
Appraisers shall jointly select a third appraisal firm that has not performed
services for either party who independently shall calculate the Fair Market
Value of the Warrant within forty-five (45) days of such selection. The Fair
Market Value of the Warrant determined by the third appraiser will be
arithmetically averaged with the two values determined by the original
Appraisers, and the value farthest from the average of the three will be
disregarded. The Fair Market Value of the Warrant shall be the average of the
two remaining values. The costs of appraisal shall be divided equally between
the Warrantholder and the Company.

7.6 ADJUSTMENT OF PUT VALUE UPON SIGNIFICANT CORPORATE EVENT.

(A) Not less than thirty (30) days prior to the
occurrence of a Significant Corporate Event, the Company shall give to the
Holder written notice, subject to any applicable confidentiality agreements,
laws or regulations, of such Significant Corporate Event, the date same is to
occur and all principal terms thereof, including without limitation the amount
of proceeds to be derived therefrom and the amount to be distributed to the
Company's holders of Common Stock (the "Distributable Amount") in connection
therewith. Each such notice shall state that (i) Company is not contemplating
or planning any other Significant Corporate Event or (ii) the Company is
contemplating or planning another Significant Corporate Event and describing
same to the same extent as that required in the preceding sentence. The Company
shall furnish to the Holder such information concerning each Significant
Corporate Event as the Holder shall reasonably request. A "Significant
Corporate Event" means any Acquisition or Change in Control that is consummated
on or prior to the sixth-month anniversary of the date of a purchase by the
Company of the Warrant pursuant to the Put Option. For purposes hereof:
"Acquisition" means any transaction pursuant to which all or substantially all
of the assets of the Company are sold, transferred or otherwise disposed, or
the Company merges with or into another third party entity or consolidates with
another such entity, or the Company or any Subsidiary of the Company liquidates
or dissolves; and "Change in Control" means any transaction or series of
related transactions in which beneficial ownership of more than fifty-one
percent (51%) of the issued and outstanding shares of capital stock of the
Company or any Subsidiary of the Company are sold, transferred or disposed to
any person or entity other than Advanta Corp., Advanta Partners, L.P. or any
subsidiary, direct or indirect, of either of the foregoing.

(B) In the event that a Significant Corporate Event is
consummated, the amount payable to the Warrantholder under Section 7.3 shall be
increased by the amount, if any, by which (i) that portion of the Distributable
Amount which the Warrantholder would have received from such Significant
Corporate Event if the Put Option had not been exercised and this Warrant had
been exercised, immediately prior to the record date for determining the
shareholders of record of the

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<PAGE> 12

Company entitled to receive consideration for their Shares on account of the
Significant Corporate Event, exceeds (ii) the amount theretofore paid to the
Warrantholder pursuant to Section 7.3 as the Fair Market Value of the Warrant.

(C) The Company shall pay any increased purchase price
payable pursuant to this Section 7.5 in immediately available funds on the date
of the closing of the relevant Significant Corporate Event.

8. REGISTRATION RIGHTS.

8.1. DESCRIPTION OF RIGHTS. If the Company at any time proposes
for any reason to register any of its Common Stock under the Securities Act in
connection with a proposed offering by the Company to the general public, the
Company shall at such time promptly give written notice to the Warrantholder
and all holders of Warrant Shares theretofore purchased upon the exercise
hereof of the Company's intention to do so, and, upon the written request,
given within thirty (30) days after the date of any such notice, of the
Warrantholder or the holders of Warrant Shares theretofore purchased upon the
exercise hereof to register any of the shares purchased or purchasable
hereunder (the "Shares"), the Company shall cause all such Shares the
registration of which has been so requested to be included in the Company's
registration statement under the Securities Act, promptly upon receipt of the
written request of the Warrantholder and/or such holders for such registration.
In no event, however, shall the Company be required to continue with the
registration of shares of its Common Stock if the Board of Directors of the
Company determines that it is no longer in the best interests of the Company to
proceed with the registration. In the event that the proposed registration by
the Company is, in whole or in part, an underwritten public offering of
securities of the Company, and, if the managing underwriter determines and
advises the holders thereof in writing that the inclusion of all Shares and
other Common Stock of the Company entitled to be included in the registration
("Other Registrable Stock") originally covered by a request for registration
would interfere with the successful marketing of such securities, the number of
Shares and shares of Other Registrable Stock that may, in the sole discretion
of the managing underwriter, be included in the registration statement on
behalf of the holders thereof, if any, shall be allocated: first, to the
securities sought to be included by the Company in such registration statement;
and second, to the holders of the Other Registrable Stock and the Warrantholder
in proportion, as nearly as practicable, to the respective number of shares of
Other Registrable Stock and Shares that they had requested to be included in
such registration statement. Notwithstanding anything to the contrary set forth
herein, the Company shall not be obligated to include in any registration
statement any Shares that, in the opinion of counsel satisfactory to the
Company, may be transferred without registration under the Securities Act.

8.2. REGISTRATION PROCEDURE. If and whenever the Company is
under an obligation pursuant to the provisions of this Section 8 to use its
best efforts to effect the registration of any Shares, the Company shall, as
expeditiously as practicable:

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<PAGE> 13

(A) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement under the Securities Act
with respect to such Shares and use its best efforts to cause such registration
statement to become and remain effective;

(B) Prepare and file with the Commission such amendments
and supplements to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all Shares covered by such
registration statement;

(C) Furnish to each seller such number of copies of a
summary prospectus or other prospectus including a preliminary prospectus, and
each amendment and supplement, in conformity with the requirements of the
Securities Act and such other documents as such seller may reasonably request
in order to facilitate the public sale or other disposition of such Shares;

(D) Use its best efforts to register or qualify the
Shares covered by such registration statement under the securities or blue sky
laws of such jurisdictions as each such seller shall reasonably request and do
any and all other acts or things that may be necessary or advisable to enable
such seller to consummate the public sale or other disposition in such
jurisdictions of such Shares;

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

(F) Notify each seller of the Shares covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing and, at the request of any such seller, prepare and furnish to
such seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing.

8.3. EXPENSES. The Company shall pay all expenses of such
registration with respect to any Shares to be included in any registration
statement, including, without limitation, all registration and filing fees,
fees and expenses of complying with securities and blue sky laws, printing
expenses, and fees and disbursements of counsel and accountants, provided,
however, that all underwriting discounts and selling commissions applicable to
the Shares covered by any such registration and all fees and expenses of any
attorneys or other advisors advising the holders of such

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<PAGE> 14

Shares with respect to the sale of such Shares shall be paid by the holders of
such Shares. Such expenses shall be borne by the respective sellers of the
Shares included in such registration in proportion to the respective number of
Shares sold by each of them.

8.4. LOCK-UP. Each holder of Shares agrees not to effect any
public sale or distribution of equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and during the 180-day period beginning on the
effective date of any registration statement relating to an underwritten public
offering effected by the Company (except for the sale of Shares as part of such
underwritten registration), and ending on such date as the managing underwriter
shall specify, but in no event shall such lock-up period end later than 180
days after such effective date.

8.5. COOPERATION WITH THE COMPANY. Each prospective seller of
Shares registered or to be registered under any registration hereunder shall
furnish to the Company such information and execute such documents regarding
the Shares held by such seller and the intended method of disposition thereof
as the Company shall reasonably request and as shall be required in connection
with the action to be taken by the Company.

8.6. INDEMNIFICATION; CONTRIBUTION.

(A) In the event of any registration of any Shares under
the Securities Act pursuant to this Section 8 or registration or qualification
of any Shares under state securities or blue sky laws, the Company shall
indemnify and hold harmless the seller of such Shares, each underwriter of such
Shares, if any, each broker or any other person acting on behalf of such seller
and each other person, if any, who controls any of the foregoing persons,
within the meaning of the Securities Act, against any losses, claims, damages,
expenses or liabilities, joint or several, to which any of the foregoing
persons may become subject under the Securities Act, state securities or blue
sky laws, or otherwise, insofar as such losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any registration statement under which such Shares were registered under the
Securities Act, any preliminary prospectus contained therein, or any amendment
or supplement thereto, or any document incident to registration or
qualification of any Shares under state securities or blue sky laws, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, or any violation by the Company of the Securities Act or
state securities or blue sky laws applicable to the Company and relating to
action or inaction required of the Company in connection with such registration
or qualification under such state securities or blue sky laws; and shall
reimburse each person indemnified hereunder for all legal or other reasonable
expenses reasonably incurred by him or it in connection with investigating or
defending any such loss, claim, damage, expense, liability or action; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, expense or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in said registration statement, said

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<PAGE> 15

preliminary prospectus or said prospectus or said amendment or supplement or
any document incident to registration or qualification of any Shares under
state securities or blue sky laws in reliance upon and in conformity with
written information furnished to the Company through an instrument duly
executed by such seller, underwriter or other person specifically for use in
the preparation thereof.

(B) Before Shares held by any prospective seller shall be
included in any registration pursuant to this Section 8, such prospective
seller and any underwriter acting on its behalf shall have agreed to indemnify
and hold harmless the Company, each director of the Company, each officer of
the Company who shall sign such registration statement and any person who
controls the Company within the meaning of the Securities Act with respect to
any statement or omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereto, or any document incident to registration or qualification
of any Shares under state securities or blue sky laws, if such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by such seller or
underwriter specifically for use in the preparation of such registration
statement, preliminary prospectus, final prospectus or amendment or supplement
or any document incident to registration or qualification of any Shares under
state securities or blue sky laws.

(C) Promptly after receipt by a person indemnified
hereunder of notice of the commencement of any action involving a claim
referred to in either Section 8.6(a) or 8.6(b) hereof, such indemnified person
shall, if a claim in respect thereof is made against an indemnifying person,
give written notice to the latter of the commencement of such action; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 8.6. In case any such action is brought against an indemnified person,
the indemnifying person will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying person similarly notified
to the extent that it may wish; with counsel reasonably satisfactory to such
indemnified person, and after notice from the indemnifying person to such
indemnified person of its election so to assume the defense thereof, the
indemnifying person shall be responsible for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof.
Notwithstanding the above, the indemnified party will have the right to employ
counsel of its own choice in any such action or proceeding if the indemnified
party has reasonably concluded that there may be defenses available to it that
are different from or additional to those of the indemnifying party, or counsel
to the indemnified party is of the opinion that it would not be desirable for
the same counsel to represent both the indemnifying party and the indemnified
party because such representation might result in a conflict of interest (in
either of which cases the indemnifying party will not have the right to assume
the defense of any such action or proceeding on behalf of the indemnified party
or parties, and such legal and other expenses will be borne by the indemnifying
party). An indemnifying party will not be liable to any indemnified party for
any settlement of any such action or proceeding effected without the consent of
such indemnifying party.

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<PAGE> 16

(D) If the indemnification provided for in this Section 8
shall be unavailable under applicable law to an indemnified party in respect of
any losses, claims, damages, expenses or liabilities referred to therein, then
each applicable party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, expenses or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and of the holders of Shares on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, expenses, or liabilities as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
of the holders of Shares on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Company or by the holders of Shares and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result
of the losses, claims, damages, expenses and liabilities referred to above
shall be deemed to include, subject to the limitations set forth above, any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.

9. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, upon surrender and cancellation of such Warrant, the Company, at
the expense of the Warrantholder, will execute and deliver, in lieu thereof, a
new Warrant.

10. TRANSFER OF WARRANT. Until the occurrence of an IPO this Warrant
shall not be transferable except to an affiliate of Chemical Bank who is an
"accredited investor", as that term is defined in Regulation D under the
Securities Act of 1933, as amended, and subject to the conditions stated in
clauses (a) and (b) of the third sentence of this Section 10. Notwithstanding
the foregoing, the economic rights arising from this Warrant (but not any other
rights, including, without limitation, any rights referred to by Sections 6, 7
or 8 hereof), may be transferred to affiliates of the Warrantholder and one or
more of the lenders who become party to the Credit Agreement at the time of the
initial syndication of the loans thereunder by Chemical Bank; provided that
each such transferee is an "accredited investor", as that term is defined in
Regulation D under the Securities Act of 1933, as amended. After the occurrence
of an IPO, this Warrant and all rights hereunder are transferable upon
surrender of this Warrant properly endorsed; provided that: (a) such transfer
must be effected in accordance with applicable securities laws, and (b) the
Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of the transferee and the number of
shares that the transferee is entitled to purchase upon exercise. Upon such
surrender, the Company, at the expense of the transferee or transferor hereof,
as the transferee and transferor may decide between themselves, shall issue and
deliver to, on the order of the transferee, a new Warrant in the name of such
transferee or as such transferee (on payment by such

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<PAGE> 17

transferee of any applicable transfer taxes) may direct, calling in the
aggregate on the face thereof for the number of shares called for on the face
of the Warrant surrendered.

11. MISCELLANEOUS. This Warrant shall be governed by the laws of the
Commonwealth of Pennsylvania. The headings in this Warrant are for purposes of
convenience and reference only and shall not be deemed to constitute a part
hereof. Neither this Warrant nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the Company and the registered Warrantholder. The invalidity or unenforcability
of any provision hereof shall in no way affect the validity or enforceability
of any other provision.

12. DELIVERY OF FINANCIAL STATEMENTS. To the extent that the Credit
Agreement has been terminated, the Warrantholder shall nonetheless be entitled
to continue to receive from the Company, as long as this Warrant is
outstanding, all annual and quarterly financial statements of the Company and
all reports filed by the Company with the Securities and Exchange Commission,
which would be required to be delivered by the Company to the Lenders under the
Credit Agreement if the Credit Agreement had continued.

13. NOTICE GENERALLY. Any notice, demand or delivery pursuant to the
provisions hereof shall be sufficiently given or made if sent by registered or
certified mail, postage prepaid, or overnight delivery service, addressed to
the Warrantholder at such Warrantholder's last known address appearing on the
books of the Company, or, except as herein otherwise expressly provided, to the
Company at RMH Sales and Marketing Consulting, Inc., 40 Morris Avenue, Bryn
Mawr, PA 19010, Attention: Chief Financial Officer with an additional copy to
Advanta Partners L.P., Five Horsham Business Center, 300 Welsh Road, Horsham,
PA 19044, Attention: Anthony P. Brenner, Senior Managing Director, or such
other address as shall have been furnished to the party giving or making such
notice, demand or delivery.

ISSUED THIS 24th day of May, 1996.

(SEAL) RMH SALES AND MARKETING CONSULTING, INC.

Attest:

/s/ /s/ MarySue Lucci Hansell
_______________________ By:_____________________________________
Secretary Title: President

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<PAGE> 18

ANNEX A

NOTICE OF EXERCISE

(To be Executed by
the Registered Warrantholder
in Order to Exercise the Warrant)

The undersigned hereby irrevocably elects to exercise the right to
purchase from RMH Sales and Marketing Consulting, Inc.________________________
(____________) Warrant Shares covered by the Warrant dated ______________,1996
and issued to__________________, according to the conditions thereof.

Payment is hereby tendered in the form of $________________________ by
wire transfer or by certified or bank check.

The undersigned understands that the shares being issued hereunder
have not been registered under the Securities Act of 1933 (the "Act") or any
state securities laws and that such shares may not be sold, transferred, or
assigned except: (i) pursuant to an effective registration thereof under the
Act; or (ii) if in the opinion of counsel for the registered owner thereof,
which opinion is reasonably satisfactory to the Company, the proposed sale,
transfer or assignment may be effected without such registration under the Act
and will not be in violation of applicable state securities laws.

Printed Name
of Registered
Dated:_______________ Warrantholder:_______________________

Signature:___________________________

Address:_____________________________

_____________________________

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<PAGE> 1
EXHIBIT 10.6

MANAGEMENT FEE AGREEMENT

THIS MANAGEMENT FEE AGREEMENT (this "Agreement"), effective as of
May 24, 1996, is entered into by and between ADVANTA PARTNERS LP, a Pennsylvania
limited partnership ("AP"), and RMH SALES & MARKETING CONSULTING, INC., a
Pennsylvania corporation ("RMH").

RECITALS

WHEREAS, AP owns a substantial portion of the capital stock of RMH;

WHEREAS, AP desires to offer RMH the ability to obtain certain
management support services that AP is able to provide to its portfolio
companies in a cost effective manner; and

WHEREAS, RMH may, from time to time, desire to obtain some or all of
such services from AP, as the management of RMH deems appropriate; and

NOW, THEREFORE, in consideration of the foregoing recitals and the
terms and conditions stated below, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, AP and RMH,
intending to be legally bound, agree as follows:

SECTION 1: MANAGEMENT SUPPORT SERVICES TO BE PERFORMED BY AP FOR RMH.

In consideration of the fees set forth in Section 2, AP agrees to
perform the following services for RMH, upon RMH's request:

Provide technical and management assistance to RMH, including (i)
causing representatives of AP to perform duties as board members and officers of
RMH without separate compensation therefor; and (ii) providing guidance and
advice on such subjects as strategic direction; budgeting; recruiting;
financing; and establishing a management compensation system.

SECTION 2: FEES

RMH shall pay an annual fee of $100,000 to AP for the services
provided pursuant to this Agreement. Such fee shall be paid in quarterly
installments in arrears with the first $25,000 installment being due and payable
on June 30, 1996 (pro-rated for the first partial calendar quarter); provided,
however, that no such installment or installments shall be paid if an Event of
Default as defined in that certain Credit Agreement of even date herewith
between RMH and Chemical Bank, or Agent, shall have occurred and be continuing;
provided, further,

<PAGE> 2
that if such Event of Default is subsequently cured, all such fees which were
not paid by reason of the first proviso herein may be paid on the next
intallment date or dates to the extent such payment would not cause an Event of
Default.

SECTION 3: EXTRAORDINARY SERVICES.

In the event AP is required to perform any extraordinary services,
including without limitation investment banking services, or undertake an
extraordinary project in carrying out those services contemplated in Section 1,
AP and RMH shall, in good faith, negotiate an additional fee which shall be paid
to AP by RMH, and in the event the parties are unable to agree upon the amount
of such extra fee, AP shall not be obligated to perform such extraordinary
services.

SECTION 4: OUT-OF-POCKET EXPENSES

All reasonable and necessary out-of-pocket expenses incurred by AP
in carrying out its foregoing obligations under Section 2 shall be reimbursed by
RMH promptly upon demand by AP.

SECTION 5: AP'S PERFORMANCE STANDARD.

AP shall perform all of its obligations set forth in Section 2 with
all due care, in a commercially reasonable manner, and in a manner consistent
with its own administrative practices and standards or the standards prevailing
in the telemarketing industry, whichever standard of conduct is more stringent.

SECTION 6: COMPLIANCE WITH LAW.

Each party represents, warrants and covenants to the other party
that all of its practices and acts in connection with this Agreement are and at
all times will be in compliance with all applicable federal, state and local
laws, statutes, rules and regulations.

SECTION 7: LIABILITY.

(a) Indemnification. RMH agrees to indemnify and hold AP
harmless from all claims and liabilities (including attorney's fees) incurred or
assessed against it in connection with the performance of services, except such
as may arise from AP's own negligent action, negligent failure to act, willful
misconduct or willful violation of applicable law.

(b) No Personal Liability. No liability shall attain in
favor of one party to this Agreement against any officer, director or employee
of the other party. The party attaining such liability agrees to look solely to
the assets of the other party for satisfaction.

<PAGE> 3
SECTION 8: TERM.

This Agreement shall extend for a term of five years from the date
first set forth above and shall be automatically renewed for additional one-year
periods unless written notice of termination is given by either party to the
other at least 45 days prior to the end of any such period or subsequent renewal
period.

SECTION 9: INDEPENDENT CONTRACTOR STATUS OF AP.

The relationship of AP to RMH is that of independent contractor.
Nothing herein shall be construed as constituting a partnership, joint venture
or agency between AP and RMH.

SECTION 10: CONFIDENTIALITY.

It is understood between the parties hereto that during the term of
this Agreement, each of the parties may be dealing with confidential information
and processes which are the other party's property, used in the course of its
respective business. Each of the parties agrees that it will not intentionally
disclose any such confidential information to anyone, directly or indirectly,
without the prior consent of the other party.

SECTION 11: MISCELLANEOUS.

(a) No Assignment. This Agreement may not be assigned by
either party without the prior written consent of the other party, which,
because of the nature of the parties' respective obligations hereunder, may be
declined by such party for any reason or no reason.

(b) Notices. Any notice or other communication required or
permitted to be given under this Agreement must be in writing and will be deemed
effective when delivered in person or sent by facsimile, cable, telegram or
telex, or by overnight courier or registered or certified mail, postage prepaid,
return receipt requested, to the following addresses:

If to Advanta Partners LP:
Advanta Partners LP
Five Horsham Business Center
300 Welsh Road
Horsham, PA 19044
Attention: Anthony P. Brenner
Telephone: (215) 830-6450
Telecopier: (215) 830-6499
<PAGE> 4
If to RMH Sales and Marketing Consulting, Inc.
RMH Sales and Marketing Consulting, Inc.
40 Morris Avenue
Bryn Mawr, PA 19010
Attention: Raymond J. Hansell
Telephone: (610) 520-5300
Telecopier: (610) 520-5354

(c) Amendment. This Agreement may be amended, and the
observance of any term hereof may be waived (either prospectively or
retroactively and either generally or in a particular instance) only by a
written document signed by authorized representatives of the parties hereto.

(d) Choice of Law. This Agreement will be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania. Any
and all legal actions brought by one party against the other shall be brought in
the state or federal courts of the Commonwealth of Pennsylvania.

(e) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes any and all prior oral or
written understandings and agreements between the parties regarding the subject
matter addressed in this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered, effective as of the date specified at the
beginning hereof.

ADVANTA PARTNERS LP RMH SALES AND MARKETING CONSULTING, INC.
By AP Capital, Inc., general partner

By: /s/ Mitchell L. Hollin By: /s/ MarySue Lucci Hansell
--------------------------------- -------------------------------------
Name: Mitchell L. Hollin Name: MarySue Lucci Hansell
Title: Vice-President Title: President

<PAGE> 1

EXHIBIT 10.7

======================================

CREDIT AGREEMENT

Dated as of May 24, 1996

Among

RMH SALES AND MARKETING CONSULTING, INC.,

THE GUARANTORS NAMED HEREIN,

THE LENDERS NAMED HEREIN,

and

CHEMICAL BANK, AS AGENT

======================================

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
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<S> <C> <C>
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

II. THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.01. Term Loan Commitments and Revolving Credit
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.03. Notice of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.04. Notes; Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.05. Interest on Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.06. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.07. Termination and Reduction of Revolving Credit
Commitments and Term Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.08. Interest on Overdue Amounts; Alternate Rate of
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.09. Prepayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.10. Reserve Requirements; Change in Circumstances . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 2.11. Change in Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.12. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.13. Pro Rata Treatment; Assumption by and Delegation
of Authority to the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 2.14. Sharing of Setoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 2.16. Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 2.17. Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 2.18. Payment of Letters of Credit; Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.19. Agent's Actions with respect to Letters of Credit . . . . . . . . . . . . . . . . . . . . . 47
SECTION 2.20. Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

III. COLLATERAL SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 3.01. Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 3.02. Filing and Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.01. Organization, Legal Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.02. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 4.03. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.04. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.05. Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

</TABLE>

i
<PAGE> 3

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 4.06. Litigation; Compliance with Laws; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 4.07. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 4.08. Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.10. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.11. No Material Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.12. Investment Company Act; Public Utility Holding
Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.13. Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.14. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.15. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 4.17. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 4.18. Permits, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.19. Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.20. No Change in Credit Criteria or Collection Policies . . . . . . . . . . . . . . . . . . . . 57
SECTION 4.21. Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

V. CONDITIONS OF CREDIT EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 5.01. All Credit Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 5.02. First Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

VI. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.01. Legal Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.02. Businesses and Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 6.03. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.04. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 6.05. Financial Statements, Reports, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 6.06. Litigation and Other Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.07. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.09. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.10. Fiscal Year-End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.11. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.12. Additional Grantors and Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.13. Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.14. Pay Obligations to Lenders and Perform Other
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 6.15. Maintain Operating Accounts and Cash Management
Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.16. Purchase Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

</TABLE>

<PAGE> 4

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 6.17. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.18. Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.19. Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

VII. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7.01. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.02. Sale and Lease-Back Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 7.03. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 7.04. Dividends, Distributions and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 7.05. Consolidations, Mergers and Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 7.06. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 7.07. Capital Expenditures and Permitted Acquisitions . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 7.08. Debt Service Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 7.09. Total Senior Funded Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 7.10. Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.11. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.12. Sales of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.13. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.14. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 7.15. Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 7.16. Prepayment or Modification of Indebtedness;
Modification of Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 7.17. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 7.18. Consulting Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 7.19. Negative Pledges, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

VIII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

IX. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND
OTHER COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 10.01. Collection of Receivables; Management of Collateral . . . . . . . . . . . . . . . . . . . . 89
SECTION 10.02. Receivables Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 10.03. Status of Receivables and Other Collateral . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 10.04. Monthly Statement of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 10.05. Collateral Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

XI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 11.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 11.02. Survival of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 11.03. Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 11.04. Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

</TABLE>

iii

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<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
SECTION 11.05. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 11.06. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 11.07. Payments on Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SECTION 11.08. Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
SECTION 11.09. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc. . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 11.11. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 11.12. Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 11.13. Counterparts; Facsimile Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
SECTION 11.14. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

XII. GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

</TABLE>

<PAGE> 6

<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
EXHIBIT A Form of Term Note
EXHIBIT A-1 Form of Term Note Evidencing Acquisition
Term Loan
EXHIBIT B Form of Revolving Credit Note
EXHIBIT C Form of Opinion of Counsel
EXHIBIT D Form of Pledge Agreement
EXHIBIT E Form of Security Agreement
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G [Intentionally Omitted
EXHIBIT H Form of Assignment of Life Insurance
EXHIBIT I Form of Assignment of Contract
EXHIBIT J Form of Holdings Guarantee

SCHEDULES

SCHEDULE 2.01(a) Term Loan Commitments
SCHEDULE 2.01(b) Revolving Credit Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 2.20 Letter of Credit Fees
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.05 Material Adverse Change
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.06(b) Compliance with Laws
SCHEDULE 4.15 Subsidiaries
SCHEDULE 4.19 Environmental Law Compliance
SCHEDULE 6.05(g) Inventory Designations
SCHEDULE 6.05(k) Borrowing Base Certificate
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
SCHEDULE 7.06 Permitted Acquisitions
SCHEDULE 7.08 Addbacks

</TABLE>

<PAGE> 7

CREDIT AGREEMENT dated as of May 24, 1996, among RMH SALES AND
MARKETING CONSULTING, INC., a Pennsylvania corporation (the
"Borrower"), the Guarantors named herein and signatories
hereto, the lenders named in Schedules 2.01(a) and 2.01(b)
annexed hereto (collectively, the "Lenders"), and CHEMICAL
BANK, as agent for the Lenders (in such capacity, the "Agent").

The Borrower has applied to the Lenders for Loans (such term
and all other capitalized terms used in this paragraph having the respective
meanings ascribed to such terms above or hereinafter) up to an aggregate
principal amount of $20,000,000 in the form of (a) a Term Loan to the Borrower
in an aggregate principal amount not in excess of $14,000,000 outstanding and
(b) Revolving Credit Loans to the Borrower at any time and from time to time
prior to the Revolving Credit Termination Date in an aggregate principal amount
not in excess of $6,000,000 at any time outstanding. The proceeds of the Term
Loan and, in part, the Revolving Credit Loans shall be used to consummate the
Recapitalization pursuant to the Recapitalization Agreement and related
transaction costs. The proceeds of the Revolving Credit Loans shall also be
used for working capital purposes, capital expenditures and Permitted
Acquisitions. The Grantors will provide Collateral in accordance with the
provisions of this Agreement and the Security Documents. The Lenders are
severally, and not jointly, willing to extend such Loans to the Borrower
subject to the terms and conditions hereinafter set forth. Accordingly, the
Borrower, the Guarantors, the Lenders and the Agent hereby agree as follows:

I. DEFINITIONS

SECTION 1.01. Certain Defined Terms. For purposes hereof,
the following terms shall have the meanings specified below:

"Acquisition Term Loan" shall have the meaning assigned to
such term in Section 2.01(b) hereof.

"Adjusted Net Cash Flow" shall mean Net Cash Flow plus the
change (expressed as a negative number in the event of an increase or a
positive number in the event of a decrease), if any, in the excess of current
assets (excluding cash and cash equivalents) as of the end of the applicable
period over current liabilities (excluding the current portion of long-term
Indebtedness) as of the end of such period as compared with the beginning of
such period. For
<PAGE> 8

purposes hereof, in calculating capital expenditures for any applicable period
amounts committed for in the fourth fiscal quarter of such period and made in
the first fiscal quarter of the following period shall be counted in the
earlier period but to the extent so counted shall not be deemed capital
expenditures in such subsequent period.

"Adjusted LIBO Rate" shall mean, with respect to any
Eurodollar Loan for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the product of (i) the
LIBO Rate in effect for such Interest Period and (ii) Statutory Reserves. For
purposes hereof, "Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the applicable reserve percentages
(including, without limitation, any marginal, special, emergency, or
supplemental reserves) expressed as a decimal established by the Board and any
other banking authority to which a member bank of the Federal Reserve System is
subject with respect to the Adjusted LIBO Rate for Eurocurrency Liabilities (as
defined in Regulation D). Such reserve percentages shall include, without
limitation, those imposed under Regulation D. Eurodollar Loans shall be deemed
to constitute Eurocurrency Liabilities and as such shall be deemed to be
subject to such reserve requirements without benefit of or credit for
proration, exceptions or offsets which may be available from time to time to
any Lender under Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

"Affiliate" of any person shall mean any other person which,
directly or indirectly, controls or is controlled by or is under common control
with such person and, without limiting the generality of the foregoing,
includes (i) any person which beneficially owns or holds 10% or more of any
class of voting securities of such person or 10% or more of the equity interest
in such person, (ii) any person of which such person beneficially owns or holds
10% or more of any class of voting securities or in which such person
beneficially owns or holds 10% or more of the equity interest in such person
and (iii) any director, officer or employee of such person. For the purposes of
this definition, the term "control" (including, with correlative meanings, the
terms "controlled by" and "under common control with"), as used with respect to
any person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities or by contract or otherwise.

<PAGE> 9

"Agent" shall have the meaning assigned to such term in the
preamble to this Agreement.

"Alternate Base Loan" shall mean a Loan based on the Alternate
Base Rate in accordance with Article II hereof.

"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1%, and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Agent at its principal office
in New York City as its prime rate in effect at such time. "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and
(ii) Statutory Reserves and (b) the Assessment Rate. "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such
day shall not be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day or
such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Agent from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it. "Statutory Reserves" as
used herein shall mean a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus
the maximum reserve percentage (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal, established by the Board and any
other banking authority to which the Agent is subject with respect to the Base
CD Rate, for new negotiable nonpersonal time deposits in dollars of over
$100,000 with maturities approximately equal to three months. Statutory
Reserves shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage. "Assessment Rate" shall mean the annual
assessment rate (net of refunds and rounded upwards, if necessary, to the next
1/16 of 1%) estimated by the Agent (in good faith, but in no event in excess of
statutory or regulatory maximums) to be payable by the Agent to the Federal
Deposit Insurance Corporation (or any successor) for insurance by such
Corporation (or such

<PAGE> 10

successor) of time deposits made in dollars at the Agent's domestic offices
during the current calendar year. "Federal Funds Effective Rate" shall mean,
for any day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for the day of such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate,
or both, for any reason, including, the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or
the Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate, respectively.

"Applicable Lending Office" shall mean, with respect to each
Lender, such Lender's Domestic Lending Office in the case of an Alternate Base
Loan and such Lender's Eurodollar Lending Office in the case of a Eurodollar
Loan.

"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee and accepted by the Agent,
in substantially the form of Exhibit F annexed hereto.

"Assignment of Contract" shall mean the Assignment of
Contract, dated as of the date hereof, between the Grantors and the Agent, for
its own benefit and for the benefit of the Lenders, substantially in the form
of Exhibit I annexed hereto, as amended, modified or supplemented from time to
time.

"Assignment of Life Insurance" shall mean the Assignment of
Life Insurance dated as of the date hereof, between the Borrower and the Agent,
for its own benefit and for the benefit of the Lenders, substantially in the
form of Exhibit I annexed hereto, as amended, modified or supplemented from
time to time.

<PAGE> 11

"Availability" shall mean at any time (i) the lesser at such
time of (x) the Total Revolving Credit Commitment and (y) the Borrowing Base,
minus (ii) the sum at such time of (x) the unpaid principal balance of the
Revolving Credit Loans, together with all reserves established pursuant to this
Agreement including, without limitation, Sections 2.01 and 7.01(c) hereof and
(y) the Letter of Credit Usage.

"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.

"Borrower" shall have the meaning assigned to such term in the
preamble to this Agreement.

"Borrowing Base" shall have the meaning assigned to such term
in Section 2.01(b) hereof.

"Business Day" shall mean any day, other than a Saturday,
Sunday or legal holiday in the State of New York, on which banks are open for
substantially all their banking business in New York City except that, if any
determination of a "Business Day" shall relate to a Eurodollar Loan, the term
"Business Day" shall in addition exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.

"Capitalized Lease Obligation" shall mean an obligation to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real and/or personal property which obligation is required to be
classified and accounted for as a capital lease on a balance sheet prepared in
accordance with GAAP, and for purposes hereof the amount of such obligation
shall be the capitalized amount thereof determined in accordance with GAAP.

"Cash Interest Expense" shall mean, with respect to any person
for any period, the Interest Expense of such person for such period less all
non-cash items constituting Interest Expense during such period (including,
without limitation, amortization of debt discounts and payments of interest on
Indebtedness by issuance of Indebtedness).

"Change of Control" shall mean (i) at any time prior to the
initial public offering of Borrower or Holdings in compliance with Section
2.09(d) hereof Investor Group shall cease to own stock of the Borrower
entitling it, at the time a determination is made hereunder, to cast the votes
required to elect a majority of members of the Board of Directors of Borrower,
or at such time as the shares of

<PAGE> 12

Borrower are dividended or otherwise transferred to Holdings, then Holdings and
(ii) after the establishment of Holdings if Holdings shall own less than 100%
of the equity interests in the Borrower.

"Closing Date" shall mean the date of the first borrowing
under this Agreement, but in no event later than June 15, 1996.

"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.

"Collateral" shall mean all collateral and security as
described in the Security Documents.

"Commitment" shall mean, with respect to each Lender, the sum
of the Term Loan Commitment of such Lender as set forth in Schedule 2.01(a),
and the Revolving Credit Commitment of such Lender as set forth in Schedule
2.01(b), as each may be adjusted from time to time pursuant to this Agreement
including, without limitation, Section 2.07 hereof.

"Consolidated" shall mean, in respect of any person, as
applied to any financial or accounting term, such term determined on a
consolidated basis in accordance with GAAP (except as otherwise required
herein) for the person and all consolidated subsidiaries thereof.

"Contaminant" shall mean all Hazardous Materials and all those
substances which are regulated by or form the basis of liability under Federal,
state or local environmental, health and safety statutes or regulations, or any
other material or substance which constitutes a material health, safety or
environmental hazard to any person or property.

"Conversion Date" shall have the meaning assigned to such term
in Section 2.01(b) hereof.

"Credit Event" shall mean each borrowing and the issuance of
each Letter of Credit hereunder.

"Credits" shall mean each of the Loans made and Letters of
Credit opened hereunder.

"Customer" shall mean and include the account debtor or
obligor with respect to any Receivable.

<PAGE> 13

"Debt Service Coverage Ratio" shall mean, with respect to any
person for any period, the ratio of (i) Net Cash Flow to (ii) the aggregate
Debt Service Expense of such person for such period.

"Debt Service Expense" shall mean, with respect to any person
for any period, the aggregate of regularly scheduled principal payments of all
long-term Indebtedness (including, without limitation, Subordinated
Indebtedness but excluding any payment of Revolving Credit Loans) made or to be
made by such person during such period on a Consolidated basis in accordance
with GAAP.

"Default" shall mean any condition, act or event which, with
notice or lapse of time or both, would constitute an Event of Default.

"dollars" or the symbol "$" shall mean dollars in lawful
currency of the United States of America.

"Domestic Lending Office" shall mean, with respect to any
Lender, the office of such Lender specified as its "Domestic Lending Office"
opposite its name in Schedule 2.02 annexed hereto, or such other office of such
Lender as such Lender may from time to time specify to the Borrower and the
Agent.

"EBITDA" shall mean with respect to any person for any period
the sum of (i) Net Income, (ii) Interest Expense, (iii) depreciation and
amortization of intangible assets and all other non-cash items properly
deducted in determining Net Income (but less non-cash items properly added in
determining Net Income), including, without limitation, any management fees to
Advanta Partners LP which are accrued but not paid in cash within thirty days
of expensing such fees (but less any such fees when paid that are not included
in Borrower's income statement for such period) and (iv) federal, state and
local income taxes, in each case of such person for such period, computed and
calculated in accordance with GAAP.

"Eligible Receivables" shall mean Receivables created by the
Borrower in the ordinary course of business arising out of the sale or lease of
goods or rendition of services by the Borrower, which are and at all times
shall continue to be acceptable to the Agent in all respects. Standards of
eligibility may be fixed and revised from time to time solely by the Agent in
the Agent's reasonable discretion. In general, without limiting the foregoing,
a Receivable shall in no event be deemed to be an Eligible Receivable unless:
(a) all payments due on the Receivable have been invoiced and the underlying
goods shipped or services performed, as the case may be; (b) the payment due on
the

<PAGE> 14

Receivable is not more than 90 days past the invoice date; (c) the payments due
on more than 50% of all Receivables from the same Customer are less than 90
days past the invoice date; (d) the Receivable arose from a completed and bona
fide transaction (and with respect to a sale of goods, a transaction in which
title has passed to the Customer) which requires no further act under any
circumstances on the part of the Borrower in order to cause such Receivable to
be payable in full by the Customer; (e) the Receivable is in full conformity
with the representations and warranties made by the Borrower to the Agent and
the Lenders with respect thereto and is free and clear of all security
interests and Liens of any nature whatsoever other than any security interest
deemed to be held by the Borrower or any security interest created pursuant to
the Security Documents or permitted by Section 7.01 hereof; (f) the Receivable
constitutes an "account" or "chattel paper" within the meaning of the Uniform
Commercial Code of the state in which the Receivable is located; (g) the
Customer has not asserted that the Receivable, and the Borrower is not aware
that the Receivable, arises out of a bill and hold, consignment or progress
billing arrangement or is subject to any setoff, contras, net-out contract,
offset, deduction, dispute, credit, counterclaim or other defense arising out
of the transactions represented by the Receivables or independently thereof and
the Customer has finally accepted the goods from the sale out of which the
Receivable arose and has not objected to its liability thereon or returned,
rejected or repossessed any of such goods, except for complaints made or goods
returned in the ordinary course of business for which, in the case of goods
returned, goods of equal or greater value have been shipped in return; (h) the
Receivable arose in the ordinary course of business of the Borrower; (i) the
Customer is not (x) the United States government or the government of any state
or political subdivision thereof or therein, or any agency or department of any
thereof or (y) an Affiliate (other than Advanta Corporation and its
subsidiaries and Colonial National Bank) of the Borrower or any subsidiary of
any thereof; (j) the Customer is a United States person or an obligor in the
United States; (k) the Receivable complies with all material requirements of
all applicable laws and regulations, whether Federal, state or local
(including, without limitation, usury laws and laws, rules and regulations
relating to truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy); (l) to the
knowledge of the Borrower, the Receivable is in full force and effect and
constitutes a legal, valid and binding obligation of the Customer enforceable
in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and by general equity
principles; (m) the Receivable is denominated in and provides for payment by
the Customer in dollars; (n) the Receivable has not been and is not required to
be charged off or written off as uncollectible in accordance with

<PAGE> 15

GAAP or the customary business practices of the Borrower; (o) the Agent on
behalf of the Lenders possesses a valid, perfected first priority security
interest in such Receivable as security for payment of the Obligations; and (p)
the Agent is satisfied with the credit standing of the Customer in relation to
the amount of credit extended. Notwithstanding the foregoing, all Receivables
of any single Customer (other than JC Penney Life Insurance Company or any
other person agreed to by the Required Lenders) which, in the aggregate, exceed
25% (or 40% in the case of AT&T and its subsidiaries and 40% in the case of
Advanta Corporation and its subsidiaries) of the total Eligible Receivables at
the time of any such determination shall be deemed not to be Eligible
Receivables to the extent of such excess.

"Environmental Claim" shall mean any written notice of
violation, claim, demand, abatement or other order by any governmental authority
or any person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or deed or use restrictions, resulting from or based upon (i)
the existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden, accidental or nonaccidental Releases),
of, or exposure to, any Contaminant at, in, by or from any of the properties of
the Borrower or its subsidiaries, (ii) the environmental aspects of the
transportation, storage, treatment or disposal of Contaminants in connection
with the operation of any of the properties of the Borrower or its subsidiaries
or (iii) the violation, or alleged violation by the Borrower or any of its
subsidiaries, of any statutes, ordinances, orders, rules, regulations, Permits
or licenses of or from any governmental authority, agency or court relating to
environmental matters connected with any of the properties of the Borrower or
its subsidiaries, under any applicable Environmental Law.

"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601
et seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), the Oil Pollution Act of 1990 (33 U.S.C. Section 2701 et. seq.), the
Safe Drinking Water Act (42 U.S.C. Section 300f, et seq.), the Clear Air Act
(42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act, as amended
(15 U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Occupational Safety
and Health Act (29 U.S.C. Section 651 et seq.), as such laws have been and
hereafter may be amended or supplemented, and any related or analogous present
or future

<PAGE> 16

Federal, state or local, statutes, rules, regulations, ordinances, licenses,
permits and interpretations and orders of regulatory and administrative bodies.

"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated thereunder, as
in effect from time to time.

"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) which together with the Borrower or any of its subsidiaries
would be treated as a single employer under the provisions of Title I or Title
IV of ERISA.

"Eurodollar Lending Office" shall mean, with respect to any
Lender, the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name in Schedule 2.03 annexed hereto (or, if no such office is
specified, its Domestic Lending Office), or such other office of such Lender as
such Lender may from time to time specify to the Borrower and the Agent.

"Eurodollar Loan" shall mean a Loan based on the Adjusted LIBO
Rate in accordance with Article II hereof.

"Event of Default" shall have the meaning assigned to such
term in Article VIII hereof.

"Excess Cash Flow" shall mean, with respect to any person for
any period, the amount, if any, by which Adjusted Net Cash Flow of such person
and its subsidiaries on a Consolidated basis for such period exceeds the sum
(a) of the Debt Service Expense of such person and its subsidiaries on a
Consolidated basis for such period plus (b) the aggregate amount of all
optional prepayments, if any, made with respect to the Term Loans pursuant to
Section 2.09(a) hereof, during such period.

"Final Maturity Date" shall mean June 30, 2002.

"Financial Officer" shall mean, with respect to any person,
the chief financial officer of such person.

"Fiscal Year" shall mean the fiscal year of the Borrower for
accounting purposes which ends on September 30 of each year.

"GAAP" shall have the meaning assigned to such term in Section
1.02 hereof.

<PAGE> 17

"Grantor" shall mean any Grantor, Pledgor or Debtor, as such
terms are as defined in any of the Security Documents.

"Guarantee" shall mean any obligation, contingent or
otherwise, of any person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or obligation of any other person in any manner,
whether directly or indirectly, and shall in any event include the Holdings
Guarantee, and shall include, without limitation, any obligation of such
person, direct or indirect, to (i) purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or obligation or to purchase
(or to advance or supply funds for the purchase of) any security for the
payment of such Indebtedness or obligation, (ii) purchase property, securities
or services for the purpose of assuring the owner of such Indebtedness or
obligation of the payment of such Indebtedness or obligation, or (iii) maintain
working capital, equity capital, available cash or other financial condition of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness or obligation; provided, however, that the term Guarantee shall
not include endorsements for collection or collections for deposit, in either
case in the ordinary course of business.

"Guarantor" shall mean any subsidiary of the Borrower on the
date hereof or which becomes a guarantor of the Obligations after the date
hereof and Holdings from and after the date of its existence.

"Hazardous Material" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance or
material, defined or regulated as such in (or for purposes of) any
Environmental Law and any other toxic, reactive, or flammable chemicals,
including (without limitation) any asbestos, any petroleum (including crude oil
or any fraction), any radioactive substance and any polychlorinated biphenyls;
provided, in the event that any Environmental Law is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply
subsequent to the effective date of such amendment; and provided, further, to
the extent that the applicable laws of any state establish a meaning for
"hazardous material," "hazardous substance," "hazardous waste," "solid waste"
or "toxic substance" which is broader than that specified in any Federal
Environmental Law, such broader meaning shall apply.

"Holdings" shall mean a corporation hereafter established as
the parent of the Borrower and which has complied with Section 6.12 hereof.

<PAGE> 18

"Indebtedness" shall mean, with respect to any person, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, including, without limitation, Subordinated Indebtedness,
(b) all obligations of such person evidenced by bonds, debentures, notes or
other similar instruments or upon which interest charges are customarily paid,
(c) all obligations of such person for the deferred purchase price of property
or services, except current accounts payable arising in the ordinary course of
business and not overdue beyond such period as is commercially reasonable for
such person's business, (d) all obligations of such person under conditional
sale or other title retention agreements relating to property purchased by such
person and all Capitalized Lease Obligations, (e) all payment obligations of
such person with respect to interest rate or currency protection agreements,
including, without limitation, the Rate Agreements, (f) all obligations of such
person as an account party under any letter of credit or in respect of bankers'
acceptances, (g) all obligations of any third party secured by property or
assets of such person (regardless of whether or not such person is liable for
repayment of such obligations), (h) all Guarantees of such person and (i) the
redemption price of all redeemable preferred stock of such person, but only to
the extent that such stock is redeemable at the option of the holder or
requires sinking fund or similar payments at any time prior to the Final
Maturity Date (but in no event including the Borrower's Series A and Series B
Preferred Stock outstanding on the Closing Date).

"Indemnitees" shall have the meaning assigned to such term in
Section 11.04(c) hereof.

"Information" shall have the meaning assigned to such term in
Section 11.11 hereof.

"Interest Coverage Ratio" shall mean, with respect to any
person for any period, the ratio of (i) the sum of (w) EBITDA less (x) the sum
of capital expenditures, plus expenditures for Permitted Acquisitions, in each
case not financed by third party sources (excluding under this Agreement and
including additional equity investments by the Investor Group for capital
expenditures and Permitted Acquisitions) for such period, to (ii) the sum of
(y) the Cash Interest Expense of such person plus cash dividends and other
distributions paid in cash and paid by the end of or within 45 (or 60 for
Fiscal Year end) days after the end of such period of such person for such
period.

"Interest Expense" shall mean, with respect to any person for
any period, the interest expense of such person during such period determined
on a

<PAGE> 19

Consolidated basis in accordance with GAAP, and shall in any event include,
without limitation, (i) the amortization of debt discounts, (ii) the
amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense, (iii) the portion of
any Capitalized Lease Obligation allocable to interest expense and (iv)
payments of interest expense in kind.

"Interest Margin" shall mean, with respect to any Loan, the
amount set forth below as corresponds to the ratio of total Senior Funded Debt
to EBITDA for the Borrower and its subsidiaries set forth below, determined on
the Closing Date and adjusted thereafter, three (3) Business Days after the
delivery of the financial statements to the Agent required pursuant to Section
6.05(a) or (b), as applicable, together with the corresponding compliance
certificates required pursuant to Section 6.05(e), commencing with the
financial statements for the period ending on June 30, 1997, or if the Borrower
shall fail to deliver such statements and certificates for any such period,
then at the highest Interest Margin provided for herein until such delivery is
made:

Total Senior Funded Debt LIBO Rate Alternate Base
to EBITDA Ratio Interest Margin Rate Interest Margin
--------------- --------------- --------------------

<S> <C> <C>
Greater than 1.50:1.00 3% 1 1/2%

Equal to or less than
1.50:1.00 but
greater than 1.00:1.00
2 3/4% 1 1/4%
1.00:1.00 or less 2 1/2% 1%
</TABLE>

On the Closing Date, the LIBO Rate Interest Margin shall be 3%
and the Alternate Base Rate Interest Margin shall be 1 1/2% and shall be
adjusted thereafter in accordance with the provisions hereof.

"Interest Payment Date" shall mean (i) in the case of an
Alternate Base Loan, the last Business Day of each March, June, September and
December, commencing June 30, 1996, and (ii) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable thereto, and, in addition,
in respect of any Eurodollar Loan of more than three (3) months' duration, each
earlier day which is three (3) months after the first day of such Interest
Period.

"Interest Period" shall mean, as to any Eurodollar Loan, the
period commencing on the date of such Eurodollar Loan and ending on the
numerically corresponding day (or, if there is no numerically corresponding
day, on the last

<PAGE> 20

day) in the calendar month that is one (1), two (2), three (3) or six (6)
months thereafter, as the Borrower may elect with respect to its Eurodollar
Loans; provided, however, that (x) if an Interest Period would end on a day
that is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, with respect to Eurodollar Loans, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (y) no
Interest Period shall end later than the Final Maturity Date and (z) interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.

"Investor Group" shall mean (x) Advanta Partners LP, Advanta
Corp. and/or any entity directly or indirectly controlled by Advanta Corp. or
Advanta Partners LP and (y) Glengar International Investments Limited and any
transferee permitted by the Borrower's or Holdings' shareholder agreement in
effect on the date hereof.

"Lender" shall have the meaning assigned to such term in the
preamble to this Agreement.

"Letter of Credit" shall have the meaning assigned to such
term in Section 2.17 hereof.

"Letter of Credit Usage" shall mean at any time, (i) the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(ii) the unreimbursed drawings at such time under Letters of Credit.

"LIBO Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the rate at which dollar deposits
approximately equal in principal amount to the Eurodollar Loan of the Agent and
for a maturity equal to the applicable Interest Period are offered in
immediately available funds to the London branch of the Agent by leading banks
in the London interbank market for Eurodollars at approximately 11:00 A.M.,
London time, two (2) Business Days prior to the first day of such Interest
Period.

"Lien" shall mean, with respect to any asset, (i) any
mortgage, lien, pledge, encumbrance, charge or security interest in or on such
asset, (ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset, (iii) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities or (iv) any other right
of or arrangement with any creditor to have such creditor's claim satisfied out
of such assets, or the proceeds therefrom, prior to the general creditors of
the owner thereof.

<PAGE> 21

"Loan" shall mean the Term Loans or any Revolving Credit Loan.

"Loan Documents" shall mean this Agreement, each Security
Document, each Guarantee executed and delivered at any time with respect to the
Obligations, the Notes and each other document, instrument, or agreement now or
hereafter delivered to the Agent or any Lender in connection herewith or
therewith.

"Loan Party" shall mean the Borrower, each Grantor, each
Guarantor, and each subsidiary thereof.

"Mandatory Prepayment" shall mean an amount equal to fifty
percent (50%) of Excess Cash Flow, if any, of the Borrower and its subsidiaries
for the Fiscal Year then ended.

"Margin Stock" shall have the meaning assigned to such term in
Regulation U.

"Material Adverse Effect" shall mean a material adverse effect
on (i) the business, assets, prospects, operations or financial or other
condition of any Loan Party, (ii) the ability of any Loan Party to perform or
pay the Obligations in accordance with the terms hereof or of any other Loan
Document, (iii) the rights of, or benefits available to, the Lenders or the
Agent under any Loan Document or (iv) the Agent's Lien on any material portion
of the Collateral or the priority of such Lien.

"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.

"Net Amount of Eligible Receivables" shall mean and include at
any time, without duplication, the gross amount of Eligible Receivables at such
time less (i) sales, excise or similar taxes and (ii) returns, discounts,
claims, credits and allowances of any nature at any time issued, owing,
granted, outstanding, available or claimed.

"Net Cash Flow" shall mean, with respect to any person for any
period, without duplication of addition or subtraction of items, (A) the sum
for such period of (i) Net Income, (ii) depreciation and amortization, (iii)
other noncash items properly deducted in arriving at Net Income, including,
without limitation, any management fees to Advanta Partners LP which are
accrued but not paid in cash within thirty days of expensing such fees, (iv)
less noncash items properly added in arriving at Net Income and less management
fees that when paid are not included in Borrower's income statement for such
period, (v) the change (expressed as a positive number in the event of an
increase or a negative number in the event of a decrease) in deferred tax
liabilities and (vi) the change

<PAGE> 22

(expressed as a negative number in the event of an increase or a positive
number in the event of a decrease) in deferred tax assets, minus (B) the sum of
(x) all capital expenditures plus expenditures for Permitted Acquisitions, in
each case not financed by third party sources (excluding under this Agreement
and including additional equity investments by the Investor Group for capital
expenditures and Permitted Acquisitions) during such period and (y) dividends
paid and other distributions in cash and paid by the end of or within 45 (or 60
for Fiscal Year end) days after the end of such period.

"Net Income" shall mean, with respect to any person for any
period, the aggregate income (or loss) of such person for such period which
shall be an amount equal to net revenues and other proper items of income for
such person less the aggregate for such person of any and all items that are
treated as expenses under GAAP, and less Federal, state and local income taxes,
but excluding any extraordinary gains or losses or any gains or losses from the
sale or disposition of assets other than in the ordinary course of business,
all computed and calculated in accordance with GAAP.

"Notes" shall mean the Term Notes and the Revolving Credit
Notes.

"Obligations" shall mean all obligations, liabilities and
Indebtedness of the Borrower to the Lenders and the Agent, whether now existing
or hereafter created, direct or indirect, due or not, whether created directly
or acquired by assignment, participation or otherwise, and arising under or in
connection with this Agreement, including without limitation all obligations,
liabilities and Indebtedness of the Borrower with respect to the Rate
Agreements (so long as Chemical Bank shall be party thereto), the Security
Documents and other Loan Documents, the principal of and interest on the
Revolving Credit Loans, the Term Loans and the payment or performance of all
other obligations, liabilities, and Indebtedness of the Borrower to the Lenders
and the Agent hereunder or under any one or more of the other Loan Documents,
including without limitation all fees, costs, expenses and indemnity
obligations hereunder and thereunder.

"Other Taxes" shall have the meaning assigned to such term in
Section 2.15(b) hereof.

"PBGC" shall mean the Pension Benefit Guaranty Corporation.

"Pension Plan" shall mean any Plan which is subject to the
provisions of Title IV of ERISA.

"Permits" shall have the meaning assigned to such term in
Section 4.18 hereof.

<PAGE> 23
"Permitted Acquisitions" shall have the meaning assigned to
such term in Section 7.06 hereof.

"person" shall mean any natural person, corporation, business
trust, association, company, joint venture, partnership or government or any
agency or political subdivision thereof.

"Plan" shall mean any employee benefit plan within the meaning
of Section 3(3) of ERISA and which is maintained (in whole or in part) for
employees of the Borrower, any subsidiary or any ERISA Affiliate.

"Pledge Agreement" shall mean the Pledge Agreements dated as
of the date hereof, between the Grantor(s) and the Agent, for its own benefit
and for the benefit of the Lenders, in substantially the form of Exhibit D
annexed hereto, as amended, modified or supplemented from time to time.

"Pledged Stock" shall have the meaning assigned to such term in
the Pledge Agreement.

"Rate Agreements" shall have the meaning assigned to such term
in Section 6.18 hereof.

"Recapitalization" shall mean the recapitalization of the
Borrower in connection with the equity investment to be made by the Investor
Group and the redemption of shares held by the Borrower's present stockholders,
all pursuant to the Recapitalization Agreement.

"Recapitalization Agreement" shall mean the Recapitalization
and Stock Purchase Agreement entered into as of May 24, 1996 among the
Borrower, the principals named therein and the investors named therein.

"Recapitalization Documents" shall mean the Recapitalization
Agreement and all agreements, documents and instruments executed and delivered
pursuant thereto or in connection therewith, in each case as in effect on the
Closing Date.

"Receivables" shall mean and include all of the Borrower's
accounts, instruments, documents, chattel paper and general intangibles,
whether secured or unsecured, whether now existing or hereafter created or
arising, and whether or not specifically assigned to the Agent for its own
benefit and/or the ratable benefit of the Lenders.

"Register" shall have the meaning assigned to such term in
Section 11.03(e) hereof.

<PAGE> 24

"Regulation D" shall mean Regulation D of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.

"Regulation G" shall mean Regulation G of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.

"Regulation T" shall mean Regulation T of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.

"Regulation U" shall mean Regulation U of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.

"Regulation X" shall mean Regulation X of the Board, as the
same is from time to time in effect, and all official rulings and
interpretations thereunder or thereof.

"Release" shall mean any releasing, spilling, leaking,
seepage, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping, in each case as defined in
Environmental Law, and shall include any "Threatened Release," as defined in
Environmental Law.

"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind
or nature with respect to any property of the Borrower or its subsidiaries
(whether such property is owned, leased, subleased or used), including, without
limitation, with respect to Contaminants and the Release thereof.

"Repayment Date" shall have the meaning assigned to such term
in Section 2.04(c) hereof.

"Reportable Event" shall mean a Reportable Event as defined in
Section 4043(c) of ERISA, other than a Reportable Event for which the
requirement to provide notice to the PBGC has been waived.

"Required Lenders" shall mean Lenders having at least 51% of
the Total Commitment.

"Responsible Officer" shall mean, with respect to any person,
any vice president or president, or the chief financial officer or controller,
of such person.

<PAGE> 25

"Revolving Credit Alternate Base Loan" shall mean a Revolving
Credit Loan that is an Alternate Base Loan.

"Revolving Credit Commitment" shall mean, with respect to any
Lender, the Revolving Credit Commitment of such Lender as set forth in Schedule
2.01(b) annexed hereto, as the same may be reduced from time to time pursuant
to this Agreement including, without limitation, Section 2.07 hereof.

"Revolving Credit Commitment Fee" shall have the meaning set
forth in Section 2.06(a) hereof.

"Revolving Credit Eurodollar Loan" shall mean a Revolving
Credit Loan that is a Eurodollar Loan.

"Revolving Credit Loan" shall mean a Revolving Credit Loan
made pursuant to Sections 2.01 and 2.02 hereof.

"Revolving Credit Notes" shall mean the Revolving Credit Notes
of the Borrower, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit B annexed hereto, as amended, modified or
supplemented from time to time.

"Revolving Credit Termination Date" shall mean the earlier to
occur of (i) the fifth anniversary of the Closing Date and (ii) such date as
the Revolving Credit Loans shall otherwise be payable in full and the Revolving
Credit Commitment shall terminate, expire or be canceled in accordance with the
terms of this Agreement.

"Security Agreement" shall mean the Security Agreement dated
as of the date hereof, between the Grantor(s) and the Agent, for its own
benefit and for the benefit of the Lenders, substantially in the form of
Exhibit E annexed hereto, as amended, modified or supplemented from time to
time.

"Security Documents" shall mean the Pledge Agreement, the
Security Agreement, the Assignment of Life Insurance, the Assignment of
Contract, and each other agreement now existing or hereafter created providing
collateral security for the payment or performance of any Obligations.

"Seller Note" shall mean the 6% Subordinated Note dated May
24, 1996 made by Borrower to the Hansells in the original principal amount of
$3,000,000.

"Senior Funded Debt" shall mean with respect to any person as
of the date of determination thereof, all Indebtedness (other than Subordinated
Indebtedness) of such person and its subsidiaries on a Consolidated basis

<PAGE> 26

outstanding at such time which matures more than one year after the date of
calculation, and any such Indebtedness maturing within one year from such date
of calculation which is renewable or extendable at the option of the obligor to
a date more than one year from such date but including in any event the current
portion of any such Indebtedness and the Revolving Credit Loans outstanding.

"Subordinated Indebtedness" shall mean, with respect to the
Borrower, Indebtedness subordinated in right of payment to such person's
monetary obligations under this Agreement upon terms satisfactory to and
approved in writing by the Agent, and in any event which does not by its terms
mature or become subject to any mandatory prepayment or amortization of
principal prior to the Final Maturity Date, and shall in any event include the
Indebtedness of the Borrower pursuant to the Seller Note.

"Subsidiary" shall mean, with respect to any person, any
corporation, association or other business entity of which securities or other
ownership interests representing more than 50% of the ordinary voting power
are, at the time as of which any determination is being made, owned or
controlled, directly or indirectly, by the parent of such person or one or more
subsidiaries of the parent of such person.

"Taxes" shall have the meaning assigned to such term in Section
2.15(a) hereof.

"Term Alternate Base Loan" shall mean a Term Loan that is an
Alternate Base Loan.

"Term Eurodollar Loan" shall mean a Term Loan that is a
Eurodollar Loan.

"Term Loan" or "Term Loans" shall mean the Term Loans made
pursuant to Section 2.01(a) and the Acquisition Term Loan made on each
Conversion Date.

"Term Loan Commitment" shall mean, with respect to any Lender,
the Term Loan Commitment of such Lender as set forth in Schedule 2.01(a).

"Term Notes" shall mean the Term Notes of the Borrower,
executed and delivered as provided in Section 2.04 on the Closing Date in
substantially the form of Exhibit A hereto, as amended, modified or
supplemented from time to time, and each Term Note evidencing an Acquisition
Term Loan when subsequently executed and delivered.

"Total Commitment" shall mean the sum of the Lenders' Total
Term Loan Commitment and Total Revolving Credit Commitment, as the same may be

<PAGE> 27

reduced from time to time pursuant to this Agreement including, without
limitation, Section 2.07 hereof.

"Total Revolving Credit Commitment" shall mean the sum of the
Lenders' Revolving Credit Commitments, as the same may be reduced from time to
time pursuant to this Agreement including, without limitation, Section 2.07
hereof.

"Total Term Loan Commitment" shall mean the sum of the
Lenders' Term Loan Commitments, as the same may be reduced from time to time
pursuant to this Agreement including, without limitation, Section 2.07 hereof.

"Transactions" shall have the meaning assigned to such term in
Section 4.02 hereof.

SECTION 1.02. Accounting Terms. Unless otherwise expressly
provided herein, each accounting term used herein shall have the meaning given
it under generally accepted accounting principles in effect from time to time
in the United States applied on a basis consistent with those used in preparing
the financial statements referred to in Section 6.05 hereof ("GAAP"); provided,
however, that each reference in Article VII hereof, or in the definition of any
term used in Article VII hereof, to GAAP shall mean GAAP as in effect on the
date hereof.

II. THE LOANS

SECTION 2.01. Term Loan Commitments and Revolving Credit
Commitments. (a) Subject to the terms and conditions and relying upon the
representations and warranties herein set forth, the Lenders, severally and not
jointly, agrees to make a Term Loan to the Borrower on the Closing Date in the
aggregate amount of $11,200,000 and thereafter through and including September
30, 1996 additional Term Loans not more often than weekly in a minimum
aggregate amount of $500,000 or the remaining availability if less and in
integral multiples of $100,000 provided, however, that the aggregate of Term
Loans made by any Lender pursuant to this subsection (a) shall not in principal
amount exceed the amount of such Lender's Term Loan Commitment set forth
opposite its name in Schedule 2.01(a) hereto.

(b) Subject to the terms and conditions and relying upon
the representations and warranties herein set forth, each Lender, severally and
not jointly, agrees to make Revolving Credit Loans to the Borrower, at any time
and from time to time from the date hereof to the Revolving Credit Termination
Date, in an aggregate principal amount at any time outstanding not to exceed
the amount of such Lender's Revolving Credit Commitment set forth opposite its

<PAGE> 28

name in Schedule 2.01(b) annexed hereto, as such Revolving Credit Commitment
may be reduced from time to time in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, the aggregate principal amount of
Revolving Credit Loans outstanding at any time to the Borrower shall not exceed
(1) the lesser of (A) the Total Revolving Credit Commitment (as such amount may
be reduced pursuant to this Agreement including, without limitation, Section
2.07 hereof) and (B) an amount equal to up to eighty-five percent (85%) of the
Net Amount of Eligible Receivables (this clause (1)(B) referred to herein as
the "Borrowing Base") minus (2) the Letter of Credit Usage at such time (not to
exceed $1,000,000 at any time). The Borrowing Base will be computed monthly and
a compliance certificate from a Responsible Officer of the Borrower presenting
its computation will be delivered to the Agent in accordance with Section 6.05
hereof.

Subject to the foregoing and within the foregoing limits, the
Borrower may borrow, repay (or, subject to the provisions of Section 2.09
hereof, prepay) and reborrow Revolving Credit Loans, on and after the date
hereof and prior to the Revolving Credit Termination Date, subject to the
terms, provisions and limitations set forth herein, including, without
limitation, the requirement that no Revolving Credit Loan shall be made
hereunder if the amount thereof exceeds the Availability outstanding at such
time. Subject to the terms and conditions of this Agreement, on the date, but
only if prior to the initial public offering of Borrower in compliance with
Section 2.09(d) hereof (the "Conversion Date"), on which the aggregate of
Revolving Credit Loans from time to time made for the purpose of Permitted
Acquisitions equals $3,000,000, then the lesser of (x) $3,000,000 and (y) the
unpaid principal amount of such Loans shall be converted into a term loan (the
"Acquisition Term Loan") from the Lenders. Subsequent to the initial Conversion
Date, if such date occurs, if the Borrower shall request Revolving Credit Loans
for the purpose of a Permitted Acquisition aggregating $500,000 or more, then
on each occasion prior to the initial public offering of Borrower in compliance
with Section 2.09(d) hereof that the aggregate of such Loans is $500,000 or
more (also a Conversion Date) the unpaid principal amount thereof shall be
converted into a term loan (also an Acquisition Term Loan) from the Lenders.

SECTION 2.02. Loans. (a) The Revolving Credit Loans made by
the Lenders that are Eurodollar Loans shall be in a minimum aggregate principal
amount equal to the product of $500,000 times the number of Lenders on such
date.

(b) Loans shall be made ratably by the Lenders in
accordance with their respective Term Loan Commitments or Revolving Credit
Commitments, as the case may be; provided, however, that the failure of any
Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder. The Term Loans to be made pursuant to Section
2.01(a) shall be

<PAGE> 29

made by the Lenders against delivery of Term Notes, payable to the order of the
Lenders, as referred to in Section 2.04. The initial Revolving Credit Loans
shall be made by the Lenders against delivery of Revolving Credit Notes,
payable to the order of the Lenders, as referred to in Section 2.04 hereof. On
each Conversion Date, the term loans to be made by the Lenders shall be made
against delivery of Term Notes, payable to the order of the Lenders, as
referred to in Section 2.04.

(c) Each Loan shall be either an Alternate Base Loan or a
Eurodollar Loan as the Borrower may request pursuant to Section 2.03 hereof.
Each Lender may fulfill its obligations under this Agreement by causing its
Applicable Lending Office to make such Loan; provided, however, that the
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the term of the applicable Note. Not more
than three (3) Eurodollar Loans may be outstanding at any one time.

(d) Subject to the provisions of paragraph (e) below,
each Lender shall make its Term Loans pursuant to Section 2.01(a) and Revolving
Credit Loans on the proposed dates thereof by paying the amount required to the
Agent in New York, New York in immediately available funds not later than 12:00
noon, New York City time, and the Agent shall as soon as practicable, but in no
event later than 3:00 p.m., New York City time, credit the amounts so received
to the general deposit account of the Borrower with the Agent in immediately
available funds or, if Loans are not to be made on such date because any
condition precedent to a borrowing herein specified is not met, return the
amounts so received to the respective Lenders.

(e) The Borrower shall have the right at any time upon
prior irrevocable written, telex or facsimile notice (promptly confirmed in
writing) to the Agent given in the manner and at the times specified in Section
2.03 with respect to the Loans into which conversion or continuation is to be
made, to convert all or any portion of Eurodollar Loans into Alternate Base
Loans, to convert all or any portion of Alternate Base Loans into Eurodollar
Loans (specifying the Interest Period to be applicable thereto), to convert the
Interest Period with respect to all or any portion of any Eurodollar Loans to
another permissible Interest Period, and to continue all or any portion of any
Loans into a subsequent Interest Period of the same duration, subject to the
terms and conditions of this Agreement (including the last sentence of Section
2.02(c) hereof) and to the following:

(i) in the case of a conversion or continuation
of fewer than all the Loans, the aggregate principal amount of
Loans converted or continued shall not be less than $100,000
in the case of Alternate Base Loans or $500,000 times the
number of Lenders on such date in the case of Eurodollar Loans
and shall be an integral multiple of $500,000;

<PAGE> 30

(ii) accrued interest on a Loan (or portion
thereof) being converted or continued shall be paid by the
Borrower at the time of conversion or continuation;

(iii) if any Eurodollar Loan is converted at any
time other than the end of an Interest Period applicable
thereto, the Borrower shall make such payments associated
therewith as are required pursuant to Section 2.12;

(iv) any portion of a Revolving Credit Loan which
is subject to an Interest Period ending on a date that is less
than one month prior to the Revolving Credit Termination Date
may not be converted into, or continued as, a Eurodollar Loan
and shall be automatically converted at the end of such
Interest Period into an Alternate Base Loan;

(v) any portion of a Term Eurodollar Loan
required to be paid on any Repayment Date occurring less than
one month after the end of the then current Interest Period
applicable to such Loan, may not be converted into, or
continued as, a Term Eurodollar Loan and shall be
automatically converted at the end of such Interest Period
into a Term Alternate Base Loan; and

(vi) no Default or Event of Default shall have
occurred and be continuing.

The Interest Period applicable to any Eurodollar Loan
resulting from a conversion shall be specified by the Borrower in the
irrevocable notice of conversion delivered pursuant to this Section; provided,
however, that if no such Interest Period shall be specified, the Borrower shall
be deemed to have selected an Interest Period of one month's duration; and,
provided further, that no such Interest Period may be for more than one month
for the period commencing on the Closing Date and ending on the earlier to
occur of (x) the 120th day following the Closing Date and (y) the completion to
the satisfaction of Chemical Bank of the syndication of its portion of the
Total Commitment and the Loans and other Credits thereunder. If the Borrower
shall not have given timely notice to continue any Eurodollar Loan into a
subsequent Interest Period (and shall not otherwise have given notice to
convert such Loan), such Loan (unless repaid or required to be repaid pursuant
to the terms hereof) shall, subject to (iv) and (v) above, automatically be
converted into an Alternate Base Loan. The Agent shall promptly advise the
Lenders of any notice given pursuant to this Section and of each Lender's
portion of the continuation or conversion hereunder.

SECTION 2.03. Notice of Loans. The Borrower shall, through
a Responsible Officer of the Borrower, give the Agent irrevocable written,
telex or

<PAGE> 31

facsimile notice (promptly confirmed in writing) (including, without
limitation, a conversion as permitted by Section 2.02(e) hereof) not later than
11:00 A.M., New York City time, (i) three (3) Business Days before a proposed
Eurodollar Loan borrowing or conversion and (ii) one Business Day before an
Alternate Base Loan borrowing or conversion (except that no such confirmation
will be required, unless requested by the Agent, to the extent that the
proceeds of such borrowing are requested to be disbursed to Borrower's
controlled disbursement account maintained with the Agent). Such notice shall
specify (w) whether the Loans then being requested are to be Alternate Base
Loans or Eurodollar Loans and a Revolving Credit Loan or Term Loan pursuant to
Section 2.01(a), (x) the date of such borrowing (which shall be a Business Day)
and amount thereof and (y) if such Loans are to be Eurodollar Loans, the
Interest Period with respect thereto. If no election as to the type of Loan is
specified in any such notice, all such Loans shall be Alternate Base Loans. If
no Interest Period with respect to any Eurodollar Loan is specified in any such
notice, then an Interest Period of one month's duration shall be deemed to have
been selected; provided, however, that no such Interest Period may be for more
than one month for the period commencing on the Closing Date and ending on the
earlier to occur of (x) the 120th day following the Closing Date and (y) the
completion to the satisfaction of Chemical Bank of the syndication of its
portion of the Total Commitment and the Loans and other Credits thereunder. The
Agent shall promptly advise the Lenders of any notice given pursuant to this
Section 2.03 and of each Lender's portion of the requested borrowing.

SECTION 2.04. Notes; Repayment of Loans. (a) The Term Loans
made by a Lender pursuant to Section 2.01(a) shall be evidenced by a single
Term Note, duly executed on behalf of the Borrower, dated the Closing Date, in
substantially the form of Exhibit A annexed hereto, delivered and payable to
such Lender in a principal amount equal to its Term Loan Commitment on such
date and enforceable to the extent of the Term Loans made pursuant to Section
2.01(a). The term loan, if any, made by a Lender on each Conversion Date shall
be evidenced by a single Term Note, duly executed on behalf of the Borrower,
dated such Conversion Date, in substantially the form of Exhibit A-1 annexed
hereto, delivered and payable to such Lender in a principal amount equal to its
share of the Revolving Credit Loans being converted on such date. All Revolving
Credit Loans made by a Lender to the Borrower shall be evidenced by a single
Revolving Credit Note, duly executed on behalf of the Borrower, dated the
Closing Date, in substantially the form of Exhibit B annexed hereto, delivered
and payable to such Lender in a principal amount equal to its Revolving Credit
Commitment in respect of the Borrower on such date. The outstanding balance of
each Revolving Credit Loan, as evidenced by any such Revolving Credit Note,
shall mature and be due and payable on the Revolving Credit Termination Date.

(b) Each Revolving Credit Note shall bear interest from
its date on the outstanding principal balance thereof, as provided in Section
2.05 hereof.

<PAGE> 32

(c) (i) The aggregate principal amount of the Term Loans
made pursuant to Section 2.01(a), as evidenced by the applicable Term Notes,
shall be payable in twenty-three (23) consecutive quarterly installments (the
date of each such installment, a "Repayment Date") in the amounts set forth
below, and such payments shall be distributed ratably among the Lenders in
accordance with their respective Term Loan Commitments:

<TABLE>
<CAPTION>
Date Payment
---- -------

<S> <C>
December 31, 1996 $300,000
March 31, June 30, September 30
and December 31, 1997 $400,000
March 31, June 30, September 30
and December 31, 1998 $500,000
March 31, June 30, September 30
and December 31, 1999 $650,000
March 31, June 30, September 30
and December 31, for each of
the years 2000 and 2001 $750,000
March 31 and June 30, 2002 $750,000
</TABLE>

(ii) The aggregate principal amount of each Acquisition
Term Loan, as evidenced by its applicable Term Notes, shall be payable in
consecutive installments on the last Business Day of each March, June,
September and December of each year (also a Repayment Date), commencing with
the last Business Day of the first full fiscal quarter succeeding the
applicable Conversion Date, in the amount set forth in the next sentence, and
such payments shall be distributed ratably among the Lenders in accordance with
their pro rata share of such Acquisition Term Loan. Payments of principal on
each Repayment Date shall be in equal amounts calculated on an amortization
schedule which assumes a maturity date ending six (6) years subsequent to the
applicable Conversion Date and which is confirmed in writing to the Borrower by
the Agent; provided, however, that the final installment under such Term Notes
shall be in the amount of the unpaid principal balance of such Term Notes and
shall be payable on the Final Maturity Date.

To the extent not previously paid, all Term Loans shall be due
and payable on the Final Maturity Date. Each Term Note shall bear interest
from its date on the outstanding principal balance thereof, as provided in
Section 2.05. All principal payments in respect of Term Loans shall be
accompanied by accrued interest on the principal amount being repaid to the
date of payment. No scheduled payment of principal in respect of a Term Loan
shall be made to the extent that a lesser principal payment would result in the
payment in full of the outstanding amount of such Term Loan, and such lesser
amount is paid.

<PAGE> 33

(d) Each Lender, or the Agent on its behalf, shall, and
is hereby authorized by the Borrower to, endorse on the schedule attached to
any Term Note or Revolving Credit Note, as applicable, of such Lender (or on a
continuation of such schedule attached to such Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Loan to the
Borrower from such Lender, as well as the date and amount of each payment and
prepayment with respect thereto; provided, however, that the failure of any
person to make such a notation on a Note shall not affect any obligations of
the Borrower under such Note. Any such notation shall be conclusive and binding
as to the date and amount of such Loan or portion thereof, or payment or
prepayment of principal or interest thereon, absent manifest error.

SECTION 2.05. Interest on Loans. (a) Subject to the
provisions of Section 2.05(c) and Section 2.08 hereof, each Alternate Base Loan
shall bear interest at a rate per annum equal to the Alternate Base Rate plus
the applicable Interest Margin.

(b) (c) Subject to the provisions of Section 2.05(c)
and Section 2.08 hereof, each Eurodollar Loan shall bear interest at a rate per
annum equal to the Adjusted LIBO Rate plus the applicable Interest Margin.

(d) Interest on each Loan shall be payable in arrears on
each applicable Interest Payment Date, Revolving Credit Termination Date,
Conversion Date and on the Final Maturity Date. Interest on each Alternate Base
Loan and Eurodollar Loan shall be computed based on the number of days elapsed
in a year of 360 days. The Agent shall determine each interest rate applicable
to the Loans and shall promptly advise the Borrower and the Lenders of the
interest rate so determined.

SECTION 2.06. Fees. (a) The Borrower shall pay each Lender,
through the Agent, (i) on the last Business Day of each March, June, September
and December commencing June 30, 1996, (ii) on the date of any reduction of the
Revolving Credit Commitments pursuant to this Agreement including, without
limitation, Section 2.07 hereof and (iii) on the Revolving Credit Termination
Date, in immediately available funds, a commitment fee (the "Revolving Credit
Commitment Fee") of one-half of one percent ( 1/2 of 1%) per annum on the
average daily unused amount of the Revolving Credit Commitment of such Lender,
during the quarter (or shorter period commencing with the date hereof or ending
with the Revolving Credit Termination Date) ending on such date. The Revolving
Credit Commitment Fee due to each Lender under this Section 2.06 shall commence
to accrue on the date hereof and cease to accrue on the earlier of (i) the
Revolving Credit Termination Date and (ii) the termination of the Revolving
Credit Commitment of such Lender pursuant to this Agreement including, without
limitation, pursuant to Section 2.07 hereof. The Revolving

<PAGE> 34

Credit Commitment Fee shall be calculated on the basis of the actual number of
days elapsed in a year of 360 days.

(b) The Borrower shall pay to the Agent for its own
account an administration fee of $15,000 per annum, paid on the Closing Date
and each anniversary thereof.

SECTION 2.07. Termination and Reduction of Revolving Credit
Commitments and Term Loan Commitments. (a) Upon at least three (3) Business
Days' prior irrevocable written notice (or facsimile notice promptly confirmed
in writing) to the Agent, the Borrower may at any time in whole permanently
terminate, or from time to time in part permanently reduce, the Total Revolving
Credit Commitment, ratably among the Lenders in accordance with the amounts of
their Revolving Credit Commitments; provided, however, that the Total Revolving
Credit Commitment shall not be reduced at any time to an amount less than the
Revolving Credit Loans outstanding under the Revolving Credit Commitments and
the Letter of Credit Usage at such time. Each partial reduction of the Total
Revolving Credit Commitment shall be in a minimum of $100,000 or an integral
multiple of $100,000.

(b) Simultaneously with any termination of the Total
Revolving Credit Commitment pursuant to paragraph (a) of this Section 2.07, the
Borrower shall pay to each Lender, through the Agent, the Revolving Credit
Commitment Fee due and owing through and including the date of such termination
or reduction on the amount of the Revolving Credit Commitment of such Lender so
terminated or reduced.

(c) The Total Revolving Credit Commitment shall be
permanently reduced (i) on each date that a prepayment of principal of the
Revolving Credit Loans is required pursuant to Section 2.09(e) hereof by the
amount of each such required prepayment and (ii) on each Conversion Date by the
amount of the Acquisition Term Loan. In any event, the Revolving Credit
Commitment of each Lender shall automatically and permanently terminate on the
Revolving Credit Termination Date, and all Revolving Credit Loans still
outstanding on such date shall be due and payable in full together with accrued
interest thereon.

(d) The Total Term Loan Commitment shall be drawn in its
entirety no later than September 30, 1996 and shall be permanently reduced by
the amount of any repayment or prepayment of the outstanding principal amount
of the Term Loans on the date of any such repayment or prepayment. In any
event, all amounts due and owing under the Total Term Loan Commitment shall be
due and payable on the Final Maturity Date.

SECTION 2.08. Interest on Overdue Amounts; Alternate Rate
of Interest. (a) If the Borrower shall default in the payment of the principal
of or

<PAGE> 35

interest on any Loan or any other amount becoming due hereunder, by
acceleration or otherwise, the Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on all Obligations outstanding from
the day of default up to the date of actual payment of such defaulted amount
(after as well as before judgment) at a rate per annum equal to two percent
(2%) in excess of the rates otherwise applicable thereto.

(b) In the event, and on each occasion, that on the day
two (2) Business Days prior to the commencement of any Interest Period for a
Eurodollar Loan the Agent shall have determined that dollar deposits in the
amount of each Eurodollar Loan are not generally available in the London
interbank market, or that the rate at which dollar deposits are being offered
will not reflect adequately and fairly the cost to any Lender of making or
maintaining such Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the
Agent shall as soon as practicable thereafter give written notice (or facsimile
notice promptly confirmed in writing) of such determination to the Borrower and
the Lenders, and any request by the Borrower for the making of a Eurodollar
Loan pursuant to Section 2.03 hereof or conversion or continuation of any Loan
into a Eurodollar Loan pursuant to Section 2.02 hereof shall, until the
circumstances giving rise to such notice no longer exist, be deemed to be a
request for an Alternate Base Loan. Each determination by the Agent made
hereunder shall be conclusive absent manifest error.

SECTION 2.09. Prepayment of Loans. (a) Subject to the terms
and conditions contained in this Section 2.09 and elsewhere in this Agreement,
the Borrower shall have the right to prepay any Loan at any time in whole or
from time to time in part (except in the case of a Eurodollar Loan only on the
last day of an Interest Period) without penalty (except as otherwise provided
for herein); provided, however, that each such partial prepayment of a Loan
shall be in an integral multiple of $100,000.

(b) On the date of any termination or reduction of the
Total Revolving Credit Commitment pursuant to Section 2.07(a) hereof or
elsewhere in this Agreement, the Borrower shall pay or prepay so much of the
Revolving Credit Loans as shall be necessary in order that the Availability
equals or exceeds zero following such termination or reduction. Any prepayments
required by this paragraph (b) shall be applied to outstanding Revolving Credit
Alternate Base Loans up to the full amount thereof before they are applied to
outstanding Revolving Credit Eurodollar Loans; provided, however, that the
Borrower shall not be required to make any prepayment of any Eurodollar Loan
pursuant to this Section until the last day of the Interest Period with respect
thereto so long as an amount equal to such prepayment is deposited by the
Borrower in a cash collateral account with the Agent to be held in such account
on terms satisfactory to the Agent.

<PAGE> 36

(c) The Borrower shall make prepayments of the Revolving
Credit Loans from time to time such that the Availability equals or exceeds
zero at all times. Any prepayments required by this paragraph (c) shall be
applied to outstanding Revolving Credit Alternate Base Loans up to the full
amount thereof before they are applied to outstanding Revolving Credit
Eurodollar Loans; provided, however, that the Borrower shall not be required to
make any prepayment of any Eurodollar Loan pursuant to this Section until the
last day of the Interest Period with respect thereto so long as an amount equal
to such prepayment is deposited by the Borrower in a cash collateral account
with the Agent to be held in such account on terms satisfactory to the Agent.

(d) Within three days of (i) the sale of any assets of
the Borrower or any of its subsidiaries (excluding sales of assets in the
ordinary course of business, sales of assets which have become obsolete or worn
out and which are replaced by comparable assets within a period of 180 days of
sale or placement of an order for such replacement and other assets no longer
necessary in the business not exceeding $100,000 in any Fiscal Year) or of the
capital stock of the Borrower or Holdings (subject to the net proceeds of any
initial public offering being in an amount sufficient to repay in full all
outstanding Term Loans plus any bonus payment due the Hansells under the
Recapitalization Agreement), other than stock issued to the Investor Group the
proceeds of which are used for Permitted Acquisitions so long as such shares if
issued by the Borrower are pledged under the Pledge Agreement, (ii) the
consummation of the issuance of any debt securities (excluding Indebtedness
permitted pursuant to Section 7.03) of the Borrower or Holdings, or (iii) the
receipt by the Borrower of any monies in accordance with the Recapitalization
Documents only for purchase price adjustments, the Borrower shall make a
mandatory prepayment of the Loans (subject to paragraph (g) below) in an amount
equal to 100% of the cash or cash equivalent proceeds received and cash
subsequently realized from non-cash proceeds when received (net, in each of the
transactions referred to in clauses (i), (ii) and (iii) above, of taxes due and
any reasonable fees or expenses of sale and the amount of any Indebtedness
secured by Liens on the assets sold which are not assumed), which proceeds
shall be applied as set forth in paragraph (g) below. Nothing contained in
this paragraph (d) shall be or be deemed to be a consent to the sale of any
assets or stock or the issuance of any stock or debt securities not otherwise
permitted by the terms of this Agreement.

(e) Within one hundred (100) days of the end of each
Fiscal Year of the Borrower, commencing with the Fiscal Year ending September
30, 1997, the Borrower shall make a mandatory prepayment of the Loans in an
amount equal to the Mandatory Prepayment for the Fiscal Year then ended, such
prepayment to be applied as set forth in paragraph (g) below.

(f) (i) Except as provided in clause (ii) below, promptly
and in any event not more than ten days following the receipt by the Agent or
the Borrower

<PAGE> 37

or any of its subsidiaries of any net proceeds of (x) any casualty insurance
required to be maintained pursuant to Section 6.03 hereof on account of each
separate loss, damage or injury (each, a "Casualty Event") in excess of
$100,000 (or, if there shall be continuing a Default or an Event of Default, of
the full amount of net proceeds) to any asset of the Borrower or such
subsidiary (including, without limitation, any Collateral), or (y) any business
interruption insurance required to be maintained pursuant to Section 6.03
hereof on account of any business interruption event (each, a "BI Event") in
excess of $100,000 (or, if there shall be continuing a Default or Event of
Default, of the full amount of net proceeds), the Borrower or such subsidiary
shall notify the Agent of such receipt in writing or by telephone promptly
confirmed in writing, and not later than three Business Days following receipt
by the Agent or the Borrower or such subsidiary of any such proceeds, there
shall become due and payable a prepayment of the Loans in an amount equal to
100% of such proceeds. Prepayments from such net proceeds shall be applied as
set forth in paragraph (g) below.

(ii) In the case of the receipt of net proceeds
described in clause (i) above with respect to a Casualty Event or BI Event, the
Borrower may elect, by written notice delivered to the Agent not later than the
day on which a prepayment would otherwise be required under clause (i), (x) in
the case of proceeds received with respect to a BI Event, to use such proceeds
in the ordinary course of Borrower's business and (y) in the case of proceeds
received with respect to any Casualty Event, to apply all or a portion of such
net proceeds for the purpose of replacing, repairing, restoring or rebuilding
(referred to herein as a "Rebuilding") the relevant tangible property, and, in
any such event, any required prepayment under clause (i) above shall be reduced
dollar for dollar by the amount of such election under clause (x) or clause (y)
of this sentence. An election under this clause (ii) shall not be effective
unless: (x) at the time of such election there is continuing no Default or
Event of Default; (y) the Borrower shall have certified to the Agent that: (i)
the net proceeds of the insurance adjustment with respect to a Casualty Event,
together with other funds available to the Borrower, shall be sufficient to
complete such proposed Rebuilding in accordance with all applicable laws,
regulations and ordinances; and (ii) no Default or Event of Default has arisen
or will arise as a result of such BI Event, Casualty Event or Rebuilding; and
(z) if the amount of net proceeds in question exceeds $1,000,000, the Borrower
shall have obtained the written consent of the Required Lenders to such
election.

(iii) In the event of an election under clause (ii)
above, pending application of the net proceeds to business operations with
respect to a BI Event or to Rebuilding with respect to a Casualty Event, the
Borrower shall not later than the time at which prepayment would have been, in
the absence of such election, required under clause (i) above, apply such net
proceeds to the prepayment of the outstanding principal balance, if any, of the
Revolving Credit Loans (not in permanent reduction of the Revolving Credit
Commitment), and

<PAGE> 38

deposit (the "Special Deposit") with the Agent, the balance, if any, of such
net proceeds remaining after such application, pursuant to agreements in form,
scope and substance reasonably satisfactory to the Agent. The Special Deposit,
together with all earnings on such Special Deposit, shall be available to the
Borrower solely for the applicable Rebuilding or ordinary course business
operations, as the case may be; provided, however, that at such time as a
Default or Event of Default shall occur, the balance of the Special Deposit and
earnings thereon may be applied by the Agent to repay the Revolving Credit
Loans (not in permanent reduction of the Revolving Credit Commitment). If such
Default or Event of Default is subsequently cured, then the amounts so applied
may be used for Rebuilding notwithstanding the provisions of Section 4.14. The
Agent shall be entitled to require proof, as a condition to the making of any
withdrawal from the Special Deposit, that the proceeds of such withdrawal are
being applied for the purposes permitted hereunder.

(iv) Notwithstanding anything to the contrary in
this paragraph (f), on the date three days following the receipt by the Agent
or the Borrower of any net proceeds of any insurance referred to in Section
6.19 hereof, there shall become due and payable a prepayment of principal in
respect of the Obligations in an amount equal to 100% of such net proceeds up
to $3,000,000 for each insured. All prepayments made pursuant to this clause
(iv) shall be applied in the manner set forth in paragraph (g) below.

(g) When making a prepayment, whether mandatory or
otherwise, pursuant to paragraph (a), (b), (c), (d), (e) or (f) above, the
Borrower shall furnish to the Agent, not later than 11:00 a.m. (New York City
time) (i) three (3) Business Days prior to the date of such prepayment of
Alternate Base Loans and (ii) five (5) Business Days prior to the date of such
prepayment of Eurodollar Loans, written, telex or facsimile notice (promptly
confirmed in writing) of prepayment which shall specify the prepayment date and
the principal amount of each Loan (or portion thereof) to be prepaid, which
notice shall be irrevocable and shall commit the Borrower to prepay such Loan
by the amount stated therein on the date stated therein. All prepayments shall
be accompanied by accrued interest on the principal amount being prepaid to the
date of prepayment. Prepayments made pursuant to paragraph (d), (e) or (f)
above shall be applied as follows: (A) first, with respect to the Term Loans,
ratably among all Term Loans then outstanding, to outstanding Term Alternate
Base Loans in the inverse order of their maturity up to the full amount thereof
and then to outstanding Term Eurodollar Loans in the inverse order of their
maturity up to the full amount thereof and (B) second (except in the case of
proceeds of an initial public offering where no such prepayment shall be
required), to outstanding Revolving Credit Alternate Base Loans up to the full
amount thereof and then to Revolving Credit Eurodollar Loans up to the full
amount thereof; provided, however, that if at the time of making any prepayment
in accordance with clause (B), there are undrawn Letters of Credit outstanding,
then in the discretion of the Agent, all or a portion of

<PAGE> 39

any such prepayment (not to exceed an amount equal to the aggregate undrawn
amount of all such outstanding Letters of Credit) shall be deposited by the
Borrower in a cash collateral account to be held by the Agent for its own
benefit and for the benefit of the Lenders for application by the Agent to the
payment of any drawing made under any such Letter of Credit; and provided,
however, that the Borrower shall not be required to make any prepayment of any
Term or Revolving Credit Eurodollar Loan required pursuant to this Section
2.09(g) until the last day of the Interest Period with respect thereto so long
as an amount equal to such prepayment is deposited by the Borrower into a cash
collateral account with the Agent to be held in such account pursuant to terms
satisfactory to the Agent.

(h) All prepayments under this Section 2.09 shall be
subject to Section 2.12 hereof.

(i) Except as otherwise expressly provided in this
Section 2.09, payments with respect to any paragraph of this Section 2.09 are
in addition to payments made or required to be made under any other paragraph
of this Section 2.09.

(j) All prepayments of the Term Loans under this Section
2.09 shall be applied in the inverse order of the Repayment Dates. The amount
of the Term Loans prepaid may not be reborrowed.

SECTION 2.10. Reserve Requirements; Change in
Circumstances. (a) Notwithstanding any other provision herein, if after the
date of this Agreement (or in the case of any assignee of any Lender, the date
of assignment) any change after the date hereof in applicable law or regulation
or in the interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof (whether or
not having the force of law), or any change in GAAP or regulatory accounting
principles applicable to the Agent or any Lender shall: (i) subject the Agent
or any Lender (which shall for the purpose of this Section 2.10 include any
assignee or lending office of the Agent or any Lender) to any charge, fee,
deduction or withholding of any kind or to any tax with respect to any amount
paid or to be paid by either the Agent or any Lender with respect to any
Eurodollar Loans made by a Lender to the Borrower or with respect to the
obligations of any Lender under Sections 2.17 through 2.20 hereof or under any
Letter of Credit (other than (x) taxes imposed on the overall net income or
gross receipts of the Agent or such Lender and (y) capital stock or franchise
taxes imposed on the Agent or such Lender; (ii) change the basis of taxation of
payments to any Lender or the Agent of the principal of or interest on any
Eurodollar Loan or any other fees or amounts payable with respect to any Letter
of Credit or otherwise hereunder (other than taxes imposed on the overall net
income or gross receipts of such Lender or the Agent or capital stock or
franchise taxes); (iii) impose, modify or deem applicable any reserve, special

<PAGE> 40

deposit or similar requirement against assets of, deposits with or for the
account of, or loans or loan commitments extended by, or Letters of Credit
issued and maintained by, such Lender; or (iv) impose on any Lender or, with
respect to Eurodollar Loans, the London interbank market, any other condition
affecting this Agreement, Letters of Credit issued and maintained by or
Eurodollar Loans made by such Lender; and the result of any of the foregoing
shall be to increase the cost to any such Lender of making or maintaining any
Eurodollar Loan or Letter of Credit, or to reduce the amount of any payment
(whether of principal, interest, fee, compensation or otherwise) receivable by
such Lender or to require such Lender to make any payment in respect of any
Eurodollar Loan or Letter of Credit, then the Borrower shall pay to such Lender
or the Agent, as the case may be, upon such Lender's or the Agent's demand,
such additional amount or amounts as will compensate such Lender or the Agent
for such additional costs or reduction. The Agent and each Lender agree to give
notice to the Borrower of any such change in law, regulation, interpretation or
administration with reasonable promptness after becoming actually aware thereof
and of the applicability thereof to the Transactions. Notwithstanding anything
contained herein to the contrary, nothing in clause (i) or (ii) of this Section
2.10(a) shall be deemed to (x) permit the Agent or any Lender to recover any
amount thereunder which would not be recoverable under Section 2.15 hereof or
(y) require the Borrower to make any payment of any amount to the extent that
such payment would duplicate any payment made by the Borrower pursuant to
Section 2.15 hereof.

(b) If at any time and from time to time after the date
of this Agreement, any Lender shall determine that the adoption after the date
hereof of any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change after the date hereof in any applicable law, rule,
regulation or guideline regarding capital adequacy, including, without
limitation, the July 1988 report of the Basle Committee on Banking Regulations
and Supervisory Practices entitled "International Convergence of Capital
Measurement and Capital Standards", or any change in the interpretation or
administration of any thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by such Lender (or its lending office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or will have the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, if any, as a consequence of its obligations hereunder
to a level below that which such Lender could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender for such
reduction. Each Lender agrees to give notice to the Borrower of any adoption
of, change in, or change in interpretation or

<PAGE> 41

administration of, any such law, rule, regulation or guideline with reasonable
promptness after becoming actually aware thereof and of the applicability
thereof to the Transactions.

(c) A statement of any Lender or the Agent setting forth
such amount or amounts, supported by calculations in reasonable detail, as
shall be necessary to compensate such Lender (or the Agent) as specified in
paragraphs (a) and (b) above shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay each Lender or the
Agent the amount shown as due on any such statement within ten (10) days after
its receipt of the same. If any such amounts are ultimately refunded to the
Agent or any Lender, such amounts shall be promptly remitted to the Borrower.

(d) Failure on the part of any Lender or the Agent to
demand compensation for any increased costs, reduction in amounts received or
receivable with respect to any Interest Period or Letter of Credit or reduction
in the rate of return earned on such Lender's capital, shall not constitute a
waiver of such Lender's or the Agent's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
rate of return in such Interest Period or in any other Interest Period or with
respect to such Letter of Credit. The protection under this Section 2.10 shall
be available to each Lender and the Agent regardless of any possible contention
of the invalidity or inapplicability of any law, regulation or other condition
which shall give rise to any demand by such Lender or the Agent for
compensation.

(e) Any Lender claiming any additional amounts payable
pursuant to this Section 2.10 agrees to use reasonable efforts (consistent with
legal and regulatory restrictions) to avoid the need for, or reduce the amount
of, any such additional amounts and would not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to such Lender.

SECTION 2.11. Change in Legality. (a) Notwithstanding
anything to the contrary herein contained, if any change after the date hereof
in any law or regulation or in the interpretation thereof by any governmental
authority charged with the administration or interpretation thereof shall make
it unlawful for any Lender to make or maintain any Eurodollar Loan or to give
effect to its obligations to make Eurodollar Loans as contemplated hereby,
then, by written notice to Borrower and to the Agent, such Lender may:

(i) declare that Eurodollar Loans will not
thereafter be made by such Lender hereunder, whereupon the
Borrower shall be prohibited from requesting Eurodollar Loans
from such Lender hereunder unless such declaration is
subsequently withdrawn; and

<PAGE> 42

(ii) require that all outstanding Eurodollar Loans
made by such Lender be converted to Alternate Base Loans, in
which event (A) all such Eurodollar Loans shall be
automatically converted to Alternate Base Loans as of the
effective date of such notice as provided in paragraph (b)
below and (B) all payments of principal which would otherwise
have been applied to repay the converted Eurodollar Loans
shall instead be applied to repay the Alternate Base Loans
resulting from the conversion of such Eurodollar Loans.

(b) For purposes of Section 2.11(a) hereof, a notice to
the Borrower by any Lender shall be effective, if lawful, on the last day of
the then current Interest Period or, if there are then two or more current
Interest Periods, on the last day of each such Interest Period, respectively;
otherwise, such notice shall be effective with respect to the Borrower on the
date of receipt by the Borrower.

SECTION 2.12. Indemnity. The Borrower shall indemnify the
Agent and each Lender against any loss or reasonable expense (including, but
not limited to, any loss or reasonable out-of-pocket expense sustained or
incurred or to be sustained or incurred by reason of or in connection with the
execution and delivery or assignment of, or payment under, any Letter of
Credit, or in liquidating or employing deposits from third parties acquired to
affect or maintain any Loan or part thereof as a Eurodollar Loan) which the
Agent or such Lender may sustain or incur as a consequence of the following
events (regardless of whether such events occur as a result of the occurrence
of an Event of Default or the exercise of any right or remedy of the Agent or
the Lenders under this Agreement or any other agreement, or at law): any
failure of the Borrower to fulfill on the date of any Credit Event the
applicable conditions set forth in Article V hereof applicable to it; any
failure of the Borrower to borrow hereunder after irrevocable notice of
borrowing pursuant to Section 2.03 hereof has been given; any payment,
prepayment or conversion of a Eurodollar Loan on a date other than the last day
of the relevant Interest Period; any default in payment or prepayment of the
principal amount of any Loan or any part thereof or interest accrued thereon,
or with respect to any Letter of Credit, in each case as and when due and
payable (at the due date thereof, by irrevocable notice of prepayment or
otherwise); or the occurrence and continuance of an Event of Default. Such loss
or reasonable expense shall be limited to, an amount equal to the excess, if
any, of (i) the amount of interest which would have accrued on the principal or
other amount so paid, prepaid or converted or not borrowed for the period from
the date of such payment, prepayment or conversion or failure to borrow to, in
the case of a Loan, the last day of the Interest Period for such Loan (or, in
the case of a failure to borrow, the Interest Period for such Loan which would
have commenced on the date of such failure to borrow), at the applicable rate
of interest for such Loan provided for herein over (ii) the amount of interest
(as reasonably determined by such Lender) that would be realized by such

<PAGE> 43

Lender in reemploying the funds so paid, prepaid or converted or not borrowed
for such period or Interest Period, as the case may be. Any such Lender shall
provide to the Borrower a statement, signed by an officer of such Lender,
explaining any loss or expense and setting forth, if applicable, the
computation pursuant to the preceding sentence, and such statement shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such statement within ten (10) days after the receipt of
the same. The indemnities contained herein shall survive the expiration or
termination of this Agreement and of the Letters of Credit.

SECTION 2.13. Pro Rata Treatment; Assumption by and
Delegation of Authority to the Agent. (a) Except as permitted under Sections
2.10, 2.11 and 2.15 hereof, each borrowing, each payment or prepayment of
principal of the Notes, each payment of interest on the Notes, each payment of
any fee or other amount payable hereunder and each reduction of the Total
Revolving Credit Commitment and Total Term Loan Commitment shall be made pro
rata among the Lenders in the proportions that their Revolving Credit
Commitments bear to the Total Revolving Credit Commitment or that their Term
Loan Commitments bears to the Total Term Loan Commitment, as the case may be.

(b) Notwithstanding the occurrence or continuance of a
Default or Event of Default or other failure of any condition to the making of
Loans or occurrence of other Credit Events hereunder subsequent to the Credit
Events on the Closing Date, unless the Agent shall have been notified in
writing by any Lender in accordance with the provisions of paragraph (c) below
prior to the date of a proposed Credit Event that such Lender will not make the
amount that would constitute its pro rata share of the applicable Credits on
such date available to the Agent, the Agent may assume that such Lender has
made such amount available to the Agent on such date, and the Agent may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is made available to the Agent on a date after such
Credit Event date, such Lender shall pay to the Agent on demand an amount equal
to the product of (i) the daily average Federal funds rate during such period
as quoted by the Agent, times (ii) the amount of such Lender's pro rata share
of such Credits, times (iii) a fraction the numerator of which is the number of
days that elapse from and including such Credit Event date to the date on which
such Lender's pro rata share of such Credits shall have become immediately
available to the Agent and the denominator of which is 360. A certificate of
the Agent submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If such
Lender's pro rata share of such Credits not in fact made available to the Agent
by such Lender within three Business Days of such Credit Event date, the Agent
shall be entitled to recover such amount with interest thereon at the rate per
annum applicable to the Loans hereunder, on demand, from the Borrower.

<PAGE> 44

(c) Unless and until the Agent shall have received
written notice from the Required Lenders as to the existence of a Default, an
Event of Default or some other circumstance which would relieve the Lenders of
their respective obligations to extend Credits hereunder, which notice shall be
in writing and shall be signed by the Required Lenders and shall expressly
state that the Required Lenders do not intend to make available to the Agent
such Lenders' ratable share of Credits extended after the effective date of
such notice, the Agent shall be entitled to continue to make the assumptions
described in Section 2.13(b) above. After receipt of the notice described in
the preceding sentence, which shall become effective on the third Business Day
after receipt of such notice by the Agent (unless otherwise agreed by the
Agent), the Agent shall be entitled to make the assumptions described in
Section 2.13(b) above as to any Credits as to which it has not received a
written notice to the contrary prior to 11:00 a.m. (New York time) on the
Business Day next preceding the day on which such Credits are to be extended.
The Agent shall not be required to extent any Credits as to which it shall have
received notice by a Lender of such Lender's intention not to make its ratable
portion of such Credits available to the Agent. Any withdrawal of authorization
as described under this Section 2.13(c) shall not affect the validity of any
Credits extended prior to the effectiveness thereof.

SECTION 2.14. Sharing of Setoffs. Each Lender agrees that
if it shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrower, including, but not limited to, a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, obtain payment (voluntary or involuntary) in respect of a Note held
by it as a result of which the unpaid principal portion of the Notes held by it
shall be proportionately less than the unpaid principal portion of the Notes
held by any other Lender, it shall be deemed to have simultaneously purchased
from such other Lender a participation in the Notes held by such other Lender,
so that the aggregate unpaid principal amount of the Notes and participations
in Notes held by it shall be in the same proportion to the aggregate unpaid
principal amount of all Notes then outstanding as the principal amount of the
Notes held by it prior to such exercise of banker's lien, setoff or
counterclaim was to the principal amount of all Notes outstanding prior to such
exercise of banker's lien, setoff or counterclaim; provided, however, that if
any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.14 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustments restored without
interest. The Borrower expressly consents to the foregoing arrangements and
agrees that any Lender holding a participation in a Note deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by

<PAGE> 45

the Borrower to such Lender as fully as if such Lender held a Note in the
amount of such participation.

SECTION 2.15. Taxes. (a) Any and all payments by the
Borrower hereunder shall be made, in accordance with Section 2.16 hereof, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings in any such case imposed
by the United States or any political subdivision thereof, excluding:

(i) in the case of the Agent and each Lender,
taxes imposed or based on its net income (or taxes imposed on
gross receipts in lieu of net income taxes), franchise or
capital taxes imposed by the jurisdiction in which the Agent
or Lender is organized, is doing business (other than
jurisdictions in which it is deemed doing business as a result
of any transactions contemplated by this Agreement) or has its
Applicable Lending Office or any political subdivisions
thereof, withholding taxes payable with respect to payments to
the Agent or such Lender at its principal office or Applicable
Lending Office under laws (including, without limitation, any
treaty, ruling, determination or regulation) in effect on the
date hereof, but not any increase in withholding tax resulting
from any subsequent change in such laws (other than
withholding with respect to taxes imposed or based on its net
income (or taxes imposed on gross receipts in lieu of net
income taxes) or with respect to franchise or capital taxes),
and

(ii) taxes (including withholding taxes) imposed
by reason of the failure of the Agent or any Lender to comply
with Section 2.15(f) hereof (or the inaccuracy at any time of
the certificates, documents and other evidence delivered
thereunder)

(all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders or the Agent, (x) the sum payable shall be
increased by the amount necessary so that after making all required deductions
(including without limitation deductions applicable to additional sums payable
under this Section 2.15) such Lender or the Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (y) the Borrower shall make such deductions and (z) the Borrower shall
pay the full amount deducted to the relevant tax authority or other authority
in accordance with applicable law.

(b) In addition, the Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or

<PAGE> 46

similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement (hereinafter referred to as "Other Taxes").

(c) The Borrower will indemnify each Lender and the Agent
for the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction (except as specified in
clauses (a)(i) and (ii)) on amounts payable under this Section 2.15) paid by
such Lender or the Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be made within 30 days from the date such Lender or
the Agent (as the case may be) makes written demand therefor. If as a result of
a payment by Borrower of Taxes pursuant to this subsection a Lender receives a
credit against, refund of, or reduction in taxes which such Lender would not
have received but for the payment by the Borrower of Taxes pursuant to this
subsection, then such Lender shall promptly notify the Borrower of such credit,
reduction or refund and such Lender shall, within 30 days of receipt of a
request by the Borrower, but not earlier than the time Lender realizes the
benefit of such credit or tax reduction or receives the refund, pay to the
Borrower the amount of such credit, refund or reduction, provided that the
Borrower, upon the request of such Lender, agrees to return such amount (plus
any penalties, interest or other charges) to such Lender in the event such
Lender is required to repay such amount.

(d) Within 30 days after the date of any payment of Taxes
or Other Taxes withheld by the Borrower in respect of any payment to any
Lender, the Borrower will furnish to the Agent, at its address referred to in
Section 11.01 hereof, such certificates, receipts and other documents as may be
reasonably required to evidence payment thereof.

(e) Without prejudice to the survival of any other
agreement hereunder, the agreements and obligations contained in this Section
2.15 shall survive the payment in full of principal and interest hereunder.

(f) Each Lender that is a "United States person" as
defined in section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended, shall deliver to Borrower and the Agent on the date hereof two duly
completed Forms W- 9, or a successor applicable form. When such Form W-9
expires or becomes obsolete or inaccurate in any respect or after an event
requiring a change in the most recent form previously delivered to Borrower and
the Agent, a substitute Form W- 9, or successor applicable form, shall be
delivered to Borrower. Each Lender that is organized outside of the United
States shall deliver to the Borrower on the date hereof (or, in the case of an
assignee, on the date of the assignment) and from time to time as required for
renewal under applicable law (i) an Internal Revenue Service Form W-8 or W-9
and (ii) two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 (or any successor or

<PAGE> 47

additional forms), as appropriate, establishing in each case that such Lender
is entitled to receive payments under this Agreement without any deduction or
withholding of any United States federal income taxes. The Agent (if the Agent
is an entity organized outside the United States) and each Lender that is
organized outside the United States shall promptly notify the Borrower and the
Agent of any change in its Applicable Lending Office and such Lender shall,
prior to the immediately following due date of any payment by the Borrower or
any Guarantor hereunder or under any other Loan Document, deliver to the
Borrower or such Guarantor, as the case may be (with copies to the Agent), such
certificates, documents or other evidence, as required by the Code or Treasury
Regulations issued pursuant thereto, including without limitation Internal
Revenue Service Form 4224, Form 1001 and any other certificate or statement of
exemption required by Treasury Regulation Section 1.1441-4(a) or Section
1.1441-6(c) or any subsequent version thereof, properly completed and duly
executed by such Lender establishing that such payment is (i) not subject to
withholding under the Code because such payment is effectively connected with
the conduct by such Lender of a trade or business in the United States or (ii)
totally exempt from United States tax under a provision of an applicable tax
treaty. The Borrower shall be entitled to rely on such forms in their
possession until receipt of any revised or successor form pursuant to this
Section 2.15(f). Each Lender shall deliver to the Borrower and the Agent, with
respect to taxes imposed by any United States state or local governmental
authority, if requested, similar forms, if available (or the information that
would be contained in similar forms if such forms were available) to the forms
which are required to be provided under this subsection with respect to taxes
of the United States. The preceding sentence shall apply only if the Lender is
eligible for exemption from any such state or local taxes. If the Agent or a
Lender fails to provide a certificate, document or other evidence required
pursuant to this Section 2.15(f), then (i) the Borrower shall be entitled to
deduct or withhold on payments to the Agent or such Lender as a result of such
failure, as required by law, and (ii) the Borrower shall not be required to
make payments of additional amounts with respect to such withheld Taxes
pursuant to clause (x) of Section 2.15(a) to the extent such withholding is
required solely by reason of the failure of the Agent or such Lender to provide
the necessary certificate, document or other evidence.

(g) Each Lender and the Agent shall use reasonable
efforts to avoid or minimize any amounts which might otherwise be payable
pursuant to this subsection 2.15 (including seeking refunds of any amounts that
are reasonably believed not to have been correctly or legally asserted);
provided, however, that such efforts shall not include the taking of any
actions by such Lender or the Agent that would result in any tax, costs or
other expense to such Lender or the Agent (other than a tax, cost or other
expense for which such Lender or the Agent shall have been reimbursed or
indemnified by the Borrower pursuant to this Agreement or otherwise) or any
action which would or might in

<PAGE> 48

the reasonable opinion of such Lender or the Agent have an adverse effect upon
its business, operations or financial condition.

SECTION 2.16. Payments and Computations. The Borrower shall
make each payment hereunder and under any instrument delivered hereunder not
later than 12:00 noon (New York City time) on the day when due in lawful money
of the United States (in freely transferable dollars) to the Agent at its
offices at 633 Third Avenue, New York, New York 10017-6764 for the account of
the Lenders, in immediately available funds. The Agent may charge, when due and
payable, the Borrower's account with the Agent for all interest, principal and
Commitment Fees or other fees owing to the Agent or the Lenders on or with
respect to this Agreement and/or the Loans and other Loan Documents. If at any
time there is not sufficient availability to cover any of the payments referred
to in the prior sentence, and in any event upon the occurrence of any Default,
the Borrower shall make any such payments upon demand.

SECTION 2.17. Issuance of Letters of Credit. Upon the
request of the Borrower, and subject to the conditions set forth in Article V
hereof and such other conditions to the opening of Letters of Credit as the
Agent requires of its customers generally, the Agent shall from time to time
open commercial and standby letters of credit (each, a "Letter of Credit") for
the account of the Borrower, the aggregate undrawn amount of all outstanding
Letters of Credit not at any time to exceed $1,000,000; provided, however, that
the Borrower may not request the Agent to open a Letter of Credit if after
giving effect to the face amount thereof Availability would be less than zero.
The issuance of each Letter of Credit shall be made on at least three Business
Days' prior written notice from the Borrower to the Agent, at its Domestic
Lending Office, which written notice shall be an application for a Letter of
Credit on the Agent's customary form completed to the satisfaction of the
Agent, together with the proposed form of the Letter of Credit (which shall be
satisfactory to the Agent) and such other certificates, documents and other
papers and information as the Agent may reasonably request. The Agent shall not
at any time be obligated to issue any Letter of Credit if such issuance would
conflict with, or cause the Agent or any Lender to exceed any limits imposed
by, any applicable requirements of law. The expiration date of any (i)
commercial Letter of Credit shall not be later than 90 days from the date of
issuance thereof and (ii) any standby Letter of Credit shall not be later than
360 days from the date of issuance thereof, and, in any event, no Letter of
Credit shall have an expiration date later than the Revolving Credit
Termination Date. The Letters of Credit shall be issued with respect of
transactions occurring in the ordinary course of business of the Borrower.

SECTION 2.18. Payment of Letters of Credit; Reimbursement.
Upon the issuance of any Letter of Credit, the Agent shall notify each Lender
of the principal amount, the number, and the expiration date thereof and the
amount of such Lender's participation therein. By the issuance of a Letter of
Credit

<PAGE> 49

hereunder and without further action on the part of the Agent or the Lenders,
each Lender hereby accepts from the Agent a participation (which participation
shall be nonrecourse to the Agent) in such Letter of Credit equal to such
Lender's pro rata (based on its Revolving Credit Commitment) share of such
Letter of Credit, effective upon the issuance of such Letter of Credit. Each
Lender hereby absolutely and unconditionally assumes, as primary obligor and
not as a surety, and agrees to pay and discharge, and to indemnify and hold the
Agent harmless from liability in respect of, such Lender's pro rata share of
the amount of any drawing under a Letter of Credit. Each Lender acknowledges
and agrees that its obligation to acquire participations in each Letter of
Credit issued by the Agent and its obligation to make the payments specified
herein, and the right of the Agent to receive the same, in the manner specified
herein, are absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or an Event of Default hereunder, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever. The Agent shall review, on behalf of the Lenders, each draft and
any accompanying documents presented under a Letter of Credit and shall notify
each Lender of any such presentment. Promptly after it shall have ascertained
that any draft and any accompanying documents presented under such Letter of
Credit appear on their face to be in substantial conformity with the terms and
conditions of the Letter of Credit, the Agent shall give telephonic or
facsimile notice to the Lenders and the Borrower of the receipt and amount of
such draft and the date on which payment thereon will be made, and the Lenders
shall, by 11:00 A.M., New York City time on the date such payment is to be
made, pay the amounts required to the Agent in New York, New York in
immediately available funds, and the Agent, not later than 3:00 p.m. on such
day, shall make the appropriate payment to the beneficiary of such Letter of
Credit. If in accordance with the prior sentence the Lenders shall pay any
draft presented under a Letter of Credit, then the Agent, on behalf of the
Lenders, shall charge the general deposit account of the Borrower with the
Agent for the amount thereof, together with the Agent's customary overdraft fee
in the event the funds available in such account shall not be sufficient to
reimburse the Lenders for such payment and the Borrower shall not otherwise
have discharged such reimbursement obligation by 11:00 a.m., New York City
time, on the date of such payment. If the Lenders have not been reimbursed
with respect to such drawing as provided above, the Borrower shall pay to the
Agent, for the account of the Lenders, the amount of the drawing together with
interest on such amount at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the rate
applicable to Alternate Base Loans hereunder plus two percent (2%), payable on
demand. The obligations of the Borrower under this Section 2.18 to reimburse
the Lenders and the Agent for all drawings under Letters of Credit shall be
joint and several, absolute, unconditional and irrevocable and shall be
satisfied strictly in accordance with their terms, irrespective of:

<PAGE> 50

(a) any lack of validity or enforceability of any Letter
of Credit;

(b) the existence of any claim, setoff, defense or other
right which the Borrower or any other person may at any time have
against the beneficiary under any Letter of Credit, the Agent or any
Lender (other than the defense of payment in accordance with the terms
of this Agreement or a defense based on the gross negligence or
willful misconduct of the Agent or any Lender) or any other person in
connection with this Agreement or any other transaction;

(c) any draft or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;

(d) payment by the Agent or any Lender under any Letter
of Credit against presentation of a draft or other document which does
not comply with the terms of such Letter of Credit except for the
Agent's gross negligence or willful misconduct; and

(e) any other circumstance or event whatsoever, whether
or not similar to any of the foregoing.

It is understood that in making any payment under any Letter
of Credit (x) the Agent's and any Lender's exclusive reliance on the documents
presented to it under such Letter of Credit as to any and all matters set forth
therein, including, without limitation, reliance on the amount of any draft
presented under such Letter of Credit, whether or not the amount due to the
beneficiary equals the amount of such draft and whether or not any document
presented pursuant to such Letter of Credit proves to be insufficient in any
respect, if such document on its face appears to be in order, and whether or
not any other statement or any other document presented pursuant to such Letter
of Credit proves to be forged or invalid or any statement therein proves to be
inaccurate or untrue in any respect whatsoever and (y) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit with
the terms thereof shall, in each case, not be deemed willful misconduct or
gross negligence of the Agent or any Lender.

SECTION 2.19. Agent's Actions with respect to Letters of
Credit. Any Letter of Credit may, in the discretion of the Agent or its
correspondents, be interpreted by them (to the extent not inconsistent with
such Letter of Credit) in accordance with the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce, as adopted or
amended from time to time, or any other rules, regulations and customs
prevailing at the place where any Letter of Credit is available or the drafts
are drawn or negotiated. The Agent and its correspondents may accept and act
upon the name, signature, or act of

<PAGE> 51

any party purporting to be the executor, administrator, receiver, trustee in
bankruptcy, or other legal representative of any party designated in any Letter
of Credit in the place of the name, signature, or act of such party.

SECTION 2.20. Letter of Credit Fees. The Borrower agrees to
pay to the Agent the Letter of Credit fees set forth on Schedule 2.20 annexed
hereto. The Agent shall disburse to each Lender such Lender's pro rata share of
any payment of the Letter of Credit fees referred to in Schedule 2.20 annexed
hereto in immediately available funds within two (2) Business Days of the
Agent's receipt of such payment.

III. COLLATERAL SECURITY

SECTION 3.01. Security Documents. The Obligations shall be
secured by the Collateral described in the Security Documents and are entitled
to the benefits thereof. The Borrower shall duly execute and deliver the
Security Documents, all consents of third parties necessary to permit the
effective granting of the Liens created in such agreements, financing
statements pursuant to the Uniform Commercial Code and other documents, all in
form and substance satisfactory to the Agent, as may be reasonably required by
the Agent to grant to the Lenders a valid, perfected and enforceable first
priority Lien on and security interest in (subject only to the Liens permitted
under Section 7.01 hereof) the Collateral.

SECTION 3.02. Filing and Recording. The Borrower shall, at
its sole cost and expense, cause all instruments and documents given as
evidence of security pursuant to this Agreement to be duly recorded and/or
filed or otherwise perfected in all places necessary, in the opinion of the
Agent, and take such other actions as the Agent may reasonably request, in
order to perfect and protect the Liens of the Agent and Lenders in the
Collateral. The Borrower, to the extent permitted by law, hereby authorizes the
Agent to file any financing statement in respect of any Lien created pursuant
to the Security Documents which may at any time be required or which, in the
opinion of the Agent, may at any time be desirable although the same may have
been executed only by the Agent or, at the option of the Agent, to sign such
financing statement on behalf of the Borrower and file the same, and the
Borrower hereby irrevocably designates the Agent, its agents, representatives
and designees as its agent and attorney-in-fact for this purpose. In the event
that any re-recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is required to protect
and preserve such Lien, the Borrower shall, at the Borrower's cost and expense,
cause the same to be recorded and/or refiled at the time and in the manner
requested by the Agent.

<PAGE> 52

IV. REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to each of the Lenders
that both before and after giving effect to the consummation of the
Transactions (including, without limitation, under the Recapitalization
Documents):

SECTION 4.01. Organization, Legal Existence. The Borrower
and each of its subsidiaries are legal entities duly organized, validly
existing and in good standing under the laws of the jurisdiction of their
respective organization, have the requisite power and authority to own their
property and assets and to carry on their business as now conducted and as
currently proposed to be conducted and are qualified to do business in every
jurisdiction where such qualification is required (all such jurisdictions being
listed in Schedule 4.01 annexed hereto) except where the failure to so qualify
would not be likely to have a Material Adverse Effect. The Borrower has the
corporate power to execute, deliver and perform its obligations under this
Agreement and the other Loan Documents to which it is a party, and to borrow
hereunder and to execute and deliver the Notes.

SECTION 4.02. Authorization. The execution, delivery and
performance by the Borrower of this Agreement and each of the other Loan
Documents to which it is a party, the borrowings hereunder by the Borrower, the
execution and delivery by the Borrower of the Notes, the grant of security
interests in the Collateral created by the Security Documents and the
transactions contemplated to occur under or in connection with the Acquisition
Documents (collectively, the "Transactions") (a) have been duly authorized by
all requisite corporate and, if required, stockholder action and (b) will not
(i) cause a violation by the Borrower or any of its subsidiaries of (A) any
provision of law, statute, rule or regulation or the certificate or articles of
incorporation or other applicable constitutive documents or the by-laws of the
Borrower, or its subsidiaries, as the case may be, (B) any order of any court,
or any rule, regulation or order of any other agency of government binding upon
the Borrower, or its subsidiaries, or (C) any provisions of any material
indenture, agreement or other instrument to which the Borrower, or its
subsidiaries, or any of their respective properties or assets are or may be
bound, (ii) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any material indenture,
agreement or other instrument referred to in (b)(i)(C) above or (iii) result in
the creation or imposition of any Lien of any nature whatsoever (other than in
favor of the Agent, for its own benefit and for the benefit of the Lenders, as
contemplated by this Agreement and the Security Documents) upon any property or
assets of the Borrower, or its subsidiaries.

SECTION 4.03. Governmental Approvals. No registration or
filing (other than the filings necessary to perfect the Liens created by the
Security Documents) with consent or approval of, or other action by, any
Federal, state or

<PAGE> 53

other governmental agency, authority or regulatory body is or will be required
to be made by the Borrower or any of its subsidiaries in connection with the
Transactions, other than any which have been made or obtained.

SECTION 4.04. Binding Effect. This Agreement and each of
the other Loan Documents to which it is a party constitutes, and each of the
Notes when duly executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower enforceable in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and to general
equitable principles.

SECTION 4.05. Material Adverse Change. Except as set forth
in Schedule 4.05 annexed hereto, there has been no material adverse change in
the business, assets, operations or financial condition of the Borrower or any
of its subsidiaries since September 30, 1995.

SECTION 4.06. Litigation; Compliance with Laws; etc. (a)
Except as set forth in Schedule 4.06(a) annexed hereto, there are not any
actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority now
pending or, to the knowledge of any Responsible Officer of the Borrower,
threatened against or affecting the Borrower or any of its subsidiaries or the
businesses, assets or rights of the Borrower or any of its subsidiaries (i)
which involve any of the Transactions or (ii) as to which it is probable
(within the meaning of Statement of Financial Accounting Standards No. 5) that
there will be an adverse determination and which, if adversely determined,
would, individually or in the aggregate, materially impair the ability of the
Borrower to conduct business substantially as now conducted, or have a Material
Adverse Effect.

(b) Except as set forth in Schedule 4.06(b) annexed
hereto, neither the Borrower nor any of its subsidiaries is in violation of any
law, or in default with respect to any judgment, writ, injunction, decree, rule
or regulation of any court or governmental agency or instrumentality which
would have a Material Adverse Effect.

SECTION 4.07. Financial Statements. (a) The Borrower has
heretofore furnished to the Agent balance sheets and statements of income and
cash flows of the Borrower (i) dated as of September 30, 1992, 1993, 1994 and
1995 prepared by management in the case of 1992 and 1993 and in the case of
1994 and 1995 audited by and accompanied by the opinion of independent public
accountants and (ii) dated as of March 31, 1996 for the six month period then
ended and prepared by management. Such balance sheets and statements of income
and cash flows present fairly the financial condition and results of operations
of the Borrower and its subsidiaries as of the dates and for the periods

<PAGE> 54

indicated (subject to normal year-end adjustments in the case of the March 31,
1996 statements), and such balance sheets and the notes thereto disclose all
material liabilities, direct or contingent, of the Borrower and its
subsidiaries, as of the dates thereof required under GAAP to be disclosed
therein.

(b) The Borrower has heretofore furnished to the Agent
projected income statements, balance sheets and cash flows of the Borrower on a
Consolidated basis through the Final Maturity Date, together with a schedule
confirming the ability of the Borrower to consummate the Transactions and
demonstrating prospective compliance with all financial covenants contained in
this Agreement, such projections disclosing all assumptions made by the
Borrower in formulating such projections and giving effect to the Transactions.
The projections are based upon reasonable estimates and assumptions, all of
which are reasonable in light of the conditions which existed at the time the
projections were made, have been prepared on the basis of the assumptions
stated therein, and reflect as of the Closing Date management's reasonable
estimate of the results of operations and other information projected therein.

(c) The Borrower has heretofore furnished to the Agent a
pro forma balance sheet of the Borrower which is consistent with the previous
balance sheets of the Borrower and which sets forth information before and
after giving effect to the Transactions.

(d) The financial statements referred to in Section
4.07(a) have been prepared in accordance with GAAP, except for the statement
dated March 31, 1996, which does not contain all notes that would be required
under GAAP.

SECTION 4.08. Federal Reserve Regulations. (a) Neither the
Borrower nor any of its subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.

(b) No part of the proceeds of the Loans will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or carry Margin Stock or to extend credit to others
for the purpose of purchasing or carrying Margin Stock or to refund
indebtedness originally incurred for such purpose, or (ii) for any purpose
which entails a violation of, or which is inconsistent with, the provisions of
the Regulations of the Board, including, without limitation, Regulation G, T, U
or X thereof. If requested by any Lender, the Borrower or any of its
subsidiaries shall furnish to such Lender a statement on Federal Reserve Form
U-1 referred to in said Regulation U.

SECTION 4.09. Taxes. The Borrower and each of its
subsidiaries have filed or caused to be filed all Federal, state, local and
foreign tax returns

<PAGE> 55

which are required to be filed by them, on or prior to the date hereof (giving
regard to valid extensions), other than tax returns in respect of taxes that
(x) in the aggregate are not material and (y) would not, if unpaid, result in
the imposition of any material Lien on any property or assets of the Borrower
or any its subsidiaries. The Borrower and its subsidiaries have paid or caused
to be paid all taxes shown to be due and payable on such filed returns or on
any assessments received by them, other than (i) any taxes or assessments the
validity of which the Borrower or such subsidiary is contesting in good faith
by appropriate proceedings, and with respect to which the Borrower or such
subsidiary shall, to the extent required by GAAP have set aside on its books
adequate reserves and (ii) taxes that in the aggregate are not material and
which would not, if unpaid, result in the imposition of any material Lien on
any property or assets of the Borrower or any of its subsidiaries. No Federal
income tax returns of the Borrower or any of its subsidiaries have been audited
by the United States Internal Revenue Service and neither the Borrower nor any
of its subsidiaries has as of the date hereof requested or been granted any
extension of time to file any Federal, state, local or foreign tax return.
Neither the Borrower nor any of its subsidiaries is party to or has any
obligation under any tax sharing agreement.

SECTION 4.10. Employee Benefit Plans. With respect to the
provisions of ERISA:

(i) No Reportable Event has occurred or is continuing with
respect to any Pension Plan which would have a Material Adverse Effect.

(ii) No prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) which would have a Material Adverse
Effect has occurred with respect to any Plan subject to Part 4 of Subtitle B of
Title I of ERISA.

(iii) As of the date hereof neither the Borrower nor any ERISA
Affiliate is now, or has been during the preceding five years, obligated to
contribute to a Pension Plan or a Multiemployer Plan. Neither the Borrower nor
any ERISA Affiliate has (A) ceased operations at a facility so as to become
subject to the provisions of Section 4062(e) of ERISA, (B) withdrawn as a
substantial employer so as to become subject to the provisions of Section 4063
of ERISA, (C) ceased making contributions to any Pension Plan subject to the
provisions of Section 4064(a) of ERISA to which the Borrower, any subsidiary of
the Borrower or any ERISA Affiliate made contributions, (D) incurred or caused
to occur a "complete withdrawal" (within the meaning of Section 4203 of ERISA)
or a "partial withdrawal" (within the meaning of Section 4205 of ERISA) from a
Multiemployer Plan that is a Pension Plan so as to incur withdrawal liability
under Section 4201 of ERISA (without regard to subsequent reduction or waiver
of such liability under Section 4207 or 4208 of ERISA), or (E) been a party to
any transaction or

<PAGE> 56

agreement under which the provisions of Section 4204 of ERISA were applicable
which in any case or all such cases in the aggregate would result in a Material
Adverse Effect.

(iv) No notice of intent to terminate a Pension Plan under
Section 4041(c) of ERISA has been filed in the last five years, nor has any
Plan been terminated pursuant to the provisions of Section 4041(e) of ERISA.

(v) The PBGC has not instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Plan in the last five years and no
event has occurred or condition exists which might constitute grounds under the
provisions of Section 4042 of ERISA for the termination of (or the appointment
of a trustee to administer) any such Plan.

(vi) With respect to each Pension Plan that is subject to the
provisions of Title I, Subtitle B, Part 3 of ERISA, the funding method used in
connection with such Plan is acceptable under ERISA, and the actuarial
assumptions and methods used in connection with funding such Pension Plan
satisfy the requirements of Section 302 of ERISA. The assets of each such
Pension Plan (other than the Multiemployer Plans) are at least equal to the
present value of the greater of (i) accrued benefits (both vested and
non-vested) under such Plan, or (ii) "benefit liabilities" (within the meaning
of Section 4001(a)(16) of ERISA) under such Plan, in each case as of the latest
actuarial valuation date for such Plan (determined in accordance with the same
actuarial assumptions and methods as those used by the Plan's actuary in its
valuation of such Plan as of such valuation date) provided, that if the assets
do not exceed the amounts described in clauses (i) and (ii) it would not have a
Material Adverse Effect. No such Pension Plan has incurred any "accumulated
funding deficiency" (as defined in Section 412 of the Code), whether or not
waived.

(vii) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Borrower or any ERISA
Affiliate, which could reasonably be expected to be asserted, against any Plan
or the assets of any such Plan which would have a Material Adverse Effect. No
civil or criminal action brought pursuant to the provisions of Title I,
Subtitle B, Part 5 of ERISA is pending or threatened against any fiduciary or
any Plan which would have a Material Adverse Effect. None of the Plans or any
fiduciary thereof (in its capacity as such) has been the direct or indirect
subject of any audit, investigation or examination by any governmental or
quasi-governmental agency which would have a Material Adverse Effect.

(viii) All of the Plans comply in all material respects
currently, and have in all material respects complied in the past, both as to
form and operation, with their terms and with the provisions of ERISA and the
Code, and all other applicable laws, rules and regulations; all necessary
governmental approvals for

<PAGE> 57

the Plans have been obtained or are in the process of being obtained and a
favorable determination as to the qualification under Section 401(a) of the
Code of each of the Plans which is an employee pension benefit plan (within the
meaning of Section 3(2) of ERISA) has been made by or is in the process of
being obtained from the Internal Revenue Service and a recognition of exemption
from federal income taxation under Section 501(c) of the Code of each of the
funded employee welfare benefit plans (within the meaning of Section 3(1) of
ERISA) has been made by the Internal Revenue Service, and nothing has occurred
since the date of each such determination or recognition letter that would
adversely affect such qualification.

SECTION 4.11. No Material Misstatements. No information,
report, financial statement, exhibit or schedule (taken as a whole) prepared or
furnished by or on behalf of the Borrower to the Agent or any Lender in
connection with any of the Transactions or this Agreement, the Security
Documents, the Notes or any other Loan Documents or included therein contained
or contains any material misstatement of fact or omitted or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

SECTION 4.12. Investment Company Act; Public Utility
Holding Company Act. Neither the Borrower nor any of its subsidiaries is an
"investment company" as defined in, or is otherwise subject to regulation
under, the Investment Company Act of 1940. Neither the Borrower nor any of its
subsidiaries is a "holding company" as that term is defined in or is otherwise
subject to regulation under, the Public Utility Holding Company Act of 1935.

SECTION 4.13. Security Interest. Each of the Security
Documents creates and grants to the Agent, for its own benefit and for the
benefit of the Lenders, a legal, valid and perfected first (except as permitted
pursuant to Section 7.01 hereof) priority security interest in the collateral
identified therein. Such collateral or property is not subject to any other
Liens whatsoever, except Liens permitted by Section 7.01 hereof.

SECTION 4.14. Use of Proceeds. (a) All proceeds of the
borrowing under the Total Term Loan Commitment shall be used to partially
finance the consideration required under the Recapitalization Agreement and for
related Transaction expenses and working capital.

(b) All proceeds of each borrowing under the Revolving
Credit Commitment on the Closing Date, if any, shall be used to partially
finance the consideration required under the Recapitalization Agreement and
related Transaction expenses. All proceeds of each subsequent borrowing under
the Revolving Credit Commitment after the Closing Date shall be used to,
provide for

<PAGE> 58

working capital requirements of the Borrower, in connection with Permitted
Acquisitions or to purchase equipment.

SECTION 4.15. Subsidiaries. As of the Closing Date,
Schedule 4.15 annexed hereto sets forth each subsidiary of the Borrower, its
jurisdiction of incorporation, its capitalization and ownership of capital
stock of each such subsidiary.

SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks. (a) The Borrower and each of its subsidiaries have good and
marketable title to, or valid leasehold interest in, all of their respective
properties and assets shown on the most recent balance sheet referred to in
Section 4.07(a) hereof and all assets and properties acquired since the date of
such balance sheet, except for such properties as are no longer used or useful
in the conduct of its business or as have been disposed of in the ordinary
course of business, and except for minor defects in title that do not interfere
with the ability of the Borrower or any of its subsidiaries to conduct its
business as now conducted. All such assets and properties are free and clear of
all Liens other than those permitted by Section 7.01 hereof.

(b) The Borrower and each of its subsidiaries have
complied with all obligations under all leases to which they are a party and
under which they are in occupancy except where the failure to so comply would
not have a Material Adverse Effect, and all such leases are in full force and
effect and the Borrower and each of its subsidiaries enjoy peaceful and
undisturbed possession under all such leases.

(c) The Borrower and each of its subsidiaries own or
control all material trademarks, trademark rights, trade names, trade name
rights, copyrights, patents, patent rights and licenses which are necessary for
the conduct of the business of the Borrower and each of its subsidiaries.
Neither the Borrower nor any of its subsidiaries is infringing upon or
otherwise acting adversely to any of such trademarks, trademark rights, trade
names, trade name rights, copyrights, patent rights or licenses owned by any
other person or persons. There is no claim or action by any such other person
pending, or to the knowledge of any Responsible Officer of the Borrower or any
subsidiary thereof, threatened, against the Borrower or any of its subsidiaries
with respect to any of the rights or property referred to in this Section
4.16(c).

SECTION 4.17. Solvency. (a) The fair salable value of the
assets of the Borrower and its Consolidated subsidiaries is not less than the
amount that will be required to be paid on or in respect of the probable
liability on the existing debts and other liabilities (including contingent
liabilities) of the Borrower and its Consolidated subsidiaries, as they become
absolute and mature.

<PAGE> 59

(b) The assets of the Borrower and its Consolidated
subsidiaries do not constitute unreasonably small capital for the Borrower and
its Consolidated subsidiaries to carry out their business as now conducted and
as proposed to be conducted including the capital needs of the Borrower and its
Consolidated subsidiaries, taking into account the particular capital
requirements of the business conducted by the Borrower and its Consolidated
subsidiaries and projected capital requirements and capital availability
thereof.

(c) Neither the Borrower nor any of its subsidiaries
intends to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be received by the
Borrower and any of its subsidiaries, and of amounts to be payable on or in
respect of debt of the Borrower and any of its subsidiaries). The cash flow of
the Borrower and its Consolidated subsidiaries, after taking into account all
anticipated uses of the cash of the Borrower and its Consolidated subsidiaries,
will at all times be sufficient to pay all such amounts on or in respect of
debt of the Borrower and its Consolidated subsidiaries when such amounts are
required to be paid.

(d) Neither the Borrower nor any of its subsidiaries
believes that final judgments against them in actions for money damages
presently pending will be rendered at a time when, or in an amount such that,
they will be unable to satisfy any such judgments promptly in accordance with
their terms (taking into account the maximum reasonable amount of such
judgments in any such actions and the earliest reasonable time at which such
judgments might be rendered). The cash flow of the Borrower and its
Consolidated subsidiaries, after taking into account all other anticipated uses
of the cash of the Borrower and its Consolidated subsidiaries (including the
payments on or in respect of debt referred to in paragraph (c) of this
Section), will at all times be sufficient to pay all such judgments promptly in
accordance with their terms.

SECTION 4.18. Permits, etc. Except where the failure to so
comply would not have a Material Adverse Effect, the Borrower and each of its
subsidiaries possess all licenses, permits, approvals and consents, including,
without limitation, all environmental, health and safety licenses, permits,
approvals and consents (collectively, "Permits") of all Federal, state and
local governmental authorities as required to conduct properly their business,
each such Permit is and will be in full force and effect, the Borrower and each
of its subsidiaries are in compliance in all material respects with all such
Permits, and no event (including, without limitation, any violation of any law,
rule or regulation) has occurred which allows the revocation or termination of
any such Permit or any restriction thereon.

SECTION 4.19. Compliance with Environmental Laws. Except as
disclosed in Schedule 4.19 hereto: (i) the operations of the Borrower and its
subsidiaries comply in all material respects with all applicable Environmental

<PAGE> 60

Laws; (ii) the Borrower and its subsidiaries and all of their present
facilities or operations, as well as to the knowledge of the Borrower and its
subsidiaries their past facilities or operations, are not subject to any
judicial proceeding or administrative proceeding or any outstanding written
order or agreement with any governmental authority or private party respecting
(a) any Environmental Law, (b) any Remedial Work, or (c) any Environmental
Claims arising from the Release of a Contaminant into the environment; (iii) to
the best of the knowledge of the Borrower and its subsidiaries, none of their
operations is the subject of any Federal or state investigation evaluating
whether any Remedial Work is needed to respond to a Release of any Contaminant
into the environment in violation of any Environmental Law; (iv) neither the
Borrower nor any of its subsidiaries nor any predecessor of the Borrower or any
of its subsidiaries has filed any notice under any Environmental Law indicating
past or present treatment, storage, or disposal of a Hazardous Material or
reporting a spill or Release of a Contaminant into the environment; (v) to the
best of the knowledge of the Borrower and its subsidiaries, neither the
Borrower nor any of its subsidiaries has any contingent liability in connection
with any Release of any Contaminant into the environment; (vi) none of the
operations of the Borrower or any of its subsidiaries involves the generation,
transportation, treatment or disposal of Hazardous Materials the manufacture,
use or disposal of which by Borrower would give rise to any claim or liability
under any Environmental Law; (vii) neither the Borrower nor any of its
subsidiaries has disposed of any Contaminant by placing it in or on the ground
or waters of any premises owned, leased or used by any of them and to the
knowledge of the Borrower and its subsidiaries neither has any lessee, prior
owner, or other person; (viii) no underground storage tanks or surface
impoundments are on any property of the Borrower and its subsidiaries; and (ix)
no Lien in favor of any governmental authority for (A) any liability under any
Environmental Law or regulation, or (B) damages arising from or costs incurred
by such governmental authority in response to a Release of a Contaminant into
the environment, has been filed or attached to the property of the Borrower and
its subsidiaries.

SECTION 4.20. No Change in Credit Criteria or Collection
Policies. Through the date hereof, there has been no material change in credit
criteria or collection policies concerning account receivables of the Borrower
since September 30, 1995.

SECTION 4.21. Recapitalization. (i) The execution, delivery
and performance by the parties thereto of the Recapitalization Agreement have
been duly authorized by all necessary action on their part, (ii) the
Recapitalization Agreement constitutes the valid, binding and enforceable
obligation of each party thereto, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and to general equitable principles, and are in
full force and effect without default or waiver of any of the conditions
thereunder and (iii) there are no governmental

<PAGE> 61

consents, filings, approvals or notices required to be made or obtained in
connection with the execution, delivery and performance of the Recapitalization
Agreement except such as have been duly made, obtained or delivered.

V. CONDITIONS OF CREDIT EVENTS

The obligation of each Lender to extend Credits hereunder
shall be subject to the following conditions precedent:

SECTION 5.01. All Credit Events. On each date on which a
Credit Event is to occur:

(a) The Agent shall have received a notice of borrowing
or a request for the issuance of a Letter of Credit pursuant to
Section 2.17 hereof as required by Section 2.03 hereof.

(b) The representations and warranties set forth in
Article IV hereof and in any documents delivered herewith, including,
without limitation, the Loan Documents, shall be true and correct in
all material respects with the same effect as though made on and as of
such date (except insofar as such representations and warranties
relate expressly to an earlier date).

(c) The Borrower shall be in compliance with all the
terms and provisions contained herein on its part to be observed or
performed, and at the time of and immediately after such Credit Event
no Default or Event of Default shall have occurred and be continuing.

(d) The Agent shall have received a certificate signed on
behalf of the Borrower by the Financial Officer of the Borrower (i) as
to the compliance with (b) and (c) above and (ii) with respect to each
Revolving Credit Loan and each Letter of Credit demonstrating that
after giving effect thereto Availability is zero or greater.

SECTION 5.02. First Borrowing. The obligations of the
Lenders in respect of the first Credit Event hereunder is subject to the
following additional conditions precedent:

(a) The Lenders shall have received the favorable written
opinion of counsel for the Borrower and each of the Guarantors and
Grantors, substantially in the form of Exhibit C hereto, dated the
Closing Date, addressed to the Lenders and satisfactory to the Agent.

55
<PAGE> 62

(b) The Lenders shall have received (i) a copy of the
certificate or articles of incorporation or constitutive documents, in
each case as amended to date, of each of the Borrower, the Grantors
and the Guarantors, certified as of a recent date by the Secretary of
State or other appropriate official of the state of its organization,
and a certificate as to the good standing of each from such Secretary
of State or other official, in each case dated as of a recent date;
(ii) a certificate of the Secretary of each of the Borrower, Grantor
and Guarantor, dated the Closing Date and certifying (A) that attached
thereto is a true and complete copy of such person's By-laws as in
effect on the date of such certificate and at all times since a date
prior to the date of the resolution described in item (B) below, (B)
that attached thereto is a true and complete copy of a resolution
adopted by such person's Board of Directors authorizing the execution,
delivery and performance of this Agreement, the Security Documents,
the Notes, the other Loan Documents and the Credit Events hereunder,
as applicable, and that such resolution has not been modified,
rescinded or amended and is in full force and effect, (C) that such
person's certificate or articles of incorporation or constitutive
documents has not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant
to (i) above, and (D) as to the incumbency and specimen signature of
each of such person's officers executing this Agreement, the Notes,
each Security Document or any other Loan Document delivered in
connection herewith or therewith, as applicable; (iii) a certificate
of another of such person's officers as to incumbency and signature of
its Secretary; and (iv) such other documents as the Agent or any
Lender may reasonably request.

(c) The Agent shall have received a certificate, dated
the Closing Date and signed on behalf of the Borrower by the Financial
Officer of the Borrower, confirming compliance with the conditions
precedent set forth in paragraphs (b) and (c) of Section 5.01 hereof
and the conditions set forth in this Section 5.02.

(d) Each Lender shall have received its Revolving Credit
Note and Term Note duly executed by the Borrower, payable to its order
and otherwise complying with the provisions of Section 2.04 hereof.

(e) The Agent shall have received the Security Documents
and certificates evidencing the Pledged Stock, together with undated
stock powers executed in blank, each duly executed by the applicable
Grantors.

(f) The Agent shall have received certified copies of
requests for copies or information on Form UCC-11 or certificates
satisfactory to the Lenders of a UCC Reporter Service, listing all
effective financing statements which name as debtor the Borrower, any
Guarantor or any

<PAGE> 63

Grantor and which are filed in the appropriate offices in the States
in which are located the chief executive office and other operating
offices of such person, together with copies of such financing
statements. With respect to any Liens not permitted pursuant to
Section 7.01 hereof, the Agent shall have received termination
statements in form and substance satisfactory to it.

(g) Each document (including, without limitation, each
Uniform Commercial Code financing statement) required by law or
requested by the Agent to be filed, registered or recorded in order to
create in favor of the Agent for its own benefit and for the benefit
of the Lenders a first priority perfected security interest in the
Collateral shall have been properly filed, registered or recorded in
each jurisdiction in which the filing, registration or recordation
thereof is so required or requested. The Agent shall have received an
acknowledgment copy, or other evidence satisfactory to it, of each
such filing, registration or recordation.

(h) The Agent shall have received the results of a search
of tax and other Liens, and judgments and of the Uniform Commercial
Code filings made with respect to the Borrower and each Grantor in the
jurisdictions in which the Borrower is doing business and/or in which
any Collateral is located, and in which Uniform Commercial Code
filings have been made against the Borrower, each Guarantor and each
Grantor pursuant to paragraph (g) above.

(i) The Lenders and the Agent shall have received and
determined to be in form and substance satisfactory to them:

(i) the most recent (dated within thirty (30)
days of the Closing Date) schedule and invoice date aging of
accounts receivable of the Borrower;

(ii) evidence that the Borrower has not less than
$3,000,000 in Availability (assuming for this purpose that
Borrower is the owner of Receivables transferred to the
present shareholders under the Recapitalization Agreement) on
the Closing Date and that at least $2,500,000 of such amount
is undrawn;

(iii) evidence that the Borrower has Subordinated
Indebtedness evidenced by the Seller Note of at least
$3,000,000 and equity of $10,500,000 (of which $9,500,000
shall have been contributed in cash) consisting of $1,000,000
of 6% Current-Pay Series A Preferred Stock, $6,500,000 of
Deferred-Pay Series B Preferred Stock and $3,000,000 of common
stock, including

<PAGE> 64

$1,720,427 of Series A Common Stock and $1,279,573 of Series B
Common Stock on the Closing Date;

(iv) a copy of a field examination of the
Borrower's books and records;

(v) evidence of the compliance by the Borrower
with Section 6.03 hereof;

(vi) the financial statements described in Section
4.07 hereof;

(vii) evidence that the Transactions are in
compliance with all applicable laws and regulations;

(viii) evidence of payment of all fees owed to the
Agent and the Lenders by the Borrower;

(ix) evidence that all requisite third party
consents (including, without limitation, consents with respect
to the Borrower and each of the Grantors and Guarantors) to
the Transactions have been received;

(x) copies of all major customer and supplier
contracts in excess of $25,000 with respect to the Borrower;

(xi) evidence that there has been no material
adverse change in the business, assets, operations or
financial condition of the Borrower and its subsidiaries since
September 30, 1995;

(xii) evidence of the repayment in full of [exiting
credit arrangements] and the termination of all commitments to
lend thereunder, and the termination of all security interests
securing such indebtedness as required under paragraph (f)
above; and

(xiii) evidence that there are no actions, suits or
proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory
authority now pending or threatened against or affecting the
Borrower or any of its subsidiaries or any of their respective
businesses, assets or rights which involve any of the
Transactions.

(j) The Agent and the Lenders shall have had the
opportunity, if they so choose, to examine the books of account and
other records and files of the Borrower, its subsidiaries, the
Grantors and the Guarantors and

<PAGE> 65

to make copies thereof, payment of payroll taxes and accounts payable
and formulation of an opening Borrowing Base, and the results of such
examination and audit shall have been satisfactory to the Agent and
Lenders in all respects.

(k) The Agent shall have received and had the opportunity
to review and determine to be in form and substance satisfactory to
it:

(i) copies of all lease agreements entered into by
the Borrower and its subsidiaries;

(ii) copies of all loan agreements, notes and other
documentation evidencing Indebtedness for borrowed money of
the Borrower, its subsidiaries, Grantors or Guarantors; and

(iii) copies of all management agreements.

(l) Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel
to the Agent, shall have received payment in full for all legal fees
charged, and all costs and expenses incurred, by such counsel through
the Closing Date in connection with the transactions contemplated
under this Agreement, the Security Documents and the other Loan
Documents and instruments in connection herewith and therewith.

(m) The Agent and the Lenders shall have:

(i) received copies of each of the
Recapitalization Documents, including all amendments and
schedules thereto, each certified by a Responsible Officer of
the Borrower;

(ii) received evidence that the Recapitalization
Agreement is in full force and effect and all consents,
filings and approvals required by applicable law in connection
therewith shall have been obtained and made;

(iii) received evidence that simultaneously with
the occurrence of the Credit Events on the Closing Date, the
transactions contemplated by the Recapitalization Agreement
have been duly and validly consummated, without modification,
amendment or waiver (except for such as shall have been
approved in writing by the Agent), in accordance with the
terms, conditions and provisions of the Recapitalization
Agreement and the other Recapitalization Documents; and

<PAGE> 66

(iv) determined that the terms and provisions of
all agreements and documents in connection with the
Recapitalization, including without limitation the
Recapitalization Documents, are satisfactory in form and
substance and the Agent shall have received such legal
opinions, certificates and copies of necessary governmental
filings and consents as the Agent shall have requested in
connection therewith, and shall have determined to its
satisfaction that the consummation of the Recapitalization and
other transactions contemplated by the Recapitalization
Documents are in compliance with all applicable laws and
regulations.

(n) The corporate structure and capitalization of the
Borrower shall be satisfactory to the Agent in all respects.

(o) All legal matters in connection with the Transactions
shall be satisfactory to the Agent, the Lenders and their respective
counsel in their sole discretion.

(p) The Borrower shall have executed and delivered to the
Agent a disbursement authorization letter with respect to the
disbursement of the proceeds of the Credit Events made on the Closing
Date, in form and substance satisfactory to the Agent.

(q) The Agent shall have received such other documents as
the Lenders or the Agent or Agent's counsel shall reasonably deem
necessary.

VI. AFFIRMATIVE COVENANTS

The Borrower covenants and agrees with each Lender that, so
long as this Agreement shall remain in effect or the principal of or interest
on any Note, any amount under any Letter of Credit, or any fee, expense or
other Obligation payable hereunder or in connection with any of the
Transactions shall be unpaid, it will, and will cause each of its subsidiaries
and, with respect to Section 6.07 hereof, each ERISA Affiliate, to:

SECTION 6.01. Legal Existence. Do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence except as permitted pursuant to Section 7.05.

SECTION 6.02. Businesses and Properties. At all times do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect the rights, licenses, Permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses; maintain
and operate such businesses in the same general manner in which they are

<PAGE> 67

presently conducted and operated; comply with all laws, rules, regulations and
governmental orders (whether Federal, state or local) applicable to the
operation of such businesses whether now in effect or hereafter enacted
(including, without limitation, all applicable laws, rules, regulations and
governmental orders relating to public and employee health and safety and all
Environmental Laws) and with any and all other applicable laws, rules,
regulations and governmental orders, the lack of compliance with which would
have a Material Adverse Effect; take all actions which may be required to
obtain, preserve, renew and extend all Permits and other authorizations which
are material to the operation of such businesses; and at all times maintain,
preserve and protect all property material to the conduct of such businesses
and keep such property in good repair, working order and condition and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in order
that the business carried on in connection therewith may be properly conducted
at all times.

SECTION 6.03. Insurance. (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers,
(b) maintain such other insurance, to such extent and against such risks,
including fire and other risks insured against by extended coverage, as is
customary with companies similarly situated and in the same or similar
businesses, provided, however, that such insurance shall insure the property of
the Borrower against all risk of physical damage, including, without
limitation, loss by fire, explosion, theft, fraud and such other casualties as
may be reasonably satisfactory to the Agent, but in no event at any time in an
amount less than the greater of (i) the Obligations and (ii) the replacement
value of the Collateral, (c) maintain in full force and effect public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by the Borrower or any of its subsidiaries, in
such amount as the Agent shall reasonably deem necessary, (d) maintain business
interruption insurance to such extent as is customary with companies similarly
situated and in the same or similar businesses, and (e) maintain such other
insurance as may be required by law or as may be reasonably requested by the
Agent for purposes of assuring compliance with this Section 6.03 and, where
applicable, naming the Agent as an additional insured. All insurance covering
tangible personal property subject to a Lien in favor of the Agent for its own
benefit and for the benefit of the Lenders granted pursuant to the Security
Documents shall provide that, in the case of each separate loss the full amount
of insurance proceeds shall be payable to the Agent and shall further provide
for at least 30 days' prior written notice to the Agent of the cancellation or
substantial modification thereof.

SECTION 6.04. Taxes. Pay and discharge promptly when due
all taxes, assessments and governmental charges or levies imposed upon it or
upon its income or profits or in respect of its property before the same shall
become

<PAGE> 68

delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens upon such
properties or any part thereof other than any such taxes, assessments, charges,
levies or claims which do not aggregate more than $20,000 at any one time
outstanding and which are being contested in good faith by appropriate
proceedings.

SECTION 6.05. Financial Statements, Reports, etc. Furnish
to the Agent, and directly to each of the Lenders:

(a) within 90 days after the end of each Fiscal Year, (i)
Consolidated and consolidating balance sheets and Consolidated and
consolidating income statements showing the financial condition of the
Borrower and its subsidiaries as of the close of such Fiscal Year and
the results of their operations during such year, and (ii) a
Consolidated and consolidating statement of shareholders' equity and a
Consolidated and consolidating statement of cash flow, as of the close
of such Fiscal Year, comparing such financial condition and results of
operations to such financial condition and results of operations for
the comparable period during the immediately preceding Fiscal Year,
all the foregoing Consolidated financial statements to be audited by
independent public accountants acceptable to the Agent (which report
shall contain the consolidating work papers and shall not contain any
qualification except with respect to new accounting principles
mandated by the Financial Accounting Standards Board);

(b) within 45 days after the end of each of the first
three (3) fiscal quarters of the Borrower, (i) unaudited Consolidated
and consolidating balance sheets and Consolidated and consolidating
income statements showing the financial condition and results of
operations of the Borrower and its subsidiaries as of the end of each
such quarter, (ii) a Consolidated and consolidating statement of
shareholders' equity and (iii) a Consolidated and consolidating
statement of cash flow, in each case for the fiscal quarter just ended
and for the period commencing at the end of the immediately preceding
Fiscal Year and ending with the last day of such quarter, and
comparing such financial condition and results of operations to the
projections for the applicable period provided under paragraph (h)
below and to the results for the comparable period during the
immediately preceding Fiscal Year, in each case prepared and certified
on behalf of the Borrower by the Financial Officer of the Borrower as
presenting fairly the financial condition and results of operations of
the Borrower and its subsidiaries and as having been prepared in
accordance with GAAP, in each case subject to normal year-end audit
adjustments;

<PAGE> 69

(c) within 30 days after the end of each month, (i)
unaudited Consolidated and consolidating balance sheets and income
statements showing the financial condition and results of operations
of the Borrower and its subsidiaries as of the end of each such month,
(ii) a Consolidated and consolidating statement of shareholders'
equity and (iii) a Consolidated and consolidating statement of cash
flow, in each case for the month just ended and for the period
commencing at the end of the immediately preceding Fiscal Year and
ending with the last day of such month, and comparing such financial
condition and results of operations to the projections for the
applicable period provided under paragraph (h) below and to the
results for the comparable period during the immediately preceding
Fiscal Year, prepared and certified by the Financial Officer of the
Borrower as presenting fairly the financial condition and results of
operations of the Borrower and its subsidiaries and as having been
prepared in accordance with GAAP, in each case subject to normal
year-end audit adjustments;

(d) promptly after the same become publicly available,
copies of such registration statements, annual, periodic and other
reports, and such proxy statements and other information, if any, as
shall be filed by the Borrower or any subsidiaries with the Securities
and Exchange Commission pursuant to the requirements of the Securities
Act of 1933 or the Securities Exchange Act of 1934;

(e) concurrently with any delivery under (a) or (b)
above, a certificate of the Financial Officer of the Borrower, which
certificate shall certify that to the best of his or her knowledge no
Default or Event of Default has occurred (including calculations
demonstrating the necessary calculations for the payment required
pursuant to Section 2.09(e) hereof and compliance, including, without
limitation, evidence of purchase orders or like documentation
satisfactory to the Agent for committed capital expenditures being
included in the calculations of Adjusted Net Cash Flow, as of the
dates of the financial statements being furnished, with the covenants
set forth in Sections 7.07, 7.08, 7.09, 7.10 and 7.20 hereof) and, if
such a Default or Event of Default has occurred, specifying the nature
and extent thereof and any corrective action taken or proposed to be
taken with respect thereto;

(f) concurrently with any delivery under (a) above, a
management letter if prepared by the independent public accountants
who reported on the financial statements delivered under (a) above,
with respect to the internal audit and financial controls of the
Borrower and its subsidiaries;

<PAGE> 70

(g) within 20 days of the end of each fiscal month, an
aging schedule of the Receivables in the form of the invoice date
aging schedule of Receivables dated April 30, 1996 previously
furnished to the Agent;

(h) within 30 days prior to the beginning of each Fiscal
Year (except for the Fiscal Year ending September 30, 1997 when such
plans and projections may be delivered no later than October 15,
1996), a summary of business plans and financial operation projections
(including, without limitation, with respect to capital expenditures)
for the Borrower and its respective subsidiaries for such Fiscal Year
(including [monthly] balance sheets, statements of income and of cash
flow) and annual projections through the Final Maturity Date prepared
by management including reasonable details and underlying assumptions;

(i) as soon as practicable, copies of all reports, forms,
filings, loan documents and financial information submitted to
governmental agencies and/or its shareholders;

(j) within 20 days after the end of each fiscal month, a
certificate substantially in the form of Schedule 6.05(k) hereto
executed on behalf of the Borrower by the Financial Officer of the
Borrower demonstrating compliance as at the end of each month with the
Availability requirements;

(k) promptly upon becoming aware thereof, notice to the
Agent of the breach by any party of any material agreement with the
Borrower; and

(l) at least as often as quarterly, and promptly upon
becoming aware of a Conversion Date, a calculation for the Agent of
the aggregate of Revolving Credit Loans made for Permitted
Acquisitions and such other information as the Agent or any Lender may
reasonably request.

SECTION 6.06. Litigation and Other Notices. Give the Agent
prompt written notice of the following as to which a Responsible Officer has
actual knowledge:

(a) the issuance by any court or governmental agency or
authority of any injunction, order, decision or other restraint
prohibiting, or having the effect of prohibiting, the making of the
Loans or occurrence of other Credit Events, or invalidating, or having
the effect of invalidating, any provision of this Agreement, the Notes
or the other Loan Documents, or the initiation of any litigation or
similar proceeding seeking any such injunction, order, decision or
other restraint;

(b) the filing or commencement of any action, suit or
proceeding against the Borrower or any of its subsidiaries, whether at
law or in equity

<PAGE> 71

or by or before any court or any Federal, state, municipal or other
governmental agency or authority, (i) which is material and is brought
by or on behalf of any governmental agency or authority, or in which
injunctive or other equitable relief is sought or (ii) as to which it
is probable (within the meaning of Statement of Financial Accounting
Standards No. 5) that there will be an adverse determination and
which, if adversely determined, would (A) reasonably be expected to
result in liability of one or more Borrower or a subsidiary thereof in
an aggregate amount of $100,000 or more, not reimbursable by
insurance, or (B) materially impair the right of the Borrower or a
subsidiary thereof to perform its obligations under this Agreement,
any Note or any other Loan Document to which it is a party;

(c) any Default or Event of Default, specifying the
nature and extent thereof and the action (if any) which is proposed to
be taken with respect thereto; and

(d) any development in the business or affairs of the
Borrower or any of its subsidiaries which has had or which is likely,
in the reasonable judgment of any Responsible Officer of the Borrower,
to have, a Material Adverse Effect.

SECTION 6.07. ERISA. (a) Pay and timely discharge any
liability imposed upon it pursuant to the provisions of Title IV of ERISA;
provided, however, that neither the Borrower nor any ERISA Affiliate shall be
required to pay any such liability if (1) the amount, applicability or validity
thereof shall be diligently contested in good faith by appropriate proceedings,
and (2) such person shall have set aside on its books reserves which, in the
opinion of the independent certified public accountants of such person, are
adequate with respect thereto.

(b) Deliver to the Agent, promptly, and in any event
within 30 days, after (i) the Borrower or any ERISA Affiliate becomes obligated
to contribute to a Pension Plan or Multiemployer Plan, a description of such
Plan, (ii) the occurrence of any Reportable Event which could reasonably be
expected to have a Material Adverse Effect, a copy of the materials that are
filed with the PBGC, (iii) the Borrower or any ERISA Affiliate or an
administrator of any Pension Plan files with participants, beneficiaries or the
PBGC a notice of intent to terminate any such Plan, a copy of any such notice,
(iv) the receipt of notice by the Borrower or any ERISA Affiliate or an
administrator of any Pension Plan from the PBGC of the PBGC's intention to
terminate any Pension Plan or to appoint a trustee to administer any such Plan,
a copy of such notice, (v) the filing thereof with the Internal Revenue
Service, copies of each annual report that is filed on Treasury Form 5500 with
respect to any Plan, together with certified financial statements (if any) for
the Plan and any actuarial statements on Schedule B to such Form 5500, (vi) the
Borrower or any ERISA Affiliate knows or has reason to know of any event or
condition which might constitute grounds under the provisions of Section 4042
of ERISA for the termination of (or the appointment of a trustee to administer)
any Pension Plan, an explanation of such event or condition, (vii) the receipt
by the Borrower or any ERISA Affiliate of an assessment of withdrawal liability
under Section 4201 of ERISA from a Multiemployer Plan, a copy of such
assessment, (viii) the Borrower or any ERISA Affiliate knows or has reason to
know of any event or condition which might cause any one of them to incur a
liability under Section 4062, 4063, 4064 or 4069 of ERISA or Section 412(n) or
4971 of the Code, an explanation of such event or condition, and (ix) the
Borrower or any ERISA Affiliate knows or has reason to

<PAGE> 72

know that an application is to be, or has been, made to the Secretary of the
Treasury for a waiver of the minimum funding standard under the provisions of
Section 412 of the Code, a copy of such application, and in each case described
in clauses (i) through (iv) and (vi) through (ix) together with a statement
signed by the Financial Officer setting forth details as to such Reportable
Event, notice, event or condition and the action which the Borrower or such
ERISA Affiliate proposes to take with respect thereto.

SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit. Maintain financial records in accordance with
accepted financial practices and, upon reasonable notice (which may be
telephonic), at all reasonable times and as often as any Lender may reasonably
request, permit any authorized representative designated by such Lender to
visit and inspect the properties and financial records of the Borrower and its
subsidiaries and to make extracts from such financial records at such Lender's
expense, and permit any authorized representative designated by such Lender to
discuss the affairs, finances and condition of the Borrower and its
subsidiaries with the appropriate Financial Officer and such other officers as
the Borrower shall deem appropriate and the Borrower's independent public
accountants, as applicable. The Agent agrees that it shall schedule any meeting
with any such independent public accountant through the Borrower and a
Responsible Officer of the Borrower shall have the right to be present at any
such meeting. At the Borrower's expense with respect to one audit (which shall
be invoiced to Borrower and paid within 30 days) in each Fiscal Year or any
audit conducted after the occurrence of an Event of Default, the Agent shall
have the right to audit twice in any Fiscal Year (or upon the occurrence of an
Event of Default, as often as it may request), the existence and condition of
the accounts receivables, inventory, books and records of the Borrower and its
subsidiaries and to review their compliance with the terms and conditions of
this Agreement and the other Loan Documents.

SECTION 6.09. Use of Proceeds. Use the proceeds of the
Credit Events only for the purposes set forth in Section 4.14 hereof.

<PAGE> 73

SECTION 6.10. Fiscal Year-End. Cause its Fiscal Year to end
on September 30 in each year.

SECTION 6.11. Further Assurances. Execute any and all
further documents and take all further actions which may be required under
applicable law, or which the Agent may reasonably request, to grant, preserve,
protect and perfect the first priority security interest created by the
Security Documents in the Collateral.

SECTION 6.12. Additional Grantors and Guarantors. Promptly
inform the Agent of the creation or acquisition of any direct or indirect
subsidiary (subject to the provisions of Section 7.06 hereof) and cause each
direct or indirect subsidiary not in existence on the date hereof to become a
Guarantor by executing and delivering an addendum to this Agreement in form and
substance satisfactory to the Agent, and to execute the Security Documents, as
applicable, as a Grantor, and cause the direct parent of each such subsidiary
to pledge all of the capital stock of such subsidiary pursuant to the Pledge
Agreement and cause each such subsidiary to pledge its accounts receivable and
all other assets pursuant to the Security Agreement. Upon the creation of
Holdings, Holdings shall execute and deliver its Guarantee in the form of
Exhibit J annexed hereto and shall pledge all of the capital stock of Borrower
pursuant to its Pledge Agreement. Such Guarantee and Pledge Agreement shall be
accompanied by certified resolutions and opinions of counsel in form and
substance reasonably satisfactory to the Agent.

SECTION 6.13. Environmental Laws. (a) Comply, and cause
each of its subsidiaries to comply, in all material respects with the
provisions of all Environmental Laws, and shall keep its properties and the
properties of its subsidiaries free of any Lien imposed pursuant to any
Environmental Law. The Borrower shall not cause or suffer or permit, and shall
not suffer or permit any of its subsidiaries to cause or suffer or permit, the
property of the Borrower or its subsidiaries to be used for the generation,
production, processing, handling, storage, transporting or disposal of any
Hazardous Material, except for Hazardous Materials used in the ordinary course
of business of the Borrower, in which case such Hazardous Materials shall be
used, stored, generated, treated and disposed of only in compliance with
Environmental Law in all material respects.

(b) Supply to the Agent copies of all submissions by the
Borrower or any of its subsidiaries to any governmental body and of the reports
of all environmental audits and of all other environmental tests, studies or
assessments (including the data derived from any sampling or survey of
asbestos, soil, or subsurface or other materials or conditions) that may be
conducted or performed (by or on behalf of the Borrower or any of its
subsidiaries) on or regarding the properties owned, operated, leased or
occupied by the Borrower or any of its

<PAGE> 74

subsidiaries or regarding any conditions that might have been affected by
Hazardous Materials on or Released or removed from such properties. The
Borrower shall also permit and authorize, and shall cause its subsidiaries to
permit and authorize, the consultants, attorneys or other persons that prepare
such submissions or reports or perform such audits, tests, studies or
assessments to discuss such submissions, reports or audits with the Agent and
the Lenders.

(c) Promptly (and in no event more than two Business Days
after a Responsible Officer of the Borrower becomes aware or is otherwise
informed of such event) provide oral and written notice to the Agent upon the
happening of any of the following:

(i) the Borrower, any subsidiary of the Borrower,
or any tenant or other occupant of any property of the
Borrower or such subsidiary receives written notice of any
claim, complaint, charge or notice of a violation or potential
violation of any Environmental Law;

(ii) there has been a spill or other Release of
Hazardous Materials upon, under or about or affecting any of
the properties owned, operated, leased or occupied by the
Borrower or any of its subsidiaries, in amounts that may have
to be reported under Environmental Law or Hazardous Materials
at levels or in amounts that may have to be reported, remedied
or responded to under Environmental Law are detected on or in
the soil or groundwater;

(iii) the Borrower or any of its subsidiaries is
or may be liable for any costs of cleaning up or otherwise
responding to a Release of Hazardous Materials;

(iv) any part of the properties owned, operated,
leased or occupied by the Borrower or any of its subsidiaries
is or may be subject to a Lien under any Environmental Law; or

(v) the Borrower or any of its subsidiaries
undertakes any Remedial Work with respect to any Hazardous
Materials.

(d) Without in any way limiting the scope of Section
11.04(c) and in addition to any obligations thereunder, the Borrower hereby
indemnifies and agrees to hold the Agent and the Lenders harmless from and
against any liability, loss, damage, suit, action or proceeding arising out of
its business or the business of its subsidiaries pertaining to Hazardous
Materials, including, but not limited to, claims of any governmental body or
any third person arising under any Environmental Law or under tort, contract or
common law. To the extent laws of the United States or any applicable state or
local law in which property owned by

<PAGE> 75

the Borrower or any of its subsidiaries is located provide that a Lien upon
such property of the Borrower or such subsidiary may be obtained for the
removal of Hazardous Materials which have been or may be Released, no later
than sixty days after notice that a Release has occurred is given by the Agent
to the Borrower or such subsidiary, the Borrower or such subsidiary shall
deliver to the Agent a report issued by a qualified third party engineer
assessing the existence and extent of any Hazardous Materials located upon or
beneath the specified property. To the extent any Hazardous Materials located
therein or thereunder either subject the property to Lien or require removal to
safeguard the health of any persons, the removal thereof shall be an
affirmative covenant of the Borrower hereunder to the extent Borrower was
responsible for placing such Materials on the property.

(e) In the event that any Remedial Work is required to be
performed by the Borrower or any of its subsidiaries under any applicable
Environmental Law, any judicial order, or by any governmental entity, the
Borrower or such subsidiary shall commence all such Remedial Work at or prior
to the time required therefor under such Environmental Law or applicable
judicial orders and thereafter diligently prosecute to completion all such
Remedial Work in accordance with and within the time allowed under such
applicable Environmental Laws or judicial orders.

SECTION 6.14. Pay Obligations to Lenders and Perform Other
Covenants. (a) Make full and timely payment of the Obligations, whether now
existing or hereafter arising, (b) duly comply with all the terms and covenants
contained in this Agreement (including, without limitation, the borrowing
limitations and mandatory prepayments in accordance with Article II hereof) in
each of the other Loan Documents, all at the times and places and in the manner
set forth therein, and (c) except for the filing of continuation statements and
the making of other filings by the Agent as secured party or assignee, at all
times take all actions necessary to maintain the Liens and security interests
provided for under or pursuant to this Agreement and the Security Documents as
valid and perfected first Liens on the property intended to be covered thereby
(subject only to Liens expressly permitted hereunder) and supply all
information to the Agent necessary for such maintenance.

SECTION 6.15. Maintain Operating Accounts and Cash
Management Arrangements. Within 90 days of the Closing Date, (x) enter into
cash management arrangements with the Agent pursuant to documentation in form
and substance satisfactory to the Agent and (y) maintain all of its operating
accounts with the Agent other than local accounts to the extent necessary for
the efficient operation of its business and then only if any other institution
holding such funds of the Borrower has executed and delivered a blocked account
letter.

<PAGE> 76

SECTION 6.16. Purchase Price Adjustments. Promptly notify
the Agent of any price adjustment as contemplated by the Recapitalization
Agreement, any such adjustment in favor of the Borrower to be applied as set
forth in Section 2.09(d).

SECTION 6.17. Amendments. Promptly supply to the Agent
certified copies of any amendments to the Recapitalization Documents.

SECTION 6.18. Interest Rate Protection. Within 60 days of
the Closing Date, enter into an interest rate cap (the "Rate Agreements")
covering a notional principal amount of at least $7,000,000 with a term ending
three (3) years from the Closing Date, and on such other terms and conditions
as shall be reasonably satisfactory to the Agent. Chemical Bank shall act as
principal under the Rate Agreements, subject to the right of the Borrower to
obtain Rate Agreements at a more competitive rate in the market; provided,
however, that if the Borrower receives a bona fide offer from a third party to
enter into a Rate Agreement at a more competitive rate than that theretofore
offered by Chemical Bank, the Borrower shall provide Chemical Bank with an
opportunity to match such third party offer.

SECTION 6.19. Life Insurance. Obtain within 90 days of the
Closing Date, and at all times maintain in full force and effect, key man life
insurance policies on Raymond H. Hansell and MarySue Lucci Hansell, in an
aggregate amount of not less than Five Million Dollars ($5,000,000) each, with
the Borrower as beneficiary. The Borrower shall collaterally assign to the
Agent for its own benefit and for the benefit of the Lenders as security for
the Obligations all monies payable under or in respect of a Three Million
Dollar ($3,000,000) keyman life insurance policy on each of Raymond H. Hansell
and MarySue Lucci Hansel pursuant to an Assignment of Life Insurance.

VII. NEGATIVE COVENANTS

The Borrower covenants and agrees with each Lender that, so
long as this Agreement shall remain in effect or the principal of or interest
on any Note, any amount under any Letter of Credit, or any fee, expense or
other Obligation payable hereunder or in connection with any of the
Transactions shall be unpaid, it will not and will not cause or permit any of
its subsidiaries and, in the case of Section 7.18 hereof, any ERISA Affiliate
to, either directly or indirectly:

SECTION 7.01. Liens. Incur, create, assume or permit to
exist any Lien on any of its property or assets (including the stock of any
direct or indirect subsidiary), whether owned at the date hereof or hereafter
acquired, or assign or convey any rights to or security interests in any future
revenues, except:

<PAGE> 77

(a) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security
benefits (not including any lien described in Section 412(m) of the
Code);

(b) Liens imposed by law, such as carriers',
warehousemen's, mechanics', materialmen's and vendors' liens and other
similar liens, incurred in good faith in the ordinary course of
business and securing obligations which are not overdue for a period
of more than 30 days or which are being contested in good faith by
appropriate proceedings as to which the Borrower or any of its
subsidiaries, as the case may be, shall, to the extent required by
GAAP, have set aside on its books adequate reserves;

(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being
diligently contested in good faith by appropriate proceedings and as
to which adequate reserves have been established in accordance with
GAAP; provided, however, that in no event shall the aggregate amount
of such reserves be less than the aggregate amount secured by such
Liens;

(d) zoning restrictions, easements, licenses,
reservations, provisions, covenants, conditions, waivers, restrictions
on the use of property or minor irregularities of title (and with
respect to leasehold interests, mortgages, obligations, liens and
other encumbrances incurred, created, assumed or permitted to exist
and arising by, through or under a landlord or owner of the leased
property, with or without consent of the lessee) which do not in the
aggregate materially detract from the value of its property or assets
or materially impair the use thereof in the operation of its business;

(e) Liens upon any equipment acquired through the
purchase or lease by the Borrower or any of its subsidiaries which are
created or incurred contemporaneously with such acquisition or within
90 days thereafter to secure or provide for the payment of any part of
the purchase price of, or lease payments on, such equipment (but no
other amounts and not in excess of the purchase price or lease
payments); provided, however, that any such Lien shall not apply to
any other property of the Borrower or any of its subsidiaries; and
provided, further, that after giving effect to such purchase or lease
the aggregate of outstanding Indebtedness secured thereby shall not
exceed $325,000 and compliance is maintained with Section 7.07 hereof;

(f) Liens created in favor of Chemical Bank under the
Rate Agreements;

<PAGE> 78

(g) Liens existing on the date of this Agreement and set
forth in Schedule 7.01 annexed hereto and the extension, renewal or
refunding of the Indebtedness secured thereby (but not the increase of
any such Indebtedness);

(h) Liens created in favor of the Agent for its own
benefit and for the benefit of the Lenders; or

(i) Liens securing the performance of bids, tenders,
leases, contracts (other than for the repayment of borrowed money),
statutory obligations, surety, customs and appeal bonds and other
obligations of like nature, incurred as an incident to and in the
ordinary course of business.

SECTION 7.02. Sale and Lease-Back Transactions. Enter into
any arrangement, directly or indirectly, with any person whereby the Borrower
or any of its subsidiaries shall sell or transfer any property, real or
personal, and used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which
the Borrower or such subsidiary intends to use for substantially the same
purpose or purposes as the property being sold or transferred.

SECTION 7.03. Indebtedness. Incur, create, assume or permit
to exist any Indebtedness other than (i) Indebtedness secured by Liens
permitted under Section 7.01, (ii) Indebtedness (including, without limitation,
Guarantees) existing on the date hereof and listed in Schedule 7.03 annexed
hereto, and the extension and refunding thereof, but not the increase thereof,
(iii) Indebtedness incurred hereunder, (iv) Indebtedness to trade creditors
incurred in the ordinary course of business, (v) Guarantees constituting the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business, (vi) Guarantees of the Obligations and Guarantees of
Indebtedness of subsidiaries which is permitted under this Section 7.03, (vii)
purchase money Indebtedness to the extent permitted by Sections 7.01(e) and
7.07 hereof, (viii) Subordinated Indebtedness (in accordance with the
definition thereof), (ix) Indebtedness under the Rate Agreements and (x) other
unsecured Indebtedness not otherwise permitted under this Section 7.03 not to
exceed $250,000 in the aggregate at any one time outstanding.

SECTION 7.04. Dividends, Distributions and Payments.
Declare or pay, directly and indirectly, any cash dividends or make any other
distribution, whether in cash, property, securities or a combination thereof,
with respect to (whether by reduction of capital or otherwise) any shares of
its capital stock or directly or indirectly redeem, purchase, retire or
otherwise acquire for value (or permit any subsidiary to purchase or acquire)
any shares of any class of its capital stock or set aside any amount for any
such purpose except so long as no

<PAGE> 79

Default or Event of Default has occurred and is continuing or would occur after
giving effect to such payment or distribution or redemption, as applicable, (x)
the Borrower may make the regularly scheduled dividend payment on $1,000,000 of
6% Current-Pay Series A Preferred Stock, (y) the Borrower's capital stock may
be dividended to Holdings so that the Borrower becomes a wholly-owned
subsidiary of Holdings provided there is compliance with the provisions of
Section 6.12 hereof and (z) the Borrower may redeem stock given to employees
(other than the Hansells) in an aggregate amount not to exceed $150,000 in any
Fiscal Year, but not more than $400,000 during the term of this Agreement.

SECTION 7.05. Consolidations, Mergers and Sales of Assets.
Consolidate with or merge into any other person, or sell, lease, transfer or
assign to any persons or otherwise dispose of (whether in one transaction or a
series of transactions) any portion of its assets (whether now owned or
hereafter acquired), except that if Holdings is not formed, and no Default or
Event of Default has occurred and is continuing or would occur as a result of
the hereafter described transaction, then substantially all the assets of
Borrower (subject to assumption of liabilities, including, without limitation,
the Obligations) may be transferred to a wholly-owned subsidiary of Borrower
pursuant to such transfer and assumption agreements as are in form and
substance satisfactory to the Agent, or sell any of its inventory other than in
the normal course of business, or permit another person to merge into it,
except that any wholly-owned subsidiary may merge into the Borrower, or acquire
all or substantially all the capital stock or assets of any other person except
for Permitted Acquisitions or purchases of capital assets that do not represent
the acquisition of a going business concern or the goodwill of another person
and which purchases are included by Borrower in its calculation of compliance
with Section 7.07 (and for purposes of this Agreement such purchases shall be
deemed capital expenditures and not Permitted Acquisitions).

SECTION 7.06. Investments. Own, purchase or acquire any
stock, obligations, assets (not in the ordinary course of business) or
securities of, or any interest in, or make any capital contribution or loan or
advance to, any other person, or make any other investments, except:

(a) certificates of deposit in dollars of any commercial
banks registered to do business in any state of the United States (i)
having capital and surplus in excess of $1,000,000,000 and (ii) whose
long-term debt rating is at least investment grade as determined by
either Standard & Poor's Ratings Group or Moody's Investors Service,
Inc.;

(b) readily marketable direct obligations of the United
States government or any agency thereof which are backed by the full
faith and credit of the United States;

<PAGE> 80

(d) commercial paper at the time of acquisition having
the highest rating obtainable from either Standard & Poor's Ratings
Group or Moody's Investors Service, Inc.;

(e) federally tax exempt securities rated A or better by
either Standard & Poor's Ratings Group or Moody's Investors Service,
Inc.; and

(f) investments in the stock of any subsidiary existing
on the Closing Date, but not any additional investments therein; and

(g) acquisitions of same or similar businesses that meet
the criteria set forth on Schedule annexed hereto ("Permitted
Acquisitions");

provided that, in each case mentioned in (a), (b), (d) and (e) above, such
obligations shall mature not more than one year from the date of acquisition
thereof.

SECTION 7.07. Capital Expenditures and Permitted
Acquisitions. Permit the aggregate amount of payments made for capital
expenditures, including Capitalized Lease Obligations and Indebtedness secured
by Liens permitted under Section 7.01(e) hereof and for Permitted Acquisitions,
in each of the periods indicated below to exceed the following amounts for the
indicated purposes for the Borrower and its subsidiaries:

<TABLE>
<CAPTION>
Maximum Amount Maximum Amount of Capital
in connection with Expenditures plus Permitted
Period Permitted Acquisitions Acquisitions
------ ---------------------- ------------

<S> <C> <C>
Closing Date to September 30, 1996 $ 550,000 $ 550,000

Fiscal Year ending September 30, 1997 $1,000,000 $2,530,000

Fiscal Year ending September 30, 1998 $1,000,000 $3,190,000

Fiscal Year ending September 30, 1999 $1,000,000 $3,300,000

Fiscal Year ending September 30, 2000 $1,000,000 $4,125,000

Fiscal Year ending September 30, 2001 $1,000,000 $3,630,000

</TABLE>

<PAGE> 81

<TABLE>
<S> <C> <C>
From October 1, 2001 to Final Maturity Date $1,000,000 $3,000,000
</TABLE>

SECTION 7.08. Debt Service Coverage Ratio. Permit the Debt
Service Coverage Ratio of the Borrower and its subsidiaries at the end of any
fiscal quarter or other applicable period set forth below to be less than the
respective amounts set forth below (provided, however, that in calculating
capital expenditures for the purpose of such Ratio at the end of each of the
first three quarters in each of the 1997 and 1998 Fiscal Years to the extent
that the Borrower's cumulative cash capital expenditures not financed by third
party sources (excluding under this Agreement and including additional equity
investments by the Investor Group for capital expenditures) at the end of each
such quarters exceed cumulative budgeted capital expenditures at the end of
each such quarters as set forth on the annexed Schedule 7.08 then an amount up
to the maximum capital expenditure addback set forth on the annexed Schedule
7.08 shall be added back to Net Cash Flow for the purpose of calculating such
Ratio):

<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Closing Date to December 31, 1996 1.15:1.00
From the Closing Date to March 31, 1997 1.15:1.00
Four most recent consecutive fiscal quarters
ending June 30, 1997 1.15:1.00
Four most recent consecutive fiscal quarters
ending September 30, 1997 1.15:1.00
Four most recent consecutive fiscal quarters
ending December 31, 1997 and for each
of the four most recent consecutive
fiscal quarters thereafter 1.25:1.00
</TABLE>

SECTION 7.09. Total Senior Funded Debt to EBITDA Ratio.
Permit the ratio of (x) total Senior Funded Debt of the Borrower and its
subsidiaries, to (y) EBITDA of the Borrower and its subsidiaries at the end of
any fiscal quarter or other applicable period set forth below (annualized for
the first three such periods from the Closing Date such that EBITDA for each
such period shall be divided by the actual number of days from the Closing Date
to the end of such period times 365) to be greater than the respective amounts
set forth below:

<PAGE> 82

<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Closing Date to September 30, 1996 2.50:1.00
From the Closing Date to December 31, 1996 3.25:1.00
From the Closing Date to March 31, 1997 3.25:1.00
Four most recent consecutive fiscal quarters
ending June 30, 1997 3.00:1.00
Four most recent consecutive fiscal quarters
ending September 30, 1997 3.00:1.00
Four most recent consecutive fiscal quarters
ending December 31, 1997 2.50:1.00
Four most recent consecutive fiscal quarters
ending March 31, 1998 2.50:1.00
Four most recent consecutive fiscal quarters
ending June 30, 1998 2.00:1.00
Four most recent consecutive fiscal quarters
ending September 30, 1998 2.00:1.00
Four most recent consecutive fiscal quarters
ending December 31, 1998 and for each
of the four most recent consecutive
fiscal quarters thereafter 1.50:1.00
</TABLE>

SECTION 7.10. Interest Coverage Ratio. Permit the Interest
Coverage Ratio of the Borrower and its subsidiaries at the end of any fiscal
quarter or other applicable period set forth below to be less than the
respective amounts set forth below (provided, however, that in calculating
capital expenditures for the purpose of such Ratio at the end of each of the
first three quarters in each of the 1997 and 1998 Fiscal Years to the extent
that the Borrower's cumulative cash capital expenditures not financed by third
party sources (excluding under this Agreement and including additional equity
investments by the Investor Group for capital expenditures) at the end of each
such quarters exceed cumulative budgeted capital expenditures at the end of
each such quarters as set forth on the annexed Schedule 7.08 then an amount up
to the maximum capital expenditure addback set forth on the annexed Schedule
7.08 shall be added back to EBITDA for the purpose of calculating such Ratio):

<PAGE> 83

<TABLE>
<CAPTION>
Period Ratio
------ -----

<S> <C>
From the Closing Date to September 30, 1996 3.75:1.00
From the Closing Date to December 31, 1996 2.00:1.00
From the Closing Date to March 31, 1997 2.00:1.00
Four most recent consecutive fiscal quarters
ending June 30, 1997 2.25:1.00
Four most recent consecutive fiscal quarters
ending September 30, 1997 2.50:1.00
Four most recent consecutive fiscal quarters
ending December 31, 1997 2.50:1.00
Four most recent consecutive fiscal quarters
ending March 31, 1998 and for each
of the four most recent consecutive
fiscal quarters thereafter 3.00:1.00
</TABLE>

SECTION 7.11. Business. Engage in any business not related
to its business as operated on the date of this Agreement in any material
respect (but in no event engage in the business of underwriting insurance).

SECTION 7.12. Sales of Receivables. Sell, assign, discount,
transfer, or otherwise dispose of any accounts receivable, promissory notes,
drafts or trade acceptances or other rights to receive payment held by it, with
or without recourse, except (i) for the purpose of collection or settlement in
the ordinary course of business or (ii) the sale of any such accounts to
Chemical Bank.

SECTION 7.13. Use of Proceeds. Permit the proceeds of any
Credit Event to be used for any purpose which entails a violation of, or is
inconsistent with, Regulation G, T, U or X of the Board, or for any purpose
other than those set forth in Section 4.14 hereof.

SECTION 7.14. ERISA. (a) Engage in any transaction in
connection with which the Borrower or any ERISA Affiliate could be subject to
either a civil penalty assessed pursuant to the provisions of Section 502 of
ERISA or a tax imposed under the provisions of Section 4975 of the Code which
could reasonably be expected to have a Material Adverse Effect.

(b) Terminate any Pension Plan in a "distress
termination" under Section 4041 of ERISA, or take any other action which could
reasonably be expected to result in a liability of the Borrower or any ERISA
Affiliate to the PBGC that would have a Material Adverse Effect.

<PAGE> 84

(c) Fail to make payment when due of all amounts which,
under the provisions of any Plan, the Borrower or any ERISA Affiliate is
required to pay as contributions thereto, or, with respect to any Pension Plan,
permit to exist any material "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA and Section 412 of the Code), whether or not
waived, with respect thereto which in each case or in the aggregate would have
a Material Adverse Effect.

(d) Adopt an amendment to any Pension Plan requiring the
provision of security under Section 307 of ERISA or Section 401(a)(29) of the
Code.

SECTION 7.15. Accounting Changes. Make, or permit any
subsidiary to make any change in their accounting treatment or financial
reporting practices except as required or permitted by GAAP.

SECTION 7.16. Prepayment or Modification of Indebtedness;
Modification of Charter Documents. (a) Directly or indirectly prepay, redeem,
purchase or retire any Subordinated Indebtedness.

(b) Modify, amend or otherwise alter the terms and
provisions of any Subordinated Indebtedness.

(c) Modify, amend or alter their certificates or articles
of incorporation or preferred stock/certificates of designations in any manner
which would be materially adverse to the Agent or the Lenders.

SECTION 7.17. Transactions with Affiliates. Except as
otherwise specifically set forth in this Agreement, directly or indirectly
purchase, acquire or lease any property from, or sell, transfer or lease any
property to, or enter into any other transaction with, any stockholder,
Affiliate or agent of the Borrower, except at prices and on terms not less
favorable to it than that which would have been obtained in an arm's-length
transaction with a non- affiliated third party.

SECTION 7.18. Consulting Fees. Pay any management,
consulting or other fees of any kind to any Affiliate of the Borrower or any of
the Borrower's subsidiaries except for the transaction or financing fees
payable upon closing of the Recapitalization Agreement to Advanta Partners LP,
customary investment banking fees in connection with advising as to
acquisitions (other than Permitted Acquisitions) and financings (other than
with respect to Indebtedness permitted pursuant to Section 7.03) but only from
the proceeds of such acquisitions or financings and management fees to Advanta
Partners LP not to exceed $100,000 in any Fiscal Year (or a proportional amount
for the period from the Closing Date to the Fiscal Year ending September 30,
1996), which fees shall be subordinated to the Obligations in form and
substance satisfactory to the Agent.

<PAGE> 85

SECTION 7.19. Negative Pledges, Etc. Enter into any
agreement (other than this Agreement or any other Loan Document) which (a)
prohibits the creation or assumption of any Lien to the Agent or the Lenders
upon any of the Collateral, including, without limitation, any hereafter
acquired property, or (b) specifically prohibits the amendment or other
modification of this Agreement or any other Loan Document.

VIII. EVENTS OF DEFAULT

In case of the happening of any of the following events
(herein called "Events of Default"):

(a) any representation or warranty made or deemed made in
or in connection with this Agreement, any of the Security Documents,
the Notes or other Loan Documents or any Credit Events hereunder,
shall prove to have been incorrect in any material respect when made
or deemed to be made;

(b) default shall be made in the payment of any principal
of any Note when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or
by acceleration thereof or otherwise;

(c) default shall be made in the payment of any interest
on any Note, or any fee or any other amount payable hereunder, or
under the Notes, Letters of Credit or any other Loan Document or in
connection with any other Credit Event or the Transactions when and as
the same shall become due and payable;

(d) default shall be made in the due observance or
performance of any covenant, condition or agreement to be observed or
performed on the part of any Loan Party pursuant to the terms of this
Agreement, any of the Notes, any of the Security Documents or any
other Loan Document and in the case of any such default with respect
to Sections 6.02, 6.06, 6.11, 6.12 and 6.13, such default shall
continue for a period of 10 days;

(e) any Loan Party shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the
United States Code or any other Federal, state or foreign bankruptcy,
insolvency, liquidation or similar law, (ii) consent to the
institution of, or fail to contravene in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (iii)
apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator or similar official for any Loan Party or for
a substantial part of its property or assets, (iv) file an answer
admitting the

<PAGE> 86

material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take corporate
action for the purpose of effecting any of the foregoing;

(f) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of any Loan Party, or of a
substantial part of the property or assets of any Loan Party, under
Title 11 of the United States Code or any other Federal state or
foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for any Loan Party or for a substantial part of the property
of any Loan Party or (iii) the winding-up or liquidation of any Loan
Party; and such proceeding or petition shall continue undismissed for
30 days or an order or decree approving or ordering any of the
foregoing shall continue unstayed and in effect for 30 days;

(g) default shall be made with respect to (i) any
Subordinated Indebtedness or (ii) any other Indebtedness or
obligations under a capitalized lease of any Loan Party (excluding
Indebtedness outstanding hereunder) where the amount in default
aggregates $200,000 or more if the effect of any such default shall be
to accelerate, or to permit the holder or obligee of any such
Subordinated Indebtedness or such other Indebtedness or obligations
under a capitalized lease (or any trustee on behalf of such holder or
obligee) at its option to accelerate, the maturity of such
Subordinated Indebtedness or such other Indebtedness or obligations
under a capitalized lease;

(h) (i) a Reportable Event shall have occurred with respect to
a Pension Plan, (ii) the filing by any Loan Party, any ERISA
Affiliate, or an administrator of any Plan of a notice of intent to
terminate such a Plan in a "distress termination" under the provisions
of Section 4041 of ERISA, (iii) the receipt of notice by any Loan
Party, any ERISA Affiliate, or an administrator of a Plan that the
PBGC has instituted proceedings to terminate (or appoint a trustee to
administer) such a Pension Plan, (iv) any other event or condition
exists which might, in the opinion of the Agent, constitute grounds
under the provisions of Section 4042 of ERISA for the termination of
(or the appointment of a trustee to administer) any Pension Plan by
the PBGC, (v) a Pension Plan shall fail to maintain the minimum
funding standard required by Section 412 of the Code for any plan year
or a waiver of such standard is sought or granted under the provisions
of Section 412(d) of the Code, (vi) any Loan Party or any ERISA
Affiliate has incurred, or is likely to incur, a liability under the
provisions of Section 4062, 4063, 4064 or 4201 of ERISA, (vii) any
Loan Party or any ERISA Affiliate

<PAGE> 87

fails to pay the full amount of an installment required under Section
412(m) of the Code, (viii) the occurrence of any other event or
condition with respect to any Plan which would constitute an event of
default under any other agreement entered into by any Loan Party or
any ERISA Affiliate, and in each case in clauses (i) through (viii) of
this subsection (h), such event or condition, together with all other
such events or conditions, if any, could subject any Loan Party or any
ERISA Affiliate to any taxes, penalties or other liabilities which, in
the opinion of the Agent, could reasonably be expected to have a
Material Adverse Effect on the financial condition of any Loan Party
or any ERISA Affiliate;

(i) any Loan Party or any ERISA Affiliate (i) shall have
been notified by the sponsor of a Multiemployer Plan that it has
incurred any withdrawal liability to such Multiemployer Plan and (ii)
does not have reasonable grounds for contesting such withdrawal
liability and is not in fact contesting such withdrawal liability in a
timely and appropriate manner which would have a Material Adverse
Effect;

(j) a judgment (not reimbursed by insurance policies of
any Loan Party) or decree for the payment of money, a fine or penalty
which when taken together with all other such judgments, decrees,
fines and penalties shall exceed $200,000 shall be rendered by a court
or other tribunal against any Loan Party and shall remain undischarged
or unbonded for a period of 45 consecutive days during which the
execution of such judgment, decree, fine or penalty shall not have
been stayed effectively;

(k) this Agreement, any Note, any of the Security
Documents, any Guarantee or other Loan Documents shall for any reason
cease to be as a result of any action or inaction taken by any Loan
Party, or shall be asserted by any Loan Party not to be, a legal,
valid and binding obligation of any Loan Party, enforceable in
accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and to general equitable
principles, or the security interest or Lien purported to be created
by any of the Security Documents shall for any reason cease to be, or
be asserted by any Loan Party not to be, a valid, first priority
perfected security interest in any Collateral (except to the extent
otherwise permitted under this Agreement or any of the Security
Documents); or

(l) a Change of Control shall occur;

then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event,
the Agent may, and upon the written request of the Required Lenders shall, by
written notice (or facsimile notice promptly confirmed in writing) to the
Borrower,

<PAGE> 88

take any or all of the following actions at the same or different times: (i)
terminate forthwith all or any portion of the Total Commitment and the
obligations of the Lenders to issue Letters of Credit hereunder; (ii) declare
the Notes and any amounts then owing to the Lenders on account of drawings
under any Letters of Credit to be forthwith due and payable, and (iii) require
that the Borrower remit to the Agent cash collateral in an amount equal to the
aggregate undrawn amount of all outstanding Letters of Credit at such time,
such cash collateral to be held by the Agent for its own benefit and the
benefit of the Lenders in a cash collateral account on terms and conditions
satisfactory to the Agent, whereupon the principal of such Notes, together with
accrued interest and fees thereon and any amounts then owing to the Lenders on
account of drawings under any Letters of Credit and other liabilities of the
Borrower accrued hereunder, shall become forthwith due and payable both as to
principal and interest, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in the Notes to the contrary notwithstanding;
provided, however, that with respect to a default described in paragraph (e) or
(f) above, the Total Commitment and the obligations of the Lenders to issue
Letters of Credit shall automatically terminate and the principal of the Notes,
together with accrued interest and fees thereon and any amounts then owing to
the Lenders on account of drawings under any Letters of Credit and any other
liabilities of the Borrower accrued hereunder shall automatically become due
and payable, both as to principal and interest, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived
by the Borrower, anything contained herein or in the Notes to the contrary
notwithstanding.

IX. AGENT

In order to expedite the transactions contemplated by this
Agreement, Chemical Bank is hereby appointed to act as Agent on behalf of the
Lenders. Each of the Lenders and each subsequent holder of any Note or issues
of any Letter of Credit by its acceptance thereof, irrevocably authorizes the
Agent to take such action on its behalf and to exercise such powers hereunder
and under the Security Documents and other Loan Documents as are specifically
delegated to or required of the Agent by the terms hereof and the terms thereof
together with such powers as are reasonably incidental thereto. Neither the
Agent nor any of its directors, officers, employees or agents shall be liable
as such for any action taken or omitted to be taken by it or them hereunder or
under any of the Security Documents and other Loan Documents or in connection
herewith or therewith (a) at the request or with the approval of the Required
Lenders (or, if otherwise specifically required hereunder or thereunder, the
consent of all the Lenders) or (b) in the absence of its or their own gross
negligence or willful misconduct.

<PAGE> 89

The Agent is hereby expressly authorized on behalf of the
Lenders, without hereby limiting any implied authority, (a) to receive on
behalf of each of the Lenders any payment of principal of or interest on the
Notes outstanding hereunder and all other amounts accrued hereunder paid to the
Agent, and promptly to distribute to each Lender its proper share of all
payments so received, (b) to distribute to each Lender copies of all notices,
agreements and other material as provided for in this Agreement or in the
Security Documents and other Loan Documents as received by such Agent and (c)
to take all actions with respect to this Agreement and the Security Documents
and other Loan Documents as are specifically delegated to the Agent.

In the event that (a) the Borrower fails to pay when due the
principal of or interest on any Note, any amount payable under any Letter of
Credit or any fee payable hereunder or (b) the Agent receives written notice of
the occurrence of a Default or an Event of Default, the Agent within a
reasonable time shall give written notice thereof to the Lenders, and shall
take such action with respect to such Event of Default or other condition or
event as it shall be directed to take by the Required Lenders; provided,
however, that, unless and until the Agent shall have received such directions,
the Agent may take such action or refrain from taking such action hereunder or
under the Security Documents or other Loan Documents with respect to a Default
or Event of Default as it shall deem advisable in the best interests of the
Lenders.

The Agent shall not be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, perfection, value, genuineness,
validity or due execution of this Agreement, the Notes or any of the other Loan
Documents or Collateral or any other agreements or certificates, requests,
financial statements, notices or opinions of counsel or for any recitals,
statements, warranties or representations contained herein or in any such
instrument or be under any obligation to ascertain or inquire as to the
performance or observance of any of the terms, provisions, covenants,
conditions, agreements or obligations of this Agreement or any of the other
Loan Documents or any other agreements on the part of the Borrower and, without
limiting the generality of the foregoing, the Agent shall, in the absence of
knowledge to the contrary, be entitled to accept any certificate furnished
pursuant to this Agreement or any of the other Loan Documents as conclusive
evidence of the facts stated therein and shall be entitled to rely on any note,
notice, consent, certificate, affidavit, letter, telegram, teletype message,
statement, order or other document which it believes in good faith to be
genuine and correct and to have been signed or sent by the proper person or
persons. It is understood and agreed that the Agent may exercise its rights and
powers under other agreements and instruments to which it is or may be a party,
and engage in other transactions with the Borrower, as though it were not Agent
of the Lenders hereunder.

<PAGE> 90

Except as provided in Section 6.05, the Agent shall promptly
give notice to the Lenders of the receipt or sending of any notice, schedule,
report, projection, financial statement or other document or information
pursuant to this Agreement or any of the other Loan Documents and shall
promptly forward a copy thereof to each Lender.

Neither the Agent nor any of its directors, officers,
employees or agents shall have any responsibility to the Borrower on account of
the failure or delay in performance or breach by any Lender other than the
Agent of any of its obligations hereunder or to any Lender on account of the
failure of or delay in performance or breach by any other Lender or the
Borrower of any of their respective obligations hereunder or in connection
herewith.

The Agent may consult with legal counsel selected by it in
connection with matters arising under this Agreement or any of the other Loan
Documents and any action taken or suffered in good faith by it in accordance
with the opinion of such counsel shall be full justification and protection to
it. The Agent may exercise any of its powers and rights and perform any duty
under this Agreement or any of the other Loan Documents through agents or
attorneys.

The Agent and the Borrower may deem and treat the payee of any
Note as the holder thereof until written notice of transfer shall have been
delivered as provided herein by such payee to the Agent and the Borrower.

With respect to the Loans made hereunder, the Notes issued to
it and any other Credit Event applicable to it, the Agent in its individual
capacity and not as an Agent shall have the same rights, powers and duties
hereunder and under any other agreement executed in connection herewith as any
other Lender and may exercise the same as though it were not the Agent, and the
Agent and its affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or other affiliate thereof as
if it were not the Agent.

Each Lender agrees (i) to reimburse the Agent in the amount of
such Lender's pro rata share (based on its Commitment hereunder) of any
expenses incurred for its own benefit and for the benefit of the Lenders by the
Agent, including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, not reimbursed by the Borrower and
(ii) to indemnify and hold harmless the Agent and any of its directors,
officers, employees or agents, on demand, in the amount of its pro rata share,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against it in its capacity as the Agent or any of them in any way relating to
or arising out of this Agreement or any of the other Loan Documents or any
action taken or omitted by

<PAGE> 91

it or any of them under this Agreement or any of the other Loan Documents, to
the extent not reimbursed by the Borrower; provided, however, that no Lender
shall be liable to the Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgment, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of the
Agent or any of its directors, officers, employees or agents.

Each Lender acknowledges that it has, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and any other Loan Document to which such
Lender is party. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document, any related agreement or any document
furnished hereunder.

Subject to the appointment and acceptance of a successor Agent
as provided below, the Agent may resign at any time by notifying the Lenders
and the Borrower. Upon any such resignation, the Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so
appointed by such Lenders and shall have accepted such appointment within 30
days after the retiring Agent gives notice of its resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a bank with an office (or an affiliate with an office) in New York,
New York, having a combined capital and surplus of at least $500,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor bank, such
successor shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent and the retiring Agent
shall be discharged from its duties and obligations hereunder and under each of
the other Loan Documents. After any Agent's resignation hereunder, the
provisions of this Article shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as Agent.

The Lenders hereby acknowledge that the Agent shall be under
no duty to take any discretionary action permitted to be taken by the Agent
pursuant to the provisions of this Agreement or any of the other Loan Documents
unless it shall be requested in writing to do so by the Required Lenders. The
Lenders hereby further acknowledge that the Agent is not acting as the
fiduciary of, or the trustee for, any of the Lenders.

<PAGE> 92

X. MANAGEMENT, COLLECTION AND STATUS OF RECEIVABLES AND OTHER COLLATERAL

SECTION 10.01. Collection of Receivables; Management of
Collateral. (a) Upon the occurrence and continuance of an Event of Default, at
the request of the Agent, the Borrower will, at its own cost and expense, (i)
arrange for remittances on Receivables to be made directly to lockboxes
designated by the Agent or in such other manner as the Agent may direct, and
(ii) promptly deposit all payments received by the Borrower on account of
Receivables, whether in the form of cash, checks, notes, drafts, bills of
exchange, money orders or otherwise, in one or more accounts designated by the
Agent in precisely the form received (but with any endorsements of the Borrower
necessary for deposit or collection), subject to withdrawal by the Agent only,
as hereinafter provided, and until such payments are deposited, such payments
shall be deemed to be held in trust by the Borrower for and as the Lenders'
property and shall not be commingled with the Borrower's other funds. All
remittances and payments that are deposited in accordance with the foregoing
will, after two Business Days (or three Business Days in the case of deposits
that are made after 1:00 p.m. (New York time)), be applied by the Agent to
reduce the outstanding balance of the Revolving Credit Loans, subject to final
collection in cash of the item deposited.

Upon the occurrence and continuance of an Event of Default,
the Agent may send a notice of assignment and/or notice of the Agent's security
interest to any and all Customers or any third party holding or otherwise
concerned with any of the Collateral, and thereafter the Agent shall have the
sole right to collect the Receivables and/or take possession of the Collateral
and the books and records relating thereto. The Borrower shall not, after the
occurrence and during the continuance of an Event of Default, without the
Agent's prior written consent, grant any extension of the time of payment of
any Receivable, compromise or settle any Receivable for less than the full
amount thereof, release, in whole or in part, any person or property liable for
the payment thereof, or allow any credit or discount whatsoever thereon except,
prior to the occurrence and continuance of an Event of Default, as permitted by
Section 10.03 hereof.

(b) (i) The Borrower hereby constitutes the Agent or the
Agent's designee as the Borrower's attorney-in-fact with power during the
continuance of an Event of Default to endorse the Borrower's name upon any
notes, acceptances, checks, drafts, money orders or other evidences of payment
or Collateral that may come into its possession; to sign the Borrower's name on
any invoice or bill of lading relating to any Receivables, drafts against
Customers, assignments and verifications of Receivables and notices to
Customers; to send verifications of Receivables; upon the occurrence of an
Event of Default, to notify the Postal Service authorities to change the
address for delivery of mail addressed to the Borrower to such address as the
Agent may designate; and to

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do all other acts and things necessary to carry out this Agreement. All acts of
said attorney or designee are hereby ratified and approved, and said attorney
or designee shall not be liable for any acts of omission or commission, for any
error of judgment or for any mistake of fact or law, provided that the Agent or
its designee shall not be relieved of liability to the extent it is determined
by a final judicial decision that its act, error or mistake constituted gross
negligence or willful misconduct. This power of attorney being coupled with an
interest is irrevocable until all of the Obligations are paid in full and this
Agreement and the Total Commitment is terminated.

(ii) The Agent, without notice to or consent of the
Borrower, upon the occurrence and during the continuance of an Event of
Default, (A) may sue upon or otherwise collect, extend the time of payment of,
or compromise or settle for cash, credit or otherwise upon any terms, any of
the Receivables or any securities, instruments or insurance applicable thereto
and/or release the obligor thereon; (B) is authorized and empowered to accept
the return of the goods represented by any of the Receivables; and (C) shall
have the right to receive, endorse, assign and/or deliver in its name or the
name of the Borrower any and all checks, drafts and other instruments for the
payment of money relating to the Receivables, and the Borrower hereby waives
notice of presentment, protest and non-payment of any instrument so endorsed.

(c) Nothing herein contained shall be construed to
constitute the Borrower as agent of the Agent for any purpose whatsoever, and
the Agent shall not be responsible or liable for any shortage, discrepancy,
damage, loss or destruction of any part of the Collateral wherever the same may
be located and regardless of the cause thereof (except to the extent it is
determined by a final judicial decision that the Agent's or a Lender's act or
omission constituted gross negligence or willful misconduct). The Agent and the
Lenders shall not, under any circumstances or in any event whatsoever, have any
liability for any error or omission or delay of any kind occurring in the
settlement, collection or payment of any of the Receivables or any instrument
received in payment thereof or for any damage resulting therefrom (except to
the extent it is determined by a final judicial decision that the Agent's or
such Lender's error, omission or delay constituted gross negligence or willful
misconduct). The Agent and the Lenders do not, by anything herein or in any
assignment or otherwise, assume the Borrower's obligations under any contract
or agreement assigned to the Agent or the Lenders, and the Agent and the
Lenders shall not be responsible in any way for the performance by the Borrower
of any of the terms and conditions thereof.

(d) If any of the Receivables includes a charge for any
tax payable to any governmental tax authority, the Agent is hereby authorized
(but in no event obligated) in its discretion to pay the amount thereof to the
proper taxing authority for the account of the Borrower and to charge the
Borrower's account therefor. The Borrower shall notify the Agent if any
Receivables include any tax due to any

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such taxing authority and, in the absence of such notice, the Agent shall have
the right to retain the full proceeds of such Receivables and shall not be
liable for any taxes that may be due from the Borrower by reason of the sale
and delivery creating such Receivables.

SECTION 10.02. Receivables Documentation. The Borrower will,
in addition to the monthly Receivables agings delivered pursuant to this
Agreement, at such intervals as the Agent may reasonably require, furnish such
further schedules and/or information as the Agent may require relating to the
Receivables, including, without limitation, sales invoices. In addition, the
Borrower shall notify the Agent of any non-compliance in respect of the
representations, warranties and covenants contained in Section 10.03 hereof.
The items to be provided under this Section 10.02 are to be in form
satisfactory to the Agent and are to be executed and delivered to the Agent
from time to time solely for its convenience in maintaining records of the
Collateral; the Borrower's failure to give any of such items to the Agent shall
not affect, terminate, modify or otherwise limit the Agent's Lien or security
interest in the Collateral.

SECTION 10.03. Status of Receivables and Other Collateral.
The Borrower covenants, represents and warrants that: (a) to the best of its
knowledge, all signatures and endorsements that appear on all documents and
agreements relating to Receivables shall be genuine and all signatories and
endorsers with respect thereto shall have full capacity to contract; (b) it
shall maintain books and records pertaining to the Collateral in such detail,
form and scope as the Agent shall require; (c) it will immediately notify the
Agent if any accounts arise out of contracts with the United States or any
department, agency or instrumentality thereof, and will execute any instruments
and take any steps required by the Agent in order that all monies due or to
become due under any such contract shall be assigned to the Agent and notice
thereof given to the United States Government under the Federal Assignment of
Claims Act; (d) it will, immediately upon learning thereof, report to the Agent
any material loss or destruction of, or substantial damage to, any of the
Collateral, and any other matters affecting the value, enforceability or
collectability of any of the Collateral; (e) if any amount payable under or in
connection with any Receivable is evidenced by a promissory note or other
instrument, as such terms are defined in the Uniform Commercial Code, such
promissory note or instrument shall be immediately pledged, endorsed, assigned
and delivered to the Agent as additional collateral; (f) it shall not re-date
any invoice or sale or make sales on extended dating beyond that customary in
the industry; and (g) it is not nor shall it be entitled to pledge the Lenders'
credit on any purchases or for any purpose whatsoever.

SECTION 10.04. Monthly Statement of Account. The Agent shall
render to the Borrower each month a statement of the Borrower's account, which
shall constitute an account stated.

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SECTION 10.05. Collateral Custodian. Upon the occurrence and
continuance of an Event of Default, the Agent may at any time and from time to
time employ and maintain in the premises of the Borrower a custodian selected
by the Agent who shall have full authority to do all acts necessary to protect
the Agent's and Lenders' interests and to report to the Agent thereon. The
Borrower hereby agrees to cooperate with any such custodian and to do whatever
the Agent may reasonably request to preserve the Collateral. All reasonable
costs and expenses incurred by the Agent by reason of the employment of the
custodian shall be charged to the Borrower's account and added to the
Obligations.

XI. MISCELLANEOUS

SECTION 11.01. Notices. Notices, consents and other
communications provided for herein shall be in writing and shall be delivered
or mailed (or in the case of telex or facsimile communication, delivered by
telex, graphic scanning, telecopier or other telecommunications equipment, with
receipt confirmed) addressed,

(a) if to the Borrower, Guarantors, or Grantors, at 40
Morris Avenue, Bryn Mawr, PA 19010, Attention: Raymond Hansell, CEO,
(title) , with a copy to Wolf, Block, Schorr and Solis-Cohen, Twelfth
Floor Packard Building S.E. Corner 15th and Chestnut Streets,
Philadelphia, PA 19102-2678 Attention: Herman C. Fala, Esq.; and
Advanta Partners LP, Five Horsham Business Center, 300 Welsh Road,
Horsham PA 19044-2296 Attention: Anthony P. Brenner;

(b) if to the Agent, at Chemical Bank, Middle Market
Structured Finance Division, 633 Third Avenue, New York, New York
10017, Attention: Credit Deputy, with a copy to Kaye, Scholer, LLP, et
al., at 425 Park Avenue, New York, New York 10022, Attention: Jeffrey
M. Epstein, Esq.; and

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon receipt if by any telex, facsimile or other telecommunications equipment,
in each case addressed to such party as provided in this Section 11.01 or in
accordance with the latest unrevoked direction from such party.

<PAGE> 96

SECTION 11.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrower or any of its
subsidiaries herein and in the certificates or other instruments prepared or
delivered in connection with this Agreement, any of the Security Documents, any
Guarantee or any other Loan Document, shall be considered to have been relied
upon by the Lenders and shall survive the making by the Lenders of the Loans
and the execution and delivery to the Lenders of the Notes and occurrence of
any other Credit Event and shall continue in full force and effect as long as
the principal of or any accrued interest on the Notes or any other fee or
amount payable under the Notes or this Agreement or any other Loan Document is
outstanding and unpaid and so long as the Total Commitment has not been
terminated.

SECTION 11.03. Successors and Assigns; Participations.
(a) Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Borrower, any
Guarantor, any Grantor, any ERISA Affiliate, any subsidiary of any thereof, the
Agent or the Lenders, that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns. Without limiting the
generality of the foregoing, the Borrower specifically confirms that any Lender
may at any time and from time to time pledge or otherwise grant a security
interest in any Loan or any Note (or any part thereof) to any Federal Reserve
Bank. The Borrower may not assign or transfer any of its rights or obligations
hereunder without the written consent of all the Lenders.

(b) Each Lender, without the consent of the Borrower or
the Agent, may sell participations to one or more banks or other entities in
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Revolving Credit Commitment or Term
Loan Commitment) and the Loans owing to it and undrawn Letters of Credit and
the Notes held by it); provided, however, that (i) such Lender's obligations
under this Agreement (including, without limitation, its Revolving Credit
Commitment and Term Loan Commitment) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the banks or other entities buying participations
shall be entitled to the cost protection provisions contained in Sections 2.10,
2.12 and 2.15 hereof, but only to the extent any of such Sections would be
available to the Lender which sold such participation, and (iv) the Borrower,
the Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement; provided, further, however, that each Lender shall retain the sole
right and responsibility to enforce the obligations of the Borrower, Grantors
and the Guarantors relating to the Loans, including, without limitation, the
right to approve any amendment, modification or waiver of any provision of this
Agreement, other than amendments, modifications

<PAGE> 97

or waivers with respect to decreasing any fees payable hereunder or the amount
of principal or the rate of interest payable on, or the dates fixed for any
payment of principal of or interest on, the Loans or changing or extending the
Commitments or the release of all Collateral.

(c) Each Lender may assign by novation, to any one or
more banks or other entities (exclusive of a non-financial institution which is
a provider of telemarketing services to third parties) without the prior
written consent of the Borrower but with the prior written consent of the
Agent, who shall notify and consult with the Borrower regarding any such
assignment prior thereto (but approval thereof remaining exclusively with the
Agent), all or a portion of its interests, rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of its Revolving Credit Commitment or Term Loan Commitment and the same
portion of the Loans at the time owing to it and the Note or Notes held by it),
provided, however, that (i) each such assignment shall be of a constant, and
not a varying, percentage of all of the assigning Lender's rights and
obligations under this Agreement, which shall include the same percentage
interest in the Loans, Letters of Credit and Notes, (ii) the amount of the
Revolving Credit Commitment or Term Loan Commitment of the assigning Lender
being assigned pursuant to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Agent) shall be in a minimum principal amount of $3,000,000 in the aggregate
for the Revolving Credit Commitment and Term Loan Commitment of such Lender and
the amount of the Revolving Credit Commitment and Term Loan Commitment of such
Lender shall not be less than $3,000,000 or shall be zero, (iii) the parties to
each such assignment shall execute and deliver to the Agent, for its acceptance
and recording in the Register (as defined below), an Assignment and Acceptance,
together with any Note subject to such assignment and a processing and
recordation fee of $5,000, (iv) at all times Chemical Bank shall maintain a
percentage of the Total Commitment at least equal to the Lender (other than
Chemical Bank) holding the largest percentage of the Total Commitment and (v)
the Assignee, if it shall not be a Lender, shall deliver to the Agent an
Administrative Questionnaire in the form provided to such Assignee by the
Agent. Upon such execution, delivery, acceptance and recording and after
receipt of the written consent of the Agent, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, (x) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and under the other Loan Documents and (y) the Lender which is
assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
an assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of

<PAGE> 98

Sections 2.10, 2.12, 2.15 and 11.04, as well as any fees accrued for its
account hereunder and not yet paid).

(d) By executing and delivering an Assignment and
Acceptance, the Lender which is assignor thereunder and the assignee thereunder
confirm to, and agree with, each other and the other parties hereto as follows:
(i) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereunder free and clear of
any adverse claim, and that its Commitment and the outstanding balance of its
Loans and participations in Letters of Credit, in each case without giving
effect to assignments thereof which have not become effective, are as set forth
in such Assignment and Acceptance, such Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, perfection, genuineness,
sufficiency or value of this Agreement, the other Loan Documents or any
Collateral with respect thereto or any other instrument or document furnished
pursuant hereto or thereto; (ii) such Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower, or any Grantor or Guarantor or the performance or observance
by the Borrower, Grantor or the Guarantor of any of their respective
obligations under this Agreement, any Guarantees or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance and confirms that it
has received a copy of this Agreement, any Guarantees and of the other Loan
Documents, together with copies of financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such Lender
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee appoints
and authorizes the Agent to take such action as the Agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

(e) The Agent shall maintain at its address referred to
in Section 11.01 hereof a copy of each Assignment and Acceptance delivered to
it and a register for the recordation of the names and addresses of the Lenders
and the Revolving Credit Commitment or Term Loan Commitment, as the case may
be, of, and principal amount of the Loans owing to, each Lender from time to
time (the "Register"). The entries in the Register shall be conclusive, in the
absence

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of manifest error, and the Borrower, the Agent and the Lenders may treat each
person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

(f) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee together with any Note or Notes
subject to such assignment, any processing and recordation fee and, if
required, an Administrative Questionnaire and the written consent to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is precisely in the form of Exhibit F annexed hereto, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein
in the Register and (iii) give prompt notice thereof to the Lenders and the
Borrower. Within five (5) Business Days after receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to the Agent in
exchange for each surrendered Note or Notes a new Note or Notes to the order of
such assignee in an amount equal to its portion of the Term Loan Commitment
and/or Revolving Credit Commitment, as the case may be, assumed by it pursuant
to such Assignment and Acceptance and, if the assigning Lender has retained any
Term Loan Commitment or Revolving Credit Commitment hereunder, a new Note or
Notes to the order of the assigning Lender in an amount equal to the Term Loan
Commitment and/or Revolving Credit Commitment, as the case may be, retained by
it hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note or Notes, or,
with respect to the Term Notes, the principal amount of the Term Notes
outstanding at such time as evidenced by the Term Note or Notes, shall be dated
the effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A or Exhibit B, as the case may be. Notes
surrendered to the Borrower shall be canceled by the Borrower.

(g) Notwithstanding any other provision herein, any
Lender may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 11.03, disclose to the
assignee or participant or proposed assignee or participant, any information,
including, without limitation, any Information, relating to the Borrower
furnished to such Lender by or on behalf of the Borrower in connection with
this Agreement; provided, however, that prior to any such disclosure, each such
assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential Information relating to the
Borrower received from such Lender.

SECTION 11.04. Expenses; Indemnity. (a) The Borrower agrees
to pay all reasonable out-of-pocket expenses incurred by the Agent in
connection with the preparation of this Agreement and the other Loan Documents
or with any

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amendments, modifications, waivers, extensions, renewals, renegotiations or
"workouts" of the provisions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or incurred by the Agent or any of
the Lenders in connection with the enforcement or protection of its rights in
connection with this Agreement or any of the other Loan Documents or with the
Loans made or the Notes or Letters of Credit issued hereunder, or in connection
with any pending or threatened action, proceeding, or investigation relating to
the foregoing, including but not limited to the reasonable fees and
disbursements of counsel for the Agent (which shall be invoiced to Borrower and
paid within 30 days other than such fees and disbursements of counsel for Agent
related to the preparation of this Agreement and the other Loan Documents which
shall be paid on the Closing Date) and ongoing field examination expenses
(which shall be invoiced to Borrower and paid within 30 days) and charges, and,
in connection with such enforcement or protection, the reasonable fees and
disbursements of counsel for the Lenders. The Borrower further indemnifies the
Lenders from and agrees to hold them harmless against any documentary taxes or
similar assessments or charges made by any governmental authority by reason of
the execution and delivery of this Agreement or the Notes.

(b) The Borrower indemnifies the Agent and each Lender
and their respective directors, officers, employees and agents against, and
agrees to hold the Agent, each Lender and each such person harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by or asserted against the
Lender or any such person arising out of, in any way connected with, or as a
result of (i) the use of any of the proceeds of the Loans, (ii) this Agreement,
the Guarantees, any of the Security Documents, Acquisition Documents or the
other documents contemplated hereby or thereby, (iii) the performance by the
parties hereto and thereto of their respective obligations hereunder and
thereunder (including but not limited to the making of the Total Commitment)
and consummation of the transactions contemplated hereby and thereby, (iv)
breach of any representation or warranty, or (v) any claim, litigation,
investigation or proceedings relating to any of the foregoing, whether or not
the Agent, any Lender or any such person is a party thereto; provided, however,
that such indemnity shall not, as to the Agent or any Lender, apply to any such
losses, claims, damages, liabilities or related expenses to the extent that
they result from the gross negligence or willful misconduct of the Agent or any
Lender.

(c) The Borrower indemnifies, and agrees to defend and
hold harmless the Agent and the Lenders and their respective officers,
directors, shareholders, agents and employees (collectively, the "Indemnitees")
from and against any loss, cost, damage, liability, lien, deficiency, fine,
penalty or expense (including, without limitation, reasonable attorneys' fees
and reasonable expenses for investigation, removal, cleanup and remedial costs
and modification costs incurred to permit, continue or resume normal operations
of any property or

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assets or business of the Borrower or any subsidiary thereof) arising from a
violation by Borrower of, or failure to comply by Borrower with any
Environmental Law and to remove any Lien arising therefrom except to the extent
caused by the gross negligence or willful misconduct of any Indemnitee, which
any of the Indemnitees may incur or which may be claimed or recorded against
any of the Indemnitees by any person.

(d) The provisions of this Section 11.04 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the invalidity or unenforceability of any
term or provision of this Agreement or the Notes, or any investigation made by
or on behalf of the Agent or any Lender. All amounts due under this Section
11.04 shall be payable on written demand therefor.

SECTION 11.05. APPLICABLE LAW. THIS AGREEMENT AND THE NOTES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).

SECTION 11.06. Right of Setoff. If an Event of Default shall
have occurred and be continuing, upon the request of the Required Lenders each
Lender shall and is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement and the Notes held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or the Notes and although such obligations may be
unmatured. Each Lender agrees to notify promptly the Agent and the Borrower
after any such setoff and application made by such Lender, but the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of each Lender under this Section are in addition to other rights
and remedies (including, without limitation, other rights of setoff) which may
be available to such Lender.

SECTION 11.07. Payments on Business Days. (a) Should the
principal of or interest on the Notes or any fee or other amount payable
hereunder become due and payable on other than a Business Day, payment in
respect thereof may be made on the next succeeding Business Day (except as
otherwise specified in the definition of "Interest Period"), and such extension
of time shall in such case be included in computing interest, if any, in
connection with such payment.

95
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(b) All payments by the Borrower hereunder and all Loans
made by the Lenders hereunder shall be made in lawful money of the United
States of America in immediately available funds at the office of the Agent set
forth in Section 11.01 hereof.

SECTION 11.08. Waivers; Amendments. (a) No failure or delay
of any Lender in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Lenders hereunder are
cumulative and not exclusive of any rights or remedies which they may otherwise
have. No waiver of any provision of this Agreement or the Notes nor consent to
any departure by the Borrower therefrom shall in any event be effective unless
the same shall be authorized as provided in paragraph (b) below, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Borrower in any case
shall entitle it to any other or further notice or demand in similar or other
circumstances. Each holder of any of the Notes shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not
such Note shall have been marked to indicate such amendment, modification,
waiver or consent.

(b) Neither this Agreement nor any provision hereof may
be waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders; provided,
however, that no such agreement shall (i) change the principal amount of, or
extend or advance the maturity of or the dates for the payment of principal of
or interest on, any Note or reduce the rate of interest on any Note, (ii)
change the Revolving Credit Commitment or Term Loan Commitment of any Lender or
amend or modify the provisions of this Section, Section 2.06, Section 2.13,
Section 4.14 or Section 11.04 hereof or the definition of "Required Lenders,"
or (iii) release any material portion of Collateral, in each case without the
prior written consent of each Lender affected thereby and provided, further,
however, that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Agent under this Agreement or the other Loan Documents
without the written consent of the Agent. Each Lender and holder of any Note
shall be bound by any modification or amendment authorized by this Section
regardless of whether its Notes shall be marked to make reference thereto, and
any consent by any Lender or holder of a Note pursuant to this Section shall
bind any person subsequently acquiring a Note from it, whether or not such Note
shall be so marked.

(c) In the event that the Borrower requests, with respect
to this Agreement or any other Loan Document, an amendment, modification or
waiver and such amendment, modification or waiver would require the unanimous

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consent of all of the Lenders in accordance with Section 11.08(b) above, and
such amendment, modification or waiver is agreed to in writing by the Borrower
and the Required Lenders but not by all of the Lenders, then notwithstanding
anything to the contrary in Section 11.08(b) above, with the written consent of
the Borrower and such Required Lenders, the Borrower and Required Lenders may,
but shall not be obligated to, amend this Agreement without the consent of the
Lender or Lenders who did not agree to the proposed amendment, modification or
waiver (the "Minority Lenders") solely to provide for (i) the termination of
the Revolving Credit Commitment and Term Loan Commitment of each Minority
Lender, (ii) the assignment in accordance with Section 11.03 hereof to one or
more persons of each Minority Lender's interests, rights and obligations under
this Agreement (including, without limitation, all of such Minority Lender's
Revolving Credit Commitment and Term Loan Commitment as well as its portion of
all outstanding Loans and the Note or Notes held by such Minority Lender) and
the other Loan Documents and/or an increase in the Revolving Credit Commitment
and Term Loan Commitment of one or more Required Lenders, in each case so that
after giving effect thereto the Total Revolving Credit Commitment and Total
Term Loan Commitment shall be in the same amounts as prior to the events
described in this paragraph, (iii) the repayment to the Minority Lenders in
full of all Loans outstanding and accrued interest thereon at the time of the
assignment and/or increase in Commitments described in clause (ii) above with
the proceeds of Loans made by such persons who are to become Lenders by
assignment or with the proceeds of Loans made by Required Lenders who have
agreed to increase their Revolving Credit Commitment and/or Term Loan
Commitment, (iv) the payment to the Minority Lenders by the Borrower of all
fees and other compensation due and owing such Minority Lenders under the terms
of this Agreement and the other Loan Documents and (v) such other modifications
as the Required Lenders and Borrower shall deem necessary in order to effect to
changes specified in clauses (i) through (iv) hereof.

SECTION 11.09. Severability. In the event any one or more of
the provisions contained in this Agreement or in the Notes should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall
not in any way be affected or impaired thereby.

SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc.
(a) This Agreement, the Notes and the other Loan Documents constitute the
entire contract between the parties hereto relative to the subject matter
hereof. Any previous agreement among the parties hereto with respect to the
Transactions is superseded by this Agreement, the Notes and the other Loan
Documents. Except as expressly provided herein or in the Notes or the Loan
Documents (other than this Agreement), nothing in this Agreement, the Notes or
in the other Loan Documents, expressed or implied, is intended to confer upon
any party, other than the parties hereto, any rights, remedies, obligations or

<PAGE> 104

liabilities under or by reason of this Agreement, the Notes or the other Loan
Documents.

(b) Except as prohibited by law, each party hereto hereby
waives any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this
Agreement, the Notes, any of the other Loan Documents or the Transactions.

(c) Except as prohibited by law, each party hereto hereby
waives any right it may have to claim or recover in any litigation referred to
in paragraph (b) of this Section 11.10 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.

(d) Each party hereto (i) certifies that no
representative, agent or attorney of any Lender has represented, expressly or
otherwise, that such Lender would not, in the event of litigation, seek to
enforce the foregoing waivers and (ii) acknowledges that it has been induced to
enter into this Agreement, the Notes or the other Loan Documents, as
applicable, by, among other things, the mutual waivers and certifications
herein.

SECTION 11.11. Confidentiality. The Agent and the Lenders
agree to keep confidential (and to cause their respective officers, directors,
employees, agents and representatives to keep confidential) all information,
materials and documents furnished to the Agent or any Lender (the
"Information"). Notwithstanding the foregoing, the Agent and each Lender shall
be permitted to disclose (but shall notify any recipient of the confidential
nature of) Information (i) to such of its officers, directors, employees,
agents and representatives as need to know such Information in connection with
its participation in any of the Transactions or the administration of this
Agreement or the other Loan Documents; (ii) to the extent required by
applicable laws and regulations or by any subpoena or similar legal process, or
requested by any governmental agency or authority; (iii) to the extent such
Information (A) becomes publicly available other than as a result of a breach
of this Agreement, (B) becomes available to the Agent or such Lender on a
non-confidential basis from a source other than the Borrower, any Guarantor,
any Grantor or any of their respective subsidiaries or (C) was available to the
Agent or such Lender on a non-confidential basis prior to its disclosure to the
Agent or such Lender by the Borrower, any Guarantor, any Grantor or any of
their respective subsidiaries; (iv) to the extent the Borrower, any Guarantor
or any of their respective subsidiaries shall have consented to such disclosure
in writing; (v) in connection with the sale of any Collateral pursuant to the
provisions of any of the other Loan Documents; or (vi) pursuant to Section
11.03(g) hereof.

SECTION 11.12. Submission to Jurisdiction. (a) Any legal
action or proceeding with respect to this Agreement or the Notes or any other
Loan

<PAGE> 105

Document may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, the Borrower and each of the Guarantors hereby
accept for themselves and in respect of their property, generally and
unconditionally, the jurisdiction of the aforesaid courts.

(b) The Borrower and each of the Guarantors hereby
irrevocably waive, in connection with any such action or proceeding, any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which they may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.

(c) The Borrower and each of the Guarantors hereby
irrevocably consent to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to each such person, as the case
may be, at its address set forth in Section 11.01 hereof.

(d) Nothing herein shall affect the right of the Agent or
any Lender to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrower or any Guarantor in
any other jurisdiction.

SECTION 11.13. Counterparts; Facsimile Signature. This
Agreement may be executed in counterparts, each of which shall constitute an
original but all of which when taken together shall constitute but one
contract, and shall become effective when copies hereof which, when taken
together, bear the signatures of each of the parties hereto shall be delivered
to the Agent. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
signature page hereto.

SECTION 11.14. Headings. Article and Section headings and
the Table of Contents used herein are for convenience of reference only and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.

XII. GUARANTEES

Each Guarantor unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally with each other
Guarantor, the due and punctual payment of the principal of and interest on
each of the Notes, when and as due, whether at maturity, by acceleration, by
notice of prepayment or otherwise, and the due and punctual performance of all
other Obligations. Each Guarantor further agrees that the Obligations may be
extended and renewed, in

<PAGE> 106

whole or in part, without notice to or further assent from it, and that it will
remain bound upon its guarantee notwithstanding any extension or renewal of any
Obligations.

Each Guarantor waives presentment to, demand of payment from
and protest to the Borrower of any of the Obligations, and also waives notice
of acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by (a) the failure
of any Lender or the Agent to assert any claim or demand or to enforce any
right or remedy against the Borrower or any other Guarantor under the
provisions of this Agreement, the Notes or any of the other Loan Documents or
otherwise; (b) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement, the Notes, any of the other Loan
Documents, any guarantee or any other agreement; (c) the release of any
security held by the Agent for the Obligations or any of them; or (d) the
failure of any Lender to exercise any right or remedy against any other
Guarantor of the Obligations.

Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by any Lender to any security (including,
without limitation, any Collateral) held for payment of the Obligations or to
any balance of any deposit account or credit on the books of any Lender in
favor of the Borrower or any other person.

The obligations of each Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of each Guarantor
hereunder shall not be discharged or impaired or otherwise affected by the
failure of the Agent or any Lender to assert any claim or demand or to enforce
any remedy under this Agreement, the Notes or under any other Loan Document,
any guarantee or any other agreement, by any waiver or modification of any
provision thereof, by any default, failure or delay, willful or otherwise, in
the performance of the Obligations, or by any other act or omission which may
or might in any manner or to any extent vary the risk of such Guarantor or
otherwise operate as a discharge of such Guarantor as a matter of law or
equity.

Each Guarantor further agrees that its guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be returned by the Agent or any Lender upon the
bankruptcy or reorganization of the Borrower or otherwise.

100

<PAGE> 107

Each Guarantor hereby waives and releases all rights of
subrogation against the Borrower and its property and all rights of
indemnification, contribution and reimbursement from the Borrower and its
property, in each case in connection with this guarantee and any payments made
hereunder, and regardless of whether such rights arise by operation of law,
pursuant to contract or otherwise.

101

<PAGE> 108

IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders
have caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.

RMH SALES AND MARKETING
CONSULTING, INC.

By: /s/ MarySue Lucci Hansell
_____________________________
Name: MarySue Lucci Hansell
Title: President

CHEMICAL BANK, as Lender

By: /s/ C. Scott Fields
_____________________________
Name: C. Scott Fields
Title:

CHEMICAL BANK, as Agent

By: /s/ C. Scott Fields
_____________________________
Name: C. Scott Fields
Title:

102

<PAGE> 109

SCHEDULE 2.01(a)

TERM LOAN COMMITMENTS

<TABLE>
<CAPTION>
Approximate
Term Loan Percentage of Total
Lender Commitment Term Loan Commitment
- ------ ---------- --------------------
<S> <C> <C>
Chemical Bank $14,000,000 100%
633 Third Avenue
New York, NY 10017
Attention: Credit Deputy

</TABLE>

<PAGE> 110

SCHEDULE 2.01(b)

Revolving Credit Commitments

<TABLE>
<CAPTION>
Approximate
Revolving Percentage of
Credit Total Revolving
Lender Commitment Credit Commitment
- ------ ---------- -----------------
<S> <C> <C>
Chemical Bank
633 Third Avenue
New York, New York 10017 $6,000,000 100%
Attention: Credit Deputy

</TABLE>
<PAGE> 111

SCHEDULE 2.02

Domestic Lending Offices

<TABLE>
<CAPTION>
Lender Domestic Lending Office
- ------ -----------------------

<S> <C>
Chemical Bank Chemical Bank
633 Third Avenue
New York, NY 10017
Attn: Credit Deputy

</TABLE>
<PAGE> 112

SCHEDULE 2.03

Eurodollar Lending Offices

<TABLE>
<CAPTION>
Lender Eurodollar Lending Office
- ------ -------------------------
<S> <C>
Chemical Bank Chemical Bank
633 Third Avenue
New York, NY 10017
Attn: Credit Deputy

</TABLE>
<PAGE> 113

SCHEDULE 6.05(k)

BORROWING BASE CERTIFICATE

Date Prepared: ________________

TO: Chemical Bank
633 Third Avenue
New York, New York 10017

SUBJECT: RMH Sales and Marketing Consulting, Inc.
Borrowing Base Certificate as of _________________

We hereby certify the following information:

<TABLE>
<S> <C>
1. Accounts Receivable as of the
date of the last submitted certificate $_____________
+ Sales $_____________
- Collections $_____________
- Credits $_____________
Accounts Receivable as of / / $_____________
</TABLE>

2. Accounts Receivable Aging as of / /

<TABLE>
<CAPTION>
Customer Name Total A/R Current 31-60 61-90 Over 90
------------- --------- ------- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C>
1. ______________ $_________ $________ $________ $________ $________

2. ______________ $_________ $________ $________ $________ $________

3. ______________ $_________ $________ $________ $________ $________

4. ______________ $_________ $________ $________ $________ $________

5. ______________ $_________ $________ $________ $________ $________

6. Others $_________ $________ $________ $________ $________

Total $ $ $ $ $
_________ ________ ________ ________ ________
</TABLE>
<PAGE> 114

3. Computation of Borrowing Base:

<TABLE>
<S> <C>
A. Total Accounts Receivable as of / / $____________
Per Trial Balance

Accounts Receivable Over 90 Days
Past Invoice Date $ (_____________)

Contra Receivables $ (_____________)

Receivables from Affiliated
Companies (if not specifically
permitted) $ (_____________)

Foreign Receivables $ (_____________)

Cross-aged Receivables $ (_____________)

Disputes $ (_____________)

Credits $ (_____________)

Other (Per Definition of
Eligible Receivables) $ (_____________)

Total Deductions $ (_____________)

B. Net Eligible Receivables $ (_____________)

Availability on Accounts Receivable*
(85% Advance) $--------------

C. Loans Presently Outstanding $_______________
Open Letters of Credit $_______________
Total Outstandings as of this date $_______________

D. Net Available (if negative, our check for
said amount is attached) [D = B - C] $_______________
</TABLE>

4. Comments or Other Information:

The undersigned hereby represents and warrants that this is a correct statement
regarding the status of accounts receivable assigned to Chemical Bank, as
Agent, and that the figures set forth herein are completely accurate. The
undersigned further warrants and represents that the Borrower is in complete
compliance with all the terms and conditions contained in the agreements
between us. The undersigned further understands that your loans to the Borrower
will be based upon your reliance on the information contained herein.

RMH SALES AND MARKETING
CONSULTING, INC.

By:______________________________
Name:
Title: Chief Financial Officer

*Maximum limited to Revolving Credit Commitment

2
<PAGE> 115

SCHEDULE 7.06

PERMITTED ACQUISITIONS

Permitted Acquisitions must meet the following criteria:

1. They must be in the same line of business as the Borrower.

2. The aggregate consideration expended in connection with
Permitted Acquisitions in any Fiscal Year shall not exceed $1,000,000.

3. The Agent shall have received, in form satisfactory to it, a
Certificate of the Borrower signed on its behalf by a Financial Officer thereof
demonstrating that based on pro forma projections based on reasonable
assumptions, after giving effect to such Permitted Acquisition, the Borrower is
projected to be in compliance with the financial covenants under the Credit
Agreement through the Final Maturity Date.

4. No Default or Event of Default shall have occurred and be
continuing or would occur after giving effect to such Permitted Acquisition,
and the Agent shall have received a Certificate of the Borrower signed on its
behalf by a Financial Officer to that effect.

5. The Agent shall have received the last two fiscal years'
financial statements of the acquiree, audited if available, or otherwise
certified by the chief financial officer of such acquiree.

<PAGE> 1

EXHIBIT 10.8

REVOLVING CREDIT NOTE

$6,000,000 May 24, 1996

FOR VALUE RECEIVED, the undersigned, RMH SALES AND MARKETING CONSULTING,
INC., a Pennsylvania corporation (the "Maker") hereby promises to pay to the
order of CHEMICAL BANK (the "Lender"), at the office of CHEMICAL BANK (the
"Agent"), at 633 Third Avenue, New York, New York on the Revolving Credit
Termination Date as defined in the Credit Agreement dated as of May 24, 1996,
among the Maker, the Guarantors named therein, the Lenders named therein and the
Agent (as the same may be amended, modified or supplemented from time to time in
accordance with its terms, the "Credit Agreement") or earlier as provided for in
the Credit Agreement, the lesser of the principal sum of SIX MILLION DOLLARS
($6,000,000) or the aggregate unpaid principal amount of all Revolving Credit
Loans to the Maker from the Lender pursuant to the terms of the Credit
Agreement, in lawful money of the United States of America in immediately
available funds, and to pay interest from the date thereof on the principal
amount hereof from time to time outstanding, in like funds, at said office, at a
rate or rates per annum and, in each case, and payable on such dates as
determined pursuant to the terms of the Credit Agreement.

The Maker promises to pay interest, on demand, on any overdue principal
and fees and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.

The Maker hereby waives diligence, presentment, demand, protest and notice
of any kind whatsoever. The non-exercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.

All borrowings evidenced by this Note and all payments and prepayments of
the principal hereof and interest hereon and the respective dates thereof shall
be endorsed by the holder hereof on the schedule attached hereto and make a part
hereof, or on a continuation thereof which shall be attached hereto and made a
part hereof, or otherwise recorded by such holder in its internal records;
provided, however, that the failure of the holder hereof to make such a notation
or any error in such a notation shall
<PAGE> 2

not in any manner affect the obligation of the Maker to make payments of
principal and interest in accordance with the terms of this Note and the Credit
Agreement.

This Note is one of the Notes referred to in the Credit Agreement, which,
among other things, contains provisions for the acceleration of the maturity
hereof upon the happening of certain events, for optional and mandatory
prepayment of the principal hereof prior to the maturity hereof and for the
amendment or waiver of certain provisions of the Credit Agreement, all upon the
terms and conditions therein specified. THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CHOICE OF LAW DOCTRINE, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA.

RMH SALES AND MARKETING
CONSULTING, INC.

By: /s/ MARYSUE LUCCI HANSELL

------------------------------------
Name: MarySue Lucci Hansell
Title: President
<PAGE> 3

LOANS AND PAYMENT

<TABLE>
<CAPTION> UNPAID
PRINCIPAL
NAME OF
AMOUNT AND PAYMENTS PRINCIPAL BALANCE OF PERSON MAKING
DATE TYPE OF LOAN INTEREST NOTE NOTATION
- -------------------------------------- ------------ ------------------ ---------- -------------
<S> <C> <C> <C> <C>
</TABLE>

<PAGE> 1

EXHIBIT 10.9

TERM NOTE
$14,000,000 New York, New York
May 24, 1996

FOR VALUE RECEIVED, the undersigned, RHM SALES AND MARKETING CONSULTING,
INC., a Pennsylvania corporation (the "Maker"), hereby promises to pay to the
order of CHEMICAL BANK (the "Lender"), at the office of CHEMICAL BANK (the
"Agent"), at 633 Third Avenue, New York, New York, in installments and as
otherwise provided in Section 2.04(c) of the Credit Agreement dated as of May
24, 1996, among the Maker, the Guarantors named therein, the Lenders named
therein, and the Agent (as the same may be amended, modified or supplemented
from time to time in accordance with its terms, the "Credit Agreement") the
lesser of the principal sum of FOURTEEN MILLION DOLLARS ($14,000,000) or the
aggregate of the Term Loans made by the Lender pursuant to Section 2.01(a) of
the Credit Agreement, in lawful money of the United States of America in
immediately available funds, and to pay interest from the date thereof on the
principal amount hereof from time to time outstanding, in like funds, at said
office, at a rate or rates per annum and, in each case, payable on such dates as
determined pursuant to the terms of the Credit Agreement.

The Maker promises to pay interest, on demand, on any overdue principal and
fees and, to the extent permitted by law, overdue interest from their due dates
at a rate or rates determined as set forth in the Credit Agreement.

All borrowings evidenced by this Term Note and all payments and prepayments
of the principal hereof and interest hereon and the respective dates thereof
shall be endorsed by the holder hereof on the schedule attached hereto and made
a part hereof, or on a continuation thereof which shall be attached hereto and
made a part hereof, or otherwise recorded by such holder in its internal
records; provided, however,
<PAGE> 2

that the failure of the holder hereof to make such a notation or any error in
such a notation shall not in any manner affect the obligations of the Maker to
make payments of principal and interest in accordance with the terms of this
Term Note and the Credit Agreement.

This Term Note is one of the Notes referred to in the Credit Agreement (and
is secured by the Collateral referred to therein) which, among other things,
contains provisions for the acceleration of the maturity hereof upon the
happening of certain events, for optional and mandatory prepayment of the
principal hereof prior to the maturity hereof and for the amendment or waiver of
certain provisions of the Credit Agreement, all upon the terms and conditions
therein specified. THIS TERM NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CHOICE OF LAW
DOCTRINE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

RMH SALES AND MARKETING
CONSULTING, INC.

By: /s/ MARYSUE LUCCI HANSELL
------------------------------------
Name: MarySue Lucci Hansell
Title: President
<PAGE> 3

LOANS AND PAYMENT

<TABLE>
<CAPTION>
UNPAID
NAME OF PRINCIPAL
AMOUNT AND PAYMENTS PRINCIPAL BALANCE OF PERSON MAKING
DATE TYPE OF LOAN INTEREST NOTE NOTATION
- -------------------------------------- ------------ ------------------ ---------- -------------
<S> <C> <C> <C> <C>
</TABLE>

<PAGE> 1

EXHIBIT 10.10

SECURITY AGREEMENT

SECURITY AGREEMENT dated as of May 24, 1996, between RMH SALES AND
MARKETING CONSULTING, INC., a Pennsylvania corporation (the "Borrower") (the
Borrower is sometimes referred to herein as the "Grantor"), and CHEMICAL BANK, a
New York banking corporation, as agent ("Agent") for (i) the lenders (the
"Lenders") named in Schedules 2.01(a) and 2.01(b) of the Credit Agreement dated
as of the date hereof, among the Grantor, the guarantors named therein (the
"Guarantors"), the Agent and the Lenders (as amended, modified or supplemented
from time to time in accordance with its terms, the "Credit Agreement") and (ii)
itself as issuer of the Letters of Credit and party to the Rate Agreements.

The Agent and the Lenders have agreed to extend Loans and certain other
financial accommodations, including, without limitation, the issuance of the
Letters of the Credit to the Borrower pursuant to, and subject to the terms and
conditions of, the Credit Agreement. In addition, Chemical Bank has agreed to
extend certain financial accommodations to the Borrower pursuant to the Rate
Agreements. The obligation of the Lenders to extend such Loans and of the Agent
to issue the Letters of Credit under the Credit Agreement and of Chemical Bank
to extend such financial accommodations under the Rate Agreements is conditioned
on the execution and delivery by the Grantor of a security agreement in the form
hereof to secure the following (collectively, the "Secured Obligations"): all
Obligations (such Obligations to include, without limitation, the due and
punctual payment and performance of (a) all Obligations at any time and from
time to time under the Rate Agreements, (b) the principal of and interest on the
Loans, when and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise, (c) indebtedness at any time and from
time to time under the Letters of Credit, (d) all Obligations of the Grantor at
any time and from time to time under this Agreement and (e) all other
Obligations of the Grantor and Guarantors at any time and from time to time
under the Credit Agreement and the other Loan Documents).

Accordingly, the Grantor and the Agent hereby agree as follows:

1. Definitions of Terms Used Herein. All capitalized terms used herein but
not defined herein shall have the meanings set forth in the Credit
<PAGE> 2

Agreement. As used herein, the following terms shall have the following
meanings:

(a) "Accounts Receivable" shall mean (i) all of the Grantor's present
and future accounts, general intangibles, chattel paper and instruments, as
such terms are defined in the Uniform Commercial Code as in effect in the
State of New York ("NYUCC"), (ii) all moneys, securities and other property
and the proceeds thereof, now or hereafter held or received by, or in
transit to, the Agent from or for the Grantor, whether for safekeeping,
pledge, custody, transmission, collection or otherwise, and all of the
deposits (general or special) of the Grantor, balances, sums and credits
with, and all of the Grantor's claims against the Agent at any time
existing, (iii) all of the Grantor's right, title and interest, and all of
the Grantor's rights, remedies, security and Liens, in, to and in respect
of any accounts receivable, including, without limitation, rights of
stoppage in transit, replevin, repossession and reclamation and other
rights and remedies of an unpaid vendor, lienor or secured party,
guaranties or other contracts of suretyship with respect to accounts
receivable, deposits or other security for the obligation of any account
debtor, and credit and other insurance, (iv) all of the Grantor's right,
title and interest in, to and in respect of all goods relating to, or which
by sale have resulted in, accounts receivable, including, without
limitation, all goods described in invoices or other documents or
instruments with respect to, or otherwise representing or evidencing, any
account receivable, and all returned, reclaimed or repossessed goods.

(b) "Collateral" shall mean all (i) Accounts Receivable, (ii)
Documents, (iii) Equipment, (iv) General Intangibles, (v) Inventory, and
(vi) Proceeds.

(c) "Documents" shall mean all instruments, files, records, ledger
sheets and documents covering or relating to any of the Collateral.

(d) "Equipment" shall mean all of the Grantor's machinery, equipment,
vehicles, furniture and fixtures and all attachments, accessories and
equipment now or hereafter owned or acquired in the Grantor's business or
used in connection therewith, and all substitutions and replacements
thereof, wherever located, whether now owned or hereafter acquired by the
Grantor (other than (i) any motor vehicles or (ii) any equipment acquired
as of the date hereof or hereafter through the purchase or lease by the
Grantor or any of its subsidiaries with respect to which Liens permitted
under Section 7.01(e) of the Credit Agreement were or are created or
incurred contemporaneously with such

2
<PAGE> 3

acquisition or within 90 days thereafter to secure or provide for the
payment of any part of the purchase price of, or lease payments on, such
equipment).

(e) "General Intangibles" shall mean all of the Grantor's present and
future general intangibles of every kind and description, including
(without limitation) patents, patent applications, trade names and
trademarks and the goodwill of the business symbolized thereby, Federal,
State and local tax refund claims of all kinds and all of Grantor's right,
title and interest in and to, all benefits under, and all monies due or to
become due to the Grantor under or in connection with any leases,
agreements or contracts of the Grantor other than (i) those which under the
terms thereof may not be assigned or (ii) those existing on the date hereof
that provide that a lien granted upon the rights of the Grantor thereunder
will constitute a violation of the terms thereof.

(f) "Inventory" shall mean all of the Grantor's right, title and
interest in and to raw materials, work in process, finished goods and all
other inventory (as such term is defined in the NYUCC), whether now owned
or hereafter acquired, and all wrapping, packaging, advertising and
shipping materials, and any documents relating thereto.

(g) "Proceeds" shall mean any consideration received from the sale,
exchange, lease or other disposition of any asset or property which
constitutes Collateral, any other value received as a consequence of the
possession of any Collateral and any payment received from any insurer or
other person or entity as a result of the destruction, loss, theft or other
involuntary conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include, without limitation, all cash and
negotiable instruments received or held by any of the Lenders pursuant to
any lockbox or similar arrangement relating to the payment of Accounts
Receivable.

2. Security Interests. As security for the payment or performance, as the
case may be, of the Secured Obligations, the Grantor hereby creates and grants
to the Agent, its successors and its assigns, for its own benefit and for the
pro rata benefit of the Lenders, their successors and their assigns, a security
interest in the Collateral (the "Security Interest"). Without limiting the
foregoing, the Agent is hereby authorized to file one or more financing
statements, continuation statements or other documents for the purpose of
perfecting, confirming, continuing, enforcing or protecting the Security
Interest, naming the Grantor as debtor and the Agent as secured party.

3
<PAGE> 4

The Grantor agrees at all times to keep in all material respects accurate
and complete accounting records with respect to the Collateral, including, but
not limited to, a record of all payments and Proceeds received.

3. Further Assurances. The Grantor agrees, at its expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments
and documents and take all such actions as the Agent may from time to time
reasonably request for the assuring and preserving of the Security Interest and
the rights and remedies created hereby, including, without limitation, the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the
filing of any financing statements or other documents in connection herewith.
If any amount payable under or in connection with any of the Collateral shall
be or become evidenced by any promissory note or other instrument, such note or
instrument shall be promptly pledged and delivered to the Agent, duly endorsed
in a manner satisfactory to the Agent. The Grantor agrees to notify promptly
the Agent of any change in its corporate name or in the location of its chief
executive office, its chief place of business or the office where it keeps its
records relating to the Accounts Receivable owned by it and the location of any
Collateral. The Grantor agrees promptly to notify the Agent if any material
portion of the Collateral is damaged or destroyed.

4. Inspection and Verification. The Agent and such persons as the Agent
may designate shall have the right, at any reasonable time or times during the
Grantor's usual business hours, and upon reasonable notice (which may be
telephonic), to inspect the Collateral owned by the Grantor, all records related
thereto (and to make extracts and copies from such records,) and the premises
upon which any such Collateral is located, to discuss the Grantor's affairs with
the officers of the Grantor and its independent accountants and to verify under
reasonable procedures the validity, amount, quality, quantity, value, and
condition of or any other matter relating to, such Collateral. Subject to the
provisions of Section 11.11 of the Credit Agreement, the Agent shall have the
absolute right to share any information it gains from such inspection or
verification with any or all of the Lenders.

5. Taxes; Encumbrances. At its option, upon 10 days' prior notice to the
Grantor (which notice may be, at the Agent's option, either written or
telephonic), the Agent may discharge past due taxes, liens, security interests
or other encumbrances at any time levied or placed on the Collateral and not
permitted under the Credit Agreement, and may pay for the maintenance and
preservation of the Collateral to the extent the Grantor fails to do so as
required

4
<PAGE> 5

by the Credit Agreement, and the Grantor agrees to reimburse the Agent on demand
for any payment made or any expense incurred by it pursuant to the foregoing
authorization; provided, however, that nothing in this Section 5 shall be
interpreted as excusing the Grantor from the performance of any covenants or
other promises with respect to taxes, liens, security interests or other
encumbrances and maintenances as set forth herein or in the Credit Agreement.

6. Assignment of Security Interest. If at any time the Grantor shall take
and perfect a security interest in any property of an account debtor or any
other person to secure payment and performance of an Account Receivable, the
Grantor shall promptly assign such security interest to the Agent. Such
assignment need not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and transferees
from the account debtor or other person granting the security interest.

7. Representations and Warranties. The Grantor represents and warrants to
the Agent that:

(a) Title and Authority. It has (i) rights in and good title to the
Collateral in which it is granting a security interest hereunder and (ii)
the requisite power and authority to grant to the Agent the Security
Interest in such Collateral pursuant hereto and to execute, deliver and
perform its obligations in accordance with the terms of this Agreement,
without the consent or approval of any other person other than any consent
or approval which has been obtained.

(b) Filing. Fully executed Uniform Commercial Code financing
statements containing a description of the Collateral shall have been, or
shall be delivered to the Agent in a form such that they can be, filed of
record in every governmental, municipal or other office in every
jurisdiction in which any portion of the Collateral is located necessary to
publish notice of and protect the validity of and to establish a valid,
legal and perfected security interest in favor of the Agent in respect of
the Collateral in which a security interest may be perfected by filing in
the United States and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided
under applicable law with respect to the filing of Uniform Commercial Code
continuation statements.

(c) Validity of Security Interest. The Security Interest constitutes
a valid, legal and perfected first priority security interest in all of the

5
<PAGE> 6

Collateral for payment and performance of the Secured Obligations, except as
otherwise permitted under the Credit Agreement.

(d) Information Regarding Names. It has disclosed in writing to the
Agent any trade names used to identify it in its business or in the ownership
of its properties.

(e) Absence of Other Liens. The Collateral is owned by it free and
clear of any Lien of any nature whatsoever, except as granted pursuant to this
Agreement and as permitted by the Credit Agreement, and, except as provided by
paragraph (b) of this Section 7, no financing statement has been filed, under
the Uniform Commercial Code as in effect in any state or otherwise, covering
any Collateral except as indicated on Schedule 7.01 to the Credit Agreement.

(f) Survival of Representations and Warranties. All representations
and warranties of the Grantor contained in this Agreement shall survive the
execution, delivery and performance of this Agreement until the termination of
this Agreement pursuant to Section 28.

8. Records of Accounts Receivable. The Grantor shall keep or cause to be
kept records of its Accounts Receivable which are accurate in all material
respects. In addition, the Grantor will provide the Agent with such further
schedules and/or information respecting each Account Receivable as the Agent may
reasonably require.

9. Supplemental Documentation. In connection with the execution and
delivery of this Agreement, the Grantor shall furnish or cause to be furnished
to the Agent on or prior to the Closing Date a certificate of the Grantor,
signed on its behalf by a Responsible Officer of the Grantor dated the Closing
Date, certifying that, as of the date of such certificate, all representations
and warranties of the Grantor in Section 7 are true and correct and that the
Grantor is in compliance with all conditions, agreements and covenants to be
observed or performed hereunder.

10. Protection of Security. The Grantor shall, at its own cost and
expense, take any and all actions reasonably necessary to defend title to the
Collateral owned by it against all persons and to defend the Security Interest
of the Agent in such Collateral, and the priority thereof, against any adverse
mortgage, pledge, security interest, Lien, charge or other encumbrance of any

6
<PAGE> 7

nature whatsoever except for Liens permitted pursuant to Section 7.01 of the
Credit Agreement.

11. Continuing Obligations of the Grantor. The Grantor shall remain liable
to observe and perform all the conditions and obligations to be observed and
performed by it under each contract, agreement, interest or obligation relating
to the Collateral, all in accordance with the terms and conditions thereof, and
shall indemnify and hold harmless the Agent, and the Lenders from any and all
such liabilities.

12. Use and Disposition of Collateral. Except as set forth in Section 7.16
of the Credit Agreement, the Grantor shall not make or permit to be made any
assignment, pledge or hypothecation of the Collateral, or grant any security
interest in the Collateral except for the Security Interest. The Grantor shall
not make or permit to be made any transfer of any Collateral, except assets in
the ordinary course of business and as otherwise permitted by the Credit
Agreement, and the Grantor shall remain at all times in possession of the
Collateral owned by it other than transfers to the Agent pursuant to the
provisions hereof and as otherwise provided in this Agreement or the Credit
Agreement.

13. Limitation on Modifications of Accounts Receivable. Upon the
occurrence and continuance of an Event of Default, the Grantor will not, without
the Agent's prior written consent, grant any extension of the time of payment of
any of its Accounts Receivable, compromise, compound or settle the same for less
than the full amount thereof, release, in whole or in part, any person liable
for the payment thereof, or allow any credit or discount whatsoever thereon
other than extensions, credits, discounts, compromises or settlements granted or
made in the ordinary course of business.

14. Collections. (a) The Grantor shall have the right to collect its
Accounts Receivable in the ordinary course of its business; provided, however,
that at the request of the Agent, upon the occurrence and continuance of an
Event of Default the Grantor shall (i) arrange for remittances on any of its
Account Receivable to be made directly to lockboxes designated by the Agent or
in such other manner as the Agent may direct, and (ii) promptly deposit all
payments received by the Grantor on account of Accounts Receivable, whether in
the form of cash, checks, notes, drafts, bills of exchange, money orders or
otherwise, in one or more accounts designated by the Agent in precisely the form
received (but with any endorsements of the Grantor necessary for deposit or
collection), subject to withdrawal by the Agent only, as hereinafter provided,
and until they are deposited, shall be deemed to be held in trust by the Grantor
for and as the

7
<PAGE> 8

Agent's property on its own behalf and on behalf of the Lenders and shall not be
commingled with the Grantor's other funds.

(b) The Agent shall have the right, as the true and lawful agent of the
Grantor, with power of substitution for the Grantor and in the Grantor's name,
the Agent's name or otherwise, for the use and benefit of the Agent and the
Lenders, (i) to endorse the Grantor's name upon any notes, acceptances, checks,
drafts, money orders or other evidences of payment or Collateral that may come
into its possession; (ii) to sign the name of the Grantor on any invoice or bill
of lading relating to any of the Collateral, drafts against Customers,
assignments and verifications of Accounts Receivable and notices to Customers;
and (iii) upon the occurrence and during the continuance of an Event of Default,
(A) to receive, endorse, assign and/or deliver any and all notes, acceptances,
checks, drafts, money orders or other evidences or instruments of payment
relating to the Collateral or any part thereof, and the Grantor hereby waives
notice of presentment, protest and non-payment of any instrument so endorsed,
(B) to demand, collect, receive payment of, give receipt for, extend the time of
payment of and give discharges and releases of all or any of the Collateral
and/or release the obligor thereon, (C) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral, (D) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to or
pertaining to all or any of the Collateral, (E) to notify, or to require the
Grantor to notify, the account debtors obligated on any or all of the Accounts
Receivable to make payment thereof directly to the Agent, (F) to notify the
Postal Service authorities to change the address for delivery of mail addressed
to the Grantor to such address as the Agent may designate, (G) to accept the
return of goods represented by any of the Accounts Receivable, and (H) to use,
sell, assign, transfer, pledge, make any agreement with respect to or otherwise
deal with all or any of the Collateral, and to do all other acts and things
necessary to carry out the purposes of this Agreement, as fully and completely
as though the Agent were the absolute owner of the Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Agent or any Lender to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by the Agent or
such Lender or to present or file any claim or notice, or to take any action
with respect to the Collateral or any part thereof or the moneys due or to
become due in respect thereof or any property covered thereby, and no action
taken by the Agent or any Lender or omitted to be taken with respect to the
Collateral or any part thereof shall give rise to any defense, counterclaim or
offset in favor of the Grantor or to

8
<PAGE> 9

any claim or action against the Agent or any Lender in the absence of the gross
negligence or willful misconduct of the Agent or such Lender. It is understood
and agreed that the appointment of the Agent as the agent of the Grantor for the
purposes set forth above in this Section 14 is coupled with an interest and is
irrevocable. The provisions of this Section 14 shall in no event relieve the
Grantor of any of its obligations hereunder or under the Credit Agreement with
respect to the Collateral or any part thereof or impose any obligation on the
Agent or any Lender to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the Agent or
any Lender of any other or further right which it may have on the date of this
Agreement or hereafter, whether hereunder or by law or otherwise.

15. Remedies upon Default. Upon the occurrence and during the continuance
of an Event of Default, the Grantor agrees to deliver each item of Collateral to
the Agent on demand, and it is agreed that the Agent shall have the right to
take any or all of the following actions at the same or different times: with or
without legal process and with or without previous notice or demand for
performance, to take possession of the Collateral and without liability for
trespass (except for actual damage caused by the Agent's gross negligence or
willful misconduct) to enter any premises where the Collateral may be located
for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a secured party under, and
subject to its obligations contained in, the Uniform Commercial Code as in
effect in any state or other applicable law. Without limiting the generality of
the foregoing, the Grantor agrees that the Agent shall have the right, subject
to the mandatory requirements of applicable law, to sell or otherwise dispose of
all or any part of the Collateral, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Agent shall deem appropriate. Each such purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of the Grantor, and the Grantor hereby waives (to the extent permitted by
law) all rights of redemption, stay and appraisal which the Grantor now has or
may at any time in the future have under any rule of law or statute now existing
or hereafter enacted.

The Agent shall give the Grantor 10 days' written notice (which the Grantor
agrees is reasonable notice within the meaning of Section 9-504(3) of the NYUCC)
of the Agent's intention to make any sale of Collateral. Such notice, in the
case of a public sale, shall state the time and place for such sale and, in the
case of a sale at a broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or

9
<PAGE> 10

exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Agent may fix and
state in the notice (if any) of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Agent may (in its sole and absolute discretion) determine. The
Agent shall not be obligated to make any sale of any Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Agent until the sale price is paid by the purchaser or purchasers thereof, but
the Agent shall not incur any liability in case any such purchaser or purchasers
shall fail to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may be sold again upon like notice. At any public
sale made pursuant to this Section 15, Chemical Bank or any Lender may bid for
or purchase, free (to the extent permitted by law) from any right of redemption,
stay or appraisal on the part of the Grantor (all said rights being also hereby
waived and released to the extent permitted by law), with respect to the
Collateral or any part thereof offered for sale and Chemical Bank or any such
Lender may make payment on account thereof by using any claim then due and
payable to Chemical Bank or any such Lender from the Grantor as a credit against
the purchase price, and Chemical Bank or any such Lender may, upon compliance
with the terms of sale, hold, retain and dispose of such property without
further accountability to the Grantor therefor. The Grantor shall remain liable
for any deficiency. For purposes hereof, a written agreement to purchase the
Collateral or any portion thereof shall be treated as a sale thereof; the Agent
shall be free to carry out such sale and purchase pursuant to such agreement,
and the Grantor shall not be entitled to the return of the Collateral or any
portion thereof subject thereto, notwithstanding the fact that after the Agent
shall have entered into such an agreement all Events of Default shall have been
remedied and the Secured Obligations paid in full and/or the Total Commitment
shall have been terminated. As an alternative to exercising the power of sale
herein conferred upon it, the Agent may proceed by a suit or suits at law or in
equity to foreclose this Agreement and to sell the Collateral or any portion
thereof pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.

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<PAGE> 11

16. Application of Proceeds. The proceeds of any collection or sale of
Collateral, as well as any Collateral consisting of cash, shall be applied by
the Agent as follows:

FIRST, to the Agent to reimburse the Agent for that portion of the
payments, if any, made by it with respect to Letters of Credit for which a
Lender, as a participant in such Letter of Credit pursuant to Section 2.18 of
the Credit Agreement, failed to pay its pro rata share thereof as required
pursuant to such Section 2.18;

SECOND, to the payment of all reasonable costs and expenses incurred by the
Agent in connection with such collection or sale or otherwise in connection with
this Agreement or any of the Secured Obligations, including, but not limited to,
all court costs and the reasonable fees and expenses of its agents and legal
counsel, the repayment of all advances made by the Agent hereunder on behalf of
the Grantor and any other reasonable costs or expenses incurred in connection
with the exercise of any right or remedy hereunder;

THIRD, to the Agent to be held as cash collateral to the extent of the
undrawn amounts, if any, of outstanding Letters of Credit;

FOURTH, pro rata to the payment in full of (i) principal and interest in
respect of any Loans outstanding (pro rata as among the Lenders in accordance
with the amounts of the Loans made by them pursuant to the Credit Agreement) and
(ii) all unpaid monetary obligations of the Grantor to Chemical Bank under the
Rate Agreements;

FIFTH, pro rata to the payment in full of all Secured Obligations (other
than those referred to above) owed to the Lenders (pro rata as among the Lenders
in accordance with their respective Commitments); and

SIXTH, to the Grantor, its successors and assigns, or as a court of
competent jurisdiction may otherwise direct.

Upon any sale of the Collateral by the Agent (including, without limitation,
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see the application of any
part of the purchase money paid over to the Agent or such officer or be
answerable in any way for the misapplication thereof.

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<PAGE> 12

17. Locations of Collateral; Place of Business. (a) The Grantor hereby
represents and warrants that all the Collateral is located at the locations
listed on Schedule I hereto. The Grantor agrees not to establish, or permit to
be established, any other location for Collateral unless all filings under the
Uniform Commercial Code as in effect in any state or otherwise which are
required by this Agreement or the Credit Agreement to be made with respect to
the Collateral have been made and the Agent has a valid, legal and perfected
first priority security interest in the Collateral.

(b) The Grantor confirms that its chief executive office is located as
indicated in Schedule I hereto. The Grantor agrees not to change, or permit to
be changed, the location of its chief executive office unless all filings under
the Uniform Commercial Code or otherwise which are required by this Agreement or
the Credit Agreement to be made have been made and the Agent has a valid, legal
and perfected first priority security interest.

18. Security Interest Absolute. All rights of the Agent hereunder, the
Security Interest, and all obligations of the Grantor hereunder, shall be
absolute and unconditional irrespective of (i) any lack of validity or
enforceability of the Credit Agreement, any other Loan Document, any other
agreement with respect to any of the Secured Obligations or any other agreement
or instrument relating to any of the foregoing, (ii) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Secured Obligations, or any other amendment or waiver of or consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument or (iii) any exchange, release or nonperfection of any
other Collateral, or any release or amendment or waiver of or consent to or
departure from any guarantee, for all or any of the Secured Obligations.

19. No Waiver. No failure on the part of the Agent to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Agent preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law. The
Agent and the Lenders shall not be deemed to have waived any rights hereunder or
under any other agreement or instrument unless such waiver shall be in writing
and signed by such parties.

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<PAGE> 13

20. Agent Appointed Attorney-in-Fact. The Grantor hereby appoints the
Agent the attorney-in-fact of the Grantor solely for the purpose of carrying out
the provisions of this Agreement and taking any action and executing any
instrument which the Agent may deem reasonably necessary or advisable for the
purpose of perfecting, confirming, continuing, enforcing or protecting the
Security Interest, which appointment is irrevocable and coupled with an
interest.

21. Agent's Fees and Expenses. The Grantor shall be obligated to, upon
demand, pay to the Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts or
agents which the Agent may incur in connection with (i) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral, (ii) the exercise or enforcement of any of the rights of the
Agent hereunder, or (iii) the failure by the Grantor to perform or observe any
of the provisions hereof. In addition, the Grantor indemnifies and holds the
Agent and the Lenders harmless from and against any and all liability incurred
by the Agent or the Lenders hereunder or in connection herewith as a result of
the Grantor's acts, unless such liability shall be due to the gross negligence
or willful misconduct of the Agent or the Lenders, as the case may be. Any such
amounts payable as provided hereunder or thereunder shall be additional Secured
Obligations secured hereby and by the other Security Documents.

22. Binding Agreement; Assignments. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
the Grantor shall not be permitted to assign this Agreement or any interest
herein or in the Collateral, or any part thereof, or any cash or property held
by the Agent as Collateral under this Agreement, except as contemplated by this
Agreement or the Credit Agreement.

23. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.

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<PAGE> 14

24. Notices. All communications and notices hereunder shall be in writing
and given as provided in the Credit Agreement.

25. Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable the remaining
provisions contained herein shall not in any way be affected or impaired.

26. Section Headings. Section headings used herein are for convenience
only and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

27. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument. This Agreement shall be
effective when a counterpart which bears the signature of the Grantor shall have
been delivered to the Agent.

28. Termination. This Agreement and the Security Interest shall terminate
when (a) all the Secured Obligations have been fully paid in cash, (b) the
Lenders have no further commitment to make any Loans under the Credit Agreement,
(c) the Agent shall have no further obligation to issue any Letters of Credit,
and (d) Chemical Bank has no further obligation to extend financial
accommodations under the Rate Agreements, at which time the Agent shall execute
and deliver to the Grantor all Uniform Commercial Code termination statements
and similar documents which the Grantor shall reasonably request to evidence
such termination; provided, however, that all indemnities of the Grantor
contained in this Agreement shall survive, and remain operative and in full
force and effect regardless of, the termination of this Agreement.

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<PAGE> 15

IN WITNESS WHEREOF, the parties hereto have duly executed this Security
Agreement as of the day and year first above written.

RMH SALES AND MARKETING
CONSULTING, INC.

By: /s/ MARYSUE LUCCI HANSELL
----------------------------
Name: MarySue Lucci Hansell
Title: President

CHEMICAL BANK, as Agent

By: /s/ C. SCOTT FIELDS
---------------------
Name: C. Scott Fields
Title: Vice-President
---------------
15
<PAGE> 16

SCHEDULE I TO THE
SECURITY AGREEMENT

LOCATIONS OF COLLATERAL

CHIEF EXECUTIVE OFFICE OF THE GRANTOR

TRADE NAMES OF THE GRANTOR

<PAGE> 1
EXHIBIT 10.11

================================================================================

6% SUBORDINATED NOTE

made by

RMH SALES AND MARKETING CONSULTING, INC.
("Maker")

in favor of

RAYMOND J. HANSELL AND MARYSUE LUCCI HANSELL
(collectively "Payee")

AMOUNT: $3,000,000.00

DATED: May 24, 1996

================================================================================
<PAGE> 2

6% SUBORDINATED NOTE

Philadelphia, Pennsylvania

$3,000,000 Date: May 24, 1996

FOR VALUE RECEIVED, RMH SALES AND MARKETING CONSULTING, INC., a
Pennsylvania corporation (" Maker"), promises to pay to the order of RAYMOND J.
HANSELL AND MARYSUE LUCCI HANSELL (collectively "Payee"), having an address at
506 Chaumont Drive, Villanova, Pennsylvania 19085, the principal sum of Three
Million Dollars ($3,000,000.00) lawful money of the United States of America
(subject to increase pursuant to Paragraph 17 below), together with unpaid
interest from the date of this Note, at the rate and on the terms set forth
below:

1. Defined Terms. For the purposes of this Note, the following
terms shall have the meanings set forth below:

"Acquisition Agreement" shall mean that certain
Recapitalization and Stock Purchase Agreement by and among Advanta, Glengar
Investor, Maker and Payee dated on or about the date hereof.

"Advanta" shall mean Advanta Partners LP.

"Advanta Preferred Stock" shall mean the Series B redeemable
preferred stock of Maker delivered to Advanta under the terms of the
Acquisition Agreement or as a result of "payment in kind" dividends.

"Affiliate" of an entity shall mean any entity who or which
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such entity.

"Available Cash Flow" with respect to any fiscal year of Maker
shall mean twenty-five percent (25%) of the amount by which (a) Maker's
Projections of EBITDA (as defined below) of Maker for the then current fiscal
year, exceeds (b) the sum of (i) Maker's Projections of all capital
expenditures for the then current fiscal year, (ii) Maker's Projections of its
cash interest and principal obligations on all anticipated debt of Maker
(excluding (A) projected principal payments on this Note which are only payable
to the extent of Available Cash Flow and (B) projected payments of Deferred
Interest) for the then current fiscal year and all anticipated cash dividend
obligations on Seller's Preferred Stock for the then current fiscal year, (iii)
Maker's Projections of all taxes of any nature (other than those of a nature
which are deducted from earnings in computing EBITDA) for the then
<PAGE> 3

current fiscal year, (iv) Maker's Projections of all dividends on any preferred
stock of Maker for the then current fiscal year, and (v) Maker's Projections of
increases in working capital needs from the preceding fiscal year to the then
current fiscal year. As used herein, "EBITDA" shall mean the earnings of Maker
before deduction for interest, taxes, depreciation and amortization, as
determined by the independent auditors of Maker in accordance with generally
accepted accounting principles.

"Call Exercise" shall mean the closing of the exercise of any
right of Maker to call the Common Stock held by Payee pursuant to Article 9 of
the Shareholders Agreement.

"Common Stock" shall mean the common stock of Maker, including
the Class A voting common stock and the Class B non-voting common stock.

"Coverage Ratio" shall mean the quotient obtained by dividing
the Twelve Month Trailing Adjusted EBITDA by the Twelve Month Interest
Obligation.

"Deferred Purchase Price" shall initially mean $3,000,000, but
shall mean $4,000,000 from and after such time, if at all, as the principal
balance of this Note is increased by $1,000,000 pursuant to Section 2.2(b)(ii)
of the Acquisition Agreement.

"Deferred Interest" shall have the meaning set forth in
Paragraph 2 below.

"Glengar Investor" shall mean Glengar International
Investments Limited.

"Glengar Preferred Stock" shall mean the Series B redeemable
preferred stock of Maker delivered to Glengar Investor under the terms of the
Acquisition Agreement or as a result of payment in kind dividends.

"InvestorAccrued Preferred Dividends" shall mean the then
accrued but unpaid dividends with respect to the Series B Preferred Stock,
which unpaid dividends shall include, but shall not be limited to, the amount
of any unredeemed "payment in kind" stock dividends (which shall be valued in
an amount equal to the cash dividends they were distributed in lieu of).

"IPO" shall mean Maker's receipt of the net proceeds from the
sale of its equity securities in an initial public offering pursuant to an
effective registration statement under the Securities Act of 1933(excluding any
registration on Form S-8).

"IPO Bonus" shall mean the aggregate amounts payable as the
"IPO Bonus" under each of the two Employment Agreements of even date herewith
between Maker and the individuals comprising Payee.

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<PAGE> 4

"Maker's Projections" shall mean, with respect to an amount in
question, Maker's pro forma projections of such amount as determined in good
faith by Maker's board of directors based on the input of the chief financial
officer of Maker.

"Maturity Date" shall mean the earliest of (i) the Sale of
Maker, or (ii) a Call Exercise, or (iii) the eighth anniversary of the date of
this Note or (iv) the transfer by Advanta of any of the Common Stock delivered
to it under the terms of the Acquisition Agreement other than to Advanta's
Affiliates or the employees of Advanta or its Affiliates.

"Minimum Coverage Ratio" shall mean one and five tenths (1.5).

"Preference Allocations" shall mean (i) in the case of an IPO
or a Subsequent Offering, the aggregate dollar amount allocated by the
underwriter to be used to redeem or prepay this Note, to be used to redeem or
purchase the Seller's Preferred Stock, or to be used to redeem or purchase the
Series B Preferred Stock, or (ii) in the case of any other transaction
resulting in equity or debt proceeds to Maker, the aggregate amount of the net
proceeds of such transaction utilized by Maker to redeem or prepay this Note,
to redeem or purchase the Seller's Preferred Stock, or to redeem or purchase
the Series B Preferred Stock.

"Principal Amortization Condition" shall be deemed to be
satisfied with respect to a particular principal payment if the ratio, as of
the date of the proposed principal payment, of all outstanding debt of the
Company (including, for this purpose, Seller's Preferred Stock and this Note)
to all equity of the Company (including all common stock, the Series B
Preferred Stock and all other equity interests then outstanding, but excluding
the Seller's Preferred Stock), each determined on a book value basis in
accordance with generally accepted accounting principles, shall be no greater
than 1:2

"Redemption Ratio" shall mean the quotient obtained by
dividing (i) the amount by which (A) the sum of (1) the Deferred Purchase Price
plus (2) unpaid Deferred Interest plus (3) $1,000,000 plus (4) Seller Accrued
Preferred Dividends exceeds (B) the IPO Bonus by (ii) the amount by which (A)
the sum of (1) $6,500,000 plus (2) Investor Accrued Preferred Dividends plus
(3) the Deferred Purchase Price plus (4) unpaid Deferred Interest plus
(5)$1,000,000 plus (6) Seller Accrued Preferred Dividends exceeds (B) the IPO
Bonus.

"Sale of Maker" shall mean the closing of any transaction in
which Maker sells or assigns all or substantially all of its assets or capital
stock (other than any such sale or assignment to an Affiliate of Maker).

"Seller Accrued Preferred Dividends" shall mean the accrued
but unpaid dividends with respect to Seller's Preferred Stock.

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<PAGE> 5

"Seller's Preferred Stock" shall mean the Series A preferred
stock of Payee delivered to Payee under the terms of the Acquisition Agreement.

"Seller's Redemption Amount" shall mean the lesser of (i) the
outstanding balance of this Note or (ii) the product of (A) the Preference
Allocations and (B) the Redemption Ratio.

"Series B Preferred Stock" shall mean the Advanta Preferred
Stock and the Glengar Preferred Stock.

"Shareholders Agreement" shall mean that certain Shareholders
Agreement with respect to Maker dated on or about the date hereof among
Advanta, Payee, Glengar Investor and Maker.

"Subsequent Acquisition" shall mean any acquisition by Maker
of all or substantially all of the assets of a third party (directly or
indirectly through the purchase of stock or otherwise) occurring after the date
hereof.

"Subsequent Offering" shall mean Maker's receipt of the net
proceeds from the sale of its equity securities in a public offering pursuant
to an effective registration statement under the Securities Act of 1933
(excluding any registration on Form S-8 and excluding any IPO).

"Third Party Debt" shall mean all debt obligations of the
Company of every kind or nature (including, but not limited to, capital lease
obligations and obligations made or issued by Maker at any time and from time
to time to one or more banks, thrift institutions, insurance companies, pension
funds, trustees under an indenture of trust for the holders of debt
instruments, finance companies or other lending or financial institutions or
their Affiliates or other individuals or entities which are not Affiliates of
Glengar Investor, Advanta or Maker, whether term loan, revolving credit loan or
other facility, whether secured or unsecured, and all advances, re-advances,
extensions, renewals, refundings, refinancings and modifications thereof and
thereunder, and all payment and performance obligations of Maker under all
documents and instruments evidencing and securing such obligations, as such
documents and instruments may be extended, renewed, refunded, refinanced or
modified) other than (i) debt in favor of Affiliates of Maker, (ii) accounts
payable in favor of vendors and service providers of Maker incurred in the
ordinary course, (iii) the debt evidenced by this Note, (iv) accrued expenses,
including, without limitation, accrued payroll and (v) current or accrued
liabilities for taxes.

"Third Party Debt Pay-Off Date" shall mean the date on which
all Third Party Debt is retired.

"Twelve Month Interest Obligation" shall mean, at any point in
time, Maker's Projections of its cash interest payment obligations on all
anticipated debt of Maker

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<PAGE> 6

during the next succeeding 12 months (including, but not limited to any debt
assumed in connection with a Subsequent Acquisition which has not been paid in
full).

"Twelve Month Trailing Adjusted EBITDA" shall mean, at any
point in time, Maker's earnings for the twelve-month period ending on the last
day of the immediately preceding calendar month (the "Prior Twelve Month
Period"), before deduction for (i) interest, taxes, depreciation and
amortization or (ii) any nonrecurring extraordinary expenditures incurred
during such period, but after deducting capital expenditures incurred during
such period in order to maintain or replace existing assets of Maker
("Maintenance Capital Expenditures") as opposed to those incurred to improve
the assets of Maker or acquire new assets, all as determined by the Board of
Directors based on the input of the Chief Financial Officer of Maker in
conformance with generally accepted accounting principles consistently applied.
If a Subsequent Acquisition has occurred during or subsequent to the Prior
Twelve Month Period, Twelve Month Trailing Adjusted EBITDA shall be computed as
if such Subsequent Acquisition had occurred on or prior to the beginning of the
Prior Twelve Month Period so as to include the earnings of the Company or other
entity so acquired during the entire Prior Twelve Month Period with all
appropriate adjustments being made.

2. Interest and Principal.

(a) Maker promises to pay interest on the then
outstanding principal amount of this Note, from the date hereof until payment
in full, at the rate of six percent (6%) per annum. Interest shall be due and
payable quarterly in arrears on the last day of each calendar quarter occurring
during the term of this Note (that is, on the last day of March, June,
September and December), with the first payment due on June 30, 1996 and
continuing thereafter until the Maturity Date.

(b) Any installment of interest not paid when due
hereunder ("Deferred Interest") by reason of Paragraph 4 below, shall bear
interest at the rate of 6% per annum. Deferred Interest (and interest thereon)
shall be payable (provided Payee is no longer prohibited by the provisions of
Paragraph 4 from accepting such interest) on the earlier of such time as Maker
has Available Cash Flow to pay such Deferred Interest or the Maturity Date.

(c) The principal of this Note shall, in any event, be
due and payable on the Maturity Date; provided, however, that portions of the
principal shall be payable prior to the Maturity Date as follows:

(i) one-half of the Deferred Purchase Price shall
be due and payable on the seventh anniversary of the date of this Note, if and
to the extent not earlier paid pursuant to any of the other provisions of this
Note (including, but not limited to, Paragraphs 2(c)(ii), 2(c)(iii), 2(c)(iv)
and 5 below);

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<PAGE> 7

(ii) one-third of the principal balance of this
Note outstanding as of the Third Party Debt Pay-Off Date shall be due and
payable on each of the first, second and third anniversaries of the Third Party
Debt Pay- Off Date (if and to the extent, subsequent to the Third Party Debt
Pay-Off Date, not earlier paid pursuant to any other provisions of this Note
(including, but not limited to, Paragraph 2(c)(i)above and Paragraphs
2(c)(iii), 2(c)(iv) and 5 below)) provided that there is Available Cash Flow on
such dates to make these principal payments (to the extent that there is not
Available Cash Flow to make any of such annual payments, any annual payment (or
a portion thereof) which is not made, shall be made when and if there is
Available Cash Flow to make such payment);

(iii) an amount equal to Seller's Redemption Amount
shall be due and payable upon the occurrence of an IPO, a Subsequent Offering,
or any other transaction that results in the Company's receipt, from the sale
of equity or debt, proceeds that are utilized to redeem or purchase the Series
B Preferred Stock, in whole or in part; and

(iv) at the end of the first full calender quarter
following the occurrence of an IPO (provided that the Principal Amortization
Condition is satisfied at the end of such calender quarter), and at the end of
each succeeding calender quarter during the term of this Note occurring at a
time when the Principal Amortization Condition remains satisfied, an amount
equal to the product of (A) twenty five percent (25%) and (B) Available Cash
Flow with respect to the fiscal year in which such quarter occurs shall be due
and payable.

(d) The entire unpaid balance of principal, all unpaid
interest accrued on it and all other unpaid sums payable under this Note shall
be due and payable in full on the Maturity Date.

3. Method of Payment. The principal and interest shall be payable
by Maker's plain check at the address of Payee set forth above, or at such
other place as Payee, from time to time, may designate in writing.

4. Subordination.

(a) Payee hereby agrees, by accepting this Note, for
Payee and any transferee, assignee or subsequent Payee of this Note
(collectively, the "Subordinated Creditor"), that the indebtedness of Maker
evidenced by the Note is subordinated and junior in right of payment to all
unpaid Third Party Debt. As used in this Note, the term "subordinated and
junior in right of payment" shall mean that no part of this Note shall have any
claim to the assets of Maker on a parity with or prior to the claims of the
Third Party Debt.

(b) Maker shall make, and the Subordinated Creditor may
accept, regularly scheduled payments (but not any prepayment whether due by
virtue of acceleration

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<PAGE> 8

of this Note or otherwise) of principal and interest due under this Note until
a Specified Event has occurred and is continuing. As used in this Note the term
"Specified Event" shall mean that (i) a petition or case under any bankruptcy,
insolvency, reorganization or other similar law has been filed by or against
Maker or Maker has made an assignment for the benefit of creditors or admitted
in writing its inability to pay its debts as they come due or there occurs any
other event set forth in Paragraph 6(c) of this Note or (ii) the holder of any
Third Party Debt (or any person or entity acting on behalf of such holder) has
declared an event of default under any note or other instrument relating to any
of the Third Party Debt and has notified Maker thereof. Except as permitted by
the first sentence of this Paragraph 4(b), until and unless the Third Party
Debt shall have been fully paid and satisfied, the Subordinated Creditor shall
not be entitled to receive any payment on account of any amounts due under this
Note. Maker shall promptly notify Payee at such time as Maker becomes aware
that a Specified Event has occurred (but the failure to so notify shall not
affect the rights of any holder of the Third Party Debt).

(i) the holders of Third Party Debt shall be
entitled to receive payment in full of the principal of, prepayment premium, if
any, and interest and other amounts payable under the Third Party Debt
(including, but not limited to, interest accruing before and after the
occurrence of a Specified Event) before Subordinated Creditor shall be entitled
to receive any payment on this Note; and

(ii) until the Third Party Debt is paid in full,
any distribution to which Subordinated Creditor would be entitled pursuant to
the terms of this Note but for this Paragraph 4 shall be made to the holders of
the Third Party Debt.

(d) Upon any distribution of assets (in cash, securities
or other property) of Maker to Subordinated Creditor in violation of this
Paragraph 4, Subordinated Creditor shall hold the distribution in trust for the
benefit of, and shall forthwith pay over and deliver such distribution to, the
holders of the Third Party Debt.

(e) Notwithstanding anything to the contrary contained in
this Note or any agreement or instrument relating to the indebtedness evidenced
hereby, the Subordinated Creditor shall not accelerate the indebtedness payable
under this Note, initiate any action to seek or enforce collection of this
Note, including initiating a filing of a case or petition for relief under the
Federal Bankruptcy Code during any period with respect to which payment may not
be made on the Note under this Paragraph 4 unless judicial proceedings have
been initiated by the holders of the Third Party Debt to collect the Third
Party Debt and are continuing.

(f) Except as specifically provided herein, the rights
under these subordination provisions of the holders of the Third Party Debt as
against the Subordinated

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<PAGE> 9

Creditor shall remain in full force and effect without regard to, and shall not
impaired or affected by:

(i) any act or failure to act on the part of Maker
under the terms of this Note;

(ii) any extension or indulgence in respect of any
payment or prepayment of any Third Party Debt or any part thereof or in respect
of any other amount payable to any holder of the Third Party Debt;

(iii) any amendment, modification or waiver of, or
addition or supplement to, or deletion from, or compromise, release, consent or
other action in respect of, any of the terms of any Third Party Debt, any
agreement which may be made relating to any Third Party Debt or any instrument
evidencing the Third Party Debt; or

(iv) any exercise or nonexercise by any holder of the
Third Party Debt of any right or remedy under or in respect of any Third Party
Debt or these subordination provisions or any waiver of any such right or
remedy or of any default in respect of the Third Party Debt or these
subordination provisions, or any receipt by any holder of the Third Party Debt
of any security, or any failure by any holder of the Third Party Debt to
perfect a security interest in, or any release by any holder of the Third Party
Debt, any security or guaranty for the payment of the Third Party Debt.

(g) The obligations of the Subordinated Creditor under
this Note shall continue to be effective, or be reinstated, as the case may be,
if at any time any payment in respect of any Third Party Debt, or any other
payment to any holder of any Third Party Debt, is rescinded or must otherwise
be restored or returned by the holders of such Third Party Debt upon the
occurrence of any event described in clause (i) of the second sentence of
Paragraph 4(b) hereof, all as though such payment had not been made.

(h) The provisions of this Paragraph 4 shall continue in
full force and effect, notwithstanding the commencement of a case under title
11 of the United States Code, as amended, by or against Maker or any of its
property. In furtherance of the foregoing, if Payee receives, directly or
indirectly, by set-off, redemption, purchase or in any other manner, any
property of, or payments from, Maker after the commencement of such a case on
account of a claim which is subordinated by the terms of this Paragraph 4
(whether as "adequate protection" payments or otherwise), Payee shall
immediately turn such property or payments over to the holders of the Third
Party Debt in accordance with the applicable provisions of this Paragraph 4.

(i) Subject to the prior payment in full of the Third
Party Debt, the Subordinated Creditor shall be subrogated to the rights of the
holders of the Third Party Debt (to the extent payments on the Third Party Debt
are made by or on behalf of the Subordinated Creditor) to receive payments,
including interest, penalties and fees, or

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<PAGE> 10

distributions of assets of Maker made on the Third Party Debt until all amounts
due on this Note shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Third Party
Debt of any cash, property or securities to which the Subordinated Creditor
would be entitled except for these provisions shall, as between Maker and its
creditors (other than the holders of the Third Party Debt), be deemed to be a
payment by Maker to or on account of the Third Party Debt, it being understood
that these provisions are and are intended solely for the purpose of defining
the relative rights of the Subordinated Creditor, on the one hand, and the
holders of the Third Party Debt, on the other hand.

(j) No payment or performance of any obligation of Maker
hereunder shall be required which would violate the terms of, or cause an
acceleration under, the documents evidencing and securing the Third Party Debt,
and Maker shall not be in default hereunder as a result of any such non-payment
or non-performance; provided, however, that, subject to Paragraphs 4(b) and
4(c) above: (i) the foregoing provision shall not apply to interest payments
due under this Note and (ii) the foregoing provision shall not apply to
principal payments due under this Note so long as an IPO has occurred, there is
Available Cash Flow to make such principal payments and the Principal
Amortization Condition is satisfied at the time the relevant principal payment
is required.

(k) Notwithstanding that the foregoing provisions of this
Paragraph 4 shall be self-executing and automatic without the need for any
further act or deed on the part of Payee, Payee agrees, by accepting this Note,
to execute, acknowledge and deliver such subordination, standby and other
instruments as may be requested by the holders of Third Party Debt in order to
confirm or further effectuate the foregoing provisions.

(l) Holders of Third Party Debt shall have no obligation
to disclose or discuss with Payee their assessment of the financial condition
or prospects of Maker.

5. Prepayments. Maker shall have the right to prepay this Note in
full or in part at any time without penalty or premium.

6. Acceleration. Subject to Paragraph 4(e) above, if any of the
events specified in subparagraphs (a) or (b) below occurs and remains uncured
after the giving of notice and passage of the grace period set forth in
Paragraph 8, or upon the occurrence and during the continuance of any of the
events specified in subparagraph (c), below, unless, in each case, such event
of default shall have been waived in writing by Payee, the unpaid principal
amount of this Note, together with all accrued interest thereon and any other
amounts owing hereunder, shall automatically accelerate without further act and
become immediately due and payable, without presentment, demand, protest, or
notice of any kind, all of which are hereby expressly waived, anything herein
or in any other instrument or agreement to the contrary notwithstanding:

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<PAGE> 11

(a) a default in the payment of interest or principal
when due hereunder, subject to the provisions of Paragraph 4 above; or

(b) a breach by Maker of any other term of this Note,
subject to the provisions of Paragraph 4 above; or

(c) the appointment of a receiver, liquidator or trustee
of Maker or of any substantial portion of Maker's property, the commencement by
Maker of any bankruptcy, reorganization, dissolution, insolvency, receivership
or other proceeding or case under the federal Bankruptcy Code or similar state
or federal statute or the commencement of any such proceeding against Maker
that is not stayed or dismissed within sixty (60) days of its commencement.

7. Reference to Acquisition Agreement. The rights of holder
hereunder, and of any assignee or successor of holder, are expressly subject to
the remedies set forth in Section 10.5 of the Acquisition Agreement.

8. Right to Cure. Notwithstanding anything to the contrary in
this Note, Payee shall not have the right to exercise any right or remedy
provided for in this Note: (a) because of any default of Maker specified in
Paragraph 6(a), unless Payee shall have first given Maker written notice of
such default, and Maker shall have failed to cure such default within ten (10)
days after Maker's receipt of such notice; and (b) because of any default of
Maker specified in Paragraph 6(b), unless Payee shall have first given Maker
written notice of such default, and Maker shall have failed to cure such
default within twenty (20) days after Maker's receipt of such notice.

9. No Transfers. THIS NOTE WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THIS NOTE IS NOT A
NEGOTIABLE INSTRUMENT.

10. Severability. If any provision of this Note is held to be
invalid or unenforceable by a Court of competent jurisdiction, the other
provisions of this Note shall remain in full force and effect.

11. Maximum Rate of Interest. In no event shall the rate of
interest under this Note exceed the maximum rate of interest permitted to be
charged by applicable law, and any interest paid in excess of the permitted
rate shall be refunded to Maker. Such refund shall be made by application of
the excessive amount of interest paid against any principal or other sums
outstanding under this Note and shall be applied in such order as Payee may
determine. If the excessive amount of interest paid exceeds all outstanding

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<PAGE> 12

principal and other sums outstanding under this Note, the portion exceeding the
principal and other sums outstanding under this Note shall be refunded to Maker
in cash by Payee.

12. Governing Law. This Note and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania,
notwithstanding any conflict-of-laws doctrines of such state or other
jurisdiction to the contrary, and without the aid of any canon, custom or rule
of law requiring construction against the draftsman.

13. Terms Used. Whenever used, the use of any gender shall be
applicable to all genders and the words "Payee" and "Maker" shall be deemed to
include the respective heirs, personal representatives, successors and assigns
of Payee and Maker; provided, however, that nothing contained in this Paragraph
13 shall be construed to permit any assignment by Payee that would otherwise be
prohibited hereunder. Definitions contained in this Note which identify
documents, including the Acquisition Agreement, shall be deemed to include all
amendments and supplements to such documents from the date hereof, and all
future amendments and supplements thereto entered into from time to time.
Reference to this Note contained in any of the foregoing documents shall be
deemed to include all amendments and supplements to this Note.

14. Notices. All notices, requests, demands and other
communications required or permitted under this Note between Maker and Payee
shall be in writing and shall be deemed to have been duly given, made and
received only when provided as set forth in the Acquisition Agreement.

15. Attorney's Fees. In connection with any litigation or
arbitration arising with respect to this Note, the prevailing party shall be
entitled to recover its reasonable attorneys fees and expenses and court costs.

16. Debt Coverage. Maker agrees that it will not incur any
increases in the aggregate of its Third Party Debt unless at the time such
increase in Third Party Debt is incurred the Coverage Ratio equals or exceeds
the Minimum Coverage Ratio. For the purpose of the preceding sentence, any
advances which may be on account of that certain $14,000,000 term loan from
Chemical Bank pursuant to Loan Agreement dated on or about the date hereof or
on account of a $6,000,000 revolving loan from Chemical Bank pursuant to Loan
Agreement dated on or about the date hereof (such $14,000,000 loan and such
$6,000,000 loan being hereinafter collectively referred to as the "Chemical
Loan") shall not be deemed increases in Maker's Third Party Debt. Additionally,
for so long as any portion of the Chemical Loan shall remain outstanding (or
available for disbursement) any additional loans made by the holder of the
Chemical Loan shall not be deemed increases in Maker's Third Party Debt so long
as such additonal loans do not cause the total loans made by (or available for
disbursement from) the holder of the Chemical Loan to Maker to exceed
$25,000,000.

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<PAGE> 13

17. Increase in Deferred Purchase Price. The principal balance of
this Note shall increase, retroactive to the date of this Note, by $1,000,000
at such time, if at all, as Section 2.2(b)(ii) of the Acquisition Agreement
requires such increase. Interest shall be deemed to have accrued on such
$1,000,000 sum at the interest rate set forth in Paragraph 2(a) of this Note
from and after the date of this Note (such interest being hereinafter called
"Retroactive Interest") and Retroactive Interest shall be payable on the first
interest payment date pursuant to Paragraph 2(a) above occurring after Section
2.2(b)(ii) of the Acquisition Agreement requires such $1,000,000 increase.

18. Remedies Concurrent. The remedies of Payee with respect to
this Note may be pursued singly, successively, or together at the sole
discretion of Payee, may be exercised as often as occasion for their exercise
shall occur; and in no event shall the failure to exercise any right or remedy
be construed as a waiver or release of it.

19. Payments Contingent Upon Available Cash Flow. Wherever in this
Note interest or principal is payable only to the extent there is Available
Cash Flow or is computed by reference to the amount of Available Cash Flow
(such payments being collectively referred to as "Contingent Payments"), in no
event shall Maker be obligated to make Contingent Payments, in the aggregate,
in any fiscal year exceeding Available Cash Flow for such year.

IN WITNESS WHEREOF, Maker, intending to be legally bound, has caused
this Note to be executed by its duly authorized signatory on the day and year
first set forth above.

MAKER:

RMH SALES AND MARKETING
CONSULTING, INC.

By: /s/ MarySue Lucci Hansell
-------------------------------
Name: MarySue Lucci Hansell
Title: President

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<PAGE> 1
EXHIBIT 10.12

EXCHANGE AND CONVERSION AGREEMENT

AGREEMENT, made as of the 2nd day of July, 1996, among RMH
TELESERVICES, INC., a Pennsylvania corporation formerly known as RMH SALES AND
MARKETING CONSULTING, INC. ("the Company"), Raymond J. Hansell ("Hansell"),
MarySue Lucci Hansell ("Lucci"), ADVANTA PARTNERS LP, a Pennsylvania limited
partnership ("Advanta Partners"), and GLENGAR INTERNATIONAL INVESTMENTS LIMITED,
a limited liability company organized in the British Virgin Islands ("Glengar").
Hansell and Lucci are sometimes referred to herein as the "Founders."

WHEREAS, the Founders are the payees under a 6% Subordinated
Promissory Note made by the Company, dated May 24, 1996 (the "Founders' Note"),
in the principal amount of $3,000,000.00, subject to an increase of $1,000,000
upon the Company's achieving certain earnings targets as described therein;

WHEREAS, the Founders own in aggregate 1,000,000 shares of
Series A Preferred Stock of the Company, par value $1.00 per share (the "Series
A Preferred Stock" and, collectively with The Founder's Note, the "Founders'
Securities");

WHEREAS, Advanta Partners and Glengar own 6,226,316 and
273,684 shares of Series B Preferred Stock of the Company, par value $1.00 per
share (the "Series B Preferred Stock"), respectively, which are redeemable at
the option of the holder upon the occurrence of an initial public offering;

WHEREAS, Advanta Partners owns 1,279,573 shares of Class B
Non-Voting Common Stock of the Company, no par value per share (the "Class B
Common Stock") and that such shares of Class B Common Stock are convertible at
the option of Advanta Partners into a like number of shares of Class A Voting
Common Stock, no par value per share (the "Class A Common Stock" and,
collectively with the Class B Common Stock, the "Common Stock"), upon the
occurrence of an initial public offering of the Company's Common Stock, no par
value per share;

WHEREAS, the Company and Advanta Partners have entered into a
Management Fee Agreement, dated as of May 24, 1996 (the "Management Fee
Agreement");

WHEREAS, the Company intends to complete an initial public
offering of its Common Stock (the "IPO") on the terms set forth in a
Registration Statement to be filed with the United States Securities and
Exchange Commission on or about July 3, 1996;

WHEREAS, the Company, Advanta Partners, Glengar and the
Founders wish to effect certain changes in the Company's capital structure in
connection with the completion of the IPO and wish to amend the terms of the
Company's relationship with Advanta Partners;
<PAGE> 2
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties to this Agreement, intending
to be legally bound, hereby agree as follows:

1. Exhange of Founders' Securities.

(a) Subject to the terms of this Agreement, effective
upon the closing of the IPO (the "Closing"), all of the Founders' Securities
shall be exchanged for such number of fully paid and nonassessable shares Common
Stock as equals (i) $5,000,000 divided by (ii) the price per share of the
Company's Common Stock sold in the IPO, before deduction of underwriters'
discounts and other offering expenses.

(b) Each of the Founders hereby represents and
warrants to the Company that such Founder is acquiring the shares of Common
Stock for investment and not with a view to resale or distribution except in
accordance with applicable securities laws and further agrees that such Founder
will not sell or otherwise transfer any shares of Common Stock unless such
Founder complies with the restrictions on transfer set forth herein and in the
Shareholders' Agreement, dated May 24, 1996. Each of the Founders further
represents and warrants that, as of the date hereof and as of the Closing, such
Founder will have good unencumbered title to the Founders' Securities and that
the transactions contemplated by this Agreement will not violate any agreement
or law applicable to such Founder.

2. Redemption of Series B Preferred Stock; Conversion of
Class B Common Stock.

(a) Subject to the terms of this Agreement, each of
Advanta Partners and Glengar hereby elects, effective upon the Closing, without
the requirement of any further action by Advanta Partners or Glengar, to redeem
all shares of Series B Preferred Stock owned by each of them and shall receive
from the proceeds of the IPO a redemption payment in cash equal to the sum of
$1.00 per share of Series B Preferred Stock held by such holder, plus the amount
of any accrued but unpaid dividends to such shares through such date. The
parties hereto agree and acknowledge that the execution of this Agreement shall
constitute a waiver of the requirements of giving or receiving any separate
"Redemption Notice" under the terms of Article II(b)(6) of the Company's
Articles of Incorporation, as amended. The Company hereby agrees to honor such
redemption on such terms.

(b) Advanta Partners hereby elects to convert,
without the requirement of any further action, effective upon the Closing, each
share of Class B Common Stock held by it into one fully paid and non-assessable
share of Class A Common Stock. The Company hereby agrees to honor such
conversion on such terms.

<PAGE> 3
3. Termination of Management Fee Agreement.

Effective upon the Closing, the Company and Advanta Partners
shall terminate the Management Fee Agreement and the Company shall pay to
Advanta Partners in cash an amount equal to a pro rata portion based on the
fraction of the calendar year which has elapsed between the date of such
agreement and the date of such termination. The parties hereto further agree
that the Company and Advanta Partners shall enter into a Consulting Agreement
pursuant to which Advanta Partners will provide consulting services to the
Company on substantially the same terms as are contained in the Management Fee
Agreement (other than compensation terms), in consideration of which the Company
shall pay to Advanta Partners $50,000 per year.

4. Termination of this Agreement.

If the Closing has not occurred by September 30, 1996, this
Agreement shall be void ab initio, and all rights and obligations of the parties
under this Agreement shall be wholly without force and effect.

5. Equitable Relief.

The parties hereto agree that in the event of any breach or
threatened breach of any such covenant or agreement, in addition to any and all
other legal and equitable remedies that may be available, any party hereto may
specifically enforce the terms of this Agreement and may obtain temporary and/or
permanent injunctive relief without the necessity of proving actual damages by
reason of breach or threatened breach hereof and, to the extent permissible
under the applicable statutes and rules of procedure, a temporary injunction may
be granted immediately upon the commencement of any such suit and without notice
to any other party.

6. Entire Agreement; Amendment; Modification

This Agreement contains the entire understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein contained. The
express terms control and supersede any course of performance and/or usage of
trade inconsistent with any of the terms hereof. This Agreement may be amended
or modified at any time or times by the unanimous agreement in writing of the
parties to this Agreement.

7. Miscellaneous

(a) Indulgences, Etc. Neither the failure nor any
delay on the part of any party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof. Nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege.
Nor shall any waiver of any right, remedy, power or privilege with respect to
any

3
<PAGE> 4
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence.

(b) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.

(c) Binding Nature of Agreement; No Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns,
except that no party may assign or transfer its rights or obligations under this
Agreement without the prior written consent of the other parties.

(d) Provisions Separable. The provisions of this
Agreement are independent of and separable from each other, and no provision
shall be affected or rendered invalid or unenforceable by virtue of the fact
that for any reason any other or others of them may be invalid or unenforceable
in whole or in part.

IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement on the date first above written.

GLENGAR INTERNATIONAL
/s/ Raymond J. Hansell INVESTMENTS LIMITED
- --------------------------------
Raymond J. Hansell By: /s/ Ian C. Crosby
----------------------------
Ian C. Crosby
Director: Montblanc (Directors)
Limited
/s/ MarySue Lucci Hansell Sole corporate director: Glengar
- -------------------------------- International Investments Limited
MarySue Lucci Hansell

ADVANTA PARTNERS LP RMH TELESERVICES, INC
By: AP CAPITAL, INC.,
general partner

By: /s/ Mitchell L. Hollin By: /s/ Anthony P. Brenner
--------------------------- ----------------------------
Mitchell L. Hollin, Anthony P. Brenner,
Vice President Chairman

<PAGE> 1
EXHIBIT 10.14

RMH SALES AND MARKETING CONSULTING, INC.
40 MORRIS AVENUE
BRYN MAWR, PA 19010

June 28, 1996

Chemical Bank,
individually and as Agent
633 Third Avenue
New York, NY 10017

Ladies and Gentlemen:

The undersigned (the "Borrower") is a party, together with you,
individually and as Agent, to a Credit Agreement between us dated as of May 24,
1996 (the "Credit Agreement") and the Borrower has issued a common stock
purchase warrant (the "Warrant") to you in connection therewith. We have
advised you that the Borrower intends to consummate a public offer of its
common stock with respect to which the gross proceeds to the Borrower will be
at least $20,000,000 and with respect to which a registration statement will be
filed with the SEC on or before July 31, 1996 (the "Public Offering").

In connection therewith we have agreed as follows:

1. You hereby waive all of your registration rights under Section 8
of the Warrant in connection with the Public Offering, and, in the event of the
closing of the Public Offering you will, as a result of Section 7.1 of the
Warrant, no longer be entitled to exercise the Put Option described in Section
7 of the Warrant. Notwithstanding the fact that certain officers, directors
and/or shareholders of the Borrower may purchase additional shares of common
stock in the Public Offering, for purposes of Section 2.8 of the Warrant the
Fair Market Value of the shares issued in the Offering shall be deemed to be
the offering price thereof.

2. A portion of the proceeds of the Public Offering may be used by the
Borrower to redeem in full all of the Class B Preferred Stock of the Borrower,
and to pay a $6,000,000 bonus to Mary Sue Hansell and Raymond Hansell under
their employment agreements with the Borrower entered into pursuant to the
terms of the Recapitalization Agreement. The Hansells may also convert all of
the principal amount payable (or which may have been payable in the future
upon the happening of certain events) under the Borrower's promissory notes to
the Hansells evidencing Subordinated Indebtedness into shares of common stock
of the Borrower.

3. Any costs and expenses up to $750,000 in the aggregate incurred by
the Borrower in connection with the Public Offering shall not be deemed to be
costs or expenses of the Borrower in connection with the computation of the
covenants under the Credit Agreement.
<PAGE> 2
Chemical Bank,
June 28, 1996
Page 2

4. From and after the closing of the Public Offering, there shall be
only one class of common stock of the Borrower, and from and after such
closing, any reference in the Warrant to Warrant Shares shall be deemed to be a
reference to the applicable number of shares of such common stock, rather than
to shares of Class B Common Stock.

5. Section 8.1 of the Warrant is hereby amended and restated to read
in its entirety as follows:

8. Registration Rights.

8.1. DESCRIPTION OF RIGHTS. If the Company at any
time proposes for any reason to register any of its Common Stock
under the Securities Act in connection with either (x) a proposed
offering by the Company to the general public, or (y) a proposed
offering on behalf of a holder of the Company's Common Stock to the
general public pursuant to any "piggyback", demand or other
registration rights granted to such holder by the Company, the
Company shall at such time promptly give written notice to the
Warrantholder and all holders of Warrants Shares theretofore
purchased upon the exercise hereof of the Company's intention to do
so, and, upon the written request, given within thirty (30) days
after the date of any such notice, of the Warrantholder or the
holders of Warrant Shares theretofore purchased upon the exercise
hereof to register any of the shares purchased or purchasable
hereunder (the "Shares"), the Company shall cause all such Shares
the registration of which has been so requested to be included in
the Company's registration statement under the Securities Act,
promptly upon receipt of the written request of the Warrantholder
and/or such holders for such registration. In no event, however,
shall the Company be required to continue with the registration of
shares of its Common Stock if the Board of Directors of the Company
determines that it is no longer in the best interests of the Company
to proceed with the registration. In the event that the proposed
registration by the Company is, in whole or in part, an underwritten
public offering of securities of the Company, and, if the managing
underwriter determines and advises the holders thereof in writing
that the inclusion of all Shares and other Common Stock of the
Company entitled to be included in the registration ("Other
Registrable Stock") originally covered by a request for registration
would interfere with the successful marketing of such securities,
the
<PAGE> 3
Chemical Bank,
June 28, 1996
Page 3

number of Shares and shares of Other Registrable Stock that may,
in the sole discrection of the managing underwriter, be included
in the registration statement on behalf of the holders thereof,
if any, shall be allocated: in the case of (x) above, first, to
the securities sought to be included by the Company in such
registration statement; and, second, to the holders of the Other
Registrable Stock and the Warrantholder in proportion, as nearly
as practicable, to the respective number of shares of Other
Registrable Stock and Shares that they had requested to be
included in such registration statement; and in the case of (y)
above, to the holders of the securities sought to be included by
the holder of Common Stock requesting and entitled to such
registration and the Warrantholder in proportion, as nearly as
practicable, to the respective number of shares held by each and
requested to be included in such registration statement
(provided, however, that in no event shall the percentage of the
Warrantholder's shares which the Warrantholder may include in
such registration statement unless and until all shares of the
holders of Common Stock requesting and entitled to such
registration have been included be greater than the percentage
of the shares acquired by Advanta Partners LP ("APLP") pursuant
to the Recapitalization Agreement referred to in the Credit
Agreement which APLP is permitted to include in such
registration statement, such proviso to remain in effect only
so long as APLP is the holder of shares of Common Stock subject
to any such restrictions on registration; and second to the
holders of the Other Registrable Stock. Notwithstanding anything
to the contrary set forth herein, the Company shall not be
obligated to include in any registration statement any Shares
that, in the opinion of counsel satisfactory to the Company, may
be transferred without registration under the Securities Act.

6. Promptly after the execution hereof, you agree to execute and
deliver to Smith Barney Inc. a "lockup" letter relating to the Warrant and any
shares of stock of the Borrower which you or any other party may acquire
pursuant to the exercise of the Warrant pursuant to which it is agreed that for
a period of 180 days after the date of the final Prospectus relating to the
Public Offering neither any portion of the Warrant or any such shares will be
sold, offered for sale or otherwise transferred or disposed of, and no
announcement or disclosure of any intention with respect to any such sale or
transfer shall be made, with such letter containing other customary terms.

In the event of any inconsistency between the terms of the Credit
Agreement and the terms of this Agreement, the terms of this Agreement shall
control and take precedence.
<PAGE> 4
Chemical Bank
June 28, 1996
Page 4

Please confirm your agreement to the foregoing by signing and returning
a copy of this letter. By execution hereof you hereby confirm that you
currently are the sole Lender under the Credit Agreement and have not assigned,
or granted a participation interest in, any of your rights or any loans
previously made thereunder.

RMH SALES AND MARKETING CONSULTING, INC.

By /s/ MarySue Lucci Hansell
_____________________________________
President

Acknowledged and agreed to:

Chemical Bank

By /s/ C. Scott Fields
--------------------
Vice-President

<PAGE> 1
EXHIBIT 16

July 2, 1966

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549

RE: RMH Teleservices, Inc.

We were previously the principal accountant for RMH Teleservices, Inc. and,
under the date of June 27, 1996, we reported on the balance sheet of RMH
Teleservices, Inc. as of September 30, 1994 and the related statements of
operations, shareholders' equity and cash flows for each of the two years in the
period then ended. In June 1996, our appointment as principal accountant was
terminated. We have read RMH Teleservices, Inc.'s statements included under
Information Concerning Independent Public Accountants as part of Form S-1
Registration Statement dated July 3, 1996 and we agree with such statements.

/s/ Asher & Company, Ltd.
--------------------------
ASHER & COMPANY, Ltd.

<PAGE> 1
EXHIBIT 23.1

[ARTHUR ANDERSEN LLP LETTERHEAD]

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

Philadelphia, Pa.,
July 2, 1996

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

As independent certified public accountants, we hereby consent to the
use of our report dated June 27, 1996, relating to the financial statements of
RMH Teleservices, Inc. and to all references to our Firm included in or made a
part of this Form S-1 Registration Statement and to the reference to our Firm
under the caption "Experts" in the Prospectus.

/s/ Asher & Company, Ltd.
-------------------------
ASHER & COMPANY, Ltd.

Philadelphia, Pennsylvania
July 2, 1996

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM S-1 REGISTRATION STATEMENT NO. 333-
.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 322,024
<SECURITIES> 0
<RECEIVABLES> 4,496,351
<ALLOWANCES> 47,000
<INVENTORY> 0
<CURRENT-ASSETS> 4,988,393
<PP&E> 6,013,741
<DEPRECIATION> 2,349,792
<TOTAL-ASSETS> 8,757,183
<CURRENT-LIABILITIES> 3,927,716
<BONDS> 1,161,418
0
0
<COMMON> 80,200
<OTHER-SE> 3,587,849
<TOTAL-LIABILITY-AND-EQUITY> 8,757,183
<SALES> 0
<TOTAL-REVENUES> 25,544,790
<CGS> 0
<TOTAL-COSTS> 23,521,430
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 44,860
<INTEREST-EXPENSE> 261,546
<INCOME-PRETAX> 1,761,814
<INCOME-TAX> 21,000
<INCOME-CONTINUING> 1,740,814
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,740,814
<EPS-PRIMARY> .23
<EPS-DILUTED> .23

</TABLE>

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 19,484
<SECURITIES> 0
<RECEIVABLES> 3,970,713
<ALLOWANCES> 56,000
<INVENTORY> 0
<CURRENT-ASSETS> 4,262,175
<PP&E> 6,989,692
<DEPRECIATION> 2,857,265
<TOTAL-ASSETS> 8,452,593
<CURRENT-LIABILITIES> 1,835,489
<BONDS> 1,882,490
0
0
<COMMON> 80,200
<OTHER-SE> 4,654,414
<TOTAL-LIABILITY-AND-EQUITY> 8,452,593
<SALES> 0
<TOTAL-REVENUES> 14,784,290
<CGS> 0
<TOTAL-COSTS> 13,555,811
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8,390
<INTEREST-EXPENSE> 146,914
<INCOME-PRETAX> 1,081,565
<INCOME-TAX> 15,000
<INCOME-CONTINUING> 1,066,565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,066,565
<EPS-PRIMARY> .14
<EPS-DILUTED> .14

</TABLE>