TN TECHNOLOGIES HOLDING INC, S-1, 1996-10-31

TN TECHNOLOGIES HOLDING INC
S-1, 1996-10-31

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 1996

REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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TN TECHNOLOGIES HOLDING INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 7389 06-1464807
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

TN TECHNOLOGIES HOLDING INC.
228 SAUGATUCK AVENUE
WESTPORT, CT 06880
(203) 341-5200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

GREGORY W. BLAINE
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
TN TECHNOLOGIES HOLDING INC.
228 SAUGATUCK AVENUE
WESTPORT, CT 06880
(203) 341-5200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:
ALAN K. AUSTIN, ESQ. HOWARD S. LANZNAR, ESQ.
BRIAN C. ERB, ESQ. LAWRENCE D. LEVIN, ESQ.
ELIZABETH M. KURR, ESQ. TARA A. GOFF, ESQ.
MARK L. REINSTRA, ESQ. KAREN A. RUZIC, ESQ.
THOMAS I. SAVAGE, ESQ. KATTEN MUCHIN & ZAVIS
WILSON SONSINI GOODRICH & ROSATI 525 W. MONROE STREET, SUITE 1600
PROFESSIONAL CORPORATION CHICAGO, IL 60661-3693
650 PAGE MILL ROAD (312) 902-5200
PALO ALTO, CA 94304-1050
(415) 493-9300

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED PRICE(1) REGISTRATION FEE
- -------------------------------------------------------------------------------
<S> <C> <C>
Class A Common Stock, $0.001 par value... $30,000,000 $9,091
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(o).

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

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS +
+OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)
Issued October 31, 1996

Shares
[LOGO]
CLASS A COMMON STOCK

-----------

OF THE SHARES OF CLASS A COMMON STOCK (THE "CLASS A COMMON STOCK") BEING
OFFERED HEREBY, SHARES ARE BEING SOLD BY THE COMPANY AND SHARES ARE BEING
SOLD BY THE SELLING STOCKHOLDERS NAMED HEREIN. SEE "PRINCIPAL AND SELLING
STOCKHOLDERS." THE COMPANY WILL NOT RECEIVE ANY OF THE PROCEEDS FROM THE SALE
OF THE SHARES OF CLASS A COMMON STOCK BY THE SELLING STOCKHOLDERS. PRIOR TO
THE OFFERING, THERE HAS BEEN NO 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 "UNDERWRITERS" FOR A DISCUSSION
OF THE FACTORS TO BE CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING
PRICE. THE COMPANY HAS TWO CLASSES OF AUTHORIZED COMMON STOCK, THE CLASS A
COMMON STOCK OFFERED HEREBY AND CLASS B COMMON STOCK (THE "CLASS B COMMON
STOCK" AND, COLLECTIVELY WITH THE CLASS A COMMON STOCK, THE "COMMON STOCK").
THE RIGHTS OF HOLDERS OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK ARE
IDENTICAL EXCEPT FOR VOTING AND CONVERSION RIGHTS. HOLDERS OF THE CLASS A
COMMON STOCK ARE ENTITLED TO ONE VOTE PER SHARE, AND HOLDERS OF THE CLASS B
COMMON STOCK ARE ENTITLED TO SEVEN VOTES PER SHARE ON MOST MATTERS SUBJECT
TO STOCKHOLDER VOTE. THE COMPANY IS A SUBSIDIARY OF TRUE NORTH
COMMUNICATIONS INC. ("TRUE NORTH"). UPON CONSUMMATION OF THE OFFERING, TRUE
NORTH WILL BENEFICIALLY OWN ALL OF THE OUTSTANDING CLASS B COMMON STOCK AND
WILL HAVE APPROXIMATELY % OF THE COMBINED VOTING POWER OF THE COMMON
STOCK ( % IF THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS EXERCISED IN
FULL). APPLICATION HAS BEEN MADE TO LIST THE CLASS A COMMON STOCK FOR
QUOTATION ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "TNTI."

-----------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 6 HEREOF.

-----------
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.

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PRICE $ A SHARE

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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS (1) COMPANY (2) STOCKHOLDERS
---------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Per Share................... $ $ $ $
Total (3)................... $ $ $ $
</TABLE>
- -----
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
(2) Before deducting expenses estimated at $, all of which are payable by
the Company. The Company has agreed to pay the underwriting discounts
and commissions relating to the Shares of Class A Common Stock to be
sold by the Selling Stockholders. See "Use of Proceeds" and
"Relationship With True North and Certain Transactions."
(3) The Company has granted the Underwriters an option, exercisable within
30 days of the date hereof, to purchase up to an aggregate of additional
Shares of Class A Common Stock at the price to public less underwriting
discounts and commissions for the purpose of covering over-allotments,
if any. If the Underwriters exercise such option in full, the total
price to public, underwriting discounts and commissions and proceeds to
Company will be $, $ and $, respectively. See "Underwriters."

-----------

The Shares of Class A Common Stock are offered, subject to prior sale, when,
as and if accepted by the Underwriters named herein and subject to approval of
certain legal matters by Katten Muchin & Zavis, counsel for the Underwriters.
It is expected that delivery of the Shares of Class A Common Stock will be made
on or about , 1996 at the office of Morgan Stanley & Co. Incorporated, New
York, New York, against payment therefor in immediately available funds.

-----------

MORGAN STANLEY & CO.
Incorporated
DONALDSON, LUFKIN & JENRETTE
Securities Corporation
ROBERTSON, STEPHENS & COMPANY

, 1996
<PAGE>

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR BY ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY BY ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFERING
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

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UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT 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.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................. 3
Risk Factors....................... 6
The Company........................ 14
Use of Proceeds.................... 14
Dividend Policy.................... 14
Capitalization..................... 15
Dilution........................... 16
Selected Financial Data............ 17
Pro Forma Financial Information.... 18
Management's Discussion and
Analysis
of Financial Condition and Results
of Operations..................... 21
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Business............................ 29
Management.......................... 41
Relationship With True North and
Certain Transactions............... 48
Principal and Selling Stockholders.. 52
Description of Capital Stock........ 53
Shares Eligible for Future Sale..... 56
Underwriters........................ 58
Legal Matters....................... 59
Experts............................. 59
Additional Information.............. 60
Index to Financial Statements....... F-1
</TABLE>

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TN Technologies, Modem Media, R/GA Interactive, Northern Lights Interactive,
Cf2GS, Relationship Technology Group and Delivra are trademarks or tradenames
of the Company. This Prospectus also includes product names and other trade
names and trademarks of the Company and of other organizations.

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

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
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.

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

2
<PAGE>

PROSPECTUS SUMMARY

This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under "Risk Factors" and elsewhere in this
Prospectus. The following summary is qualified in its entirety by the more
detailed information and the financial statements and notes thereto appearing
elsewhere in this Prospectus.

TN Technologies Holding Inc. was incorporated in Delaware in October 1996 to
convert all of the general and limited partnership interests of Modem Media
Advertising Limited Partnership ("Modem Media"), a Connecticut limited
partnership, into common stock of TN Technologies Holding Inc. (the
"Conversion"). Following the Conversion, TN Technologies Holding Inc. acquired
certain businesses of True North (the "Combination"). In this Prospectus,
unless the context otherwise indicates, the "Company" means TN Technologies
Holding Inc. after the Conversion and the Combination, and the "True North
Units" means the operations of the businesses acquired by the Company from True
North in the Combination. Prior to consummation of the Offering, the Company
will change its name to TN Technologies Inc. See "The Company" and
"Relationship With True North and Certain Transactions." Except as otherwise
indicated herein, all information in this Prospectus (i) assumes no exercise of
the Underwriters' over-allotment option and (ii) reflects the filing of an
amended and restated Certificate of Incorporation providing for two classes of
common stock, Class A Common Stock having one vote per share and Class B Common
Stock having seven votes per share, concurrently with the consummation of the
Offering. See "Underwriters."

THE COMPANY

The Company is a leader in digital interactive marketing, having developed
over 500 marketing programs since 1987. The Company combines traditional
marketing skills with capabilities in digital media and communications
technologies to enable clients to more effectively reach and interact with
customers and other key constituents, including employees, stockholders,
suppliers and other business partners. The Company delivers a complete range of
digital interactive marketing products and services through a combination of
its substantial expertise in strategic marketing, technology development and
digital design and production. These products and services include: customized
product positioning; creation, production, updating and maintenance of World
Wide Web ("Web") sites and other interactive communications vehicles; analysis
of customer requests, purchases and behaviors; delivery of uniform and updated
information tools for sales forces; and technical consulting. The Company
believes that by offering comprehensive digital interactive marketing
solutions, it can add substantial value to organizations impacted by the
challenges and opportunities created by rapidly changing digital media and
interactive communications technologies. Pro forma revenues derived from
digital interactive marketing activities accounted for 72.5% of the Company's
total pro forma revenues in the first six months of 1996.

The Company's products and services link the two-way distribution
capabilities of digital communications networks (principally the Internet, the
Web, proprietary on-line services and corporate intranets) with fundamental
marketing strategies and digital design and production capabilities. Digital
interactive marketing applications developed by the Company permit the
Company's clients to target narrow market segments, supply detailed product and
service information on demand, obtain instant feedback, and update advertising,
marketing and customer service programs quickly and easily. The Company
believes that interactive technologies are becoming an increasingly important
component of many organizations' marketing strategies as these technologies
enhance the ability to communicate effectively and to establish one-to-one
relationships with current and potential customers and other key constituents.
The Company seeks to strengthen and maintain long-term relationships with
established organizations, including AT&T, Delta Air Lines, Levi Strauss & Co.,
JC Penney, Microsoft, Motorola, Royal Caribbean Cruises and S.C. Johnson, as
well as with emerging companies that are effecting change in digital media,
such as i-Village and PC Financial Network.

3
<PAGE>

business founded by Robert M. Greenberg in 1993. In October 1996, these
businesses (Northern Lights Interactive, Cf2GS and R/GA Interactive, along with
the technology development operations of True North) were acquired by Modem
Media, a leader in digital interactive marketing which has been providing such
services since 1987. Through the Combination, the Company brings together
substantial experience in digital interactive marketing and offers
comprehensive solutions to its clients. In addition, the Company believes that
its ongoing relationship with True North will provide it with additional
opportunities to offer digital interactive marketing products and services to
True North's clients.

THE OFFERING

<TABLE>
<S> <C>
Class A Common Stock offered.... shares
shares by the Company
shares by the Selling
Stockholders
Common Stock to be outstanding
after the
Offering (1)(2):
Class A Common Stock.......... shares
Class B Common Stock (2)...... shares
Total....................... shares
Voting rights:
Class A Common Stock.......... One vote per share
Class B Common Stock.......... Seven votes per share
Use of Proceeds to the Company.. For general corporate purposes, including
working capital and capital expenditures. In
addition, the Company will use an aggregate
of $ million of the net proceeds for
certain payments to the Selling Stockholders.
See "Use of Proceeds" and "Relationship With
True North and Certain Transactions."
Proposed Nasdaq National Market
Symbol......................... TNTI
</TABLE>
- --------
(1) After giving effect to the Conversion and the Combination. Excludes an
aggregate of shares of Class A Common Stock reserved for issuance upon
exercise of options granted to certain employees of Modem Media prior to
the Conversion which were converted into options to purchase Class A Common
Stock of the Company in connection with the Conversion. Also excludes an
aggregate of shares of Class A Common Stock reserved for
issuance pursuant to the Company's 1996 Stock Option Plan, of which the
Company intends to grant to certain officers and employees of the Company
options to purchase shares of Class A Common Stock at the
initial public offering price concurrently with the consummation of the
Offering, and shares of Class A Common Stock reserved for
issuance pursuant to the Company's 1996 Employee Stock Purchase Plan. See
"Management--Stock Plans," "Relationship With True North and Certain
Transactions" and "Description of Capital Stock."
(2) Each share of Class B Common Stock is convertible, at any time at the
option of the holder, into 1.015 shares of Class A Common Stock. In
addition, the Class B Common Stock will be automatically converted into
Class A Common Stock upon the occurrence of certain events. See
"Description of Capital Stock."

4
<PAGE>

SUMMARY HISTORICAL FINANCIAL DATA
AND PRO FORMA FINANCIAL INFORMATION

The Company was formed in October 1996 for the purpose of converting all of
the general and limited partnership interests of Modem Media into common stock
of TN Technologies Holding Inc. Following the Conversion, the Company acquired
the True North Units, which included substantially all of the assets and
properties of Northern Lights Interactive (established by True North in 1995),
R/GA Interactive (acquired by True North in July 1995) and Cf2GS (acquired by
True North in April 1994), as well as True North's technology development
operations, in exchange for the assumption by the Company of certain
liabilities of True North relating to the True North Units and the issuance to
True North of all of the Company's Class B Common Stock. See "Relationship With
True North and Certain Transactions."

The following summary financial information should be read in conjunction
with the financial statements and notes thereto included elsewhere in this
Prospectus. The summary financial information contained below and elsewhere in
this Prospectus is that of Modem Media, as predecessor of the Company. The
summary statement of operations data for the fiscal years ended December 31,
1993, 1994 and 1995 is derived from audited financial statements of Modem Media
that are included elsewhere in this Prospectus. The summary pro forma
information presented is unaudited and gives effect to the Conversion and the
Combination. The Combination has been accounted for using the purchase method
of accounting. The unaudited six month financial information reflects all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of the Company's management, necessary for a fair presentation of the
results of the interim periods. The results of operations for current interim
periods are not necessarily indicative of results to be expected for the entire
year.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
----------------------------- ------------------------------
PRO PRO FORMA
FORMA ----------------
1993 1994 1995 1995 1995 1996 1995 1996
------ ------ ------- ------- ------ ------ ------- -------
(UNAUDITED)
---------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $1,221 $4,335 $11,719 $24,541 $4,449 $7,908 $10,034 $16,033
Operating income (loss). 481 1,237 3,953 (152) 1,907 1,288 520 (2,096)
Net income (loss) (1)... 484 1,241 3,960 (806) 1,911 1,277 (61) (1,574)
Net income (loss) per
share.................. -- -- -- -- --
Shares used to compute
net income (loss) per
share.................. -- -- -- -- --
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------
PRO PRO FORMA AS
ACTUAL FORMA ADJUSTED (2)
------ ------- ------------
(UNAUDITED, IN THOUSANDS)
---------------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash................................................ $ 518 $ 765 $
Working capital..................................... 2,746 4,858
Total assets........................................ 8,423 42,860
Capital lease obligations, less current portion..... 161 161 161
Partners' capital/Stockholders' equity.............. 4,223 32,435
</TABLE>
- --------
(1) No provision for income taxes was made by Modem Media in any of the fiscal
years ended December 31, 1993, 1994 and 1995 or for the six months ended
June 30, 1995 and 1996 because of its partnership structure.
(2) As adjusted to reflect the sale of the shares of Class A Common
Stock offered by the Company hereby at an assumed initial public offering
price of $ per share and application of the net proceeds therefrom
(after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by the Company). The Company will incur
a charge of approximately $ million in the second half of 1996
relating to the grant of certain options to purchase partnership interests
in Modem Media prior to the Conversion and the payment of certain amounts
to the Selling Stockholders in connection with the Conversion. See "Risk
Factors--Limited Operating History; Variability of Operating Results," "Use
of Proceeds," "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Overview."

5
<PAGE>

RISK FACTORS

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in this Prospectus. In evaluating the Company's business, prospective
investors should consider carefully the following risk factors in addition to
the other information set forth in this Prospectus.

Risks Associated With Integration of Separate Businesses. The Company was
formed in October 1996 and acquired certain businesses of True North,
including substantially all of the assets and properties of Northern Lights
Interactive, R/GA Interactive and Cf2GS, as well as True North's technology
development operations. The integration of the business units of True North
sold in the Combination with those of Modem Media has placed and will continue
to place a significant burden on the Company's management. The Company's
business units have historically operated independently, and it is expected
that the Company's management will integrate certain aspects of the businesses
into a single organization. Such integration is subject to various risks and
uncertainties and include: the inability to effectively assimilate operations,
products, technologies, personnel and cultures of the business units involved;
the potential disruption of the Company's business; the potential
deterioration of uniform standards, controls, procedures and policies; and the
impairment of relationships with employees and clients as a result of the
integration of new management personnel. If the Company were to fail to
integrate successfully the business units of True North with those of Modem
Media, such failure could have a material adverse effect on the Company's
business, financial condition or results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Relationship With True North and Certain Transactions."

Dependence on and Relationship With True North. In 1995, True North
established Northern Lights Interactive to provide digital interactive
marketing services to True North's traditional marketing services clients.
Prior to the Combination, the business of Northern Lights Interactive was, and
the Company expects that Northern Lights Interactive will continue to be,
dependent on successful client referrals from True North. True North is not
obligated to refer clients to the Company, and there can be no assurance that
True North will continue to refer clients to the Company. In addition, even if
referred to the Company, True North's clients are not obligated to hire the
Company, and there can be no assurance that such referrals will be successful.
True North has agreed in connection with the Combination, subject to certain
limited exceptions, not to compete with the Company for business relating to
digital interactive marketing services for a period of three years. However,
if True North were to be acquired by a company that competes with the Company,
or if True North were to acquire a business with a unit that competes with the
Company, True North could become a competitor of the Company and could reduce
the number of, or discontinue making, client referrals to the Company. In
addition, the number of client referrals the Company receives from True North
is dependent in part on True North's business. In the event of a reduction or
discontinuance of client referrals because of a decline in True North's
business, or for any other reason, the Company's business, financial position
or results of operations could be materially adversely affected.

The True North Units have historically depended on True North for a variety
of management and administrative services, including accounting, cash
management, tax and payroll administration, insurance and employee benefits
administration and financing. In connection with the Combination, the Company
and True North have entered into certain intercompany agreements providing for
various interim and ongoing services and relationships between the two
companies, including an intercompany credit agreement, a tax matters
agreement, an intellectual property agreement, an administrative services
agreement and a real estate space sharing agreement. True North will continue
to provide such services until termination of the respective agreements
pursuant to their respective terms. Any such termination would require the
Company to independently provide, or seek an alternative source of, such
services. There can be no assurance that the Company could independently
provide, or find a third party to provide, these services on a cost-effective
basis or that any transition to a new service provider would not have a
material adverse effect on the Company's business, financial position or
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Relationship With True North and
Certain Transactions."

6
<PAGE>

Limited Operating History; Variability of Operating Results. Prior to the
Combination, the Company did not operate as a combined business organization.
The Company has experienced operating losses, on a pro forma basis, in each of
the last three quarters, and there can be no assurance that the Company will
achieve or sustain profitability in the future. In addition, the Company has
incurred, and anticipates that it will continue to incur, substantial costs to
expand and integrate its operations. Such costs have had, and could continue
to have, a material adverse effect on the operating results of the Company.
Future operating results will depend on many factors, including demand for the
Company's services, the Company's ability to successfully integrate its
business units, the Company's ability to maintain its client relationships and
obtain assignments from new clients, the Company's success in attracting and
retaining qualified personnel, the level of competition and the Company's
ability to respond to competitive developments. There can be no assurance that
the Company will be successful in addressing the risks presented by such
factors. The Company's operating results have fluctuated in the past, and may
continue to fluctuate in the future, as a result of a variety of factors,
including the timing of any material reduction, cancellation or completion of
major projects, the loss of a major client, the loss or hiring of personnel,
the timing of the opening or closing of an office, the relative mix of
business, changes in the pricing strategies of the Company or its competitors,
fluctuations in working capital, fluctuations in personnel and other costs
relating to the expansion of operations, and other factors that are outside of
the Company's control. As a result of these fluctuations, the Company believes
that period to period comparisons cannot be relied upon as indicators of
future performance. Due to all of the foregoing factors, in some future
quarters the Company's operating results may fall below the expectations of
securities analysts and investors. In such event, the trading price of the
Class A Common Stock could likely be materially and adversely affected.

The Company experiences some variation in operating results throughout the
year which result in part from timing of product introductions, business
cycles of the Company's clients and marketing communications spending patterns
in general. The Company's revenues have historically been higher during the
second half of the Company's fiscal year. The Company expects this variation
in operating results to continue in the future. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Factors
Affecting Operating Results."

The Company will incur a one-time, non-cash charge of approximately $
million in the second half of 1996 relating to the grant to certain employees
of Modem Media of options to purchase limited partnership interests in Modem
Media which were converted into options to purchase Class A Common Stock of
the Company and the payment of certain amounts to the Selling Stockholders,
each in connection with the Conversion. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Overview."

Dependence on Key Clients; Absence of Long-Term Contracts. The Company's
five largest clients accounted for 63.4% and 67.0% of the Company's revenues
(on a pro forma basis) for the fiscal year ended December 31, 1995 and the six
months ended June 30, 1996, respectively, with fluctuations in the amount of
revenue contribution from each such client from quarter to quarter. AT&T
accounted for 37.8% and 43.0% of the Company's revenues (on a pro forma basis)
for the fiscal year ended December 31, 1995 and for the six months ended June
30, 1996, respectively. AT&T accounted for 57.4%, 78.4%, and 84.4% of the
revenues of Modem Media for fiscal years 1994 and 1995 and for the six months
ended June 30, 1996. AT&T is also a client of certain of the Company's other
business units, and there can be no assurance that the Company will be able to
maintain the rate of growth or current level of revenues derived from AT&T or
from any other client in the future.

Because the Company's clients generally hire the Company on an assignment
basis rather than on a retainer basis, a client from whom the Company
generates substantial revenue in one period may not be a substantial source of
revenue in a subsequent period. In addition, the Company's clients generally
have the right to terminate their relationships with the Company without
penalty and on relatively short or no notice. As a result, the Company may
gain or lose several significant clients each year, and there can be no
assurance that new clients will be obtained or, if obtained, will offset any
client losses. To the extent that the Company's major clients do not remain a
significant source of revenues and the Company is unable to replace these
clients, the Company's

7
<PAGE>

business, financial condition or results of operations could be materially
adversely effected. Once an assignment is completed there can be no assurance
that a client will engage the Company for further services. The termination of
the Company's business relationship with any of its significant clients,
including AT&T, or a material reduction in the use of the Company's services
by a significant client could have a material adverse effect on the Company's
business, financial condition or results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--Company Clients."

Management of Growth; Risks Associated With Potential Acquisitions. The
expansion of the Company's business and its customer base has resulted in a
corresponding growth in the demands on the Company's management, its operating
systems, internal controls, and financial and physical resources. The
Company's continued growth, if any, may strain existing management and human
resources, in particular, affecting its ability to attract and retain talented
personnel. Further, operational, financial and management information systems
and controls, may not be adequate to support continued growth of the Company's
operations. Consequently, the Company may be required to increase expenditures
to hire new employees, open new offices and invest in new equipment or other
capital expenditures. Any failure to expand any of the foregoing areas in an
efficient manner could have a material adverse effect on the Company's
business, financial condition or results of operations. The Company expects
that it will need to develop further its financial and management controls,
reporting systems and procedures to accommodate future growth, if any. There
can be no assurance that the Company will be able to develop such controls,
systems or procedures effectively or on a timely basis. The failure to do so
could have a material adverse effect on the Company's business, financial
condition or results of operations.

The Company has made in the past, and may make in the future, acquisitions
of, or significant investments in, businesses, including those that offer
complementary marketing communications services, products and technologies, or
that expand the Company's geographic coverage. Any such future acquisitions or
investments would be accompanied by risks, including the difficulty of
assimilating the operations and personnel of the acquired businesses, the
potential disruption of the Company's ongoing business, the inability of
management to maximize the financial and strategic position of the Company
through the successful incorporation of acquired personnel and clients, the
maintenance of uniform standards, controls, procedures and policies, and the
impairment of relationships with employees and clients as a result of any
integration of new management personnel. These factors could have a material
adverse effect on the Company's business, financial condition or results of
operations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

Dependence on Key Personnel. The Company's success will depend on the
ability of the Company's senior management, in particular, Gregory W. Blaine,
Chairman and Chief Executive Officer, Gerald M. O'Connell, President and Chief
Operating Officer, and Robert M. Greenberg, President, R/GA Interactive. The
Company's success also will depend to a significant degree on the continuing
contributions of other members of its senior management and its key account
management, marketing, creative and technology development personnel, as well
as its ability to attract and retain highly skilled personnel in all job
categories. Competition for qualified personnel in the digital interactive
marketing industry is intense. The Company has at times experienced, and
continues to experience, difficulty in recruiting sufficient numbers of
qualified personnel. Although certain members of the Company's senior
management have entered into employment agreements with the Company, there can
be no assurance that any of these executives will not voluntarily terminate
their employment with the Company. The loss of the services of any senior
management or other key employee or the inability to attract and retain
additional personnel as required could adversely affect the Company's
business, financial condition or results of operations. The Company has
entered into an employment allocation agreement with True North and Mr.
Greenberg which provides that Mr. Greenberg will devote not less than 50% of
his time to his employment with the Company and the remainder to True North.
If one or more of the Company's key employees resigns from the Company to join
a competitor or to form a competing company, the loss of such personnel and
any resulting loss of existing or potential clients to any such competitor
could have a material adverse effect on the Company's business, financial
condition or results of operations. In the event of the loss of any key
personnel,

8
<PAGE>

there can be no assurance that the Company would be able to prevent the
unauthorized disclosure or use of its technical knowledge, practices,
procedures or client lists. See "Business--Competition," "--Employees" and
"Management."

Competition; Low Barriers to Entry. The markets for the Company's services
are highly competitive and are characterized by pressures to incorporate new
capabilities, accelerate job completion schedules and reduce prices. The
Company faces competition from a number of sources. These sources include
traditional advertising agencies as well as specialized marketing
communications firms. In addition, many advertising agencies have started to
develop internally or enter into business relationships to develop or acquire
new digital media and interactive communications capabilities. The Company also
competes with interactive marketing communications companies that provide
services (such as corporate identity and packaging, production, advertising
services or Web site design) and are technologically proficient in the digital
media and interactive communications fields. In addition, production houses,
software developers, in-house marketing and information systems departments of
organizations, interactive entertainment companies and graphic design companies
compete with certain portions of the Company's business.

Certain of the Company's competitors or potential competitors have longer
operating histories, longer client relationships and greater financial,
management, technology, development, sales, marketing and other resources than
the Company. Competition depends to a large extent on the clients' perception
of the quality and creativity as well as the technical proficiency of digital
interactive marketing products and services offered. The Company also competes
on the basis of price and the ability to serve clients on a broad geographic
basis. Moreover, clients frequently wish to have different products represented
by different marketing companies. To the extent the Company loses clients to
its competitors because of dissatisfaction with the Company's services or the
Company's reputation is adversely impacted for any other reason, the Company's
business, financial condition or operating results could be materially
adversely affected.

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

Uncertainties of Developing Market for Digital Interactive Marketing
Solutions. The market for digital interactive marketing solutions has recently
begun to develop, is evolving rapidly and is characterized by an increasing
number of market entrants. There can be no assurance that this market will
continue to grow. The Company's future growth is dependent on its ability to
create, develop and deploy digital interactive marketing solutions that are
accepted by the Company's clients as an effective form of communication with
their targeted audiences. Demand for and market acceptance of recently
introduced products and services are subject to a high level of uncertainty and
are dependent on a number of factors, including the growth in consumer access
to and acceptance of new interactive technologies such as the Internet and the
Web and the development of technologies that facilitate interactive
communication between organizations and targeted audiences. Significant issues
concerning the commercial use of these technologies (including security,
reliability, cost, ease of use and quality of service) remain unresolved and
may have a negative impact on the growth of marketing activities that utilize
these technologies. In addition, no standards have yet been widely accepted for
the measurement of the effectiveness of interactive marketing, and there can be
no assurance that such standards will develop sufficiently to support
interactive marketing as a significant marketing medium. There can be no
assurance that the market for the Company's products and services will develop,
that the Company's products and services will be adopted or that individual
personal computer users in business or at home will continue to use the
Internet, the Web or other interactive media for commerce and communication. If
the market for digital interactive marketing solutions fails to develop, or
develops more slowly than expected, or if the Company's products do not achieve
market acceptance, the Company's business, financial condition or results of
operations could be materially and adversely affected. See "Business--Industry
Background."

9
<PAGE>

Dependence on Continued Growth in Use of the Internet and the World Wide
Web. The Company's future success is substantially dependent on continued
growth in the use of the Internet. Rapid growth in the use of and interest in
the Internet is a recent phenomenon and there can be no assurance that such
growth will continue at the same rate or at all or that communication or
commerce over the Internet will become widespread. The Web may not prove to be
a viable commercial marketplace for a number of reasons, including a
potentially inadequate infrastructure that could lead to periodic shutdowns or
the failure to develop performance improvements, including high speed modems.
In addition, the Internet could lose its viability due to delays in the
development or adoption of new standards and protocols required to handle
increased levels of Internet activity, or due to increased governmental
regulation. The applicability to the Internet of existing laws governing
issues such as property ownership, libel and personal privacy is uncertain.
Changes in or insufficient availability of telecommunications services to
support the Internet also could result in slower response times and adversely
affect usage of the Internet. If use of the Internet does not continue to
grow, or if the Internet infrastructure does not effectively support the
growth that may occur, the Company's business, financial condition or results
of operations could be materially and adversely affected. See "Business--
Industry Background."

Rapid Technological Change. The Company utilizes a number of different
technology-based media in developing and deploying digital interactive
marketing solutions for its clients. The technologies used in digital
interactive marketing are developing rapidly and are characterized by evolving
industry standards as well as frequent new product and service introductions
and enhancements. There can be no assurance that the technologies utilized by
the Company and the expertise gained in those technologies will continue to be
applicable in the future. There can be no assurance that the Company can
correctly identify which technologies will achieve market acceptance, that
such new technologies will be made available to the Company or that such
technologies can be economically applied by the Company on a timely basis. The
inability to identify new and existing technologies and apply expertise in a
timely manner to subsequent projects and respond to both evolving demands of
the marketplace and competitive product and service offerings could have a
material adverse effect on the Company's business, financial condition or
results of operations. See "Business--Intellectual Property."

Conflicts of Interest. Conflicts of interest between clients are inherent in
certain segments of the marketing communications industry. In certain
circumstances, the Company has in the past been, and will in the future be,
unable to pursue potential digital interactive marketing and other
opportunities because such opportunities will require the Company to provide
services to direct competitors of existing Company clients. In addition, the
Company risks alienating or straining relationships with existing clients when
it agrees to provide services to even indirect competitors of existing Company
clients. Conflicts of interest may jeopardize the stability of revenues
generated from existing clients and preclude access to business prospects,
either of which could have a material adverse effect on the Company's
business, financial condition or results of operations. In addition,
prospective clients may choose not to retain the Company for reasons of actual
or perceived conflicts of interest. See "Business--Competition."

Control of the Company; Anti-Takeover Effects of Certificate of
Incorporation, Bylaws and Delaware Law. True North owns all of the shares of
the Class B Common Stock, each share of which is entitled to seven votes per
share, and will have approximately % of the combined voting power of both
classes of Common Stock after the Offering. The purchasers of the shares of
Class A Common Stock offered hereby will have one vote per share and
approximately % of the combined voting power. Accordingly, without the
approval of the Company's public stockholders, True North will be able to (i)
elect a majority of the Company's directors, (ii) amend the Company's
Certificate of Incorporation or effect a merger, sale of assets, or other
major corporate transaction, (iii) defeat any non-negotiated takeover attempt,
(iv) determine the amount and timing of dividends paid to itself and
purchasers of Class A Common Stock and (v) otherwise control the management
and operations of the Company and the outcome of virtually all matters
submitted for a stockholder vote.

10
<PAGE>

addressing certain business opportunities and strategies with respect to which
the Company's and True North's interests differ. The Company has not adopted
any formal plan or arrangement to address such potential conflicts of interest.
The Company's Board of Directors currently has two vacancies, which the
Company's bylaws authorize the Company's Board of Directors to fill. The
Company intends to appoint two persons who are not officers or employees of the
Company or True North to the Board of Directors within 90 days of the date of
the Prospectus and is required to do so to maintain its listing on the Nasdaq
National Market.

The Board of Directors of the Company has the authority to issue up to
5,000,000 shares of preferred stock of the Company ("Preferred Stock") and to
determine the price, rights, preferences, privileges and restrictions,
including voting rights, of such stock without further stockholder approval.
The rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any Preferred Stock that
may be issued in the future. Issuance of Preferred Stock could have the effect
of delaying, deferring or preventing a change in control of the Company.
Furthermore, certain provisions of the Company's Certificate of Incorporation,
Bylaws, and of Delaware law could have the effect of delaying, deferring or
preventing a change in control of the Company, which could adversely affect the
market price of the Company's Class A Common Stock. The Company is subject to
the anti-takeover provisions of Section 203 of the Delaware General Corporation
Law ("DGCL") which prohibits the Company from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed
manner. The application of Section 203 could have the effect of delaying or
preventing a change of control of the Company. See "Management," "Relationship
With True North and Certain Transactions," "Principal and Selling Stockholders"
and "Description of Capital Stock."

Exposure to Fixed-Fee Assignments. A portion of the Company's revenues are
derived from fixed-fee based assignments. The Company assumes greater financial
risk on fixed-fee based assignments than on time-and-materials assignments. In
addition, the Company's revenue recognition policy with respect to fixed-fee
based assignments requires the estimate of percentage of assignment completion.
To the extent these estimates prove to be inaccurate, the revenues and
operating profits, if any, reported for periods during which work on an
assignment is ongoing may not accurately reflect the final results of the
assignment, which can only be determined upon completion of the assignment.
Failure to anticipate technical problems, estimate costs accurately, control
costs during performance of a fixed-fee based assignment or obtain the client's
consent to a fee adjustment in the event costs are underestimated may have a
material adverse effect on the Company's business, financial condition or
results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

Uncertainties Regarding Intellectual Property Rights. The Company's success
and ability to compete is dependent in part on its proprietary technology
including those protections provided under trademark, trade secret and
copyright laws. In addition, factors such as the technological and creative
skills of its personnel, new product developments, frequent product
enhancements, name recognition and reliable product maintenance are also
important to establishing and maintaining a technology leadership position. The
Company presently has no patents but has one patent application pending. There
can be no assurance that such patent application will be allowed or that, if
allowed, the application will be issued. Despite the Company's efforts to
control access to its proprietary information, it may be possible for a third
party to copy or otherwise obtain and use the Company's products or
technologies without authorization, or to develop similar or superior
technologies independently. In addition, effective copyright, trade secret and
patent protection may be unavailable or limited in certain foreign countries.
Litigation may be necessary in the future to enforce the Company's intellectual
property rights, to protect the Company's trade secrets, to determine the
validity and scope of the proprietary rights of others, or to defend against
claims of infringement or invalidity. Such litigation could result in
substantial costs and diversion of resources and could have a material adverse
effect on the Company's business, financial condition or results of operations.

The Company's strategy includes creating, developing and selling digital
interactive marketing products based in part on proprietary applications and
platforms. There can be no assurance that the Company will be

11
<PAGE>

able to develop any such proprietary processes, or, if developed, will be able
to retain ownership rights of such processes. See "Business--Intellectual
Property."

Risks Associated with International Operations. Although the Company
currently has offices in Toronto, Hong Kong and London, to date the Company
has provided only limited services internationally to certain of its clients
headquartered in North America, and has only minimal direct international
experience. A component of the Company's long-term strategy is to expand its
operations in these and other international markets. There can be no assurance
that the Company will be able to successfully market, sell and deliver its
services in these regions. See "Business--Core Competencies."

Government Regulation. The marketing communications industry is subject to
extensive government regulation, both domestic and foreign, with respect to
the truth in and fairness of advertising. The Company must comply with Federal
Trade Commission regulations with respect to the marketing of products and
services and similar state regulations. In addition, there has been an
increasing tendency in the United States on the part of businesses to resort
to the judicial system to challenge comparative advertising of their
competitors on the grounds that the advertising is false and deceptive. There
can be no assurance that the Company will not be subject to claims made
against it or its clients by other companies or governmental agencies or that
any such claims, regardless of merit, would not have a material adverse effect
on the Company's business, financial condition or results of operations. See
"Business--Government Regulation."

Susceptibility to General Economic Conditions. The Company's revenues and
results of operations, like those of other marketing companies, will be
subject to fluctuations based upon general economic conditions in the United
States. If there were to be a general economic downturn or a recession in the
United States, the Company expects its clients could substantially and
immediately reduce their marketing budgets leading to a reduction in the level
of the Company's fees and commissions. In the event of a reduction in overall
marketing expenditures, it is possible that marketers may focus their reduced
budgets on traditional media advertising at the expense of digital interactive
marketing expenditures. Most of the factors that could influence clients and
prospective clients to reduce their marketing communications budgets under
these circumstances are beyond the Company's control. In the event of such an
economic downturn, the Company's business, financial condition or results of
operations could be materially and adversely affected. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Pro
Forma Quarterly Results of Operations" and "--Factors Affecting Operating
Results."

Unallocated Net Proceeds. The Company will use an aggregate of $
million of the net proceeds from the Offering for certain payments to the
Selling Stockholders in connection with the Combination. The Company has not
designated any specific use for the remaining net proceeds of the Offering.
The Company currently expects to use substantially all of the net proceeds for
general corporate purposes, including investments in working capital and
capital expenditures. Accordingly, management will have significant discretion
in applying the net proceeds of the Offering. See "Use of Proceeds" and
"Relationship With True North and Certain Transactions."

No Prior Market for the Shares; Possible Volatility of Share Price. Prior to
the Offering, there has been no public market for the Class A Common Stock.
There can be no assurance that an active trading market will develop after the
Offering or, if an active trading market does develop, that such market will
be sustained. The initial public offering price of the Class A Common Stock
will be determined by negotiation among the Company, the Selling Stockholders
and the Representatives and may not be indicative of the market price of the
Class A Common Stock after the Offering. See "Underwriters" for a discussion
of the factors to be considered in determining the initial public offering
price.

The market price for the Class A Common Stock may be significantly affected
by factors such as the announcement of new products or services by the Company
or its competitors, technological innovation by the Company or its
competitors, quarterly variations in the Company's operating results or the
operating results of the Company's competitors, changes in earnings estimates
by analysts or reported results that vary materially from such estimates. In
addition, the stock market has experienced significant price fluctuations that
have particularly affected the market prices of equity securities of many high
technology and emerging growth

12
<PAGE>

companies and that often have been unrelated to the operating performance of
such companies. These broad market fluctuations may materially and adversely
affect the market price of the Class A Common Stock. Following periods of
volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such a company and its
officers and directors. Any such litigation against the Company could result in
substantial costs and a diversion of management's attention and resources,
which could have a material adverse effect on the Company's business, financial
condition or results of operations.

Shares Eligible for Future Sale. Upon consummation of the Offering, the
shares of Class A Common Stock ( shares if the Underwriters' over-
allotment option is exercised in full) offered hereby will be freely tradeable
without restriction. The Company intends to file a registration statement
approximately 90 days after the Offering to register the shares of Class A
Common Stock reserved for issuance under the Company's 1996 Stock Option Plan
and 1996 Employee Stock Purchase Plan and the shares of Class A Common
Stock issuable upon the exercise of options granted to certain employees of
Modem Media in connection with the Conversion. Upon the filing of such
registration statement, an additional shares of Class A Common Stock
issuable upon exercise of vested stock options will be freely tradeable without
restriction. Sales of substantial numbers of shares of Common Stock into the
public market after the Offering, or the perception that such sales could
occur, could materially and adversely affect the market price of the Class A
Common Stock prevailing from time to time or could impair the Company's future
ability to obtain capital through an offering of equity securities. See
"Description of Capital Stock" and "Shares Eligible for Future Sale."

Immediate and Substantial Dilution to New Investors; Potential Future
Dilution. The initial public offering price is substantially higher than the
pro forma net tangible book value per share of the Class A Common Stock
immediately after the Offering. Investors purchasing Class A Common Stock in
the Offering will, therefore, incur immediate and substantial dilution of
approximately $ in the pro forma net tangible book value per share of
Class A Common Stock from the initial public offering price. In addition, the
options to purchase Class A Common Stock granted to certain employees of Modem
Media in connection with the Conversion are exercisable for shares of
the Company's Class A Common Stock. The Company seeks to attract and retain
employees in part by offering stock options and other rights to purchase its
Class A Common Stock. Concurrently with the Offering, the Company will grant
options to purchase an aggregate of shares of Class A Common Stock to
officers and employees of the Company under the Company's 1996 Stock Option
Plan at an exercise price equal to the initial public offering price.
Subsequently, the Company intends to grant stock options at an exercise price
equal to the fair market value of Class A Common Stock. Pursuant to the
Company's Certificate of Incorporation, in the event True North sells any of
its shares of Class B Common Stock to a third party, such shares shall
automatically convert into Class A Common Stock at a rate of 1.015 shares of
Class A Common Stock for each share of Class B Common Stock. shares
of Class A Common Stock are reserved for issuance under the Company's 1996
Stock Option Plan, 1996 Employee Stock Purchase Plan, upon exercise of options
granted to certain employees of Modem Media in connection with the Conversion
and upon conversion of the Class B Common Stock into Class A Common Stock. The
issuance of shares of Class A Common Stock upon conversion of the Class B
Common Stock will have the effect of reducing the percentage ownership in the
Company of the then existing stockholders. See "Capitalization," "Dilution,"
"Management--Stock Plans" and "Description of Capital Stock."

13
<PAGE>

THE COMPANY

The Company was formed in October 1996. Following the Conversion, the
Company acquired the True North Units, which included substantially all of the
assets and properties of Northern Lights Interactive, R/GA Interactive and
Cf2GS, as well as True North's technology development operations. See
"Relationships With True North and Certain Transactions."

In connection with the Combination, the Company and True North have entered
into certain intercompany agreements providing for various interim and ongoing
services and relationships between the two companies, including an
intercompany credit agreement, a tax matters agreement, an intellectual
property agreement, an administrative services agreement and a real estate
space sharing agreement. See "Risk Factors--Dependence on Relationship With
True North," "--Control of the Company; Anti-Takeover Effects of Certificate
of Incorporation, Bylaws and Delaware Law" and "Relationship With True North
and Certain Transactions."

The Company's principal executive office is located at 228 Saugatuck Avenue,
Westport, Connecticut 06880, and its telephone number is (203) 341-5200. The
Company maintains Web sites at http://www.modemmedia.com and
http://www.rga.com. Information contained in the Company's Web sites shall not
be deemed to be a part of this Prospectus.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Class
A Common Stock being offered by the Company hereby are estimated to be
approximately $ million (approximately $ million if the Underwriters'
over-allotment option is exercised in full) at an assumed initial public
offering price of $ per share and after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by the
Company. The Company will not receive any of the proceeds from the sale of
shares of Class A Common Stock by the Selling Stockholders. See "Principal and
Selling Stockholders." The principal purposes of the Offering are to obtain
additional capital, to create a public market for the Company's Class A Common
Stock and to facilitate future access by the Company to public equity markets.
In addition, the Company is undertaking the Offering because it believes that
the availability of adequate financial resources is a substantial competitive
factor in its industry. The Company expects to use the net proceeds from the
Offering for general corporate purposes, including investments in working
capital and capital expenditures. A portion of the net proceeds of the
Offering may also be used to acquire or invest in complementary businesses or
products, to obtain the right to use complementary technologies or to invest
in geographic expansion. The Company has no present plans, agreements or
commitments and is not currently engaged in any negotiations with respect to
any such transactions. Pending use of the net proceeds for the above purposes,
the Company intends to invest such funds in short-term, interest-bearing,
investment grade obligations.

The Company will use an aggregate of $ million of the net proceeds from
the Offering for certain payments to the Selling Stockholders in connection
with the Combination. The Selling Stockholders will sell an aggregate of
shares of Class A Common Stock in the Offering. The Company has
agreed to pay the underwriting discounts and commissions relating to the
shares of Class A Common Stock to be sold by the Selling Stockholders. See
"Relationship With True North and Certain Transactions."

DIVIDEND POLICY

The Company has never paid cash dividends on its Common Stock or other
securities. The Company anticipates that it will retain any future earnings
for use in the expansion and operation of its business and does not anticipate
paying any cash dividends in the foreseeable future.

14
<PAGE>

CAPITALIZATION

The following table sets forth at June 30, 1996 Modem Media's total
capitalization on an historical basis and the Company's total capitalization
on a pro forma basis and as adjusted to give effect to the sale of the
shares of Class A Common Stock offered by the Company hereby (at
an assumed initial public offering price of $ per share and after
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by the Company) and the application of the net
proceeds therefrom as described herein under "Use of Proceeds."

<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------
PRO PRO FORMA
HISTORICAL FORMA (1) AS ADJUSTED (2)
---------- --------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
Capital lease obligations, less current
portion.................................. $ 161 $ 161 $ 161
Partners' capital......................... 4,223 -- --
Stockholders' equity:
Common Stock, $0.001 par value;
shares of Class A Common
Stock and shares of Class B
Common Stock authorized,
shares of Class A Common Stock and
shares of Class B Common Stock
issued and outstanding, actual;
shares of Class A Common
Stock and shares of Class B
Common Stock authorized,
shares of Class A Common Stock and
shares of Class B Common Stock
issued and outstanding, as adjusted....
Additional paid-in capital..............
Retained earnings.......................
------- ------- -------
Total stockholders' equity............ -- 32,435
------- ------- -------
Total capitalization.................. $ 4,384 $32,596 $
======= ======= =======
</TABLE>
- --------
(1) Gives effect to the Conversion and the Combination.
(2) As adjusted to reflect the sale of the shares of Class A Common
Stock offered by the Company hereby at an assumed initial public offering
price of $ per share and application of the net proceeds therefrom
(after deducting estimated underwriting discounts and commissions and
estimated offering expenses payable by the Company). Excludes an aggregate
of shares of Class A Common Stock reserved for issuance upon exercise
of options granted to certain employees of Modem Media in connection with
the Conversion. Also excludes an aggregate of shares of Class A
Common Stock reserved for issuance pursuant to the Company's 1996 Stock
Option Plan, of which the Company intends to grant to certain officers and
employees of the Company options to purchase shares of Class A
Common Stock at the initial public offering price concurrently with the
consummation of the Offering, and shares of Class A Common Stock
reserved for issuance pursuant to the Company's 1996 Employee Stock
Purchase Plan. The Company will incur a one-time, noncash charge of
approximately $ million in the second half of 1996 relating to the
grant by Modem Media to certain of its employees of options to purchase
limited partnership interests in Modem Media, which were converted into
options to purchase Class A Common Stock of the Company in connection with
the Conversion, and the payment of certain amounts to the Selling
Stockholders in connection with the Conversion. See "Risk Factors--Limited
Operating History; Variability of Operating Results," "Use of Proceeds"
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Pro Forma Quarterly Results of Operations."

15
<PAGE>

DILUTION

The pro forma net tangible book value of the Company as of June 30, 1996 was
$9.5 million or $ per share of Common Stock. Net tangible book value per
share is determined by dividing the net tangible book value of the Company
(total tangible assets less total liabilities) by the number of outstanding
shares of Common Stock. After giving effect to the sale by the Company of the
shares of Class A Common Stock offered hereby (at an assumed initial
public offering price of $ per share and after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable
by the Company), the Company's adjusted pro forma net tangible book value at
June 30, 1996 would have been approximately $ or $ per share. This
represents an immediate increase in pro forma net tangible book value to
existing stockholders of $ per share and an immediate dilution to new
investors of $ per share. 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 per share as of June 30, 1996.. $
Increase in net tangible book value per share attributable to new
investors.......................................................
------
Pro Forma net tangible book value per share after the Offering...
------
Dilution per share to new investors.............................. $
======
</TABLE>

The following table sets forth on a pro forma basis as of June 30, 1996 the
difference between the number of shares of Common Stock purchased from the
Company, the total consideration paid, and the average price per share paid by
existing stockholders and by the new investors (at an assumed initial public
offering price of $ per share and after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by the
Company):

<TABLE>
<CAPTION>
SHARES
PURCHASED TOTAL CONSIDERATION
-------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders....... % $ % $
New investors............... % %
----- --- ---------- --------
Total................... 100% $ 100%
===== === ========== ========
</TABLE>

The foregoing table assumes no exercise of the Underwriters' over-allotment
option.

The above table gives effect to the Conversion and Combination. The table
above excludes an aggregate of shares of Class A Common Stock reserved for
issuance upon exercise of options granted to certain employees of Modem Media
prior to the Conversion which were converted into options to purchase Class A
Common Stock of the Company in connection with the Conversion. Also excludes
an aggregate of shares of Class A Common Stock reserved for
issuance pursuant to the Company's 1996 Stock Option Plan, of which the
Company intends to grant to certain officers and employees of the Company
options to purchase shares of Class A Common Stock at the initial
public offering price concurrently with the consummation of the Offering, and
shares of Class A Common Stock reserved for issuance pursuant to the
Company's 1996 Employee Stock Purchase Plan. See "Management--Stock Plans,"
"Relationship With True North and Certain Transactions" and "Description of
Capital Stock."

16
<PAGE>

SELECTED FINANCIAL DATA

The selected financial data of Modem Media, as predecessor of the Company,
have been included in this Prospectus. The following selected financial data
should be read in conjunction with the financial statements and notes thereto
of Modem Media and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere herein. The statement
of operations data for the fiscal years ended December 31, 1993, 1994 and 1995
and the balance sheet data as of December 31, 1994 and 1995 are derived from
financial statements of Modem Media that have been audited by Arthur Andersen
LLP, independent auditors, and are included elsewhere in this Prospectus. The
statement of operations data for the fiscal years ended December 31, 1991 and
1992 and the balance sheet data as of December 31, 1991, 1992 and 1993 are
derived from the unaudited financial statements of Modem Media that are not
included herein. The unaudited pro forma data presented is included elsewhere
in this Prospectus. The unaudited six month selected financial data reflect
all adjustments (consisting only of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair presentation of the results
of the interim periods. The operating results for the six months ended June
30, 1995 and 1996 are not necessarily indicative of the results to be expected
for any other interim period or any other future fiscal year. The historical
results are not necessarily indicative of the results of operations to be
expected in the future.

<TABLE>
<CAPTION>
SIX MONTHS PRO FORMA
PRO FORMA ENDED SIX MONTHS
YEAR ENDED DECEMBER 31, YEAR ENDED JUNE 30, ENDED JUNE 30,
----------------------------------- DECEMBER 31, ------------- ----------------
1991 1992 1993 1994 1995 1995 1995 1996 1995 1996
------ ------ ------ ------ ------- ------------ ------ ------ ------- -------
(UNAUDITED) (UNAUDITED)
------------- -------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $1,190 $1,306 $1,221 $4,335 $11,719 $24,541 $4,449 $7,908 $10,034 $16,033
Total operating
expenses............... 887 1,146 740 3,098 7,766 24,693 2,542 6,620 9,514 18,129
Operating income (loss). 303 160 481 1,237 3,953 (152) 1,907 1,288 520 (2,096)
Net income (loss) (1)... 303 155 484 1,241 3,960 (806) 1,911 1,277 (61) (1,574)
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
---------------------------------- JUNE 30, JUNE 30,
1991 1992 1993 1994 1995 1996 1996
------ ------ ------ ------ ------ -------- ---------
(UNAUDITED) (UNAUDITED)
-------------------- ------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash..................... $ 22 $ -- $ 1 $ 2 $ 184 $ 518 $ 765
Working capital.......... 349 249 402 1,034 2,698 2,746 4,858
Total assets............. 473 350 565 1,854 7,463 8,423 42,860
Capital lease
obligations, less
current portion......... -- -- -- -- 186 161 161
Partners'
capital/Stockholders'
equity.................. 372 295 472 1,327 3,762 4,223 32,435
</TABLE>
- --------
(1) No provision for income taxes was made by Modem Media for the fiscal years
ended December 31, 1991, 1992, 1993, 1994 and 1995 and for the six month
periods ended June 30, 1995 and 1996 because Modem Media was a partnership
for all such periods.

17
<PAGE>

PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma financial information is derived from the
combination of the financial statements of Modem Media and the True North
Units and, for the fiscal year ended December 31, 1995 and the six month
period ended June 30, 1995, R/GA Interactive. The pro forma financial
information is intended to present the results of operations and financial
position of the Company as if the acquisition of R/GA Interactive by the True
North Units, the Conversion and the Combination had occurred on January 1,
1995.

The pro forma financial information may not be indicative of the results
that actually would have occurred if the Conversion and the Combination had
occurred at the beginning of the period indicated or that may be obtained in
the future. The pro forma adjustments described in the accompanying notes to
these pro forma statements of operations and balance sheets are based on
available information and upon certain assumptions that management believes
are reasonable. The pro forma statements of operations and balance sheets and
notes thereto should be read in conjunction with the financial statements and
notes thereto of Modem Media, the True North Units and R/GA Interactive, Inc.,
all of which are included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-------------------------------------------------------
R/GA
INTERACTIVE
MODEM TRUE NORTH PRE- PRO
MEDIA UNITS (1) ACQUISITION (2) ADJUSTMENTS FORMA
------- ---------- --------------- ----------- -------
(UNAUDITED)
--------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $11,719 $11,439 $1,383 $ -- $24,541
Salaries and benefits
expenses............... 5,542 7,446 681 -- 13,669
Office and general
expenses............... 2,224 5,728 1,366 -- 9,318
Goodwill and other
intangibles
amortization........... -- 164 -- 1,542(3) 1,706
------- ------- ------ ------- -------
Total operating
expenses............. 7,766 13,338 2,047 1,542 24,693
------- ------- ------ ------- -------
Operating income (loss). 3,953 (1,899) (664) (1,542) (152)
Other, net.............. 7 4 -- -- 11
------- ------- ------ ------- -------
Income (loss) before
provision (benefit) for
income taxes........... 3,960 (1,895) (664) (1,542) (141)
Provision (benefit) for
income taxes........... -- (873) -- 1,538(4) 665
------- ------- ------ ------- -------
Net income (loss)....... $ 3,960 $(1,022) $ (664) $(3,080) $ (806)
======= ======= ====== ======= =======
</TABLE>
- --------
(1) Includes Northern Lights Interactive, Cf2GS and the technology development
operations of True North for the full year 1995 and R/GA Interactive for
the period July 1, 1995 to December 31, 1995.
(2) True North acquired R/GA Interactive on July 1, 1995. The transaction was
accounted for using the purchase method of accounting. As a result, the
True North Units' financial statements for 1995 include R/GA Interactive
from the date of purchase and do not include the results of R/GA
Interactive for the period January 1, 1995 to June 30, 1995.
(3) Represents six months amortization of R/GA Interactive goodwill and the
estimated amortization of goodwill as a result of the Combination.
(4) Reflects income taxes which would have been paid by Modem Media if Modem
Media had operated as a corporation rather than as a partnership. Also
reflects the tax benefit associated with R/GA Interactive pre-acquisition.
Also reflects adjustment to the True North Units' tax benefit to reflect
the effective tax rate.

18
<PAGE>

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
---------------------------------------
MODEM TRUE NORTH PRO
MEDIA UNITS ADJUSTMENTS FORMA
------ ---------- ----------- -------
(UNAUDITED, IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................... $7,908 $ 8,125 $ -- $16,033
Salaries and benefits expenses.... 4,921 6,129 -- 11,050
Office and general expenses....... 1,699 4,527 -- 6,226
Goodwill and other intangibles
amortization..................... -- 164 689(1) 853
------ ------- ------- -------
Total operating expenses........ 6,620 10,820 689 18,129
------ ------- ------- -------
Operating income (loss)........... 1,288 (2,695) (689) (2,096)
Other, net........................ (11) -- -- (11)
------ ------- ------- -------
Income (loss) before provision
(benefit) for income taxes....... 1,277 (2,695) (689) (2,107)
Provision (benefit) for income
taxes............................ -- (1,206) 673(2) (533)
------ ------- ------- -------
Net income (loss)................. $1,277 $(1,489) $(1,362) $(1,574)
====== ======= ======= =======
</TABLE>
- --------
(1) Represents the estimated amortization of goodwill as a result of the
Combination.
(2) Reflects income taxes which would have been paid by Modem Media if Modem
Media had operated as a corporation rather than as a partnership. Also
reflects adjustment to the True North Units' tax benefit to reflect the
effective tax rate.

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995
--------------------------------------------------
R/GA
INTERACTIVE
PRE-
MODEM TRUE NORTH ACQUISITION PRO
MEDIA UNITS (1) (2) ADJUSTMENTS FORMA
------ ---------- ----------- ----------- -------
(UNAUDITED) (UNAUDITED)
----------------- --------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................... $4,449 $4,202 $1,383 $ -- $10,034
Salaries and benefits
expenses.................. 1,942 2,367 681 -- 4,990
Office and general
expenses.................. 600 1,705 1,366 -- 3,671
Goodwill and other
intangibles amortization.. -- 9 -- 844(3) 853
------ ------ ------ ------- -------
Total operating expenses. 2,542 4,081 2,047 844 9,514
------ ------ ------ ------- -------
Operating income (loss).... 1,907 121 (664) (844) 520
Other, net................. 4 -- -- -- 4
------ ------ ------ ------- -------
Income (loss) before
provision (benefit) for
income taxes.............. 1,911 121 (664) (844) 524
Provision (benefit) for
income taxes.............. -- (9) -- 594(4) 585
------ ------ ------ ------- -------
Net income (loss).......... $1,911 $ 130 $ (664) $(1,438) $ (61)
====== ====== ====== ======= =======
</TABLE>
- --------
(1) Includes Northern Lights Interactive, Cf2GS and the technology development
operations of True North.
(2) True North acquired R/GA Interactive on July 1, 1995. The transaction was
accounted for using the purchase method of accounting. As a result, the
True North Units' financial statements for 1995 include R/GA Interactive
from the date of purchase and do not include the results of R/GA
Interactive for the period January 1, 1995 to June 30, 1995.
(3) Represents six months amortization of R/GA Interactive goodwill and the
estimated amortization of goodwill as a result of the Combination.
(4) Reflects income taxes which would have been paid by Modem Media if Modem
Media had operated as a corporation rather than as a partnership. Also
reflects the tax benefit associated with R/GA Interactive pre-acquisition.
Also reflects adjustment to the True North Units' tax benefit to reflect
the effective tax rate.

19
<PAGE>

<TABLE>
<CAPTION>
JUNE 30, 1996
----------------------------------------------------
MODEM TRUE NORTH PRO
MEDIA UNITS ADJUSTMENTS FORMA
------- ---------- ----------- -------
(UNAUDITED, IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash.................... $ 518 $ 247 $ -- $ 765
Accounts receivable..... 4,941 5,419 -- 10,360
Accrued revenues........ 857 462 -- 1,319
Unbilled charges........ 405 397 -- 802
Income taxes receivable. -- 1,715 (1,715)(1) --
Prepaid expenses and
other current assets... 64 108 270 (2) 442
------- ------- ------- -------
Total current assets.. 6,785 8,348 (1,445) 13,688
Property and equipment
--cost............... 2,144 5,151 (601)(3) 6,694
--accumulated
depreciation........ (573) (601) 601 (3) (573)
------- ------- ------- -------
1,571 4,550 -- 6,121
Goodwill and other
intangibles............ -- 3,585 19,397 (3) 22,982
Other assets............ 67 2 -- 69
------- ------- ------- -------
Total assets.......... $ 8,423 $16,485 $17,952 $42,860
======= ======= ======= =======
Accounts payable........ $ 2,336 $ 1,430 -- $ 3,766
Other current
liabilities............ 906 409 -- 1,315
Advanced billings....... 675 2,952 -- 3,627
Current portion of
capital lease
obligations............ 122 -- -- 122
------- ------- ------- -------
Total current
liabilities.......... 4,039 4,791 -- 8,830
Deferred tax liability.. -- 376 1,058 (2) 1,434
Intercompany loans
payable................ -- 13,534 (13,534)(1) --
Capital lease
obligations, less
current portion........ 161 -- -- 161
Partners'
capital/Stockholders'
equity................. 4,223 (2,216) 30,428 (1)(2)(3) 32,435
------- ------- ------- -------
Total liabilities and
stockholders' equity. $ 8,423 $16,485 $17,952 $42,860
======= ======= ======= =======
</TABLE>
- --------
(1) Represents the contribution of intercompany debt and income taxes
receivable by True North to the True North Units.
(2) To provide for income taxes related to the Conversion.
(3) Represents revaluation of assets and liabilities of the True North Units
to fair market value.

20
<PAGE>

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

OVERVIEW

The Company's revenues are derived principally from fees for interactive
marketing and digital design and production services rendered, and to a lesser
extent, fees for traditional advertising, direct marketing and database
management services rendered and commissions on media and production costs.
Interactive marketing operations include: customized product positioning;
creation, production, updating and maintenance of Web sites and other
communications; analysis of customer requests, purchases and behaviors;
delivery of uniform and updated information tools for sales forces; and
technical consulting. The Company's clients generally hire the Company on an
assignment basis rather than on a retainer basis. Except for services
performed by R/GA Interactive, revenues are recognized from clients on either
a time-plus-cost of materials basis or on a fixed-fee basis with pass through
of third-party production and media costs and are stated net of such third-
party costs. R/GA Interactive's revenues include certain third-party
production and media costs not separately recoverable from clients. Revenues
are recognized as services are performed (or, in the case of fixed fee
projects, on a percentage of completion method based on labor costs incurred),
and any payments received in advance of services performed are recorded as
advance billings. Provisions for losses on uncompleted contracts are
recognized in the period in which such losses are determined. Pro forma
revenues derived from digital interactive marketing activities accounted for
72.5% of total pro forma revenues in the first six months of 1996.

Salaries and benefits represent a majority of the Company's operating
expenses. These expenses include compensation, bonus payments, payroll taxes,
employment insurance costs, temporary and freelance labor, and, with respect
to Modem Media, compensation payments to partners. Office and general expenses
are comprised of depreciation, office rent, office equipment and rental,
utilities, professional and consulting fees, R/GA Interactive's third-party
production expenses, travel and entertainment, office supplies and other
related expenses.

In connection with the Combination, the Company and True North have entered
into certain intercompany agreements providing for various interim and ongoing
services and relationships. The costs for such services are primarily
allocated to the Company based on the Company's pro rata share of the costs of
those services, or in some instances, the additional costs to True North for
providing such services to the Company. True North will continue to provide
certain of these services for a period of twelve months following the
Combination, and may terminate such services on six months' prior written
notice. In addition, income taxes were calculated as if the Company and True
North filed separate tax returns and True North's tax strategies may not
necessarily reflect the tax strategies of the Company. See "Relationship With
True North and Certain Transactions."

The historical financial statements of Modem Media, as predecessor of the
Company, are presented in the Summary and Selected Financial Data included in
this Prospectus. Because the Conversion and the Combination were effective
following the periods covered by the historical financial statements included
herein, such statements do not reflect the current composition of the Company.
Management believes that the pro forma

21
<PAGE>

statement of operations data presented in the pro forma financial information
and discussed below, which gives effect to the Conversion and the Combination
as if both had occurred at the beginning of the periods presented, is useful
in evaluating the effect of these transactions on the Company. Such pro forma
information may not, however, be indicative of the results of operations of
the Company that actually would have occurred had the Conversion and the
Combination occurred at the beginning of such periods, or of the results of
operations that may be obtained by the combined businesses in the future.

The Company will incur a one-time, non-cash charge of approximately $
million in the second half of 1996 relating to the grant to certain employees
of Modem Media of options to purchase limited partnership interests in Modem
Media which were converted into options to purchase Class A Common Stock of
the Company and the payment of certain amounts to the Selling Stockholders,
each in connection with the Conversion. See "Risk Factors--Limited Operating
History; Variability of Operating Results."

HISTORICAL AND PRO FORMA RESULTS OF OPERATIONS

The following table sets forth certain items from Modem Media's historical
and the Company's pro forma statements of operations included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------ ----------------------------------
1995 HISTORICAL PRO FORMA
-------------------- -------------- ------------------
1993 1994 HISTORICAL PRO FORMA 1995 1996 1995 1996
------ ------ ---------- --------- ------ ------ ------- --------
(UNAUDITED)
---------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $1,221 $4,335 $11,719 $24,541 $4,449 $7,908 $10,034 $ 16,033
Salaries and benefits
expenses............... 406 2,239 5,542 13,669 1,942 4,921 4,990 11,050
Office and general
expenses............... 334 859 2,224 9,318 600 1,699 3,671 6,226
Goodwill and other
intangibles
amortization........... -- -- -- 1,706 -- -- 853 853
------ ------ ------- ------- ------ ------ ------- --------
Operating income (loss). 481 1,237 3,953 (152) 1,907 1,288 520 (2,096)
Other, net.............. 3 4 7 11 4 (11) 4 (11)
Provision (benefit) for
income taxes........... -- -- -- 665 -- -- 585 (533)
------ ------ ------- ------- ------ ------ ------- --------
Net income (loss)....... $ 484 $1,241 $ 3,960 $ (806) $1,911 $1,277 $ (61) $ (1,574)
====== ====== ======= ======= ====== ====== ======= ========

The following table sets forth certain items from Modem Media's historical
and the Company's pro forma statements of operations as a percentage of total
revenues on an historical and a pro forma basis for the periods indicated:

<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------------ ----------------------------------
1995 HISTORICAL PRO FORMA
-------------------- -------------- ------------------
1993 1994 HISTORICAL PRO FORMA 1995 1996 1995 1996
------ ------ ---------- --------- ------ ------ ------- --------
(UNAUDITED)
---------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Salaries and benefits
expenses............... 33.2 51.7 47.3 55.7 43.7 62.2 49.7 68.9
Office and general
expenses............... 27.4 19.8 19.0 38.0 13.5 21.5 36.6 38.8
Goodwill and other
intangibles
amortization........... -- -- -- 6.9 -- -- 8.5 5.3
------ ------ ------- ------- ------ ------ ------- --------
Operating income (loss). 39.4 28.5 33.7 (0.6) 42.8 16.3 5.2 (13.0)
Other, net.............. 0.2 0.1 0.1 -- 0.1 (0.1) -- (0.1)
Provision (benefit) for
income taxes........... -- -- -- 2.7 -- -- 5.8 (3.3)
------ ------ ------- ------- ------ ------ ------- --------
Net income (loss)....... 39.6% 28.6% 33.8% (3.3)% 42.9% 16.2% (0.6)% (9.8)%
====== ====== ======= ======= ====== ====== ======= ========
</TABLE>

PRO FORMA SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO PRO FORMA SIX MONTHS
ENDED JUNE 30, 1996

Revenues. Pro forma revenues increased $6.0 million, or 59.8%, from $10.0
million in the six months ended June 30, 1995 to $16.0 million in the same
period in 1996. Revenues derived from Modem Media represented 44.3% and 49.3%
of pro forma revenues for such periods in 1995 and 1996, respectively, with
the remainder from the True North Units (assuming the acquisition of R/GA
Interactive as of January 1, 1995). Pro forma

22
<PAGE>

revenues increased primarily as a result of increased services provided to
existing clients, principally AT&T, the completion of certain projects for
existing clients and, to a lesser extent, services provided to new clients of
the Company, partially offset by reduced revenues received from certain
existing clients. Pro forma revenues from services performed for AT&T
represented 32.5% and 43.0% of the Company's pro forma revenues for the six
months ended June 30, 1995 and 1996, respectively.

Salaries and Benefits Expenses. Pro forma salaries and benefits expenses
increased $6.1 million, or 121.4%, from $5.0 million in the six months ended
June 30, 1995 to $11.1 million in the same period in 1996. Salaries and
benefits expenses represented 49.7% and 68.9% of pro forma revenues in the six
months ended June 30, 1995 and 1996, respectively. During the six months ended
June 30, 1995, the Company's rate of revenue growth exceeded the rate of
growth in salaries and benefits expenses, in particular at Modem Media. During
the first six months of 1996, Modem Media and the True North Units increased
personnel to manage growth and actively pursue new client business. Also,
during the first half of 1996, the Company expanded R/GA Interactive's
operations, which contributed to increased salaries and benefits expenses. In
addition, certain of the Company's digital interactive marketing and
technology development operations have incurred significant salaries and
benefits expenses, but have not generated significant revenues. The Company
intends to add staff to meet its future growth, if any, as well as to enhance
its financial systems and to integrate the combined businesses. As a result,
the Company expects that salaries and benefits expenses will continue to
represent a significant percentage of the Company's revenues.

Office and General Expenses. Pro forma office and general expenses increased
$2.5 million, or 69.6%, from $3.7 million in the six months ended June 30,
1995 to $6.2 million in the same period in 1996. Office and general expenses
represented 36.6% and 38.8% of pro forma revenues in the six months ended June
30, 1995 and 1996, respectively. The increase in pro forma office and general
expenses was due primarily to increased office rent, principally as a result
of Modem Media relocating to larger offices in the second half of 1995;
increased depreciation expense, resulting principally from capital
expenditures for equipment for new employees and the Company's intranet
products; and increased utility costs, resulting from the increased number of
employees and the cost of upgrading telecommunications equipment. In addition,
costs associated with the operations of Northern Lights Interactive and
increased fees and services from third-party providers used by R/GA
Interactive, as well as the opening of R/GA Interactive's Los Angeles office,
contributed to the increase in pro forma office and general expenses. The
Company anticipates that office and general expenses will continue to
represent a significant percentage of the Company's revenues.

Goodwill and Other Intangibles Amortization. Goodwill and other intangibles
amortization is principally related to the Combination and the acquisition of
R/GA Interactive.

Operating Income (Loss). As a result of the foregoing, the pro forma
operating income for the six months ended June 30, 1995 was $520,000, compared
to a pro forma net operating loss of $2.1 million for the six months ended
June 30, 1996. Approximately $850,000 of the Company's pro forma operating
loss for the six months ended June 30, 1996 is attributable to the Los Angeles
office of R/GA Interactive, which was closed subsequent to the second quarter
of 1996.

Income Taxes. No provision for income taxes was made by Modem Media in the
six month periods ended June 30, 1995 and 1996 as a result of its partnership
structure. The Company's effective tax rate (on a pro forma basis) was 111.7%
for the six months ended June 30, 1995. For the six months ended June 30,
1996, the Company recorded a tax benefit at an effective rate of 25.3%. These
rates differ from the federal statutory rate primarily due to the effect of
non-deductible goodwill amortization and the effect of state income taxes.

Net Income (Loss). Pro forma net loss was $60,000 in the six months ended
June 30, 1995 as compared to a net loss of $1.6 million in the same period of
1996.

23
<PAGE>

PRO FORMA QUARTERLY RESULTS OF OPERATIONS

The following tables present certain unaudited statements of operations data
on a pro forma basis for the six fiscal quarters ended June 30, 1996 as well as
such data expressed as a percentage of the Company's total pro forma revenues
for the periods indicated. These data are based on unaudited pro forma
financial statements of the Company and have been prepared by the Company on a
basis consistent with the financial statements included elsewhere in this
Prospectus, after giving effect to the Conversion and the Combination. These
data include all adjustments that the Company considers necessary for a fair
presentation thereof.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------
MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1995 1995 1996 1996
-------- -------- -------- -------- -------- --------
(UNAUDITED, IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Revenues................ $4,864 $5,170 $5,938 $8,569 $7,820 $8,213
Salaries and benefits
expenses............... 2,204 2,786 3,318 5,361 5,581 5,469
Office and general
expenses............... 1,839 1,832 2,468 3,179 3,202 3,024
Goodwill and other
intangibles
amortization........... 427 426 426 427 426 427
------ ------ ------ ------ ------ ------
Operating income (loss). 394 126 (274) (398) (1,389) (707)
Other, net.............. -- 4 (1) 8 (2) (9)
Provision (benefit) for
income taxes........... 349 236 64 16 (410) (123)
------ ------ ------ ------ ------ ------
Net income (loss)....... $ 45 $ (106) $ (339) $ (406) $ (981) $ (593)
====== ====== ====== ====== ====== ======
AS A PERCENTAGE OF
REVENUES:
Revenues................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Salaries and benefits
expenses............... 45.3 53.9 55.9 62.5 71.4 66.6
Office and general
expenses............... 37.8 35.4 41.5 37.1 40.9 36.8
Goodwill and other
intangibles
amortization........... 8.8 8.3 7.2 5.0 5.5 5.2
------ ------ ------ ------ ------ ------
Operating income (loss). 8.1 2.4 (4.6) (4.6) (17.8) (8.6)
Other, net.............. -- 0.1 -- 0.1 -- (0.1)
Provision (benefit) for
income taxes........... 7.2 4.6 1.1 0.2 (5.2) (1.5)
------ ------ ------ ------ ------ ------
Net income (loss)....... 0.9% (2.1)% (5.7)% (4.7)% (12.6)% (7.2)%
====== ====== ====== ====== ====== ======
</TABLE>

Revenues. Pro forma revenues increased from the third to fourth quarter of
1995 primarily as a result of increased business with the Company's existing
clients (principally the implementation of new programs for the Company's major
clients) as well as revenues derived from Northern Lights Interactive, which
was established by True North in the fourth quarter of 1995, and R/GA
Interactive. To a lesser extent, business from new clients contributed to the
increase in pro forma revenues in the fourth quarter. The decrease in pro forma
revenues from the fourth quarter of 1995 to the first and second quarters of
1996 primarily reflects seasonal trends of the Company's industry. The Company
experiences some variation in operating results throughout the year which
result in part from timing of product introductions, business cycles of the
Company's clients and marketing communications spending patterns in general.
The Company's revenues have historically been higher during the second half of
the Company's fiscal year.

Salaries and Benefits Expenses. Pro forma salaries and benefits expenses
generally increased over the six quarters ended June 30, 1996 and exceeded the
rate of the growth of pro forma revenues, increasing from a low of 45.3% of pro
forma revenue in the first quarter of 1995 to a high of 71.4% of pro forma
revenues in the first quarter of 1996. Salaries and benefits expenses were
66.6% of pro forma revenues in the second quarter of 1996. During late 1995 and
the first six months of 1996, Modem Media, as well as the True North Units,
increased personnel to manage growth and actively pursue new client business.
In addition, certain of the Company's digital interactive marketing and
technology development operations to date have incurred significant salaries
and benefits expense, but have not recorded significant revenues. The Company
anticipates that it will continue

24
<PAGE>

to incur substantial costs to hire and train personnel for these operations
for the foreseeable future. The expansion of the R/GA Interactive operations
to open a Los Angeles office in the fourth quarter of 1995, which subsequently
closed after the end of the second quarter of 1996, also contributed to the
increase in pro forma salaries and benefits expenses.

Office and General Expenses. Pro forma office and general expenses have
increased over the six quarters ended June 30, 1996 consistent with the growth
in revenues for these periods and, as a result, pro forma office and general
expenses as a percentage of pro forma revenues have remained relatively
stable, ranging from a low of 35.4% in the second quarter of 1995 to a high of
41.5% in the third quarter of 1995 and were 36.8% in the second quarter of
1996. The expansion of the R/GA Interactive operations, and the development of
certain of the Company's digital interactive marketing (Northern Lights
Interactive) and technology development operations which have incurred
increased costs during the past six quarters without generating a significant
increase in revenues, has resulted in pro forma office and general expenses
representing a relatively high percentage of the Company's pro forma revenues.

Operating Income (Loss). Pro forma operating income for the five quarters
ended March 31, 1996 steadily declined. The operations of R/GA Interactive,
Northern Lights Interactive and the Company's technology group have resulted
in operating losses due to the expansion of R/GA Interactive's Los Angeles
office in the fourth quarter of 1995 and its closure subsequent to the second
quarter of 1996, as well as the substantial start-up costs associated with the
development of the operations of Northern Lights Interactive and the Company's
technology development group. The operating loss declined in the second
quarter of 1996 as compared to the first quarter of 1996. The effect of
$390,000 of additional revenues and a $180,000 reduction in operating expenses
(principally office and general expenses at Modem Media), resulted in the
operating loss being reduced from $1.4 million in the first quarter of 1996 to
$700,000 in the second quarter of 1996. In addition, Modem Media and Cf2GS
continued to invest in additional personnel, training costs and capital
expenditures, such as new computers for the new employees in order to support
the growth of their operations.

MODEM MEDIA HISTORICAL SIX MONTHS ENDED JUNE 30, 1995 COMPARED TO SIX MONTHS
ENDED JUNE 30, 1996

Revenues. Revenues increased $3.5 million, or 77.8%, from $4.4 million in
the six months ended June 30, 1995 to $7.9 million in the same period of 1996.
The growth in revenues was attributed principally to increased services
provided to Modem Media's largest client, AT&T, which accounted for 71.1% and
84.4% of Modem Media's revenues for the six month periods ended June 30, 1995
and 1996, respectively. In addition, the Company generated $650,000 in
revenues from new clients in the six months ended June 30, 1996, which was
offset by a $640,000 reduction in revenues from three clients.

Salaries and Benefits Expenses. Salaries and benefits expenses increased
$3.0 million, or 153.4%, from $1.9 million in the six months ended June 30,
1995 to $4.9 million in the same period in 1996. Salaries and benefits
expenses represented 43.7% and 62.2% of revenues in the six month periods
ended June 30, 1995 and 1996, respectively. Modem Media's rate of revenue
growth in 1995 substantially exceeded the rate of growth in the number of
personnel to service the additional business. During the first six months of
1996, Modem Media increased personnel to manage growth and actively pursue new
client business. As a result of such increase in personnel, salaries and
benefits expenses as a percentage of revenues increased in the six month
period ended June 30, 1996 compared to the same period in 1995.

Office and General Expenses. Office and general expenses increased $1.1
million, or 183.2%, from $600,000 in the six months ended June 30, 1995 to
$1.7 million in the same period in 1996. Office and general expenses
represented 13.5% and 21.5% of revenues in the six month periods ended 1995
and 1996, respectively. Office and general expenses represented a higher
percentage of Modem Media's revenues in 1996 primarily due to higher expenses,
including: office rent resulting from Modem Media's relocation; depreciation
expense, resulting from increased capital expenditures for technology required
to support the growth in Modem Media's business, including the increase in
employees; and increased utility costs and costs necessary to upgrade Modem
Media's telecommunications capabilities.

25
<PAGE>

Operating Income. As a result of all of the foregoing, operating income was
$1.9 million in the first six months of 1995 compared to $1.3 million in the
same period of 1996.

Income Taxes. No provision for income taxes was made in either the first six
months of 1996 or the same period of 1995 because of Modem Media's partnership
structure.

MODEM MEDIA HISTORICAL YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

Revenues. Revenues were $1.2 million, $4.3 million and $11.7 million for the
years ended December 31, 1993, 1994 and 1995, respectively. The increase in
revenues between 1993 and 1995 resulted principally from the increased
services provided to existing clients, and to a lesser extent new clients.
Revenues derived from AT&T grew from 29.0% of Modem Media's revenues in 1993
to 78.4% in 1995. The increase in revenues derived from AT&T was primarily
attributable to the implementation of several additional programs for AT&T. In
addition, increased revenues derived from two other significant clients were
partially offset by reductions and cancellations of services for other
clients.

Salaries and Benefits Expenses. Salaries and benefits expenses, including
compensation payments to partners, increased from $410,000 in 1993 to $2.2
million in 1994 and $5.5 million in 1995. As a percentage of revenues,
salaries and benefits expenses represented 33.2%, 51.7% and 47.3% of revenues
in 1993, 1994 and 1995, respectively. The increase in salaries and benefits
expenses was primarily due to the significant increase in personnel and in
temporary and freelance labor to accommodate Modem Media's growth. In
addition, salaries and benefits expenses as a percentage of revenues increased
from 1993 to 1994 primarily as a result of Modem Media's growth and decreased
slightly from 1994 to 1995 due in part to a higher rate of growth in revenues
as compared to the rate of increase in personnel during 1995.

Office and General Expenses. Office and general expenses have increased from
$330,000 in 1993 to $860,000 in 1994 and $2.2 million in 1995. As a percentage
of revenues, office and general expenses decreased from 1993 to 1995 and
represented 27.4%, 19.8% and 19.0% of revenues in 1993, 1994 and 1995,
respectively. The spending increases resulted primarily from Modem Media's
efforts to build an infrastructure to support its growth. Such expenditures
included higher office rent, supplies and other office costs related to an
increased number of personnel; increased professional fees and placement fees;
higher depreciation expense resulting from new computers and equipment
purchased for new employees; and higher communication systems costs.

Operating Income. As a result of all of the foregoing, operating income
increased from $480,000 to $1.2 million in 1993 and 1994, respectively, and to
$4.0 million in 1995.

Income Taxes. No provision for income taxes was made in any of the fiscal
years ended December 31, 1993, 1994 or 1995 because of Modem Media's
partnership structure.

FACTORS AFFECTING OPERATING RESULTS OF THE COMPANY

The Company has incurred, and anticipates that it will continue to incur,
substantial costs to expand and integrate its business. Such costs have had
and could continue to have, a material adverse effect on the operating results
of the Company. There can be no assurance that the Company will achieve or
sustain profitability in the future. The Company's operating results have
fluctuated in the past, and may continue to fluctuate in the future, as a
result of a variety of factors. As a result, the Company believes that period-
to-period comparisons cannot be relied upon as indicators of future
performance. In some future quarters the Company's operating results may fall
below the expectations of securities analysts and investors. In such event,
the trading price of the Class A Common Stock could likely be materially and
adversely affected.

A portion of the Company's revenues are derived from fixed-fee based
assignments. The Company assumes greater financial risk on fixed-fee based
assignments than on time-and-materials assignments. Because the Company's
clients generally hire the Company on an assignment basis rather than on a
retainer basis, a client

26
<PAGE>

from whom the Company generates substantial revenue in one period may not be a
substantial source of revenue in a subsequent period. In addition, the
Company's clients generally have the right to terminate their relationships
with the Company without penalty and on relatively short or no notice. As a
result, the Company may gain or lose several significant clients each year, and
there can be no assurance that new clients will be obtained or, if obtained,
will offset any client losses. To the extent that the Company's major clients
do not remain a significant source of revenues and the Company is unable to
replace these clients, the Company's business, financial condition or results
of operations could be materially adversely effected. Once an assignment is
completed there can be no assurance that a client will engage the Company for
further services. The termination of the Company's business relationship with
any of its significant clients, including AT&T, or a material reduction in the
use of the Company's services by a significant client could have a material
adverse effect on the Company's business, financial condition or results of
operations.

LIQUIDITY AND CAPITAL RESOURCES

Modem Media has financed its operations primarily from funds generated from
operations.

Net cash provided by operating activities was $660,000 and $2.5 million for
the years ended December 31, 1994 and 1995, respectively, and $1.9 million for
the six months ended June 30, 1996. Cash provided by operating activities
included net earnings plus depreciation and amortization totaling $1.3 million,
$4.2 million and $1.5 million for the years ended December 31, 1994 and 1995
and the six months ended June 30, 1996, respectively. The increase in net
earnings plus depreciation and amortization between the years ended 1994 and
1995 resulted from higher operating income between 1994 and 1995 and increased
depreciation and amortization expense. During 1994 and 1995, Modem Media
experienced increases in net working capital (excluding an increase in the cash
balance) of $640,000 and $1.7 million, respectively. Accounts receivable
increased by $450,000 and $4.0 million for the years ended December 31, 1994
and 1995, respectively, offset in part by increases in accounts payable and
accrued expenses of approximately $370,000 and $2.5 million in 1994 and 1995,
respectively. In 1994, Modem Media also experienced an increase in unbilled
charges of $520,000. During the first six months of 1996, Modem Media
experienced a decline in net working capital (excluding an increase in the cash
balance) of approximately $380,000 resulting from an increase in current
liabilities, primarily advance billings, which exceeded the increase in current
assets.

Net cash used in investing activities was $270,000, $890,000 and $490,000 for
the years ended December 31, 1994 and 1995 and the six months ended June 30,
1996, respectively. Investing activities reflect capital expenditures, net of
spending attributable to capital leases, primarily to purchase computer and
office equipment in all periods.

Net cash used in financing activities was $390,000, $1.4 million and $1.1
million for the years ended December 31, 1994 and 1995 and in the six months
ended June 30, 1996, respectively, the primary component of which was cash
distributions made to the partners of Modem Media. In addition, in 1995 and in
the six months ended June 30, 1996, Modem Media made principal payments on
capital lease obligations entered into during 1995 and 1996 totaling $30,000
and $120,000, respectively.

As a result of the foregoing, Modem Media's cash balance increased by
$180,000 during 1995 and at June 30, 1996 was $520,000.

Modem Media recently acquired the True North Units. The True North Units
previously obtained financing from True North. As part of the Conversion and
the Combination, all amounts due from the True North Units to True North were
contributed by True North and have become part of the True North Units'
additional paid-in capital. In addition, True North has extended a credit
facility to the Company allowing for revolving borrowings, letter of credit
extensions and guarantee obligations in the amount of up to $5.0 million to be
outstanding at any given time. The credit facility with True North expires one
year from the date of completion of the Offering, or sooner upon the occurrence
of certain events. The Company does not anticipate utilizing the True North
credit facility.

27
<PAGE>

The Company believes that the net proceeds from the Offering (estimated to be
$ million), together with funds available from operations, if any, will be
sufficient to meet the capital needs of the Company for at least the next
twelve months. The long-term capital needs of the Company will depend on
numerous factors, including the rate at which the Company is able to obtain new
business from clients, expand its personnel and infrastructure to accommodate
growth and invest in new technologies. The Company has various ongoing needs
for capital, including working capital for operations, project development
costs and capital expenditures to maintain and expand its operations. A portion
of the net proceeds of the Offering may also be used to acquire or invest in
complementary businesses or products, to obtain the right to use complementary
technologies or to expand operations internationally. The Company has no
present plans, agreements or commitments and is not currently engaged in any
negotiations with respect to any such transactions.

28
<PAGE>

BUSINESS

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

OVERVIEW

The Company is a leader in digital interactive marketing, having developed
over 500 marketing programs since 1987. The Company combines traditional
marketing skills with capabilities in digital media and communications
technologies to enable clients to more effectively reach and interact with
customers and other key constituents, including employees, stockholders,
suppliers and other business partners. The Company delivers a complete range of
digital interactive marketing products and services through a combination of
its substantial expertise in strategic marketing, technology development and
digital design and production. These products and services include: customized
product positioning; creation, production, updating and maintenance of Web
sites and other interactive communications vehicles; analysis of customer
requests, purchases and behaviors; delivery of uniform and updated information
tools for sales forces; and technical consulting. The Company believes that by
offering comprehensive digital interactive marketing solutions, it can add
substantial value to organizations impacted by the challenges and opportunities
created by rapidly changing digital media and interactive communications
technologies. Pro forma revenues derived from digital interactive marketing
activities accounted for 72.5% of the Company's total pro forma revenues in the
first six months of 1996.

The Company's products and services link the two-way distribution
capabilities of digital communications networks (principally the Internet, the
Web, proprietary on-line services and corporate intranets) with fundamental
marketing strategies and digital design and production capabilities. Digital
interactive marketing applications developed by the Company permit the
Company's clients to target narrow market segments, supply detailed product and
service information on demand, obtain instant feedback, and update advertising,
marketing and customer service programs quickly and easily. The Company
believes that interactive technologies are becoming an increasingly important
component of many organizations' marketing strategies, as these technologies
enhance the ability to communicate effectively and to establish one-to-one
relationships with current and potential customers and other key constituents.
The Company seeks to strengthen and maintain long-term relationships with
established organizations, including AT&T, Delta Air Lines, Levi Strauss & Co.,
JC Penney, Microsoft, Motorola, Royal Caribbean Cruises and S.C. Johnson, as
well as with emerging companies that are effecting change in digital media,
such as i-Village and PC Financial Network.

The Company was formed through the combination of businesses with substantial
creative, technological, and digital design and production expertise. Since
1995, True North, the seventh largest advertising company in the world based on
1995 billings, with agency brands such as Foote, Cone & Belding, has provided
digital interactive marketing services to its clients. These services are
currently embodied in Northern Lights Interactive, one of the Company's
strategic marketing organizations. In April 1994, True North acquired Cf2GS, an
advertising agency with substantial database and integrated marketing
expertise. In July 1995, True North acquired R/GA Interactive, an award-winning
digital design and production business founded by Robert M. Greenberg in 1993.
In October 1996, these businesses (Northern Lights Interactive, Cf2GS and R/GA
Interactive, along with the technology development operations of True North)
were acquired by Modem Media, a leader in digital interactive marketing which
has been providing such services since 1987. Through the Combination, the
Company brings together substantial experience in digital interactive marketing
and offers comprehensive solutions to its clients. In addition, the Company
believes that its ongoing relationship with True North will provide it with
additional opportunities to offer digital interactive marketing products and
services to True North's clients.

INDUSTRY BACKGROUND

The Company believes that the demand for digital interactive marketing has
evolved from the growing importance of target marketing and, more recently,
from the emergence of networked digital applications, services, communications
and distribution vehicles, including those utilizing the Internet.

29
<PAGE>

Growing Importance of Target Marketing

Companies increasingly desire the ability to segment their markets narrowly
and to measure the impact of their marketing expenditures more precisely.
However, the ability to direct traditional mass media communications, such as
broadcast television, radio and newspapers to specific target markets is
limited, and gathering relevant market feedback is difficult and expensive. As
a result, the Company believes media expenditures have increasingly flowed from
traditional mass media to new marketing channels such as cable television,
telemarketing, direct mail and specialized magazines. While these channels can
reach specific markets, they do not allow marketers to establish immediate,
interactive, one-to-one communications with consumers, where consumers can
respond to and shape the content they receive. As a result, such channels do
not enable marketers to obtain direct and immediate feedback from, and detailed
information about, consumers.

Growth of Digital Media and the Internet

The rapid development of technologies which facilitate the processing,
manipulation, transfer, storage and distribution of digitized images is having
a profound impact on the development and delivery of information. Digital
content, once created, can be easily stored, updated, manipulated and
distributed. New digital communications channels, such as the Internet, the
Web, proprietary on-line services, corporate intranets, CD-ROMs and interactive
kiosks, provide marketers with broad and rapid distribution vehicles for
detailed and measurable one-to-one communications with consumers. Many of these
digital channels are also global in reach, providing particularly attractive
outlets for multi-national marketers. With the proliferation of modem-enabled
personal computers and the development of easy-to-use Web browsers, the
Internet has emerged as a new form of mass media. IDC Research forecasts that
over 125 million people worldwide will use the Web by 2000, up from an
estimated 8.3 million in 1995.

Emergence of Digital Interactive Marketing

Companies have begun to explore the marketing potential and interactive
capabilities of new digital media. Digital interactive marketing services
include: web site development and maintenance; interactive advertising;
deployment and development of corporate intranets; and electronic commerce
services via the Internet. According to the February 1996 issue of Internet
Marketing & Technology Report published by Computer Economics Inc., the number
of commercial Web sites increased from approximately 7,300 in June 1995 to
approximately 45,000 in January 1996. IDC Research estimates that content on
the Web, as measured by number of Web pages, grew from 5.5 million pages in
January 1995 to 29.0 million in June 1996. Furthermore, Jupiter Communications
estimates 1995 total on-line advertising revenue in the United States was $80.0
million and is expected to grow to $5.0 billion in 2000. Finally, Forrester
Research estimates that approximately $518 million worth of goods will be sold
via the Internet in 1996 and that such sales are expected to grow to $6.6
billion by 2000.

The Company believes that the foregoing industry trends have resulted in
heightened demand for digitally developed and distributed communications
campaigns, marketing services and business solutions. Interactive marketing
communications programs can distribute information effectively and immediately,
provide instant and measurable feedback, and facilitate interaction between
companies, their customers and other key constituents through new Internet-
based technologies. These technologies, in turn, enable the development and
delivery of marketing programs and communications services that incorporate
graphics, video and interactive features to inform, engage and entertain the
target audience. In addition, interactive marketing provides for immediate
feedback about the tastes and preferences of individual users or targeted
groups of users. This information can be used by marketers to quickly improve
the effectiveness of advertising messages or to modify products or services.

The Company believes that new communications vehicles that deliver value-
added content and services for marketers will emerge, driven by the trend
toward one-to-one target marketing. Such value-added services include internal
corporate (both remote and on-site) communications, sales support services,
customer support

30
<PAGE>

and electronic customer care solutions, electronic commerce, and other services
that add value to the relationship between companies and their customers and
other key constituents. Developing and implementing digital interactive
communications solutions will require a combination of fundamental marketing
strategy, high-end digital design and production capabilities and technological
expertise. The Company believes that the successful application of these skills
in the emerging digital communications environment will increase the value of a
client's brands.

For many companies, interactive marketing requires the coordination of the
traditionally distinct functions of the marketing and the information systems
departments. Digital interactive marketing also requires the ability to adopt a
variety of digital communications platforms that are technologically
sophisticated, diverse, interdependent and rapidly evolving. The Company
believes that most client organizations and third-party suppliers are unable to
combine technological sophistication with the strategic expertise and creative
excellence required to capitalize fully on digital interactive marketing
opportunities.

THE COMPANY'S SOLUTION

The Company combines its core competencies in strategic marketing, technology
and digital design and production to develop comprehensive digital interactive
marketing solutions for its clients. These solutions include advertising,
custom publishing and other customized solutions delivered through multiple
digital communications media such as the Internet, the Web, proprietary on-line
services, corporate intranets and CD-ROMs. These solutions permit a client to
build global brand equity by (i) delivering its marketing message consistently
across multiple media, (ii) establishing one-to-one relationships with targeted
customers, and (iii) permitting prompt feedback which can be used to improve
the effectiveness of a Company's marketing message or modify its products or
services.

THE COMPANY'S STRATEGY

Key elements of the Company's strategy include:

Combining Expertise in Technology, Communications and Marketing to Provide
Comprehensive Interactive Solutions. The Company capitalizes on its expertise
in strategic marketing, interactive communications technology, and digital
design and production to address its clients' internal and external digital
interactive marketing needs. The Company focuses on providing clients with a
comprehensive range of services, including customized product positioning,
creation, production, updating and maintenance of Web sites and other
communications; analysis of customer requests, purchases and behaviors;
delivery of uniform and updated information tools for sales forces; and
technical consulting.

Capitalizing on and Developing Emerging Technologies. The Company intends to
build on its technological expertise to create, develop and market scalable,
cross-platform interactive marketing and communications services for its
clients. The Company's digital interactive marketing solutions and proprietary
applications capitalize on the increasing use of the Internet, corporate
intranets and future interactive technologies to provide clients with
increasingly effective marketing and communications tools. The Company intends
to retain ownership rights of these proprietary applications, which will enable
the Company to repurpose and reformat certain interactive products to service
the needs of multiple clients.

Building Upon Excellence in Creativity and Design. The Company is committed
to establishing and maintaining high-quality, creative and technical standards
for design and architecture that support digital interactive communications
services. Robert M. Greenberg, President of R/GA Interactive, has received the
Academy of Motion Pictures Arts and Sciences Scientific & Engineering Award in
1986, and together with R/GA Digital Studios, Inc., a business unit of True
North, has received numerous awards, including the Academy Award, the Chrysler
Award and the Cannes Gold Lion. In 1996, R/GA Interactive received numerous
awards for its interactive communications programs, including the International
Andy Award for interactive advertising and a Gold One Show Award for Best Web
Site. Modem Media has also earned numerous awards, including the

31
<PAGE>

1994 COMDEX Innovation Award for its JC Penney interactive television prototype
and 1996 CASIE Awards for zima.com, a Web site of Coors Brewing Company, and
AT&T's Centennial Olympic Games intermercial campaign in 1996. The Company
intends to continue to pursue, attract and retain high-quality management,
marketing, creative and technical personnel to build upon this award-winning
legacy.

Exploiting Multiple Branding Opportunities. The Company operates through five
distinct business units, or brands--Modem Media, Northern Lights Interactive
and Cf2GS (the "strategic marketing brands"), R/GA Interactive and the
Relationship Technology Group. Historically, each of the Company's brands has
operated as a standalone business unit, served its own client base and targeted
a niche within digital interactive marketing. While several of the Company's
existing clients, such as AT&T, Levi Strauss & Co. and Blue Cross/Blue Shield
of Illinois, have utilized the services of two or more of the Company's
business units, the Company believes that there is substantial opportunity for
cross-marketing and referrals among the business units. For example, if one of
the clients of R/GA Interactive needs strategic marketing assistance, R/GA
Interactive can refer the client to Modem Media, Northern Lights Interactive or
Cf2GS. By maintaining three strategic marketing brands, the Company is also
better able to manage potential conflicts and serve multiple clients within the
same industry.

Developing and Expanding Long-Term Relationships with Targeted Clients. The
Company intends to build long-term relationships with established and emerging
clients whose businesses impact or are impacted by rapidly changing digital
media and interactive communications technologies. In addition, by developing
long-term relationships, the Company believes that it can develop a deeper
understanding of a client's business needs and thereby offer more effective and
efficient marketing solutions. In addition, the Company's size and broad scope
of technical and marketing capabilities enable it to provide global marketers
with comprehensive solutions which can be adapted and integrated worldwide.

Leveraging Relationship with True North. The Company plans to continue to
leverage its relationship with True North, the seventh largest advertising
agency holding company in the world based on 1995 billings. The Company
believes that its relationship with True North and True North's familiarity
with the Company's capabilities provide the Company with additional
opportunities to work with True North's clients.

32
<PAGE>

CORE COMPETENCIES

Through its operating divisions, the Company combines its core competencies
in strategic marketing (Modem Media, Northern Lights Interactive and Cf2GS),
technology development (Relationship Technology Group) and digital design and
production (R/GA Interactive) to deliver comprehensive solutions which address
clients' digital interactive marketing and communications needs.

CORE COMPETENCIES AND BUSINESS UNITS

[A table setting forth the core competencies of the Company's three business
units, strategic marketing, technology development and digital design and
production appears here.]

Strategic Marketing: Modem Media, Northern Lights Interactive and Cf2GS

The Company's strategic marketing organizations provide a wide array of
interactive marketing services, including strategic consulting, concept
development, media research, creative development, interactive media selection
and placement, and design and production supervision. Certain clients of the
strategic marketing organizations utilize the expertise of the Company's
Relationship Technology Group or the digital design and production capabilities
of R/GA Interactive. The strategic marketing organizations integrate delivery
of the Company's strategic marketing, technology development and digital design
and production services and coordinate the traditionally distinct functions of
clients' marketing and information systems departments.

The Company provides strategic marketing services through account
representatives who utilize their creative and technological expertise to
design high-quality, creative digital interactive marketing programs and assist
in building long-term relationships with clients. The account representatives
identify and assess various traditional and interactive marketing and
communication techniques to improve clients' advertising, marketing and
customer service programs and recommend the most efficient and effective media
for the clients' businesses. In addition, account representatives specialize in
improving the performance of digital interactive programs by employing on-line
tracking and promotional services to develop database systems designed to
maximize the value of on-line transactions.

Through its three distinct strategic marketing organizations, Modem Media,
Northern Lights Interactive and Cf2GS, the Company offers services to multiple
clients across targeted industries.

33
<PAGE>

Modem Media. Modem Media, founded in 1987, has provided services to more
than 30 global marketers and since 1994 has completed more than 300 digital
interactive marketing campaigns for its clients. Modem Media focuses on
embedding Company-developed digital interactive marketing and sales systems
into all business functions of its clients' organizations in an effort to
promote long-term client relationships. For example, in 1995 Modem Media
became AT&T's Interactive Agency of Record. Modem Media's relationship with
AT&T began in 1992 when it developed an electronic ordering system and
toll-free directory for AT&T on CompuServe. Modem Media then developed a
sales information platform for AT&T's globally-dispersed sales force,
performed a competitive analysis, executed a corporate-wide education
program, and created and managed AT&T's Centennial Olympic Games Web site.
Other clients of Modem Media include Delta Air Lines, Hasbro, JC Penney and
Reader's Digest. Modem Media also conducts marketing and media research
(quantitative and qualitative), plans and buys media, and conducts
performance analysis on the digital interactive marketing and sales
programs developed for the Company's clients. The Company believes that
Modem Media is one of the leading media buying agencies for digital
interactive marketing and sales. Modem Media is located in Westport,
Connecticut.

Northern Lights Interactive. Northern Lights Interactive, founded in 1995
as a division of True North, is a digital media communications company
designed to serve the digital interactive marketing needs of True North's
clients. Through its six offices, the Company provides multinational
clients with consistent strategy, quality, production, coordination and
measurement services worldwide, while responding quickly to local or
regional interactive marketing needs. In addition, the Company intends to
pursue clients outside of True North's traditional client base. Northern
Lights Interactive's clients include Blue Cross/Blue Shield of Illinois,
Fila, Levi Strauss & Co., Merck, Motorola, Nabisco, S.C. Johnson and the
United States Postal Service.

Cf2GS. Cf2GS, founded in 1988 and acquired by the Company in 1994,
develops and delivers database-driven marketing services and programs which
enable its clients to reach customers through traditional media vehicles
such as direct mail, print and television, and, increasingly, through
digital media vehicles such as Web sites and other content-based
interactive vehicles. Cf2GS's database services provide clients with
information to better understand their customers, build customer retention,
increase transaction frequency and locate high potential prospective
customers. Cf2GS's customers include Royal Caribbean Cruises, California
State Automobile Association, L.A. Cellular and U.S. Bancorp. Cf2GS has
offices in Seattle, Portland and San Francisco.

Technology Development: The Relationship Technology Group

The Relationship Technology Group develops, builds and maintains digital
communications applications designed to enhance and improve the effectiveness
of the relationships between the Company's clients and their key constituents.
These platforms are designed to operate on multiple forms of communication
media such as the Internet, the Web, proprietary on-line services, corporate
intranets, CD-ROMs and interactive kiosks. The Relationship Technology Group
employs technology to maximize the Company's ability to provide high quality,
digital interactive marketing services to its clients in a timely and cost-
effective manner. The Relationship Technology Group also provides ongoing
maintenance, quality control and content updates for previously developed
client applications.

The Relationship Technology Group's technical expertise allows it to exploit
opportunities identified by the strategic marketing organizations to create new
technology platforms for clients. These technologies not only link marketing
departments with consumers, but also foster and enhance relationships with
other key constituents, including employees, shareholders, suppliers and other
business partners. The rights to these technologies are generally owned by the
Company. This enables the Company to repurpose and reformat certain of these
interactive products to service the needs of multiple clients. Examples of the
products developed by the Relationship Technology Group include:

Customized Intranets. Customized intranets provide a cost-effective means
to deliver essential marketing and brand management information through
personal computers to users worldwide. Customized

34
<PAGE>

intranets enhance internal communications by linking dispersed offices to a
global network allowing users to access, edit and share critical data,
including current sales and marketing materials and digital art, using
commercial software tools such as eMotion's Creative Partner and Adobe's
Photoshop and Premier. These intranets can also be used for more
traditional communications such as e-mail, corporate announcements and
employee and other corporate information. To date, the Company has
developed customized marketing intranets for True North and S.C. Johnson.

Delivra. Delivra is a communications platform developed by the Company to
deliver marketing materials electronically to large sales forces equipped
with laptop computers. Delivra permits timely, accurate and cost-effective
distribution of sales and marketing information, such as proposals,
contracts, marketing materials, pricing and competitive information, which
can then be downloaded, stored, managed and manipulated locally on personal
computers by members of geographically dispersed sales forces. The
Relationship Technology Group provides ongoing platform and operations
management services to Delivra users, including content creation and
management, user support, quality control, system usage reporting and file
management. MyPartner, a version of Delivra designed for AT&T, is in use by
more than 10,000 of AT&T's sales representatives in 18 countries.

The Company's Relationship Technology Group also provides database and
relationship marketing consulting services that focus on optimizing customer
contact strategies for its clients. These services enable the Company's clients
to assess and optimize information systems to target and contact customers. In
addition, the Relationship Technology Group provides statistical modeling to
help clients predict customer behavior. Through proprietary decision support
systems and customized software applications, the customer data are compiled,
categorized, stored and made accessible to clients.

The Relationship Technology Group employs software programmers, system
designers and quality assurance personnel with expertise in ActiveX, C/C++,
Java, HTML, Lingo, SGML, VRML and Visual Basic programming languages; CGI and
EDI technologies; and Microsoft, Netscape, Oracle and Sybase server and
database technologies. The Company's programming staff utilizes this expertise
to develop and distribute new forms of digital interactive marketing solutions.

Digital Design and Production: R/GA Interactive

R/GA Interactive, incorporated in 1993, is a full-service digital design and
production studio that produces creative content for users across a broad range
of media. R/GA Interactive develops and applies proprietary technology for
real-time 3D computer graphics, image processing, compositing, digital
painting, object-relational databases and game engines to create Web sites and
other interactive marketing tools for its clients. R/GA Interactive's software
engineers are versed in C/C++, Java, Perl, Lingo and HTML programming
languages; CGI and Active Web technologies; Unix, WindowsNT and Windows95
operating systems; and relational database design and implementation. The
Company applies these software capabilities to customize integrated marketing
programs, such as Web-based advertising vehicles, corporate intranets,
interactive kiosks and games.

R/GA Interactive executes digital design and production projects on a project
basis for its clients and those of the Company's strategic marketing
organizations. R/GA Interactive's clients include Microsoft, AT&T, Fila,
Liberty Mutual and IBM. R/GA Interactive is located in New York City.

R/GA Interactive traces its creative roots to R/GA Digital Studios Inc., an
award-winning design and production company founded in 1977 by Robert M.
Greenberg, President of R/GA Interactive. R/GA Digital Studios, Inc., a
business unit of True North, has created visual effects for over 500
commercials and 250 feature films.

Cross-Marketing Opportunities

The Company believes that its strategic marketing organizations, along with
the Relationship Technology Group and R/GA Interactive, are well-positioned to
realize economies of scale and other synergies in developing comprehensive
interactive marketing solutions for clients. The strategic marketing
organizations often require

35
<PAGE>

the customization of existing software or the development of new digital
marketing applications. The Relationship Technology Group is especially well-
suited to design, develop and maintain these applications. In addition, clients
of the Company's strategic marketing organizations frequently require the
execution of creative strategies through the design and production of digital
interactive marketing content which can be supplied by R/GA Interactive.

The Relationship Technology Group provides its core consulting, technology
development and operations services for the customers of the strategic
marketing organizations, as well as for its own customers. R/GA Interactive
executes creative strategies for certain clients of the strategic marketing
organizations, performs custom development for independent clients on a for-
hire basis and develops and retains ownership stakes in entertainment and
edutainment titles.

Through its multiple brands, the Company intends to aggressively pursue
multiple segments of the emerging digital marketing communications industry,
while offering clients' marketing and information systems departments
coordinated solutions.

COMPANY CLIENTS

The Company's clients consist primarily of large and emerging organizations
whose businesses impact or are impacted by rapidly changing digital media and
interactive communications technologies. The Company's services range from
execution of discrete marketing projects, such as strategic marketing
assignments, to global digital interactive marketing and sales programs
combining various platforms and services. The Company's five largest clients
accounted for 63.4% and 67.0% of the Company's revenues (on a pro forma basis)
for the fiscal year ended December 31, 1995 and the six months ended June 30,
1996, respectively, with fluctuations in the amount of revenue contribution
from each such client from quarter to quarter. AT&T accounted for 37.8% and
43.0%, of the Company's revenues (on a pro forma basis) for the fiscal year
ended December 31, 1995 and for the six months ended June 30, 1996,
respectively. There can be no assurance that the Company will be able to
maintain the rate of growth or current level of revenues derived from AT&T or
any other client in the future.

The Company generally performs multiple projects for clients. Consistent with
marketing communications industry custom, the Company's clients generally have
the right to terminate their relationships with the Company without penalty on
relatively short or no notice.

36
<PAGE>

The following is a list of certain of the Company's clients who accounted for
more than $50,000 of the Company's pro forma revenues since January 1, 1995 and
the services the Company has performed for such clients.

<TABLE>
<CAPTION>
INTERACTIVE
STRATEGIC CONSUMER INFORMATION DIGITAL MEDIA DATABASE APPLICATION
CONSULTING, MEDIA AND INTERACTIVE ARCHITECTURE DESIGN PLANNING MEASUREMENT DESIGN TRADITIONAL
SOLUTIONS COMPETITOR CREATIVE AND DIGITAL AND AND AND AND MEDIA
CONCEPTION RESEARCH DEVELOPMENT DESIGN PRODUCTION BUYING MODELING MAINTENANCE EXECUTIONS
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMUNICATIONS
AT&T Corp. . . . . . . . .
Los Angeles
Cellular
Telephone Co. . . .
-----------------------------------------------------------------------------------------------

COMPUTER
HARDWARE AND
SOFTWARE
International
Business
Machines Corp. . . .
Microsoft Corp. . . . . . .
Motorola Inc. . . . . . . . .

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

CONSUMER
PRODUCTS/RETAIL
Campbell Soup
Company . . . . .
Fila U.S.A.,
Inc. . . . . .
Hasbro, Inc. . . . . . . .
JC Penney
Company, Inc. . . . . . . . .
Johnson &
Johnson . . . .
Levi Strauss &
Co. . . . . . . .
Merck & Co.,
Inc. . . .
PaperDirect . . . . .
RJR Nabisco,
Inc. . . . . .
S.C. Johnson &
Sons, Inc. . . . . . . . .

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

ENTERTAINMENT/TRAVEL
Delta Air Lines,
Inc. . . . . . . . .
Jamaica Tourist
Board . . . .
Royal Caribbean
Cruises Ltd. . . . .
Washington State
Tourism .

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

SERVICES
Blue Cross/Blue
Shield of
Illinois . . . . .
California State
Automobile
Association . . . . .
Citicorp .
i-Village . . . . . .
John Hancock
Mutual Life
Insurance Co. . . . . . . . .
Liberty Mutual
Insurance Co. . . . . . . .
PC Financial
Network . . . .
Prudential
Securities,
Inc. . . .
The Reader's
Digest
Association,
Inc. . . . .
U.S. Bancorp . .
U.S. Postal
Service . . . . . . .
Washington
Forest
Protection
Association . .
</TABLE>

37
<PAGE>

CLIENT CASE STUDIES

The following client case studies illustrate marketing solutions developed
for certain of the Company's key clients by each of the Company's strategic
marketing organizations.

AT&T

AT&T selected Modem Media as its Interactive Agency of Record in 1995. Modem
Media's primary responsibilities include creation and management of
interactive advertising and marketing campaigns; brand positioning; creative
standards development; media planning and buying; research; and competitive
analysis. Modem Media's responsibilities extend through several of AT&T's
business units. Modem Media's relationship with AT&T has included such
projects as developing an electronic toll-free directory in 1992, providing
strategic consulting for interactive television market research in 1993,
developing several fax-on-demand systems for AT&T's Business Marketing Unit in
1994, contributing to a market strategy for AT&T WorldNet Service launched in
1995 and establishing AT&T's Centennial Olympic Games Web site, CD-ROM and
intermercial campaign in 1996.

In 1994, Modem Media developed and launched MyPartner, the field sales force
communications system for AT&T. MyPartner is designed to enhance the
efficiency of the sales process by enabling geographically-dispersed AT&T
sales representatives to access electronically from their field locations
vital information and multimedia marketing materials. MyPartner provides
AT&T's sales force with immediate access to current rates and terms and a wide
range of rapidly changing marketing materials.

Levi Strauss & Co.

In 1995, Levi Strauss & Co. ("Levi Strauss") selected Northern Lights
Interactive and R/GA Interactive to assist Levi Strauss in developing an on-
line presence for Levi's(R) brand jeans. The Company's initial interactive
marketing efforts has led to subsequent and expanded assignments from Levi
Strauss to produce other digital media projects for Levi's(R), Docker's(R),
the Levi's Only Store (LOS), the Mega-Shop Youthwear Center as well as
implement on-line media partnership programs on behalf of Levi Strauss with
ESPNet Sports, Women's Wire, Internet Underground Music Association (IUMA),
and MTV. Levi Strauss chose the Company to develop a program to meet Levi
Strauss' objectives of communicating with young adults around the world,
developing one-to-one relationships with consumers through digital access,
building a global knowledge base of its products, providing localized versions
of global marketing programs and establishing a foundation for integrated
marketing and transactions. The Company's primary responsibilities included
strategic planning, content design, navigational architecture, digital
production, on/off-line media placement, technology/tools development, a
measurement program and global implementation. The United States and European
site was launched in October 1995. The Company expects to launch a site in
Asia in early 1997. In September 1996, the Company developed a separate Web
site for Docker's(R).

The Company also designed and implemented interactive kiosks for use in Levi
Strauss' stores. The kiosks use a menu-driven format, full-color graphics,
digital sound, full-motion video and four language options. These kiosks
enable shoppers to obtain product and fit information and can generate
graphical maps with locations of Levi Strauss' stores anywhere in the world.

Royal Caribbean Cruises Ltd.

Since September 1992, Cf2GS has helped Royal Caribbean Cruises Ltd. ("Royal
Caribbean") develop data-driven marketing strategies aimed at building
customer loyalty and frequency of use, as well as identifying prospective
customers. In the past year, Cf2GS has provided a marketing database solution
with reporting and analysis tools designed to enable Royal Caribbean to more
accurately measure and predict market potential within certain geographic
areas. The system is intended to enable Royal Caribbean to pursue more
effective micro-market strategies with its retail channel and manage database-
driven prospecting programs that identify qualified customers and provide
these customers with personalized product information.

In 1996, the Company also combined customer and marketplace analysis with
insights relevant to customer acquisition and retention and cross-marketing to
support development of a communications plan for Royal

38
<PAGE>

Caribbean. Cf2GS developed Royal Caribbean's Crown & Anchor Society
relationship marketing program, which is expected to improve Royal Caribbean's
efforts to retain and cross-sell past guests through an emphasis on
recognition, service and communication. In connection with this program, Cf2GS
designs and produces Crown & Anchor Magazine, a custom-published product.

COMPETITION

The principal factors upon which the Company competes are service, creative
quality, technological and new media expertise and price. Although the Company
believes that it is competitive with respect to each of these factors, the
markets for the Company's services are highly competitive, and the Company
faces competition from a number of sources. These sources include traditional
advertising agencies as well as specialized marketing communications firms. In
addition, many advertising agencies have started to develop internally, or
enter into business relationships to develop or acquire, new digital media and
interactive communications capabilities. The Company also competes with
interactive marketing communications companies that provide services (such as
corporate identity and packaging, production, advertising services or Web site
design) and are technologically proficient in the digital media and interactive
communications fields. In addition, production houses, software developers, in-
house marketing and information systems departments of companies, interactive
entertainment companies and graphic design companies compete with certain
portions of the Company's business.

The Company expects that it will face additional competition from new market
entrants. There can be no assurance that existing or future competitors will
not develop or offer digital interactive marketing services and products that
provide significant performance, price, creative or other advantages over those
offered by the Company, which could have a material adverse effect on the
Company's business, financial condition or results of operations.

INTELLECTUAL PROPERTY

The Company's success and ability to compete is dependent in part upon its
proprietary technology, including those protections provided under trademark,
trade secret and copyright laws. In addition, factors such as the technological
and creative skills of its personnel, new product developments, frequent
product enhancements, name recognition and reliable product maintenance are
also important to establishing and maintaining a technology leadership
position. The Company presently has no patents but has one patent application
pending. There can be no assurance that such patent application will be allowed
or that, if allowed, the application will be issued. Despite the Company's
efforts to control access to its proprietary information, it may be possible
for a third party to copy or otherwise obtain and use the Company's products or
technologies without authorization, or to develop similar or superior
technologies independently. In addition, effective copyright, trade secret and
patent protection may be unavailable or limited in certain foreign countries.
Litigation may be necessary in the future to enforce the Company's intellectual
property rights, to protect the Company's trade secrets, to determine the
validity and scope of the proprietary rights of others, or to defend against
claims of infringement or invalidity. Such litigation could result in
substantial costs and diversion of resources and could have a material adverse
effect on the Company's business, financial condition or results of operations.

The Company's strategy includes creating, developing and selling digital
interactive marketing products based in part on proprietary applications and
platforms, which enable the Company to repurpose and reformat certain
interactive products to service the needs of multiple clients. Similar to the
traditional advertising and marketing industries, the Company's clients
generally retain ownership of content developed by the Company; however, the
Company generally retains ownership rights to the technology developed.

39
<PAGE>

GOVERNMENT REGULATION

The marketing communications industry is subject to extensive government
regulation, both domestic and foreign, with respect to the truth in and
fairness of advertising. The Company must comply with Federal Trade Commission
regulations with respect to the marketing of products and services and similar
state regulations. In addition, there has been an increasing tendency in the
United States on the part of businesses to resort to the judicial system to
challenge comparative advertising of their competitors on the grounds that the
advertising is false and deceptive. There can be no assurance that the Company
will not be subject to claims made against it or its clients by other
companies or governmental agencies or that any such claims, regardless of
merit, would not have a material adverse effect on the Company's business,
financial condition or results of operations.

EMPLOYEES

In order to maintain high levels of creativity and quality, the Company
places great importance on recruiting and retaining talented employees. As of
September 30, 1996, the Company had 274 full-time employees. The Company also
hires temporary employees and contract service providers as necessary.

The Company's success will depend on the ability of the Company's senior
management, in particular, Gregory W. Blaine, Chairman and Chief Executive
Officer, Gerald M. O'Connell, President and Chief Operating Officer and Robert
M. Greenberg, President, R/GA Interactive. The Company's success also will
depend to a significant degree on the continuing contributions of other
members of its senior management and its key account management, marketing,
creative and technology development personnel, as well as its ability to
attract and retain highly skilled personnel in all job categories. Competition
for qualified personnel in the digital interactive marketing industry is
intense. The Company has at times experienced, and continues to experience,
difficulty in recruiting sufficient numbers of qualified personnel. Although
certain members of the Company's senior management have entered into
employment agreements with the Company, there can be no assurance that any of
these executives will not voluntarily terminate their employment with the
Company. The loss of the services of any senior management or other key
employee or the inability to attract and retain additional personnel as
required could adversely affect the Company's business, financial condition or
results of operations. If one or more of the Company's key employees resigns
from the Company to join a competitor or to form a competing company, the loss
of such personnel and any resulting loss of existing or potential clients to
any such competitor could have a material adverse effect on the Company's
business, financial condition or results of operations. In the event of the
loss of any key personnel there can be no assurance that the Company would be
able to prevent the unauthorized disclosure or use of its technical knowledge,
practices, procedures or client lists.

FACILITIES

The Company's headquarters and the operations of Modem Media are located in
Westport, Connecticut and utilize approximately 23,000 square feet of leased
office space. The lease expires July 31, 2000.

Cf2GS is based in Seattle and utilizes approximately 13,000 square feet of
leased office space. The lease expires November 30, 1998. Cf2GS also leases
approximately 2,600 square feet in Portland, Oregon, under a lease expiring
August 31, 1997 and approximately 2,600 square feet in San Francisco under a
lease expiring July 16, 1997.

Northern Lights Interactive, the Relationship Technology Group and R/GA
Interactive share space with True North pursuant to an intercompany agreement.
See "Relationship With True North and Certain Transactions--Intercompany
Agreements--Space Sharing Agreement." That agreement provides for a total of
approximately 17,750 square feet for facilities in Chicago, New York, Toronto,
San Francisco, Hong Kong and London and is terminable by either party upon six
months' written notice beginning six months after the Combination.

40
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The following table sets forth certain information with respect to the
executive officers, directors and key employees of the Company as of the date
of this Prospectus:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
Gregory W. Blaine (1)... 48 Chairman of the Board and Chief Executive Officer
Gerald M. O'Connell (1). 35 President, Chief Operating Officer and Director
Robert M. Greenberg (1). 48 President, R/GA Interactive, and Director
Michael F. Bogacki (2).. 41 Executive Vice President, Chief Financial Officer, Secretary and Director
Douglas C. Ahlers....... 36 President, Relationship Technology Group, and Director
Robert C. Allen, II..... 29 President, Modem Media, and Director
Martin F. Reidy......... 39 Executive Vice President and Director
David E. Clauson........ 41 Senior Vice President and Managing Director,
Northern Lights Interactive
William H. Fritsch...... 45 President, Cf2GS
David A. Giersdorf...... 40 Chief Executive Officer, Cf2GS
Mitchell T. Engel....... 44 Director
Bruce Mason............. 56 Director
</TABLE>
- --------

(1) Member of the Nominating Committee of the Board of Directors of the
Company.

(2) Member of the Audit Committee of the Board of Directors of the Company.

Gregory W. Blaine has served as Chairman and Chief Executive Officer and a
Director of the Company since October 1996. Since 1993, Mr. Blaine has served
as Executive Vice President, Global Operating Systems, and a director for True
North. From 1990 to 1993, Mr. Blaine served as Executive Vice President of True
North. Mr. Blaine joined Foote, Cone & Belding, the predecessor of True North,
in 1979. See "--Executive Compensation and Employment Agreements." Mr. Blaine
received a B.A. in marketing from Ohio State University.

Gerald M. O'Connell has served as President and Chief Operating Officer and a
Director of the Company since October 1996. Mr. O'Connell was a Managing
Partner of Modem Media, which he co-founded in 1987. From 1986 to 1987, Mr.
O'Connell was Product Manager of CUC International, a consumer services
company, where he was responsible for Comp-u-mall--an electronic shopping mall.
Mr. O'Connell received a B.A. in English and history from Middlebury College.
Mr. O'Connell is a director for the National Fragile X Foundation.

Robert M. Greenberg has served as President of R/GA Interactive, a business
unit of R/GA Digital Studios, Inc., since R/GA Digital Studios, Inc. was
acquired by True North in July 1995. Mr. Greenberg has served as Director of
the Company since October 1996. Mr. Greenberg is Chairman and Chief Executive
Officer of R/GA Digital Studios, Inc., a digital design production company
which he founded in 1977. Mr. Greenberg received a B.S. in radio and TV
advertising and mass communications from Arizona State University, completed
graduate courses in business management at DePaul University, and in 1996 Mr.
Greenberg received an Honorary Doctor of Fine Arts degree from the University
of the Arts/Philadelphia College of Art and Design. See "--Executive
Compensation and Employment Agreements."

Michael F. Bogacki has served as Executive Vice President, Chief Financial
Officer, Secretary and a Director of the Company since October 1996. Prior to
joining the Company, Mr. Bogacki was Vice President and Controller of Fruit of
the Loom, Inc., a global manufacturer and marketer of consumer soft goods.
During a portion of 1995, Mr. Bogacki also served as Chief Financial Officer of
Fruit of the Loom, Inc.'s European

41
<PAGE>

operations. Mr. Bogacki held various positions at Fruit of the Loom, Inc.
between February 1984 and August 1996 when he joined the Company, and served as
Vice President and Controller for various public and privately held entities
including Farley Inc., a manufacturer and distributor of industrial products;
Acme Boot Company, Inc., a manufacturer and marketer of footwear and apparel;
and Farley Industries, Inc., a management services company, all of which are
affiliated or had common management with Fruit of the Loom, Inc. In July 1991,
an involuntary petition under Chapter 7 of the U.S. Bankruptcy Code was filed
against Farley Inc. which was subsequently converted to a voluntary petition
for relief under Chapter 11 of the U.S. Bankruptcy Code in September 1991. A
final order was entered in December 1992. In September 1992, West Point
Acquisition Corp. filed a voluntary petition for relief under Chapter 11 of the
U.S. Bankruptcy Code for which a final order was entered in December 1992. Mr.
Bogacki served as Vice President and Controller of both of these companies. Mr.
Bogacki received a B.S.C. in accounting from DePaul University and an M.B.A.
from the University of Chicago. Mr. Bogacki is a certified public accountant.

Douglas C. Ahlers has served as President, Relationship Technology Group, and
a Director of the Company since October 1996. Mr. Ahlers was a Managing Partner
and co-founder of Modem Media. From 1983 to 1987, Mr. Ahlers served as Manager
of Product Development of CUC International, a consumer services company. Mr.
Ahlers received a B.A. in sociology and theater from the University of Rhode
Island and an M.J. in journalism and communications from Louisiana State
University.

Robert C. Allen, II has served as President, Modem Media, and a Director of
the Company since October 1996. Mr. Allen has served as a Managing Partner of
Modem Media since 1992. From 1989 to 1992, Mr. Allen was the Director of
Business Development at Modem Media. Mr. Allen received a B.A. in English from
Gettysburg College.

Martin F. Reidy has served as Executive Vice President and a Director of the
Company since October 1996. From January 1995 to May 1996, Mr. Reidy served as
Vice President--Marketing and Business Development of Silicon Studio, Inc., a
subsidiary of Silicon Graphics, Inc., a leading computer hardware and software
company. From 1991 through 1994, Mr. Reidy served as Senior Vice President of
EMI Music, a leading global recorded music and publishing company. Prior to
joining EMI, Mr. Reidy was a partner with Bain & Company, Inc. Mr. Reidy
received a B.S. in finance and marketing from the University of California at
Berkeley and an M.B.A. from Wharton.

David E. Clauson has served as Senior Vice President and Managing Director,
Northern Lights Interactive since September 1996. Mr. Clauson joined Foote,
Cone & Belding in March 1991 as Senior Vice President, General Manager of
Foote, Cone & Belding Technology Group. Mr. Clauson has held several positions
at True North, most recently as General Manager of True North's Technology
Group. Mr. Clauson received a B.A. in American urban history from U.C.L.A.

William H. Fritsch has served as President of Cf2GS, a subsidiary of the
Company, since Cf2GS was acquired by True North in 1994. Mr. Fritsch received a
B.A. in accounting from the University of Akron Business School.

David A. Giersdorf has served as Chief Executive Officer of Cf2GS since
October 1996 and has served as Managing Director of Cf2GS since 1991. Before
joining Cf2GS, Mr. Giersdorf was the Vice President of Windstar Cruises, the
luxury subsidiary of Holland America Line/Carnival Cruises. Mr. Giersdorf
attended the University of Washington.

Mitchell T. Engel has served as a Director of the Company since October 1996.
From 1995 to present, Mr. Engel has served as President, Associated
Communications Companies and Corporate Operations of True North. From 1989 to
1995, Mr. Engel served as the Executive Vice President and Managing Director of
True North's Chicago office of Foote, Cone & Belding. Mr. Engel received a B.S.
in communications from Miami University (Ohio) and an M.S.J. in advertising
from Northwestern University.

Bruce Mason has been a Director of the Company since October 1996. Since
1991, Mr. Mason has served as Chairman and Chief Executive Officer of True
North and has been a director of True North since 1986. Mr. Mason received a
B.A. in philosophy from St. John's University and an M.B.A. from the University
of Chicago.

42
<PAGE>

Messrs. Ahlers, Allen and O'Connell were elected to the Board of Directors of
the Company in October 1996 in connection with the Conversion. The Company and
True North have agreed to cause each of Messrs. Ahlers, Allen and O'Connell, as
long as each serves as an executive officer of the Company and until certain
conditions are no longer met, to be elected to the Company's Board of
Directors.

Each officer serves at the discretion of the Company's Board of Directors.
The Company and True North have agreed to cause Mr. O'Connell to succeed Mr.
Blaine as Chief Executive Officer of the Company at such time as Mr. Blaine no
longer serves in such capacity. See "--Executive Compensation and Employment
Agreements." There are no family relationships among any of the directors or
officers of the Company.

The Company's Board of Directors currently has two vacancies, which the
Company's bylaws authorize the Company's Board of Directors to fill. The
Company intends to appoint two persons who are not officers or employees of the
Company or True North to the Board of Directors within 90 days of the date of
the Prospectus and is required to do so to maintain its listing on the Nasdaq
National Market. In the event the Company does not add such independent
directors within 90 days following the Offering, the Company could be delisted
from the Nasdaq National Market, which could have an adverse effect on the
liquidity and price of the Class A Common Stock. The Company plans to appoint
such directors as are mutually agreeable to the Company and Messrs. Ahlers,
Allen and O'Connell.

DIRECTOR COMPENSATION

Effective upon consummation of the Offering, the Company's Directors who are
not also employees of the Company or True North will be paid an annual retainer
of $6,000 and a fee of $1,000 for each meeting attended of the Company's Board
of Directors or of a committee of the Company's Board of Directors. The Company
has recently established the 1996 Stock Option Plan which provides for
automatic grants of options to purchase Class A Common Stock to nonemployee
Directors commencing upon consummation of the Offering. See
"--Stock Plans--1996 Stock Option Plan." Directors who are also employees of
the Company or True North will not receive any additional compensation for
serving on the Board of Directors.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company's Board of Directors has standing Audit, Compensation and
Nominating Committees, which assist the Board in the discharge of its
responsibilities. Members of each such Committee are elected by the Board and
serve for one-year terms.

The Audit Committee reports to the Board regarding the appointment of the
independent public accountants of the Company, the scope and fees of
prospective annual audits and the results thereof, compliance with the
Company's accounting and financial policies and management's procedures and
policies relative to the adequacy of the Company's internal accounting
controls. The members of the Audit Committee will consist of a minimum of two
outside directors, neither of whom will be an officer or employee of the
Company. In addition, Mr. Bogacki has been appointed to this Committee.

The Compensation Committee reviews and approves the annual salary and bonus
for each executive officer (consistent with the terms of any applicable
employment agreement), reviews, approves and recommends terms and conditions
for all employee benefit plans (and changes thereto) and administers the
Company's 1996 Stock Plan and Employee Stock Purchase Plan and such other
employee benefit plans as may be adopted by the Company from time to time. The
members of the Compensation Committee will consist of a minimum of two
nonemployee directors.

The Nominating Committee reports to the Board regarding nominees for
directors to be presented to the Company's stockholders for election. The
members of the Nominating Committee will consist of a minimum of two non-
employee directors. In addition, Messrs. Blaine, O'Connell and Greenberg have
been appointed to this Committee.

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<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee was formed in October 1996. No
interlocking relationship exists between the Company's Board of Directors and
the board of directors or compensation committee of any other company, nor has
any such interlocking relationship existed in the past.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Certificate of Incorporation limits the liability of directors
to the maximum extent permitted by Delaware law. Delaware law provides that a
corporation's certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director for monetary damages for
breach of their fiduciary duties as directors, except for liability (i) for any
breach of their duty of loyalty to the corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) for unlawful payments of dividends or
unlawful stock repurchases or redemptions as provided in Section 174 of the
DGCL, or (iv) for any transaction from which the director derived an improper
personal benefit. See "Description of Capital Stock--Limitation of Liability;
Indemnification."

The Company's Bylaws provide that the Company shall indemnify its directors
and officers and may indemnify its employees and agents to the fullest extent
permitted by Delaware law. See "Description of Capital Stock--Limitation of
Liability; Indemnification."

The Company intends to enter into agreements to indemnify its directors and
officers in addition to the indemnification provided for in the Company's
Certificate of Incorporation and Bylaws. These agreements, among other things,
indemnify the Company's directors and officers for certain expenses (including
attorneys' fees), judgments, fines and settlement amounts incurred by any such
person in any action or proceeding, including any action by or in the right of
the Company, arising out of such person's services as a director or officer of
the Company, any subsidiary of the Company or any other company or enterprise
to which the person provides services at the request of the Company. The
Company believes that these provisions and agreements are necessary to attract
and retain qualified individuals to serve as directors and officers.

At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that might result in a claim for such indemnification.

EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS

The Company commenced operations in its current form in November 1996. As of
December 31, 1995 and for the fiscal year ended December 31, 1995, the Company
did not exist in its current form. The Company has entered into employment
agreements with Gregory W. Blaine, its Chief Executive Officer, and certain
executive officers providing for annual compensation in excess of $100,000 as
set forth below.

In addition to his position with the Company, Mr. Blaine currently serves as
Executive Vice President, Global Operating Systems, for True North pursuant to
an employment agreement with True North. In connection with the Combination,
the Company entered into an employment allocation agreement with True North and
Mr. Blaine relating to Mr. Blaine's employment with the Company. Pursuant to
such agreement, Mr. Blaine will devote 95% of his time to his employment with
the Company and the remainder to True North. The employment allocation
agreement provides that Mr. Blaine will be paid an initial annual base salary
by the Company of $250,000, subject to increases at the discretion of the
Company's Board of Directors. In addition, Mr. Blaine is eligible to receive
(i) an annual cash bonus equal to up to 30% of his salary and (ii) a grant of
options to purchase shares of Class A Common Stock of the Company. Mr. Blaine
will also receive a salary and other benefits from True North.

In addition to his position with the Company, Mr. Greenberg currently serves
as Chairman and Chief Executive Officer of R/GA Digital Studios, Inc., pursuant
to an employment agreement with True North entered

44
<PAGE>

into in connection with the acquisition of R/GA Digital Studios, Inc. by True
North. In connection with the Combination, the Company entered into an
employment allocation agreement with True North and Mr. Greenberg relating to
Mr. Greenberg's employment with the Company. Pursuant to such agreement, Mr.
Greenberg will devote not less than 50% of his time to his employment with the
Company and the remainder to True North. The employment allocation agreement
provides that Mr. Greenberg will be paid an initial annual base salary by the
Company of $250,000, subject to increases at the discretion of the Company's
Board of Directors. In addition, Mr. Greenberg is eligible to receive (i) an
annual cash bonus equal to up to 30% of his salary and (ii) options to
purchase shares of Class A Common Stock of the Company. Mr. Greenberg will
also receive a salary and other benefits from True North.

The Company has entered into five-year employment agreements with each of
Messrs. O'Connell, Ahlers and Allen providing for an initial annual base
salary of $300,000 each, subject to increases at the discretion of the
Company's Board of Directors. Pursuant to the agreements, if the Company
terminates any executive's employment without cause, the executive is entitled
to receive severance benefits equal to salary plus profit sharing for a period
equal to the lesser of three years after such termination or the initial term
of employment. Pursuant to the agreements each executive has agreed to certain
confidentiality, noncompetition and nonsolicitation provisions. In addition,
in connection with the Combination, the Company and True North have agreed to
cause Mr. O'Connell to succeed Mr. Blaine as Chief Executive Officer of the
Company at such time as Mr. Blaine no longer serves in such capacity.

The Company did not grant stock options to any executive officer during
1995, and no options were exercised during 1995 or were outstanding as of
December 31, 1995. Concurrently with the consummation of the Offering, the
Company will grant options to purchase 67,000 shares of Class A Common Stock
to each of Messrs. Blaine and Greenberg and options to purchase 10,000 shares
of Class A Common Stock to each of Messrs. O'Connell, Ahlers and Allen, at an
exercise price equal to the initial public offering price. One-fifth of these
options will be vested immediately with an additional one-fifth of such
options to vest annually over four years.

STOCK PLANS

1996 Stock Option Plan

In October 1996, the Company established a stock option plan (the "1996
Stock Option Plan") to provide additional incentive to its employees,
officers, directors and consultants pursuant to which a total of
shares of Class A Common Stock have been reserved for issuance. The 1996 Stock
Option Plan was approved by the stockholders of the Company in October 1996.
Pursuant to the 1996 Stock Option Plan, the Company may grant incentive stock
options, nonstatutory stock options and stock purchase rights to the Company's
employees, officers, directors and consultants. The Company's Board of
Directors, or a committee to whom the Board has delegated authority (the "Plan
Administrator"), selects the Company's employees, officers, directors and
consultants to whom options and stock purchase rights are granted (provided
that incentive stock options may only be granted to employees of the Company,
and, as described below, outside directors receive automatic grants of
options), interprets and adopts rules for the operation of the 1996 Stock
Option Plan and specifies other terms of such options and stock purchase
rights. No options have been granted under the 1996 Stock Option Plan.
Concurrently with the consummation of the Offering, the Company intends to
grant options to purchase shares of Class A Common Stock at the initial public
offering price to certain officers and employees of the Company.

Subject to the terms and conditions of the 1996 Stock Option Plan, the terms
and conditions of each individual option grant are evidenced by an agreement
("Agreement") between the Company and the optionee. Options granted under the
1996 Stock Option Plan (other than to outside directors) vest as determined by
the Plan Administrator and as set forth in an Agreement. The maximum term of a
stock option under the 1996 Stock Option Plan is stated in the relevant
Agreement, provided that the maximum term of an incentive stock option is ten
years (if the optionee at the time of grant has voting power over more than
10% of the Company's capital stock outstanding, the maximum term is five
years). If an optionee terminates his or her service to the Company,

45
<PAGE>

the optionee generally may exercise only those option shares vested as of the
date of termination and, unless otherwise specified in the relevant Agreement,
must effect such exercise within three months of termination of service for
any reason other than death or disability and one year after termination due
to disability or death. The exercise price of incentive stock options granted
under the 1996 Stock Plan must be at least equal to the fair market value of
the Class A Common Stock of the Company on the date of grant. The exercise
price of stock options granted to an optionee who owns stock possessing more
than 10% of the voting power of the Company's outstanding capital stock must
equal at least 110% of the fair market value of the Class A Common Stock on
the date of grant. Payment of the exercise price may be made in such methods
as determined by the Plan Administrator (which in the case of an incentive
stock option shall be set out in the Agreement) and may include cash, check, a
promissory note or shares of the Company's Class A Common Stock valued at the
fair market value on the date of exercise or certain other methods of payment.

In addition, the 1996 Stock Plan provides that each Director that is not
also an officer or employee of the Company or True North shall be
automatically granted an option to purchase 4,000 shares of Class A Common
Stock on the later of the effective date of the plan or the date on which such
person first becomes an outside Director. Each nonemployee Director shall also
be automatically granted an option to purchase 2,000 shares on February 1st of
each year provided he or she is then a nonemployee Director and if, as of such
date, he or she shall have served on the Company's Board of Directors for at
least the preceding six months. Options granted to nonemployee Directors vest
ratably over two years, with one-third of the options being vested on the date
of grant, and have a term of ten years. The exercise price of options granted
to nonemployee Directors shall be 100% of the fair market value per share of
Class A Common Stock on the date of grant.

Terms of any stock purchase rights granted under the 1996 Stock Plan shall
be determined by the Plan Administrator at the time such rights are issued.
Unless the Plan Administrator determines otherwise, the Company shall have a
repurchase option at the original price paid by the purchaser exercisable upon
the voluntary or involuntary termination of the purchaser's service with the
Company.

In the event the Company is acquired or merges into or with another entity
or transfers or otherwise disposes of all or substantially all of its assets,
then each outstanding option and stock purchase right shall automatically vest
and become fully exercisable unless the successor entity assumes such option
or stock purchase right or replaces it with a comparable option or right.

1996 Employee Stock Purchase Plan

In October 1996, the Company's Board of Directors adopted the 1996 Employee
Stock Purchase Plan (the "Purchase Plan") under which a maximum of
shares of Class A Common Stock are made available for sale. The Purchase Plan
was approved by the stockholders of the Company in October 1996. The Purchase
Plan, which is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Internal Revenue Code of 1986, as amended,
is administered by the Board of Directors or by a committee appointed by the
Board. Employees are eligible to participate if they are employed by the
Company or a subsidiary of the Company designated by the Board for at least 20
hours per week and are customarily employed for more than five months in any
calendar year. The Purchase Plan permits eligible employees to purchase Class
A Common Stock through payroll deductions, which may not exceed 15% of an
employee's compensation, subject to certain limitations. The Purchase Plan
will be implemented in a series of consecutive, overlapping offering periods,
each of approximately 24 months in duration. Offering periods will begin on
the first trading day on or after August 1 and February 1 of every other year
and terminate on the last trading day in the period 24 months later. However,
the first offering period shall be the period of approximately 26 months
commencing on the date upon which the registration statement of which this
Prospectus is a part is declared effective by the Securities and Exchange
Commission (the "Commission") and terminating on the last trading day in the
period ending January 31, 1999. Each participant will be granted an option on
the first day of the offering period and such option will be automatically
exercised on the last date of each offering period. The purchase price of each
share of Class A Common Stock under the Purchase Plan will be equal to 85% of
the lesser of the fair market value per share of Class A Common Stock on the
start date of that offering period or on the last day of the

46
<PAGE>

offering period. Employees may modify or end their participation in the
offering at any time during the offering period subject to the Purchase Plan's
procedures and the Board's discretion to enact changes; participation ends
automatically on termination of employment with the Company. The Purchase Plan
will terminate in 2006 unless sooner terminated by the Company's Board of
Directors.

401(k) Profit Sharing Plan

The Company plans to adopt a 401(k) Profit Sharing Plan effective January 1,
1997.

47
<PAGE>

RELATIONSHIP WITH TRUE NORTH AND CERTAIN TRANSACTIONS

RELATIONSHIP WITH TRUE NORTH

In October 1996, True North acquired certain limited partnership interests
in Modem Media and shares of capital stock of Modem Media, Inc., the general
partner of Modem Media, in exchange for certain shares of common stock of True
North. Following such acquisition and in connection with the Conversion, True
North converted its interests in Modem Media into 2,969,741 shares of Class A
Common Stock of the Company (representing approximately 49% of the outstanding
equity securities of the Company). In addition, the other limited partners of
Modem Media and the other stockholders of Modem Media, Inc. converted all of
their partnership interests in Modem Media and all of their shares of capital
stock of Modem Media, Inc. into an aggregate of 3,039,785 shares of Class A
Common Stock of the Company (representing approximately 51% of the outstanding
equity securities of the Company). Following the Conversion, True North sold
to the Company the True North Units, which included substantially all of the
assets and properties of Northern Lights Interactive, R/GA Interactive and
Cf2GS, as well as True North's technology development operations, in exchange
for the assumption by the Company of certain liabilities of True North
relating to the True North Units and the issuance to True North of an
additional 1,627,059 shares of Class B Common Stock of the Company. In
connection with the Combination, True North exchanged all of its shares of
Class A Common Stock for an equal number of shares of Class B Common Stock.

Upon completion of the Offering, True North will own approximately % of
the Common Stock outstanding ( % if the Underwriters' over-allotment option
is exercised in full), representing % ( % if the Underwriter's over-
allotment option is exercised in full) of the total voting power of the
Company's voting stock. As long as True North controls the majority of the
voting power of the voting stock of the Company, it will be able, acting
alone, to (i) elect at least a majority of the Board of Directors of the
Company, (ii) amend the Company's Certificate of Incorporation or effect a
merger, sale of assets or other major corporate transaction, (iii) defeat any
non-negotiated takeover attempt, (iv) determine the amount and timing of
dividends paid to itself and holders of Class A Common Stock and (v) otherwise
control the management and operations of the Company and the outcome of
virtually all matters submitted for a stockholder vote.

Currently, four of the nine directors of the Company are also members of
senior management of True North and are compensated by True North in
connection with their employment by True North. In addition, six of the
current directors of the Company were selected by True North. These directors
may have conflicts of interest in addressing certain business opportunities
and strategies in circumstances where the Company's and True North's interests
differ. The Company has not adopted any formal plan or arrangement to address
such potential conflicts of interest.

REORGANIZATION AGREEMENT

The Reorganization Agreement provides for True North and the limited
partners of Modem Media and the stockholders of Modem Media, Inc. to
contribute their partnership interests in Modem Media and shares of Modem
Media, Inc., the general partner of Modem Media, to the Company in exchange
for shares of the Company's capital stock. The purpose of the transaction was
to change the form of Modem Media from a partnership to a corporation.

In connection with the Conversion and pursuant to the Reorganization
Agreement, the Company granted Messrs. Ahlers, Allen and O'Connell and Kraft
Enterprises LTD (collectively, the "Limited Partners") rights to sell up to an
aggregate of $ million in value of shares of Class A Common Stock of the
Company in the Offering. The Limited Partners are selling an aggregate of
shares of Class A Common Stock of the Company pursuant to the
Reorganization Agreement. The Company has agreed to pay the underwriting
discounts and commissions relating to the shares of Class A Common Stock to be
sold by the Limited Partners. In addition, the Company will pay certain
amounts to the Limited Partners in connection with the Conversion.

In connection with the Conversion, the Company and True North have agreed to
cause each of Messrs. Ahlers, Allen and O'Connell, as long as each serves as
an executive officer of the Company and continues to

48
<PAGE>

maintain specific ownership percentages of the Company, to be elected to the
Company's Board of Directors. The Company and True North have also agreed to
cause Mr. O'Connell to succeed Mr. Blaine as Chief Executive Officer of the
Company at such time as Mr. Blaine no longer serves in such capacity.

The Limited Partners made certain representations and warranties to the
Company and True North relating to the business conducted by Modem Media prior
to the Conversion. Each party to the Reorganization Agreement agreed to
indemnify each other party to such agreement for any breach by such party of
any representation, warranty or covenant contained in such agreement.

ACQUISITION AGREEMENT

The Acquisition Agreement sets forth the agreements between the Company and
True North with respect to the Combination and certain other agreements
governing the relationship among the parties thereafter.

To effect the Combination, True North has transferred or agreed to transfer,
or to cause its respective subsidiaries to transfer, the True North Units,
which include Cf2GS, R/GA Interactive, Northern Lights Interactive and True
North's technology development operations. The Company has assumed or agreed
to assume certain liabilities. Except as expressly set forth in the
Acquisition Agreement, True North made no representations or warranties to the
Company (i) as to the value or freedom from encumbrances of, or any other
matter concerning, any of the assets of the True North Units or (ii) as to the
legal sufficiency of the attempt to convey title to any of the assets of the
True North Units, or of the execution, delivery and filing of any conveyancing
and assumption instruments. All of the assets of the True North Units were
transferred on an "as is," "where is" basis, and the Company has agreed to
bear the economic and legal risks that the conveyance of such assets is
insufficient or that the Company's title to any such assets shall be other
than good and marketable and free from encumbrances. As a condition to the
consummation of the Combination, the value of the True North Units must be
independently appraised at more than $11.0 million.

The Company has agreed to indemnify, defend and hold harmless True North,
and each of its directors, officers and employees, from and against all
liabilities relating to, arising out of or due to, directly or indirectly, (i)
any breach by the Company of any representations or warranties made by the
Company in the Acquisition Agreement, (ii) any of the liabilities assumed by
the Company, (iii) any claim that the information included in this Prospectus
or the registration statement of which this Prospectus is a part (other than
information provided by True North) is false and misleading with respect to
any material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or (iv) any failure
to perform or violation of any provision of the Acquisition Agreement.

True North has agreed to indemnify, defend and hold harmless the Company and
each of its directors, officers and employees from and against all liabilities
relating to, arising out of or due to, directly or indirectly, (i) any breach
by True North of any representations or warranties made by True North in the
Acquisition Agreement, (ii) any of the liabilities retained by True North,
(iii) any claim that the information included in this Prospectus or the
registration statement of which this Prospectus is a part which has been
provided specifically by True North for the purpose of inclusion in this
Prospectus and the registration statement is false and misleading with respect
to any material fact or omits to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading or (iv) any
failure to perform or violation of any provision of the Acquisition Agreement.

The Acquisition Agreement provides that for a period of three years after
the Combination, True North will not compete with the Company with respect to
advertising services delivered through the Internet or corporate intranets and
digital communications services dedicated to marketing purposes, provided that
(i) True North may acquire another business with certain limited interactive
marketing operations and (ii) True North may acquire another business that
engages in a significant amount of interactive marketing operations if less
than one-half of such business' operations are interactive marketing
operations and True North has offered the Company a

49
<PAGE>

reasonable opportunity to purchase the interactive marketing operations of
such business on terms and conditions that are consistent with the agreement
to purchase such business by True North and at a purchase price that
reasonably reflects the relative value of such business.

INTERCOMPANY AGREEMENTS

In the normal course of business, the Company and True North have from time-
to-time entered into various business transactions and agreements and the
Company and True North may enter into additional material transactions in the
future. The following is a summary of each of the material agreements that the
Company and True North have entered into in connection with the Combination.
Such summaries are qualified in their entirety by those agreements which are
filed as exhibits to the registration statement of which this Prospectus is a
part.

Administrative Services Agreement. Under the Administrative Services
Agreement, True North will provide various administrative functions and other
services to the Company, including accounting, cash management, internal
audit, tax preparation, consulting, studio use, employee benefits and
administration, insurance, travel services, office supplies and equipment
rental, payroll, and voice and data network access. During the period that
True North performs administrative functions for the Company, expenses
associated with such functions will be charged to the Company based primarily
on either an allocation of salaries and overhead for time expended by True
North personnel on Company matters or a ratio of the salaries of Company
employees serviced by True North to the total salaries of all True North and
Company employees serviced by True North plus out-of-pocket expenses, and in
certain circumstances hourly rates or the increased costs to True North for
providing the service. The Administrative Services Agreement is subject to
renegotiation by True North and the Company from time to time. The
Administrative Services Agreement also provides that the Company will pay to
True North a referral fee equal to 1.5% of revenues received by the Company
from projects for which True North or its affiliates referred the clients to
the Company. The Company may terminate this agreement at any time upon 90
days' prior written notice, and True North may terminate the agreement 12
months following the Combination, but must give six months' prior written
notice of such intent to terminate.

Intercompany Credit Agreement. The Intercompany Credit Agreement provides
that True North will make available a $5.0 million working capital credit
facility to the Company at an interest rate equal to LIBOR plus 75 basis
points. The credit facility will terminate the earlier of one year from the
date of the Combination or 90 days after receipt by the Company of notice from
True North that True North no longer owns 50% of the voting power of the
Company and is demanding payment of any amounts owed under the credit
facility.

Intellectual Property Agreement. The Intellectual Property Agreement
provides for the licensing of certain intellectual property from the Company
to True North. Specifically, the Company will license the Knowledge Network
and the SCJ Net to True North. The Knowledge Network license has a five-year
initial term and can be renewed annually thereafter. These licenses are non-
exclusive and non-transferrable and cannot be sublicensed. Payments by True
North for these licenses are based on research and development, enhancement
and administrative expenditures associated with the licensed software. The SCJ
Net has a one-year initial term and can be renewed annually thereafter. This
license to True North is non-exclusive and non-transferrable and may only be
sublicensed to SC Johnson.

Space Sharing Agreement. The Company has entered into a Space Sharing
Agreement with True North and certain of its subsidiaries pursuant to which
the Company will lease office space. The rent per square foot under each space
sharing arrangement approximates the monthly rent per square foot under the
underlying lease. Either party may terminate such agreement upon six months'
written notice beginning six months after the Combination.

Tax Matters Agreement. Under the Tax Matters Agreement, True North will
indemnify the Company for tax liabilities attributable to periods ending on or
prior to the date of the Combination, including costs associated

50
<PAGE>

with audits. It is expected that the Company will be part of True North's
unitary group for certain states' income taxes. Accordingly, in years when the
Company has taxable income, a pro forma calculation will be made of each state
income tax that the Company would have owed had it not been a member of the
True North unitary group and the Company will pay such amount to True North. In
years in which the Company has a taxable loss or a tax credit, a pro forma
calculation of each state income tax benefit which is realized by the True
North unitary group as a result of the Company's taxable loss or tax credit
will be made, and True North will pay the Company such amount. In addition,
pursuant to the Tax Matters Agreement, the Company has agreed to pay True North
an amount equal to any net tax benefit realized by the Company on any tax
return directly or indirectly attributable to tax basis adjustments to the
assets of the Company and its subsidiaries and affiliates due to True North's
purchase of the Modem Media partnership interests no later than the earlier of
a final determination by the tax authorities or the expiration of the statute
of limitations with respect to a tax return of the Company for any affected
fiscal year.

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<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of the date of the
Prospectus, and as adjusted to reflect the sale of shares of Class A Common
Stock by the Company and the Selling Stockholders offered hereby, by (i) each
person or entity who is known by the Company to beneficially own five percent
or more of the outstanding shares of either class of Common Stock of the
Company, (ii) each Director, (iii) each executive officer, (iv) each Selling
Stockholder and (v) all directors and executive officers of the Company as a
group.

<TABLE>
<CAPTION>
CLASS B
CLASS A COMMON STOCK COMMON STOCK COMMON STOCK
------------------------------------------------- ------------ -----------------
SHARES SHARES
BENEFICIALLY OWNED BENEFICIALLY
BEFORE OWNED AFTER PERCENT OF TOTAL
OFFERING (1) NUMBER OF OFFERING (1) (2) VOTING POWER (2)
------------------ SHARES ------------------- SHARES -----------------
PERCENT BEING PERCENT BENEFICIALLY BEFORE AFTER
NAME NUMBER OF CLASS OFFERED NUMBER OF CLASS OWNED (1) OFFERING OFFERING
---- --------- -------- --------- --------- --------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
True North -- -- % -- -- -- % 4,596,800 % %
Communications Inc.....
101 East Erie Street
Chicago, Illinois 60611
Gregory W. Blaine (3)... 13,400 * -- 13,400 * --
Gerald M. O'Connell
(4)(5)................. 1,334,716 --
Michael F. Bogacki (3).. 12,800 * -- 12,800 * --
Robert M. Greenberg (3). 13,400 * -- 13,400 * --
Douglas C. Ahlers
(4)(5)................. 1,334,716 --
Robert C. Allen, II
(4)(5)................. 342,321 --
Martin F. Reidy (3)..... 12,800 * -- 12,800 * --
Mitchell T. Engel....... -- -- -- -- -- --
Bruce Mason............. -- -- -- -- -- --
Kraft Enterprises LTD... 34,032 * * --
All directors and
executive officers
as a group (9 persons)
(3)(5)................. 3,098,185 --
</TABLE>
- --------
*Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of Class A
Common Stock subject to options held by that person that are currently
exercisable or exercisable within 60 days of September 30, 1996 are deemed
outstanding. Such shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of any other person. Except
as indicated in the footnotes to this table and pursuant to applicable
community property laws, each stockholder named in the table has sole
voting and investment power with respect to the shares set forth opposite
such stockholder's name.
(2) Assumes no exercise of the Underwriters' over-allotment option.
(3) Represents shares of Class A Common Stock subject to options which are
exercisable as of the date of this Prospectus.
(4) The address of each of Messrs. O'Connell, Ahlers and Allen is c/o TN
Technologies Inc., 228 Saugatuck Avenue, Westport, Connecticut 06880.
(5) Includes 2,000 shares of Class A Common Stock subject to options, which
are exercisable as of the date of this Prospectus.

52
<PAGE>

DESCRIPTION OF CAPITAL STOCK

Pursuant to the Company's Certificate of Incorporation, the Company has
authority to issue an aggregate of 50,000,000 shares of capital stock,
consisting of 40,403,200 shares of Class A Common Stock, par value $0.001 per
share, 4,596,800 shares of Class B Common Stock, par value $0.001 per share,
and 5,000,000 shares of Preferred Stock, par value $0.001 per share.

Set forth below is a description of the Common Stock and the Preferred Stock
that may be issued under the Company's Certificate of Incorporation.

COMMON STOCK

The shares of Class A Common Stock and Class B Common Stock are identical in
all respects, except for voting rights and certain conversion rights, as
described below.

Voting Rights. Each share of Class A Common Stock outstanding is entitled to
one vote on all matters submitted to a vote of the Company's stockholders,
including the election of directors, and each share of Class B Common Stock
entitles the holder to seven votes on each such matter. Except as required by
applicable law, holders of the Class A Common Stock and Class B Common Stock
vote together as a single class on all matters submitted to a vote of the
stockholders of the Company. There is no cumulative voting in the election of
directors. See "Risk Factors--Control of the Company; Anti-Takeover Effects of
Certificate of Incorporation, Bylaws and Delaware Law."

For so long as there are any shares of Class B Common Stock outstanding, any
action that may be taken at a meeting of the stockholders may be taken by
written consent in lieu of a meeting if the Company receives consents signed
by stockholders having the minimum number of votes that would be necessary to
approve the action at a meeting at which all shares entitled to vote on the
matter were present and voted. This could permit the holders of Class B Common
Stock to take action regarding certain matters without providing other
stockholders the opportunity to voice dissenting views or raise other matters.
The right to take such action by written consent of stockholders will expire
at such time as all outstanding shares of Class B Common Stock cease to be
outstanding.

Dividends, Distributions and Stock Splits. Holders of Class A Common Stock
and Class B Common Stock are entitled to receive dividends at the same rate
as, if, and when such dividends are declared by the Company's Board of
Directors out of assets legally available therefor after payment of dividends
required to be paid on shares of Preferred Stock, if any.

In the case of dividends or distributions payable in Class A Common Stock or
Class B Common Stock, only shares of Class A Common Stock will be distributed
with respect to the Class A Common Stock and only shares of Class B Common
Stock will be distributed with respect to the Class B Common Stock. In the
case of dividends or other distributions consisting of other voting shares of
the Company, the Company will declare and pay such dividends in two separate
classes of such voting securities, identical in all respects, except that the
voting rights of each such security paid to the holders of the Class A Common
Stock shall be one-seventh of the voting rights of each such security paid to
the holders of Class B Common Stock, and such security paid to the holders of
Class B Common Stock shall convert into the security paid to the holders of
the Class A Common Stock upon the same terms and conditions applicable to the
Class B Common Stock. In the case of dividends or other distributions
consisting of non-voting securities convertible into, or exchangeable for,
voting securities of the Company, the Company will provide that such
convertible or exchangeable securities and the underlying securities be
identical in all respects, except that the voting rights of each security
underlying the convertible or exchangeable security paid to the holders of the
Class A Common Stock shall be one-seventh of the voting rights of each
security underlying the convertible or exchangeable security paid to the
holders of Class B Common Stock, and such underlying securities paid to the
holders of Class B Common Stock shall convert into the security paid to the
holders of the Class A Common Stock upon the same terms and conditions
applicable to the Class B Common Stock.

53
<PAGE>

Neither the Class A Common Stock nor the Class B Common Stock may be
subdivided or combined in any manner unless the other class is subdivided or
combined in the same proportion.

Conversion. The shares of Class A Common Stock are not convertible.

The Class B Common Stock is convertible into Class A Common Stock, in whole
or in part, at any time and from time to time at the option of the holder, on
the basis of 1.015 shares of Class A Common Stock for each share of Class B
Common Stock converted. Each share of Class B Common Stock will also
automatically convert into 1.015 shares of Class A Common Stock upon the sale
or transfer of such share of Class B Common Stock to any person other than a
nominee of such holder (without a change in beneficial ownership) or any
parent corporation or wholly-owned subsidiary of such holder.

Liquidation. In the event of any dissolution, liquidation, or winding up of
the affairs of the Company, whether voluntary or involuntary, after payment of
the debts and other liabilities of the Company and making provision for the
holders of Preferred Stock, if any, the remaining assets of the Company will
be distributed ratably among the holders of the Class A Common Stock and the
Class B Common Stock, treated as a single class.

Mergers and Other Business Combinations. Upon a merger, combination, or
other similar transaction of the Company in which shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, holders of the Class A Common Stock and Class B Common Stock will be
entitled to receive an equal per share amount (assuming conversion of the
Class B Common Stock into Class A Common Stock on the basis set forth above)
of stock, securities, cash, and/or any other property, as the case may be,
into which or for which each share of any other class of Common Stock is
exchanged or changed; provided that in any transaction in which shares of
capital stock are distributed, such shares so exchanged for or changed into
may differ as to voting rights and certain conversion rights to the extent and
only to the extent that the voting rights and certain conversion rights of
Class A Common Stock and Class B Common Stock differ at that time.

Other Provisions. The holders of the Class A Common Stock and Class B Common
Stock are not entitled to preemptive rights. There are no redemption
provisions or sinking fund provisions applicable to the Class A Common Stock
or the Class B Common Stock.

PREFERRED STOCK

Upon consummation of the Offering, 5,000,000 shares of undesignated
Preferred Stock will be authorized, and no shares will be outstanding. The
Company's Board of Directors has the authority to issue Preferred Stock in one
or more series and to establish the rights, preferences, privileges and
restrictions granted to or imposed on any unissued shares of Preferred Stock
and to fix the number of shares constituting any series and the designations
of such series, without any further vote or action by the stockholders. The
Company's Board of Directors will have authority, without approval of the
stockholders, to issue Preferred Stock that has voting and conversion rights
superior to the Common Stock which may affect the voting power of the holders
of Class A Common Stock and could have the effect of delaying, deferring or
preventing a change in control of the Company. The Company currently has no
plans to issue any shares of Preferred Stock.

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS

The Company is subject to the provisions of Section 203 of the DGCL, an
anti-takeover law. In general, the statute prohibits a publicly-held Delaware
corporation from engaging in a business combination with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes a merger, asset sale or other transaction resulting in a financial
benefit to the stockholder. For purposes of Section 203, an "interested
stockholder" is defined to include any person that is (i) the owner of 15% or
more of the voting stock outstanding of the corporation, (ii) an affiliate or
associate of that corporation

54
<PAGE>

and was the owner of 15% or more of the voting stock outstanding of the
corporation, at any time within three years immediately prior to the relevant
date, and (iii) an affiliate or associate of the persons described in the
foregoing clauses (i) or (ii). Under certain circumstances, Section 203 of the
DGCL makes it more difficult for an "interested stockholder" to effect various
business combinations with a corporation for a three-year period, although the
stockholders may, by adopting an amendment to the corporation's certificate of
incorporation or bylaws, elect for the corporation not to be governed by
Section 203, effective 12 months after adoption. Neither the Company's
Certificate of Incorporation nor the bylaws exempt the Company from the
restrictions imposed under Section 203 of the DGCL. It is anticipated that the
provisions of Section 203 of the DGCL may encourage companies interested in
acquiring the Company to negotiate in advance with the Board of Directors of
the Company because the stockholder approval requirement would be avoided if a
majority of the directors then in office approve either the business
combination or the transaction that results in the stockholder becoming an
interested stockholder.

Annual meetings of stockholders shall be held to elect the Board of Directors
of the Company and transact such other business as may be properly brought
before the meeting. Special meetings of stockholders may be called by the
Chairman, Chief Executive Officer or a majority of the Board of Directors of
the Company. The stockholders may act by written consent in lieu of a meeting
of stockholders until such time as all shares of Class B Common Stock cease to
be outstanding.

The Certificate of Incorporation may be amended with the approval of a
majority of the Board of Directors of the Company and the holders of a majority
of the Company's voting securities outstanding.

The number of Directors which shall constitute the whole Board of Directors
of the Company shall be fixed by resolution of the Board of Directors of the
Company. The size of the initial Board is fixed at eleven members. The
Directors shall be elected at the annual meeting of the stockholders, except
for filling vacancies. Directors may be removed with the approval of the
holders of a majority of the Company's voting power present and entitled to
vote at a meeting of stockholders. Vacancies and newly created directorships on
the Board of Directors of the Company resulting from any increase in the number
of Directors may be filled by a majority of the Directors then in office,
although less than a quorum, a sole remaining Director, or the holders of a
majority of the voting power present and entitled to vote at a meeting of
stockholders. In connection with the Combination, the Company has agreed to
cause the election of the following individuals to the Board of Directors of
the Company, subject to certain conditions: (i) each of the Limited Partners so
long as they collectively own at least 69% of the aggregate amount of Class A
Common Stock received pursuant to the Conversion; (ii) Mr. O'Connell and either
Mr. Ahlers or Mr. Allen, so long as the Limited Partners collectively own at
least 45% of the aggregate amount of the Class A Common Stock received pursuant
to the Conversion; and (iii) Mr. O'Connell, so long as the Limited Partners
collectively own at least 34% of the aggregate amount of Class A Common Stock
received pursuant to the Conversion.

The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the stockholders entitled to vote generally shall
constitute a quorum for stockholder action at any meeting.

LIMITATION OF LIABILITY; INDEMNIFICATION

The Company's Certificate of Incorporation contains certain provisions
permitted under the DGCL relating to the liability of directors. These
provisions eliminate a Director's personal liability for monetary damages
resulting from a breach of fiduciary duty, except in certain circumstances
involving certain wrongful acts, including (i) for any breach of the Director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the Director derives an improper personal benefit. These
provisions do not limit or eliminate the rights of the Company or any
stockholder to seek non-monetary relief, such as an injunction or rescission,
in the event of a breach of a Director's fiduciary duty. These provisions will
not alter a Director's liability under federal securities laws. The Company's
bylaws also contains provisions indemnifying the Directors and officers of the
Company to the fullest extent permitted by DGCL. The

55
<PAGE>

Company believes that these provisions will assist the Company in attracting
and retaining qualified individuals to serve as directors and officers. See
"Management--Limitation of Liability and Indemnification Matters."

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Class A Common Stock is First
Chicago Trust Company of New York.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been no public market for the Class A
Common Stock of the Company. Sales of substantial numbers of shares of Common
Stock into the public market after the Offering, or the perception that such
sales could occur, could materially and adversely affect the market price of
the Class A Common Stock prevailing from time to time or could impair the
Company's future ability to obtain capital through an offering of equity
securities. The Company cannot predict the effect, if any, that sales of
shares of Common Stock, or the availability of such shares for future sales,
will have on future market prices of the Common Stock. Such sales also may
make it more difficult for the Company to sell equity securities or equity-
related securities in the future at the time and price it deems appropriate.

Upon completion of the Offering, the Company will have an aggregate of
shares of Class A Common Stock outstanding ( if the
Underwriters over-allotment option is exercised in full) and shares of
Class B Common Stock outstanding. Of these shares, only the shares
sold in the Offering will be freely tradeable without restriction or further
registration under the Securities Act of 1933, unless such shares are
purchased by "affiliates" of the Company as that term is defined in Rule 144
under the Securities Act ("Affiliates"). The remaining shares of Common Stock
held by existing stockholders are "restricted securities" as that term is
defined in Rule 144 under the Securities Act ("Restricted Shares"). Restricted
Shares may be sold in the public market only if registered or if they qualify
for an exemption from registration under Rules 144, 144(k) or 701 promulgated
under the Securities Act, which rules are summarized below. As a result of the
contractual restrictions described below and the provisions of Rules 144,
144(k) and 701, no shares of Common Stock will be available for sale in the
public market prior to expiration of the lock-up agreements 180 days after the
date of this Prospectus.

All Directors, officers and existing stockholders of the Company have agreed
that they will not (i) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right, or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock (provided
that such shares or any securities are either now owned by the undersigned or
are hereafter acquired prior to or in connection with the Offering), or (ii)
enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of such shares of
Common Stock, whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities,
in cash or otherwise other than (x) as a bona fide gift or gifts; provided the
donee or donees thereof agree to be bound by the lock-up agreement or (y) a
transfer to employees of Modem Media made in connection with the Combination
provided such transferees thereof agree to be bound by the lock-up, for a
period ending 180 days after the date of this Prospectus, without the prior
written consent of Morgan Stanley & Co. Incorporated. Morgan Stanley & Co.
Incorporated currently has no plans to release any portion of the securities
subject to lock-up agreements.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned Restricted Shares for at least two years (including
the holding period of any prior owner except an Affiliate) would be entitled
to sell within any three-month period a number of shares that does not exceed
the greater of (i) one percent of the number of shares of Common Stock then
outstanding (which will equal approximately shares immediately after
this

56
<PAGE>

offering) or (ii) the average weekly trading volume of the Common Stock on the
Nasdaq National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale. Sales under Rule 144 are also
subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. Under Rule
144(k), a person who is not deemed to have been an Affiliate of the Company at
any time during the 90 days preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least three years (including the holding
period of any prior owner except an Affiliate), is entitled to sell such shares
without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144. In general, under Rule 701 of the
Securities Act as currently in effect, any employee, consultant or advisor of
the Company who purchased shares from the Company in connection with a
compensatory stock or option plan or other written agreement is eligible to
resell such shares 90 days after the effective date of the Offering in reliance
on Rule 144, but without compliance with certain restrictions, including the
holding period, contained in Rule 144.

The Commission has recently proposed reducing the initial Rule 144 holding
period to one year and the Rule 144(k) holding period to two years. There can
be no assurance as to when or whether such rule changes will be enacted. If
enacted, such modifications will have a material effect on the times when
shares of the Company's Common Stock become eligible for resale.

The Company intends to file a registration statement approximately 90 days
after the Offering to register the shares of Class A Common Stock reserved
for issuance under the Company's 1996 Stock Option Plan and 1996 Employee Stock
Purchase Plan and the shares of Class A Common Stock issuable upon the
exercise of options granted to certain employees of Modem Media in connection
with the Conversion. Based on the number of shares reserved for issuance as of
the date of this Prospectus under such plan, such registration statement would
cover approximately shares. See "Management--Stock Plans."
Accordingly, shares registered under such registration statement will be
available for sale in the open market, unless such shares are subject to
vesting restrictions with the Company or the lock-up agreements described
above. As of the date of this Prospectus, no options were outstanding under the
Company's 1996 Stock Plan. Concurrently with the consummation of the Offering,
the Company intends to grant options to purchase an aggregate of shares
of Class A Common Stock pursuant to the 1996 Stock Plan to certain Directors,
officers and employees of the Company at an exercise price equal to the initial
public offering price, of which will be vested immediately. See
"Management--Stock Plans."

57
<PAGE>

UNDERWRITERS

Under the terms and subject to conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the
Underwriters named below, for whom Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation and Robertson, Stephens &
Company LLC are serving as representatives for the Underwriters (the
"Representatives"), have severally agreed to purchase, and the Company and the
Selling Stockholders have agreed to sell to them severally, the respective
number of shares of Class A Common Stock set forth opposite the name of each
Underwriter below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
Morgan Stanley & Co. Incorporated..................................
Donaldson, Lufkin & Jenrette Securities Corporation................
Robertson, Stephens & Company LLC..................................
---------
Total........................................................
=========
</TABLE>

The Underwriters initially propose to offer part of the shares of Class A
Common Stock directly to the public at the price to public 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 price to public. 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 offering of the shares of Class A Common Stock, the offering
price and other selling terms may from time to time be varied by the
Representatives.

Pursuant to the Underwriting Agreement, the Company has granted to the
Underwriters an option, exercisable for 30 days from the date hereof, to
purchase up to additional shares of Class A Common Stock at the price to
public set forth on the cover page hereof, less underwriting discounts and
commissions. The Underwriters may exercise such option solely for the purpose
of covering over-allotments, if any, incurred in the sale of the shares of
Class A Common Stock offered hereby. To the extent that 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 of shares to be purchased and offered by such Underwriter
in the above table bears to the total number of shares to be purchased by the
Underwriters.

Application has been made to list the Class A Common Stock for quotation on
the Nasdaq National Market under the symbol "TNTI."

The Company and its Directors and officers, and all stockholders of the
Company, have agreed that they will not (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right, or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(provided that such shares or any securities are either now owned by the
undersigned or are

58
<PAGE>

hereafter acquired prior to or in connection with the Offering), or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of such shares of Common
Stock, whether any such transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Stock or such other securities, in cash or
otherwise other than (w) as a bona fide gift or gifts, provided the donee or
donees thereof agree to be bound by the lock-up agreement, (x) a transfer to
employees of Modem Media made in connection with the Combination provided such
transferees thereof agree to be bound by the lock-up, (y) the sale to the
Underwriters of any shares of Class A Common Stock pursuant to the
Underwriting Agreement or (z) the grant of options or issuance of stock upon
the exercise of outstanding stock options pursuant to the Company's stock
option plans, for a period ending 180 days after the date of this Prospectus,
without the prior written consent of Morgan Stanley & Co. Incorporated. See
"Shares Eligible for Future Sale."

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, True North and the Selling Stockholders and the Underwriters
have agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act.

From time to time Morgan Stanley & Co. Incorporated has provided, and
continues to provide, investment banking services to the Company and True
North. In connection with the Conversion and Combination, Morgan Stanley & Co.
Incorporated has performed certain financial advisory services, including the
issuance of a fairness opinion, to True North, and has received aggregate fees
from True North during the past year of approximately $1.3 million in
connection with all such services.

PRICING OF THE OFFERING

Prior to the Offering, there has been no public market for the shares of
Class A Common Stock. Consequently, the initial public offering price will be
determined by negotiation among the Company, the Selling Stockholders and the
Representatives. Among the factors to be considered in determining the initial
public offering price will be the future prospects of the Company and its
industry in general, sales, earnings and certain other financial and operating
information of the Company in recent periods, and the price-earnings ratios,
market prices of securities and certain financial and operating information of
companies engaged in activities similar to those of the Company. There can be
no assurance that a regular trading market for the shares of Class A Common
Stock will develop after this offering or, if developed, that a public trading
market can be sustained. There can be no assurance that the prices at which
the Class A Common Stock will sell in the public market after the Offering
will not be lower than the price at which it is issued by the Underwriters in
the Offering.

LEGAL MATTERS

Certain legal matters with respect to the legality of the issuance of the
shares of Class A Common Stock offered hereby will be passed upon for the
Company and the Selling Stockholders by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California. Certain legal matters in
connection with the Offering will be passed upon for the Underwriters by
Katten Muchin & Zavis, Chicago, Illinois.

EXPERTS

The audited financial statements of Modem Media Advertising Limited
Partnership as of December 31, 1994 and 1995 and for each of the three years
in the period ended December 31, 1995 included in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.

59
<PAGE>

The audited combined financial statements of the True North Units as of
December 31, 1994 and 1995 and for the years then ended included in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

The audited financial statements of R/GA Interactive, Inc. as of December 31,
1993 and 1994 and June 30, 1995 and for the period from inception through
December 31, 1993, the year ended December 31, 1994 and the six months ended
June 30, 1995 included in this Prospectus and elsewhere in the Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
giving said reports.

The audited financial statements of Christiansen, Fritsch, Giersdorf, Grant &
Sperry, Inc. as of December 31, 1993 and March 31, 1994 and for the year ended
December 31, 1993 and the three months ended March 31, 1994 included in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form S-
1 (the "Registration Statement") under the Securities Act with respect to the
shares of Class A 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. Certain items are omitted in accordance with the rules
and regulations of the Commission. For further information with respect to the
Company and the Class A Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed therewith.
Statements contained in this Prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. A copy of the Registration
Statement, and the exhibits and schedules thereto, may be inspected without
charge at the public reference facilities maintained by the Commission in Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
regional offices located at the Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor, New
York, New York 10048, and copies of all or any part of the Registration
Statement may be obtained from such offices upon the payment of the fees
prescribed by the Commission. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
site is http://www.sec.gov.

60
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MODEM MEDIA ADVERTISING LIMITED PARTNERSHIP
Report of Independent Public Accountants................................ F-3
Balance Sheets as of December 31, 1994 and 1995 and (unaudited) June 30,
1996................................................................... F-4
Statements of Income for the years ended December 31, 1993, 1994 and
1995 and (unaudited) the six months ended June 30, 1995 and 1996....... F-5
Statements of Partners' Capital for the years ended December 31, 1993,
1994 and 1995 and (unaudited) the six months ended June 30, 1996....... F-6
Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995 and (unaudited) the six months ended June 30, 1995 and 1996....... F-7
Notes to Financial Statements........................................... F-8
TRUE NORTH UNITS
Report of Independent Public Accountants................................ F-12
Combined Balance Sheets as of December 31, 1994 and 1995 and (unaudited)
June 30, 1996.......................................................... F-13
Combined Statements of Income (Loss) and Retained Earnings (Deficit) for
the years ended December 31, 1994 and 1995 and (unaudited) the six
months ended June 30, 1995 and 1996.................................... F-14
Combined Statements of Cash Flows for the years ended December 31, 1994
and 1995 and (unaudited) the six months ended June 30, 1995 and 1996... F-15
Notes to Combined Financial Statements.................................. F-16
R/GA INTERACTIVE, INC.
Report of Independent Public Accountants................................ F-22
Balance Sheets as of December 31, 1993, December 31, 1994, and June 30,
1995................................................................... F-23
Statements of Operations and Retained Deficit for the Period from
Inception through December 31, 1993, the year ended December 31, 1994
and the six months ended June 30, 1995................................. F-24
Statements of Cash Flows for the Period from Inception through December
31, 1993, the year ended December 31, 1994 and the six months ended
June 30, 1995.......................................................... F-25
Notes to Financial Statements........................................... F-26
CHRISTIANSEN, FRITSCH, GIERSDORF, GRANT & SPERRY, INC.
Report of Independent Public Accountants................................ F-29
Balance Sheets as of December 31, 1993 and March 31, 1994............... F-30
Statements of Loss and Retained Deficit for the year ended December 31,
1993 and the three months ended March 31, 1994......................... F-31
Statements of Cash Flows for the year ended December 31, 1993 and the
three months ended March 31, 1994...................................... F-32
Notes to Financial Statements........................................... F-33
</TABLE>

F-1
<PAGE>

MODEM MEDIA ADVERTISING LIMITED PARTNERSHIP

FINANCIAL STATEMENTS

AS OF DECEMBER 31, 1994 AND 1995 AND (UNAUDITED) JUNE 30, 1996
TOGETHER WITH AUDITORS' REPORT

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
True North Communications Inc.:

We have audited the accompanying balance sheets of Modem Media Advertising
Limited Partnership (a Connecticut limited partnership) as of December 31,
1994 and 1995, and the related statements of income, partners' capital and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the management of Modem
Media Advertising Limited Partnership. 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 Modem Media Advertising
Limited Partnership as of December 31, 1994 and 1995 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois
September 23, 1996
(except with respect to
the matters discussed in
Note 7, to which the
date is October 23, 1996)

F-3
<PAGE>

MODEM MEDIA ADVERTISING LIMITED PARTNERSHIP

BALANCE SHEETS

AS OF DECEMBER 31, 1994 AND 1995 AND (UNAUDITED) JUNE 30, 1996

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- JUNE 30,
ASSETS 1994 1995 1996
------ ---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash...................................... $ 2,091 $ 184,041 $ 518,377
Accounts receivable, net of reserve for
doubtful accounts of $21,321 in 1994,
$262,139 in 1995 and $280,969 (unaudited)
in 1996.................................. 889,479 4,933,515 4,940,591
Accrued revenues.......................... 133,049 315,594 857,208
Unbilled charges.......................... 520,904 758,520 405,071
Prepaid expenses.......................... 15,510 22,329 63,383
---------- ---------- ----------
Total current assets.................... 1,561,033 6,213,999 6,784,630
---------- ---------- ----------
PROPERTY AND EQUIPMENT:
Computers and software.................... 263,914 1,048,595 1,415,169
Equipment under capital leases............ -- 302,322 435,795
Leasehold improvements, furniture and
other.................................... 58,159 167,464 293,192
---------- ---------- ----------
Total property and equipment............ 322,073 1,518,381 2,144,156
Less: Accumulated depreciation............ (58,876) (311,801) (572,623)
---------- ---------- ----------
Total property and equipment, net....... 263,197 1,206,580 1,571,533
---------- ---------- ----------
OTHER ASSETS................................ 29,895 42,731 67,283
---------- ---------- ----------
Total assets............................ $1,854,125 $7,463,310 $8,423,446
========== ========== ==========
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable.......................... $ 268,440 $2,550,593 $2,336,221
Accrued compensation...................... 152,344 319,671 855,376
Other current liabilities................. 3,729 52,547 50,554
Bank overdrafts........................... -- 157,557 --
Advance billings.......................... 103,000 353,288 674,955
Current portion of capital lease
obligations.............................. -- 82,235 122,399
---------- ---------- ----------
Total current liabilities............... 527,513 3,515,891 4,039,505
CAPITAL LEASE OBLIGATIONS, LESS CURRENT
PORTION.................................... -- 185,706 160,710
---------- ---------- ----------
Total liabilities....................... 527,513 3,701,597 4,200,215
---------- ---------- ----------
PARTNERS' CAPITAL
General partner's interest................ 1,050,929 2,028,646 2,570,971
Limited partners' interest................ 275,683 1,733,067 1,652,260
---------- ---------- ----------
Total partners' capital................. 1,326,612 3,761,713 4,223,231
---------- ---------- ----------
Total liabilities and partners' capital. $1,854,125 $7,463,310 $8,423,446
========== ========== ==========
</TABLE>

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

F-4
<PAGE>

MODEM MEDIA ADVERTISING LIMITED PARTNERSHIP

STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND
(UNAUDITED) THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
--------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES................ $1,221,347 $4,334,604 $11,718,433 $4,448,555 $7,908,549
---------- ---------- ----------- ---------- ----------
OPERATING EXPENSES:
Salaries, outside
services and employee
benefits expenses.... 245,471 1,910,608 4,913,378 1,720,017 4,487,993
Guaranteed payments to
partners............. 160,241 328,345 628,750 222,083 433,333
Office and general
expenses............. 334,674 858,449 2,223,913 599,678 1,698,629
---------- ---------- ----------- ---------- ----------
Total operating
expenses........... 740,386 3,097,402 7,766,041 2,541,778 6,619,955
---------- ---------- ----------- ---------- ----------
OPERATING INCOME........ 480,961 1,237,202 3,952,392 1,906,777 1,288,594
Interest income....... 2,531 4,154 20,114 6,052 9,119
Interest expense...... -- -- (12,645) (1,736) (20,340)
---------- ---------- ----------- ---------- ----------
NET INCOME.............. $ 483,492 $1,241,356 $ 3,959,861 $1,911,093 $1,277,373
========== ========== =========== ========== ==========
</TABLE>

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

F-5
<PAGE>

MODEM MEDIA ADVERTISING LIMITED PARTNERSHIP

STATEMENTS OF PARTNERS' CAPITAL

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND
(UNAUDITED) THE SIX MONTHS ENDED JUNE 30, 1996

<TABLE>
<CAPTION>
GENERAL LIMITED TOTAL
PARTNER'S PARTNERS' PARTNERS'
INTEREST INTEREST CAPITAL
---------- ---------- ----------
<S> <C> <C> <C>
Partners' Capital, January 1, 1993......... $ 299,265 $ -- $ 299,265
Net Income............................... 390,428 93,064 483,492
Distributions............................ (303,374) (10,000) (313,374)
Contributions............................ -- 2,345 2,345
Contributions Receivable (Payable)....... 299,265 (299,265) --
---------- ---------- ----------
Partners' Capital, December 31, 1993....... 685,584 (213,856) 471,728
Net Income............................... 633,092 608,264 1,241,356
Distributions............................ (267,747) (118,725) (386,472)
---------- ---------- ----------
Partners' Capital, December 31, 1994....... 1,050,929 275,683 1,326,612
Net Income............................... 2,019,529 1,940,332 3,959,861
Distributions............................ (1,041,812) (482,948) (1,524,760)
---------- ---------- ----------
Partners' Capital, December 31, 1995....... 2,028,646 1,733,067 3,761,713
Net Income (unaudited)................... 651,460 625,913 1,277,373
Distributions (unaudited)................ (109,135) (714,375) (823,510)
Contributions (unaudited)................ -- 7,655 7,655
---------- ---------- ----------
Partners' Capital, June 30, 1996
(unaudited)............................... $2,570,971 $1,652,260 $4,223,231
========== ========== ==========
</TABLE>

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

F-6
<PAGE>

MODEM MEDIA ADVERTISING LIMITED PARTNERSHIP

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 AND
(UNAUDITED) THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
--------------------------------- ----------------------
1993 1994 1995 1995 1996
-------- ---------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income........... $483,492 $1,241,356 $ 3,959,861 $1,911,093 $1,277,373
Adjustments to
reconcile net income
to net cash provided
by operating
activities--
Depreciation and
amortization...... 7,939 53,767 252,925 40,125 260,822
Increase in
accounts
receivable........ (143,452) (451,682) (4,044,036) (2,222,958) (7,076)
(Increase) decrease
in accrued
revenue........... 37,020 (88,304) (182,545) 75,529 (541,614)
(Increase) decrease
in unbilled
charges........... -- (520,904) (237,616) (345,102) 353,449
Increase in prepaid
expenses.......... (11,762) (3,748) (6,819) (28,070) (41,054)
Increase in other
assets............ (17,715) (6,478) (12,836) (35,939) (24,552)
Increase (decrease)
in accounts
payable and other
current
liabilities....... (22,403) 368,916 2,498,298 1,536,728 319,340
Increase (decrease)
in advance
billings.......... (30,000) 65,500 250,288 353,308 321,667
-------- ---------- ----------- ---------- ----------
Net cash provided
by operating
activities...... 303,119 658,423 2,477,520 1,284,714 1,918,355
-------- ---------- ----------- ---------- ----------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of property
and equipment....... (31,059) (270,674) (893,986) (397,416) (492,302)
Retirement of
property and
equipment........... 12,783 -- -- -- --
-------- ---------- ----------- ---------- ----------
Net cash used in
investing
activities...... (18,276) (270,674) (893,986) (397,416) (492,302)
-------- ---------- ----------- ---------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Bank overdrafts...... -- -- 157,557 -- (157,557)
Principal payments
under capital lease
obligations......... -- -- (34,381) (1,213) (118,305)
Partners'
distributions, net.. (311,029) (386,472) (1,524,760) (395,629) (815,855)
-------- ---------- ----------- ---------- ----------
Net cash used in
financing
activities...... (311,029) (386,472) (1,401,584) (396,842) (1,091,717)
-------- ---------- ----------- ---------- ----------
NET INCREASE (DECREASE)
IN CASH............... (26,186) 1,277 181,950 490,456 334,336
CASH, at beginning of
period................ 27,000 814 2,091 2,091 184,041
-------- ---------- ----------- ---------- ----------
CASH, at end of period. $ 814 $ 2,091 $ 184,041 $ 492,547 $ 518,377
======== ========== =========== ========== ==========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW
INFORMATION:
Cash paid during the
period for interest. $ -- $ -- $ 12,645 $ 1,736 $ 10,104
======== ========== =========== ========== ==========
SUPPLEMENTAL DISCLOSURE
OF NONCASH FINANCING
ACTIVITIES:
Investment in
property and
equipment through
incurrence of
capitalized lease
obligations......... $ -- $ -- $ 302,322 $ -- $ 133,473
======== ========== =========== ========== ==========
</TABLE>

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

F-7
<PAGE>

MODEM MEDIA ADVERTISING LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1993, 1994 AND 1995 AND (UNAUDITED) JUNE 30, 1996

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Modem Media Advertising Limited Partnership, a Connecticut limited
partnership (the "Company"), was founded as Interactive Response Media, a
Connecticut General Partnership, in 1987. In June 1993 Interactive Response
Media reorganized as a Connecticut Limited Partnership and changed its name to
Modem Media Advertising Limited Partnership. The Company is a technology-based
marketing communications firm which provides interactive marketing solutions
to its customers. The Company's operations are subject to certain risks and
uncertainties including dependence on key clients (see Significant Customers
below) and an absence of long-term contracts with all clients; management of
growth and the related strain on management and human resources; dependence on
key management personnel; competition and low barriers to entry; uncertainty
of market potential for digital interactive marketing solutions; dependence on
continued growth in use of the Internet and the World Wide Web; rapid
technological change; conflicts of interests between clients; uncertainties
regarding intellectual property rights; government regulation of the marketing
communications industry; and susceptibility to general economic conditions.
See also the "Risk Factors" section of this Form S-1 for additional
information.

UNAUDITED FINANCIAL STATEMENTS

The unaudited balance sheet as of June 30, 1996 and the unaudited statements
of income, and cash flows for the six months ended June 30, 1995, and the
unaudited statements of income, partners' capital and cash flows for the six
months ended June 30, 1996 reflect all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary for
a fair presentation of the results of the interim periods. The operating
results for the six months ended June 30, 1995 and 1996 are not necessarily
indicative of the results to be expected for any other interim period or any
future fiscal year.

SIGNIFICANT CUSTOMERS

The Company's services have been provided to a limited number of customers
located in the United States in a variety of industries. The Company generally
does not require collateral and maintains a reserve for potential customer
account adjustments. One telecommunications industry customer accounted for
approximately 29%, 57%, 78%, 71% (unaudited) and 84% (unaudited) of the
Company's revenues in the years ended December 31, 1993, 1994, 1995, and the
six months ended June 30, 1995 and 1996, respectively. Combined revenue from
two customers in the retail and beverage industries represented 36%, 27%, 12%,
17% (unaudited) and 6% (unaudited) of the Company's revenues in the years
ended December 31, 1993, 1994, 1995, and the six months ended June 30, 1995
and 1996, respectively.

Subsequent to December 31, 1995, the Company substantially completed all
contract work in progress for a significant customer which comprised 15%, 15%,
6%, 9% (unaudited) and 0% (unaudited) of total Company revenue for the years
ended December 31, 1993, 1994, 1995 and the six months ended June 30, 1995 and
1996, respectively. No significant future contract work is in progress for
this customer. Management believes that the absence of further contract work
with this customer will not have a material adverse effect on the operations
of the Company.

MANAGEMENT ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect 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 revenue and expenses during the
reported period. Actual results could differ from these estimates.

REVENUE RECOGNITION

Revenue represents fees for marketing services rendered as well as
commissions on media and production costs. The Company recognizes revenue for
fees as they are earned based principally on labor costs incurred. This method
approximates the percentage of completion method. Commissions on media and
production costs

F-8
<PAGE>

MODEM MEDIA ADVERTISING LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

are recognized as revenue when billed. Advance billings represent billings in
excess of costs incurred and estimated earnings for advertising services.
Accrued revenues represent costs incurred and estimated earnings in excess of
billings. Unbilled charges consist of media, production and other reimbursable
out-of-pocket costs incurred but not yet billed. Revenue is reported net of
reimbursable costs. Losses on customer work are recognized when known.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are depreciated over their
estimated useful lives ranging from three to eight years using both straight-
line and accelerated methods. Purchased software and third party costs
incurred to develop software for internal company use are capitalized and
amortized over three years. Leasehold improvements are amortized over the
lesser of their useful lives or the remaining term of the related lease. The
Company reviews its recorded fixed assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable and provides currently for any indicated impairments.

INCOME TAXES

The Company is a limited partnership pursuant to the provisions of the
Internal Revenue and Connecticut State Tax Codes. Consequently, any federal
and state income taxes applicable to the Company's income are payable directly
by its partners. Taxable income to the partners was $464,784, $1,465,334, and
$3,158,033, for the years ended December 31, 1993, 1994 and 1995.

2. RESERVE FOR DOUBTFUL ACCOUNTS

The Company's reserve for doubtful accounts and related activity is as
follows:

<TABLE>
<CAPTION>
ADDITIONS
BALANCE CHARGED BALANCE
AT TO COSTS AT END
BEGINNING AND OF
OF PERIOD EXPENSES (DEDUCTIONS) PERIOD
--------- --------- ------------ --------
<S> <C> <C> <C> <C>
Year Ended December 31, 1993...... $ 0 $ 42,779 $ 0 $ 42,779
Year Ended December 31, 1994...... $ 42,779 $ 22,421 $(43,879) $ 21,321
Year Ended December 31, 1995...... $ 21,321 $258,273 $(17,455) $262,139
Six Months Ended June 30, 1996
(unaudited)...................... $262,139 $ 38,988 $(20,158) $280,969
</TABLE>

3. LEASE COMMITMENTS

The Company leases office space in Westport and Norwalk, Connecticut and
equipment under capital and operating leases expiring in various years through
2000. The total rent expense related to operating leases totaled $40,025,
$74,086, $295,940, $47,061 (unaudited) and $205,602 (unaudited) in the years
ended December 31, 1993, 1994, 1995, and the six months ended June 30, 1995
and 1996, respectively.

Minimum future lease payments under noncancelable capital and operating
leases with lease terms in excess of one year as of December 31, 1995, and
(unaudited) June 30, 1996 are as follows:

<TABLE>
<CAPTION>
JUNE 30, 1996
DECEMBER 31, 1995 (UNAUDITED)
-------------------- --------------------
CAPITAL OPERATING CAPITAL OPERATING
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
1996............ $100,629 $ 444,510 $108,125 $ 238,908
1997............ 58,809 511,124 58,809 511,124
1998............ 58,809 487,922 58,809 487,922
1999............ 57,598 464,720 57,598 464,720
2000............ 35,581 271,087 35,581 271,087
-------- ---------- -------- ----------
311,426 $2,179,363 318,922 $1,973,761
========== ==========
Less: amount
representing
interest....... (43,485) (35,813)
-------- --------
$267,941 $283,109
======== ========
</TABLE>

F-9
<PAGE>

MODEM MEDIA ADVERTISING LIMITED PARTNERSHIP

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)

The Company's obligations under the office space lease are guaranteed as of
December 31, 1995 by a $160,000 stand by letter of credit secured by accounts
receivable and other assets. In April 1996, the Company obtained an additional
$100,000 standby letter of credit to guarantee certain vendor payables.

The Company entered into two sublease agreements on October 1, 1995 and May
1, 1996, respectively, on the Norwalk, Connecticut locations. Total additional
revenues to be received in future years pursuant to these sublease agreements
which will offset the Company's obligation approximate $87,600 as of December
31, 1995 and $76,800 (unaudited) as of June 30, 1996.

4. RETIREMENT BENEFIT PLAN

Since January 1, 1994, the Company has maintained a profit sharing plan with
a 401(k) feature for the benefit of eligible employees. The Company made
discretionary matching contributions of $93,150, $60,000, $0 (unaudited) and
$50,000 (unaudited) in the years ended December 31, 1994 and 1995 and the six
months ended June 30, 1995 and 1996, respectively.

5. LINE OF CREDIT

At December 31, 1995, the Company had confirmed a $250,000 bank line of
credit secured by accounts receivable and other assets (which in turn are
guaranteed by the limited partners of the Company). In April 1996, the bank
line of credit was increased to $1,000,000. There were no borrowings under
bank lines during the years ended December 31, 1993, 1994 or 1995, or the six
months ended June 30, 1995 or 1996.

6. TRANSACTIONS WITH PARTNERS

The Company's partners are also employees of the Company and their
compensation is included in the accompanying statements of income and
partners' capital as "Guaranteed payments to partners." Distributions of the
Company's net income to the partners is included in the financial statements
as "Partners' distributions." The Company had a loan receivable from one
partner with a balance of $21,751 and $22,496, as of December 31, 1994 and
1995, respectively. This loan receivable is included in Other Assets in the
accompanying balance sheets.

7. SUBSEQUENT EVENTS

Effective September 30, 1996, the assets which secured the line of credit
(see Note 5. above) were no longer guaranteed by the limited partners of the
Company.

In October 1996, the Company established the Modem Media Advertising Limited
Partnership 1996 Option Plan and granted fully vested options to purchase
Modem Media Advertising Limited Partnership interests to certain management
employees. These options will result in a noncash nonrecurring charge.

In October 1996, True North Communications Inc. agreed to acquire 49%
ownership of the Company directly from the partners. Subsequently, the Company
will incorporate as a C corporation under the name TN Technologies Holding
Inc. At the time of this incorporation, the Company will record tax amounts
primarily related to changing from a cash basis tax payer to an accrual basis
tax payer. Based on the Company's June 30, 1996 financial position, the
Company would record a charge against paid-in capital of $788,288 (unaudited),
current prepaid taxes of $270,448 (unaudited) and noncurrent tax liabilities
of $1,058,736 (unaudited). Additionally, in connection with the acquisition
and incorporation, an incentive compensation arrangement is expected to be
established that will provide for payments to the partner employees in the
event that certain annual operating results are achieved in 1996.

In October 1996, the Company also agreed to acquire, subject to certain
closing conditions, certain businesses from True North Communications Inc. in
exchange for approximately 9% ownership of the Company.

F-10
<PAGE>

TRUE NORTH UNITS

COMBINED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 1994 AND 1995 AND (UNAUDITED) JUNE 30, 1996
TOGETHER WITH AUDITOR'S REPORT

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
True North Communications Inc.:

We have audited the accompanying combined balance sheets of the True North
Units, consisting of the businesses described in Note 1 to the combined
financial statements, as of December 31, 1994 and 1995, and the related
combined statements of income (loss) and retained earnings (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the management of True North Communications Inc. 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 audits 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 combined statements referred to above present fairly, in
all material respects, the financial position of the True North Units as of
December 31, 1994 and 1995, and the results of their operations and cash flows
for the years then ended, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois
September 30, 1996
(except for the matter
discussed in Note 10,
to which the date is
October 21, 1996)

F-12
<PAGE>

TRUE NORTH UNITS

COMBINED BALANCE SHEETS

AS OF DECEMBER 31, 1994 AND 1995 AND (UNAUDITED) JUNE 30, 1996

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- JUNE 30,
ASSETS 1994 1995 1996
------ ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash................................... $ 236,141 $ 446,229 $ 246,282
Accounts Receivable, net of reserve for
doubtful accounts of $87,710 in 1994,
$102,998 in 1995 and $76,150
(unaudited) in 1996................... 2,399,412 4,540,255 5,339,835
Accounts Receivable from Related Party. -- 79,403 79,403
Accrued Revenues....................... 113,511 566,477 461,560
Unbilled Charges....................... -- 205,069 397,372
Income Taxes Receivable................ 111,914 1,173,573 1,714,317
Prepaid Expenses and Other Current
Assets................................ 8,478 61,424 107,957
---------- ----------- -----------
Total Current Assets................. 2,869,456 7,072,430 8,346,726
---------- ----------- -----------
PROPERTY AND EQUIPMENT:
Computers and Software................. 201,534 3,740,679 4,807,093
Leasehold Improvements, Furniture and
Other................................. 140,501 250,846 343,691
---------- ----------- -----------
Total Property and Equipment......... 342,035 3,991,525 5,150,784
Less: Accumulated Depreciation and
Amortization.......................... (25,680) (465,043) (600,787)
---------- ----------- -----------
Total Property and Equipment, net.... 316,355 3,526,482 4,549,997
---------- ----------- -----------
GOODWILL, net of accumulated amortization
of $16,301 in 1994, $180,569 in 1995 and
$344,501 (unaudited) in 1996............ 723,733 3,748,559 3,584,627
---------- ----------- -----------
OTHER ASSETS............................. 2,384 2,384 2,384
---------- ----------- -----------
Total Assets......................... $3,911,928 $14,349,855 $16,483,734
========== =========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts Payable....................... $ 310,861 $ 891,557 $ 1,429,874
Earnout Payable........................ 54,118 1,143,626 132,006
Advance Billings....................... 1,721,281 2,419,649 2,952,044
Income Taxes Payable................... 181,932 -- --
Accrued Compensation................... 84,276 307,641 122,238
Other Current Liabilities.............. 21,133 265,763 153,623
---------- ----------- -----------
Total Current Liabilities............ 2,373,601 5,028,236 4,789,785
---------- ----------- -----------
DEFERRED TAX LIABILITY................... -- 250,808 376,212
---------- ----------- -----------
INTERCOMPANY LOANS PAYABLE............... 1,120,286 9,797,761 13,533,478
---------- ----------- -----------
STOCKHOLDER'S EQUITY
Common Stock, authorized, issued and
outstanding 6,250 shares for
Christiansen, Fritsch, Giersdorf,
Grant & Sperry, Inc. in 1994, 1995 and
(unaudited) 1996...................... 162,000 162,000 162,000
Retained Earnings (Deficit)............ 256,041 (888,950) (2,377,741)
---------- ----------- -----------
Total Stockholder's Equity........... 418,041 (726,950) (2,215,741)
---------- ----------- -----------
Total Liabilities and Stockholder's
Equity.............................. $3,911,928 $14,349,855 $16,483,734
========== =========== ===========
</TABLE>

The accompanying notes to combined financial statements
are an integral part of these balance sheets.

F-13
<PAGE>

TRUE NORTH UNITS

COMBINED STATEMENTS OF INCOME (LOSS) AND RETAINED EARNINGS (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
(UNAUDITED) THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
----------------------- -----------------------
1994 1995 1995 1996
---------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES..................... $4,019,724 $11,438,904 $4,201,508 $ 8,124,959
---------- ----------- ---------- -----------
OPERATING EXPENSES:
Salaries, Outside Services
and Employee Benefits
Expenses.................. 2,578,875 7,445,129 2,366,573 6,129,336
Office and General
Expenses.................. 1,059,658 5,728,138 1,705,492 4,526,770
Amortization of Goodwill... 16,301 164,268 8,980 163,932
---------- ----------- ---------- -----------
Total Operating Expenses. 3,654,834 13,337,535 4,081,045 10,820,038
---------- ----------- ---------- -----------
OPERATING INCOME (LOSS)...... 364,890 (1,898,631) 120,463 (2,695,079)
Other Income (Expense),
net....................... (38,831) 3,908 -- --
---------- ----------- ---------- -----------
INCOME (LOSS) BEFORE
PROVISION (BENEFIT) FOR
INCOME TAXES................ 326,059 (1,894,723) 120,463 (2,695,079)
PROVISION (BENEFIT) FOR
INCOME TAXES................ 70,018 (872,641) (9,376) (1,206,288)
---------- ----------- ---------- -----------
NET INCOME (LOSS)............ 256,041 (1,022,082) 129,839 (1,488,791)
DIVIDENDS.................... -- (123,409) (123,409) --
RETAINED EARNINGS (DEFICIT),
beginning of period......... -- 256,041 256,041 (889,450)
---------- ----------- ---------- -----------
RETAINED EARNINGS (DEFICIT),
end of period............... $ 256,041 $ (889,450) $ 262,471 $(2,378,241)
========== =========== ========== ===========
</TABLE>

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

F-14
<PAGE>

TRUE NORTH UNITS

COMBINED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
(UNAUDITED) THE SIX MONTHS ENDED JUNE 30, 1995 AND 1996

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------ -----------------------
1994 1995 1995 1996
----------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (Loss)......... $ 256,041 $(1,022,082) $ 129,839 $(1,488,791)
Adjustments to reconcile
net income (loss)
to net cash used in
operating activities--
Depreciation............ 99,410 429,205 116,259 135,744
Amortization of
Goodwill............... 16,301 164,268 8,980 163,932
Loss on Sale of
Equipment.............. 43,091 -- -- --
Changes in Assets and
Liabilities
Accounts Receivable... (1,594,042) (1,870,341) (1,764,145) (799,580)
Accounts Receivable
from Related Party... -- (79,403) -- --
Accrued Revenues...... -- (83,265) -- 104,917
Unbilled Charges...... 24,295 (202,817) 93,178 (192,303)
Prepaid Expenses and
Other Current Assets. 24,451 (52,894) (67,329) (46,533)
Accounts Payable...... (248,851) 577,976 1,314,150 538,317
Advance Billings...... 1,280,313 647,708 28,949 532,395
Income Taxes
Payable/Receivable... 70,018 (1,243,591) (96,655) (540,744)
Accrued Compensation.. 70,251 229,635 -- (185,403)
Other Current
Liabilities.......... (67,632) 3,641 (44,424) (112,140)
Deferred Income Taxes. -- 250,808 -- 125,404
----------- ----------- ---------- -----------
Net Cash Used in
Operating
Activities......... (26,354) (2,251,152) (281,198) (1,764,785)
----------- ----------- ---------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of Property and
Equipment................ (133,838) (3,595,122) (1,607,573) (1,079,165)
----------- ----------- ---------- -----------
Net Cash Used in In-
vesting
Activities......... (133,838) (3,595,122) (1,607,573) (1,079,165)
----------- ----------- ---------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Loans From Parent Company. 690,010 6,233,889 2,231,828 3,655,623
Dividends Paid to Parent
Company.................. -- (123,409) (123,409) --
Payment of Earnout........ -- (54,118) (54,118) (1,011,620)
Net Repayment of Short-
term Borrowings.......... (258,379) -- -- --
Repayments of Long-term
Debt..................... (180,907) -- -- --
----------- ----------- ---------- -----------
Net Cash Provided by
Financing Activi-
ties............... 250,724 6,056,362 2,054,301 2,644,003
----------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN
CASH....................... 90,532 210,088 165,530 (199,947)
CASH, beginning of period... 145,609 236,141 236,141 446,229
----------- ----------- ---------- -----------
CASH, end of period......... $ 236,141 $ 446,229 $ 401,671 $ 246,282
=========== =========== ========== ===========
</TABLE>

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

F-15
<PAGE>

TRUE NORTH UNITS

NOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 1994 AND 1995 AND (UNAUDITED) JUNE 30, 1996

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION--The combined financial statements include the
accounts of various businesses owned and operated by True North Communications
Inc. ("TNC") (together, the "True North Units"). These operations include:

. Christiansen, Fritsch, Giersdorf, Grant & Sperry, Inc. ("Cf2GS") which
TNC acquired effective April 1, 1994,

. R/GA Interactive, Inc. which TNC acquired effective July 1, 1995,

. Northern Lights Interactive which commenced operations in 1995 as
divisions of various subsidiary companies of TNC, and,

. Relationship Technology Group which commenced operations in 1994 as a
division of TNC.

The results of operations and cash flows of Cf2GS, Inc. and R/GA
Interactive, Inc. are included from their respective dates of acquisition (see
also Note 2). None of the True North Units either were owned by TNC in 1993 or
had operations in 1993.

All significant intercompany transactions have been eliminated.

DESCRIPTION OF BUSINESSES--The True North Units consist primarily of digital
marketing communications businesses which provide their clients with
technology-based marketing solutions as well as direct mail, media and general
advertising services. The operations of the True North Units are subject to
certain risks and uncertainties, including dependence on its relationship with
TNC for client referrals as well as management and administrative services;
limited operating history of certain businesses; dependence on key clients
(see Significant Customers below) and an absence of long-term contracts with
all clients; management of growth and the related strain on management and
human resources; dependence on key management personnel for certain
businesses; competition and low barriers to entry; uncertainty of market
potential for digital interactive marketing solutions; dependence on continued
growth in use of the Internet and the World Wide Web; rapid technological
change; conflicts of interests between clients; uncertainties regarding
intellectual property rights; risks associated with expanding operations
internationally in 1996; government regulation of the marketing communications
industry; and susceptibility to general economic conditions. See also the
"Risk Factors" Section of this Form S-1 for additional information.

UNAUDITED FINANCIAL STATEMENTS--The unaudited balance sheet as of June 30,
1996 and the unaudited statements of income (loss) and retained earnings
(deficit) and cash flows for the six months ended June 30, 1995 and 1996
reflect all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation of
the results of the interim periods. The operating results for the six months
ended June 30, 1995 and 1996 are not necessarily indicative of the results to
be expected for any other interim period or any future fiscal year.

USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that effect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenue and expenses during the reported
period. Actual results could differ from these estimates.

SIGNIFICANT CUSTOMERS--One customer, a financial institution, accounted for
approximately 18%, 25%, 10% (unaudited) and 14% (unaudited) of combined
revenues in 1994, 1995 and the six months ended June 30, 1995 and 1996,
respectively. Another customer, a government agency, accounted for
approximately 12% and

F-16
<PAGE>

TRUE NORTH UNITS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

10% (unaudited) of combined revenues in 1995 and the six months ended June 30,
1996, respectively. A third customer, in the entertainment industry, accounted
for approximately 13% and 11% (unaudited) of combined revenues in 1995 and the
six months ended June 30, 1996, respectively.

REVENUE RECOGNITION--Revenues represent fees for services rendered as well
as commissions on media and production costs. Fees are recognized as earned
based principally on labor costs incurred. This method approximates the
percentage-of-completion method. Provisions for any estimated losses on
uncompleted projects are made in the period in which such losses are
determinable. Commissions are recognized as revenue when billed. Revenue is
reported net of reimbursable expenses.

Accrued revenues represent cost incurred and estimated earnings in excess of
billings. Advance billings represent billings in excess of costs incurred and
estimated earnings for services. Unbilled charges represent media, production
and other reimbursable out-of-pocket costs incurred but not yet billed to
customers.

PROPERTY AND EQUIPMENT--Property and equipment are stated at cost and are
depreciated principally using the straight line method over their estimated
useful lives ranging from three to eight years. Purchased software and third-
party costs incurred to develop software for internal company use are
capitalized and amortized over five years. Leasehold improvements are
amortized over the lesser of the estimated useful life of the asset or the
life of the lease. Recorded fixed assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable and indicated impairments are provided for
currently.

GOODWILL--Goodwill is amortized over periods from seven to forty years.
Carrying values are periodically reviewed for impairment and adjusted, if
necessary, based upon current facts and circumstances and management's
estimates of undiscounted future operating earnings of the related businesses.

INCOME TAXES--The True North Units are parties to a tax sharing arrangement
with TNC whereby the True North Units provide for, and pay or receive, federal
and state taxes on a separate return basis based upon pretax income excluding
goodwill amortization expense. The True North Units' results are included in
the consolidated federal and state tax returns of TNC. The settlement of tax
provisions or benefits with TNC occurs in the subsequent year at the time TNC
files its related consolidated tax returns. Income taxes receivable or payable
therefore represent amounts due from or to TNC.

The True North Units provide for federal and state income taxes on earnings
regardless of the period in which such taxes are payable. Deferred income
taxes are recognized for temporary differences between financial and income
tax reporting based on enacted tax laws and rates.

2. ACQUIRED COMPANIES

Effective April 1, 1994, TNC acquired all of the outstanding common stock of
Cf2GS for $275,000, and assumed borrowings, debt and capital notes totaling
$414,286. The acquisition was accounted for using the purchase method of
accounting. The excess of the initial cost of the acquisition over the fair
market value of net assets acquired was $685,916. Under the terms of the
acquisition agreement, the former stockholders of Cf2GS are due annual earnout
payments based upon a percentage of revenues through 1998. Earnout amounts of
$54,118, $1,143,626 and $0 (unaudited) have been capitalized as goodwill in
1994, 1995 and at June 30, 1996, respectively. This portion of goodwill is
being amortized over forty years.

Effective July 1, 1995, TNC acquired certain assets and assumed certain
liabilities of various entities owned by Robert M. Greenberg. In addition, TNC
acquired from Robert M. Greenberg the common stock of R/GA Interactive, Inc.
The consideration paid was allocated to each of the operations acquired,
including R/GA Interactive, Inc., by TNC which resulted in goodwill of
$2,045,468. This portion of goodwill is being amortized over seven years.

F-17
<PAGE>

TRUE NORTH UNITS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

The following unaudited pro forma summary presents the combined results of
operations of the True North Units as if the acquisitions of Cf2GS and R/GA
Interactive, Inc. had occurred on January 1, 1994 and, therefore, includes the
amortization of goodwill from this date:

<TABLE>
<CAPTION>
1994 1995
---------- -----------
<S> <C> <C>
Revenues......................................... $5,697,690 $12,822,244
Net Loss......................................... $ (681,129) $(1,463,749)
</TABLE>

These pro forma results do not necessarily represent results which would
have occurred if these acquisitions had occurred on the date indicated or
which may be obtained in the future.

3. COSTS SHARED WITH PARENT COMPANY

As discussed in Note 1, the True North Units are divisions or subsidiaries
of TNC. TNC provides a wide range of services to the True North Units
including participation in and administration of certain employee benefit
plans (see also Note 6), accounting and treasury services, use of advertising
personnel to assist in the completion of marketing projects, and use of office
facilities and services for certain operations.

TNC charges for these services based on its estimated cost to provide these
services to the True North Units. Management of the True North Units and TNC
believe that the amounts charged for these services are not materially
different than the cost of obtaining these services from independent parties.
Charges amounted to $41,800, $861,442, $132,124 (unaudited) and $1,511,184
(unaudited) in 1994, 1995 and the six months ended June 30, 1995 and 1996,
respectively, and are included in office and general expenses in the combined
statements of income (loss) and retained earnings (deficit).

4. HOME OFFICE ALLOCATIONS

TNC also charges each of its operating units (including the True North
Units) for general corporate expenses incurred at the parent company level.
These costs include the costs of the corporate offices, primarily as they
relate to the administration of a public company. The amount of the charge is
based on the percentage of the operating unit's salaries to the total salaries
of all TNC operating units. It is TNC's policy to not assess its acquired
operating units this charge in the first year after the acquisition. Charges
amounted to $45,300, $432,286, $201,000 (unaudited) and $283,835 (unaudited)
in 1994, 1995 and the six months ended June 30, 1995 and 1996, respectively,
and are included in office and general expenses in the combined statements of
income (loss) and retained earnings (deficit).

5. LEASE OBLIGATIONS

The True North Units lease all of their office facilities as well as certain
equipment and vehicles under operating leases. All of the True North Units,
except for Cf2GS, lease their office facilities from various subsidiary
companies of TNC under month-to-month lease terms. Rent expense was $260,014,
$394,741 and $196,732 in 1994, 1995 and the six months ended June 30, 1996,
respectively.

Minimum future lease payments under noncancelable operating leases with
third parties with lease terms in excess of one year as of December 31, 1995
were as follows:

<TABLE>
<S> <C>
1996............................ $306,645
1997............................ 252,576
1998............................ 207,159
1999............................ 18,360
2000............................ 9,180
--------
Total......................... $793,920
========
</TABLE>

F-18
<PAGE>

TRUE NORTH UNITS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

6. RETIREMENT BENEFIT PLANS

Cf2GS maintains a profit sharing plan with a 401(k) feature for the benefit
of eligible employees. Cf2GS makes matching contributions equal to 25% of
employee deferrals up to 6% of an employee's salary. Matching contributions of
$13,771, $17,864 and $16,333 (unaudited) were made in 1994, 1995 and the six
months ended June 30, 1996, respectively. All of the other True North Units
participate in retirement benefit plans offered by TNC and are charged for
such costs as described in Note 3 above.

7. INCOME TAXES

The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
1994 1995
--------- -----------
<S> <C> <C>
Current provision (benefit):
Federal........................................ $ 170,259 $ (872,641)
State.......................................... 11,673 (333,387)
--------- -----------
Deferred provision (benefit): 181,932 (1,206,028)
--------- -----------
Federal........................................ (96,094) 270,096
State.......................................... (15,820) 63,291
--------- -----------
(111,914) 333,387
--------- -----------
$ 70,018 $ (872,641)
========= ===========
</TABLE>

Components of the deferred provision (benefit) were as follows:

<TABLE>
<CAPTION>
1994 1995
--------- --------
<S> <C> <C>
Amortization......................................... $ -- $249,500
Bonus accrued, not paid.............................. (17,500) (38,301)
Deferred income...................................... (86,000) 47,821
Advance billing...................................... -- 53,145
Other................................................ (8,414) 21,222
--------- --------
$(111,914) $333,387
========= ========
</TABLE>

Differences between the effective income tax rate and the U.S. statutory
rate were as follows:

<TABLE>
<CAPTION>
1994 1995
----- ----
<S> <C> <C>
Statutory federal tax rate................................... 35.0% 35.0%
State taxes, net of federal benefit.......................... 8.0 8.0
Tax basis in excess of book basis............................ (21.5) --
Other........................................................ -- 3.1
----- ----
Effective rate............................................. 21.5% 46.1%
===== ====
</TABLE>

The deferred tax assets and liabilities included in the combined financial
statements as of December 31, 1994 and 1995 consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1995
----------------------------- ------------------------------
ASSETS LIABILITIES TOTAL ASSETS LIABILITIES TOTAL
-------- ----------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Current:
Bonus accrued, not
paid................. $ 17,500 $-- $ 17,500 $ 55,801 $ -- $ 55,801
Deferred income....... 86,000 -- 86,000 38,179 -- 38,179
Advance billing....... -- -- -- -- 53,145 (53,145)
Other................. 5,897 -- 5,897 67,201 78,701 (11,500)
-------- ---- -------- -------- -------- ---------
109,397 -- 109,397 161,181 131,846 29,335
-------- ---- -------- -------- -------- ---------
Noncurrent:
Accelerated
amortization......... -- -- -- -- 249,500 (249,500)
Other................. 2,517 -- 2,517 -- 1,308 (1,308)
-------- ---- -------- -------- -------- ---------
2,517 -- 2,517 -- 250,808 (250,808)
-------- ---- -------- -------- -------- ---------
$111,914 $-- $111,914 $161,181 $382,654 $(221,473)
======== ==== ======== ======== ======== =========
</TABLE>

F-19
<PAGE>

TRUE NORTH UNITS

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONCLUDED)

Management of the True North Units believes that the deferred tax assets are
fully realizable, therefore no valuation allowances for deferred tax assets
has been provided.

The True North Units made payments for income taxes of $0 and $138,845 in
1994 and 1995, respectively.

8. INTERCOMPANY LOANS

Intercompany loans represent cash funding provided by TNC to finance the
True North Units' operations. TNC does not charge interest on these loans. In
September 1996, TNC agreed to contribute all of the outstanding intercompany
loans to the True North Units' capital accounts.

9. SUBSEQUENT EVENTS

In July 1996, management elected to discontinue the operations of the Los
Angeles office of R/GA Interactive, Inc. A charge of $17,865, primarily
related to severance, was recorded during 1996 to recognize the costs
associated with the discontinuance. Net losses for the division for the first
six months of 1996 were approximately $850,000 (unaudited).

In August 1996, management modified the terms of its earnout arrangement
with the former stockholders of Cf2GS. The new terms guarantee annual minimum
earnout payments of $983,400 in 1996, 1997 and 1998.

10. SUBSEQUENT EVENT--SALE OF BUSINESSES

In October 1996, TNC agreed to sell the True North Units to TN Technologies
Holding Inc. (formerly Modem Media Advertising Limited Partnership) for
approximately 9% of TN Technologies Holding Inc.'s common stock.

F-20
<PAGE>

R/GA INTERACTIVE, INC.

FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1993 AND 1994 AND JUNE 30, 1995
TOGETHER WITH AUDITORS' REPORT

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
True North Communications Inc.:

We have audited the accompanying balance sheets of R/GA Interactive, Inc. (a
New York corporation) as of December 31, 1993 and 1994 and June 30, 1995, and
the related statements of operations and retained deficit and cash flows for
the period from inception through December 31, 1993, the year ended December
31, 1994, and the six months ended June 30, 1995. These financial statements
are the responsibility of the management of R/GA Interactive, Inc. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of R/GA Interactive, Inc. as
of December 31, 1993 and 1994 and June 30, 1995, and the results of its
operations and its cash flows for the period from inception through December
31, 1993, the year ended December 31, 1994, and the six months ended June 30,
1995, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois
October 2, 1996

F-22
<PAGE>

R/GA INTERACTIVE, INC.

BALANCE SHEETS

AS OF DECEMBER 31, 1993 AND 1994 AND JUNE 30, 1995

<TABLE>
<CAPTION>
ASSETS DECEMBER 31,
------ ---------------------- JUNE 30,
1993 1994 1995
--------- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS:
Accounts receivable..................... $ -- $ 25,649 $ 270,538
Accrued revenues........................ -- 111,670 371,953
Prepaids expenses and other current
assets................................. -- 1,699 52
--------- ----------- -----------
Total current assets.................. -- 139,018 642,543
--------- ----------- -----------
FURNITURE AND EQUIPMENT:
Furniture and equipment................. -- 7,337 54,371
Less: Accumulated depreciation.......... -- (736) (10,197)
--------- ----------- -----------
Total furniture and equipment, net.... -- 6,601 44,174
--------- ----------- -----------
Total assets.......................... $ -- $ 145,619 $ 686,717
========= =========== ===========
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable........................ $ -- $ 16,418 $ 235,690
Advance billings........................ 117,422 77,160 50,660
Accrued expenses........................ -- 18,804 148,492
Accrued compensation.................... 13,722 30,756 33,730
Other current liabilities............... -- 25,000 52,497
--------- ----------- -----------
Total current liabilities............. 131,144 168,138 521,069
--------- ----------- -----------
NONCURRENT LIABILITIES:
Payable to related party................ 281,863 1,358,540 2,210,616
--------- ----------- -----------
STOCKHOLDER'S EQUITY:
Common stock, 200 shares authorized, 50
shares issued and outstanding.......... 500 500 500
Retained deficit........................ (413,507) (1,381,559) (2,045,468)
--------- ----------- -----------
Total stockholder's equity............ (413,007) (1,381,059) (2,044,968)
--------- ----------- -----------
Total liabilities and stockholder's
equity............................... $ -- $ 145,619 $ 686,717
========= =========== ===========
</TABLE>

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

F-23
<PAGE>

R/GA INTERACTIVE, INC.

STATEMENTS OF OPERATIONS AND RETAINED DEFICIT

FOR THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1993, THE YEAR ENDED
DECEMBER 31, 1994, AND THE SIX MONTHS ENDED JUNE 30, 1995

<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION SIX MONTHS
THROUGH YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, JUNE 30,
1993 1994 1995
------------ ------------ -----------
<S> <C> <C> <C>
REVENUES................................ $ 99,411 $ 972,525 $ 1,383,340
--------- ----------- -----------
OPERATING EXPENSES:
Salaries and employee benefits
expenses............................. 299,918 870,997 681,373
Office and general expenses........... 213,000 1,069,580 1,365,876
--------- ----------- -----------
Total operating expenses............ 512,918 1,940,577 2,047,249
--------- ----------- -----------
LOSS BEFORE PROVISION FOR INCOME TAXES.. (413,507) (968,052) (663,909)
PROVISION FOR INCOME TAXES.............. -- -- --
--------- ----------- -----------
NET LOSS................................ (413,507) (968,052) (663,909)
RETAINED DEFICIT, beginning of period... -- (413,507) (1,381,559)
--------- ----------- -----------
RETAINED DEFICIT, end of period......... $(413,507) $(1,381,559) $(2,045,468)
========= =========== ===========
</TABLE>

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

F-24
<PAGE>

R/GA INTERACTIVE, INC.

STATEMENTS OF CASH FLOWS

FOR THE PERIOD FROM INCEPTION THROUGH DECEMBER 31, 1993, THE YEAR ENDED
DECEMBER 31, 1994, AND THE SIX MONTHS ENDED JUNE 30, 1995

<TABLE>
<CAPTION>
PERIOD FROM SIX
INCEPTION MONTHS
THROUGH YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, JUNE 30,
1993 1994 1995
------------ ------------ ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................. $(413,507) $ (968,052) $(663,909)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities--
Depreciation.......................... -- 736 9,461
Changes in assets and liabilities--
Accounts receivable................. -- (25,649) (244,889)
Accrued revenues.................... -- (111,670) (260,283)
Prepaid expenses and other current
assets............................. -- (1,699) 1,647
Accounts payable.................... -- 16,418 219,272
Advance billings.................... 117,422 (40,262) (26,500)
Accrued expenses.................... -- 18,804 129,688
Accrued compensation................ 13,722 17,034 2,974
Other current liabilities........... -- 25,000 27,497
Payable to related party............ 281,863 1,076,677 852,076
--------- ---------- ---------
Net cash provided by (used in)
operating activities............. (500) 7,337 47,034
--------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of furniture and equipment.... -- (7,337) (47,034)
--------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issuances.................. 500 -- --
--------- ---------- ---------
NET INCREASE (DECREASE) IN CASH........... -- -- --
CASH, at beginning of period.............. -- -- --
--------- ---------- ---------
CASH, at end of period.................... $ -- $ -- $ --
========= ========== =========
</TABLE>

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

F-25
<PAGE>

R/GA INTERACTIVE, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1993 AND 1994 AND JUNE 30, 1995

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

R/GA Interactive, Inc., a New York corporation ("R/GA Interactive" or the
"Company"), was incorporated on July 14, 1993. Of the 200 shares of common
stock (no par value) authorized, fifty shares were issued. All fifty shares
were owned by Robert M. Greenberg.

The Company designs and creates interactive games and marketing applications
for use through a variety of interactive media including the World Wide Web,
information kiosks and CD-ROMs. The Company's primary locations are in New
York and (prior to July 1996) Los Angeles.

R/GA Interactive has historically shared certain services with related
parties. These services, provided by R/Greenberg Associates, include sharing
of rent, accounting, financial and executive management and other services.
Charges for these services were $117,000 and $413,058 for the period from
inception through December 31, 1993 and the year ended December 31, 1994,
respectively, and have been included in office and general expenses. Charges
for these services were $667,500 for the six months ended June 30, 1995, of
which $565,500 has been included in office and general expenses and $102,000
has been included in direct salaries and related expenses. Management believes
that these charges have been allocated to the Company in a reasonable and
consistent manner.

In the normal course of business, the Company purchases production and
design services from a related party, R/GA Digital Studios, Inc. Services
purchased totaled $187,459 and $184,337 for the year ended December 31, 1994,
and the six months ended June 30, 1995, respectively. Management believes that
services purchased from related parties are at reasonable prices.

The Company has incurred losses since its inception and has a retained
deficit of $2,045,468 at June 30, 1995. The Company's operations are subject
to certain risks and uncertainties including, among others, a limited
operating history, substantial operating losses, rapidly changing
technologies, current reliance on a limited number of customers and potential
competitors with greater financial, technical and marketing resources.

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 revenue and expenses during the
reporting period. Actual results could differ from those estimates.

SIGNIFICANT CUSTOMERS

The Company had one advertising customer which accounted for approximately
all revenue in the period from inception through December 31, 1993. The
Company had four principal customers which accounted for approximately 35%,
25%, 11% and 10% of revenues for the year ended December 31, 1994. Significant
customers in 1994 were engaged in the software development, advertising and
telecommunications industries. The Company had two principal software
development customers which accounted for approximately 68% and 13% of
revenues for the six months ended June 30, 1995.

DEPRECIATION

The Company depreciates its furniture, computer and office equipment on a
straight line basis over estimated useful lives ranging from three to five
years. The Company reviews its recorded fixed assets for

F-26
<PAGE>

R/GA INTERACTIVE, INC.

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)

impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable and provides currently for
any indicated impairments.

REVENUE RECOGNITION

The Company's revenues are derived primarily from contracts to provide
design and production services for its products. These contracts vary in
length from less than one month to more than a year in duration. Revenue is
recognized straight line over the estimated length of the project which
approximates the percentage of completion method. Contract costs include all
direct and indirect costs related to contract performance. Provisions for any
estimated losses on uncompleted contracts are recognized in the period in
which such losses are determinable.

Accrued revenues represent costs incurred and estimated earnings in excess
of billings. Advance billings represent billings in excess of costs incurred
and estimated earnings for services.

INCOME TAXES

Effective July 1, 1995, the Company was purchased by True North
Communications Inc. As a result of certain change in control limitations, the
realizability of future benefits does not meet the more likely than not
criteria for recognition prescribed by Statement of Financial Accounting
Standards No. 109. Accordingly, a valuation allowance of $941,938 has been
recorded to fully reserve the tax benefit of the net operating loss
carryforward.

2. SUBSEQUENT EVENTS

CHANGE IN CONTROL

On May 15, 1995, True North Communications Inc. purchased all outstanding
stock of R/GA Interactive as well as the assets of certain other entities
owned directly by Mr. Greenberg. The purchase became effective on July 1,
1995. The stock purchase was effected through the assumption of R/GA
Interactive liabilities as of the effective date of the purchase.

DISCONTINUED OPERATIONS

In July 1996, the Company discontinued the operations of the Los Angeles,
California division of R/GA Interactive. A charge of $17,865, primarily
related to severance, was recorded during 1996 to recognize the costs
associated with the discontinuance. Net losses of the division for the first
six months of 1996 were approximately $850,000 (unaudited).

SIGNIFICANT CUSTOMER

Subsequent to June 30, 1995, the Company substantially completed all
contract work in progress for a significant customer which comprised 35% and
68% of revenues for the year ended December 31, 1994, and the six months ended
June 30, 1995, respectively. No significant further contract work is in
progress for this customer. Management believes that the current absence of
further contract work with this customer will not have a material adverse
effect on the operations of the Company.

F-27
<PAGE>

CHRISTIANSEN, FRITSCH, GIERSDORF, GRANT & SPERRY, INC.

FINANCIAL STATEMENTS

AS OF DECEMBER 31, 1993 AND MARCH 31, 1994
TOGETHER WITH AUDITORS' REPORT

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
True North Communications Inc.:

We have audited the accompanying balance sheets of Christiansen, Fritsch,
Giersdorf, Grant & Sperry, Inc. (a Washington corporation) as of December 31,
1993 and March 31, 1994, and the related statements of loss and retained
deficit and cash flows for the year ended December 31, 1993 and the three
months ended March 31, 1994. These financial statements are the responsibility
of the management of Christiansen, Fritsch, Giersdorf, Grant & Sperry, Inc..
Our responsibility is to express an opinion on these financial statements
based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Christiansen, Fritsch,
Giersdorf, Grant & Sperry, Inc. as of December 31, 1993 and March 31, 1994,
and the results of its operations and its cash flows for the year ended
December 31, 1993 and the three months ended March 31, 1994, in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois
September 23, 1996

F-29
<PAGE>

CHRISTIANSEN, FRITSCH, GIERSDORF, GRANT & SPERRY, INC.

BALANCE SHEETS

AS OF DECEMBER 31, 1993 AND MARCH 31, 1994

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1993 1994
------ ------------ ----------
<S> <C> <C>
CURRENT ASSETS:
Cash................................................ $ 22,946 $ 145,609
Accounts receivable, net of reserve for doubtful
accounts of $102,998 in 1993 and $87,710 in 1994... 1,140,715 805,370
Accrued revenues.................................... 106,612 137,806
Prepaid expenses and other current assets........... 16,805 35,313
---------- ----------
Total current assets.............................. 1,287,078 1,124,098
---------- ----------
PROPERTY AND EQUIPMENT:
Computers and software.............................. 312,105 314,832
Leasehold improvements, furniture, and other........ 303,494 300,808
---------- ----------
Total property and equipment...................... 615,599 615,640
Less Accumulated depreciation and amortization...... (317,165) (335,309)
---------- ----------
Total property and equipment, net................. 298,434 280,331
---------- ----------
Total assets...................................... $1,585,512 $1,404,429
========== ==========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Short-term borrowings............................... $ 400,000 $ 150,000
Notes payable to stockholders....................... 332,379 108,379
Current portion of long-term debt................... 46,901 47,294
Accounts payable.................................... 200,653 559,712
Advance billings.................................... 392,895 440,968
Other current liabilities........................... 34,869 64,666
---------- ----------
Total current liabilities......................... 1,407,697 1,371,019
---------- ----------
NONCURRENT LIABILITIES:
Long-term debt...................................... 145,588 133,613
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, 6,250 shares authorized, issued and
outstanding........................................ 162,000 162,000
Retained deficit.................................... (129,773) (262,203)
---------- ----------
Total stockholders' equity........................ 32,227 (100,203)
---------- ----------
Total liabilities and stockholders' equity........ $1,585,512 $1,404,429
========== ==========
</TABLE>

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

F-30
<PAGE>

CHRISTIANSEN, FRITSCH, GIERSDORF, GRANT & SPERRY, INC.

STATEMENTS OF LOSS AND RETAINED DEFICIT

FOR THE YEAR ENDED DECEMBER 31, 1993 AND
THE THREE MONTHS ENDED MARCH 31, 1994

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DEC. 31, 1993 MARCH 31, 1994
------------- --------------
<S> <C> <C>
REVENUES.......................................... $3,348,653 $ 705,441
---------- ---------
OPERATING EXPENSES:
Salaries, outside services and employee benefits
expenses....................................... 2,124,982 524,885
Office and general expenses..................... 1,259,722 302,627
---------- ---------
Total operating expenses...................... 3,384,704 827,512
---------- ---------
OPERATING LOSS.................................... (36,051) (122,071)
Interest expense................................ (28,472) (11,006)
Other income, net............................... 10,846 647
---------- ---------
NET LOSS.......................................... (53,677) (132,430)
RETAINED DEFICIT, beginning of period............. (76,096) (129,773)
---------- ---------
RETAINED DEFICIT, end of period................... $ (129,773) $(262,203)
========== =========
</TABLE>

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

F-31
<PAGE>

CHRISTIANSEN, FRITSCH, GIERSDORF, GRANT & SPERRY, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 1993 AND THE THREE MONTHS ENDED MARCH 31, 1994

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DEC. 31, 1993 MARCH 31, 1994
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................... $(53,677) $(132,430)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities--
Depreciation and amortization.................. 137,454 20,196
Gain (loss) on sale of equipment............... (4,019) 38,708
Changes in assets and liabilities--
Accounts receivable.......................... 415,186 335,345
Accrued revenues............................. (106,612) (31,194)
Prepaid expenses and other current assets.... 35,037 (18,508)
Accounts payable............................. 10,187 359,059
Advance billings............................. (641,709) 48,073
Other current liabilities.................... 16,995 29,797
-------- ---------
Net cash provided by (used in) operating
activities................................ (191,158) 649,046
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment............... (111,065) (40,801)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of short-term borrowings.......... (50,000) (250,000)
Repayment of notes to stockholders............... -- (224,000)
Additions to notes to stockholders............... 229,221 --
Repayments of long-term debt..................... (39,147) (11,582)
Additions to long-term debt...................... 144,930 --
-------- ---------
Net cash provided by (used in) financing
activities................................ 285,004 (485,582)
-------- ---------
NET INCREASE (DECREASE) IN CASH.................... (17,219) 122,663
CASH, beginning of period.......................... 40,165 22,946
-------- ---------
CASH, end of period................................ $ 22,946 $ 145,609
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest.......... $ 26,705 $ 9,016
======== =========
</TABLE>

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

F-32
<PAGE>

CHRISTIANSEN, FRITSCH, GIERSDORF, GRANT & SPERRY, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1993 AND MARCH 31, 1994

1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Christiansen, Fritsch, Giersdorf, Grant & Sperry, Inc., a Washington
corporation ("Cf2GS" or the "Company"), is an advertising firm which provides
direct mail, media, database and general advertising services. The Company
earns the majority of its revenues from direct mail services.

SIGNIFICANT CUSTOMERS

One customer accounted for approximately 73% and 71% of the Company's net
revenues for the periods ended December 31, 1993 and March 31, 1994,
respectively.

MANAGEMENT ESTIMATES

REVENUE RECOGNITION

Revenue represents fees for advertising services rendered as well as
commissions on media and production costs. The Company recognizes revenue for
fees as they are earned based principally on labor costs incurred. This method
approximates the percentage-of-completion method. Commissions on media and
production costs are recognized as revenue when billed. Advance billings
represent billings in excess of costs incurred and estimated earnings for
advertising services. Accrued revenues represent costs incurred and estimated
earnings in excess of billings. Revenue is reported net of reimbursable costs.
Losses on customer work are recognized when known.

PROPERTY AND EQUIPMENT

Depreciation is provided on both straight-line and accelerated methods over
the estimated useful lives of furniture and equipment. Significant external
software costs are capitalized and amortized over five years. Leasehold
improvements are amortized over the lesser of the estimated useful life of the
asset or the life of the lease. The Company reviews its recorded fixed assets
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable and provides currently for any
indicated impairment.

INCOME TAXES

For the periods ended December 31, 1993 and March 31, 1994, the stockholders
of the Company elected S Corporation status for federal income tax purposes.
Accordingly, taxable income or loss of the Company has been included with that
of its stockholders and the operating results for the periods ended December
31, 1993 and March 31, 1994, do not include a provision or benefit for federal
income taxes.

2. LEASE COMMITMENTS

The Company leases office space, vehicles and equipment under operating
leases expiring in various years through 2000. The total rent expense related
to these operating leases totaled $262,265 and $42,126 for the year ended
December 31, 1993 and the three months ended March 31, 1994, respectively.

F-33
<PAGE>

CHRISTIANSEN, FRITSCH, GIERSDORF, GRANT & SPERRY, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Minimum future lease payments under noncancelable operating leases as of
March 31, 1994, were as follows:

3. RETIREMENT BENEFIT PAN

The Company maintains a profit sharing plan with a 401(k) feature for the
benefit of eligible employees. The Company makes matching contributions equal
to 25% of employee deferrals up to 6% of an employee's salary. Matching
contributions of $5,403 and $2,786 were made in the periods ended December 31,
1993 and March 31, 1994, respectively. Though the Company has not elected to
do so in the periods being reported, additional profit sharing contributions
may be made at the discretion of the Company's Board of Directors.

4. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Short-term borrowings represent a line of credit to finance working capital
needs. The line of credit had an interest rate of prime plus 1% and a term of
one year. Average borrowings under the line of credit were $103,000 and
$96,000 for the year ended December 31, 1993 and the three months ended March
31, 1994, respectively. The average interest rate under the line credit was
7.0% for each of the year ended December 31, 1993 and the three months ended
March 31, 1994. Total unused borrowings under the line of credit was $300,000
and $50,000 as of December 31, 1993 and March 31, 1994, respectively.

Long-term debt consists of the following obligations:

<TABLE>
<CAPTION>
DEC. 31, 1993 MAR. 31, 1994
------------- -------------
<S> <C> <C>
Term note--Seafirst Bank...................... $120,000 $112,500
Loans for leasehold improvements.............. 72,489 68,407
-------- --------
192,489 180,907
Less--Current portion......................... 46,901 47,294
-------- --------
$145,588 $133,613
======== ========
</TABLE>

The term note was incurred for the purchase of equipment and is payable in
monthly installments of $2,500 plus interest at prime plus 1.5%.

The loans for leasehold improvements relate to improvements in the Seattle
and Portland facilities in 1993 and 1991, respectively. The loans are payable
in monthly installments of $905 at 8% interest and $1,017 at 12% interest.

5. NOTES PAYABLE TO STOCKHOLDERS

The notes payable to stockholders represent interest bearing notes, due on
demand, to two stockholders to finance operating cash flow needs as follows:

<TABLE>
<CAPTION>
DEC. 31, 1993 MAR. 31, 1994
------------- -------------
<S> <C> <C>
Promissory Notes, due on demand, interest at
7%......................................... $224,000 $ --
Capital notes, due on demand, interest at
8%......................................... 108,379 108,379
-------- --------
$332,379 $108,379
======== ========
</TABLE>

F-34
<PAGE>

CHRISTIANSEN, FRITSCH, GIERSDORF, GRANT & SPERRY, INC.

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)

6. SUBSEQUENT EVENT

Effective April 1, 1994, the Company became a wholly-owned subsidiary of
True North Communications Inc. ("True North"). True North paid $275,000 for
all of the outstanding common stock and assumed all borrowings, debt and
capital notes totaling $439,286. The Company is required to make earnout
payments to the former stockholders based on a percentage of revenue through
1998. In August 1996, True North management modified the terms of its earnout
arrangement with the former stockholders of Cf2GS. The new terms guarantee
annual minimum earnout payments of $983,400 in 1996, 1997 and 1998.

F-35
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Registrant in
connection with the sale of Class A Common Stock being registered. All amounts
are estimates except the SEC registration fee, the NASD filing fee and the
Nasdaq National Market listing fee.

<TABLE>
<CAPTION>
AMOUNT
TO BE
PAID
------
<S> <C>
SEC registration fee............................................. $9,091
NASD filing fee.................................................. 3,500
Nasdaq National Market listing fee............................... *
Printing and engraving expenses.................................. *
Legal fees and expenses.......................................... *
Accounting fees and expenses..................................... *
Directors' and officers' liability insurance..................... *
Blue Sky qualification fees and expenses......................... *
Transfer agent and registrar fees................................ *
Miscellaneous fees............................................... *
------
Total........................................................ $ *
======
</TABLE>
- --------
* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article Thirteenth of the Registrant's Certificate of Incorporation (Exhibit
3.1 hereto) and Article VI of the Registrant's Bylaws (Exhibit 3.2 hereto)
provide for mandatory indemnification of its directors and officers, and
permissible indemnification of employees and other agents, to the maximum
extent permitted by the Delaware General Corporation Law. In addition, the
Registrant intends to enter into Indemnification Agreements (Exhibit 10.14
hereto) with its officers and directors. Reference is also made to Section 10
of the Underwriting Agreement contained in Exhibit 1.1 hereto, which provides
for the indemnification of officers and directors of the Registrant against
certain liabilities.

<TABLE>
<CAPTION>
EXHIBIT
DOCUMENT NUMBER
-------- -------
<S> <C>
Form of Underwriting Agreement................................... 1.1
Certificate of Incorporation..................................... 3.1
Bylaws........................................................... 3.2
Form of Indemnification Agreement to be entered into by the
Registrant with each of its directors and officers.............. 10.13
</TABLE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

From the Registrant's inception through October 22, 1996, the Registrant has
issued and sold or has agreed to issue and sell, subject to certain
conditions, the following securities:

II-1
<PAGE>

(1) In October 1996, the Registrant entered into an agreement to issue
3,039,785 shares of its Class A Common Stock to the limited partners of
Modem Media Advertising Limited Partnership ("Modem Media") and the
stockholders of Modem Media, Inc., the general partner of Modem Media, in
exchange for certain limited and general partnership interests in Modem
Media and all of the capital stock of Modem Media Inc.

(2) In October 1996, the Registrant entered into an agreement to issue
2,969,741 shares of its Class A Common Stock to True North Communications
Inc. ("True North") in exchange for certain limited and general partnership
interests in Modem Media.

(3) In October 1996, the Registrant entered into an agreement to issue
4,596,800 shares of its Class B Common Stock to True North in connection
with the transfer and assignment to the Registrant of substantially all of
the assets and properties of True North's existing digital marketing
communications business and shares of the Registrant's Class A Common Stock
in exchange for the assumption by the Registrant of certain liabilities of
True North relating to such business and the issuance of such shares of
Class B Common Stock.

The issuances of the securities described above were deemed to be exempt
from registration under the Securities Act in reliance on Section 4(2) of such
Act as transactions by an issuer not involving any public offering.
Appropriate legends were affixed to the share certificates issued in such
transactions. All recipients had adequate access, through their relationships
with the Registrant, to information about the Registrant.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
10.9* Form of Covenant Not to Compete or Solicit Business Between
the Registrant and each of Gerald M. O'Connell, Douglas C.
Ahlers and Robert C. Allen, II.
10.10* Form of Employment Agreement between Registrant and Michael
F. Bogacki.
10.11* Form of Employment Allocation Agreement among Registrant,
True North Communications Inc. and Robert M. Greenberg.
10.12* Form of Employment Allocation Agreement among Registrant,
True North Communications Inc. and Gregory W. Blaine.
10.13 Form of Indemnification Agreement.
10.14* 1996 Stock Option Plan.
10.15* 1996 Employee Stock Purchase Plan.
11.1* Statement re computation of per share earnings.
21.1 List of subsidiaries.
23.1* Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP, Independent Public
Accountants (see page II-6).
24.1 Power of Attorney (included on page II-4).
27.1 June 30, 1996 Financial Data Schedule.
27.2 December 31, 1995 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.

(b) FINANCIAL STATEMENT SCHEDULES

Not applicable.

ITEM 17. UNDERTAKINGS

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

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant, 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 Securities 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
hereunder, 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 Securities 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,
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, 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-3
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-1 TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WESTPORT,
STATE OF CONNECTICUT, ON THIS 30TH DAY OF OCTOBER 1996.

TN Technologies Holding Inc.

/s/ Gregory W. Blaine
By:__________________________________
Gregory W. Blaine
Chairman of the Board and Chief
Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS GREGORY W. BLAINE, GERALD M. O'CONNELL AND
MICHAEL F. BOGACKI, AND EACH OF THEM SINGLY, AS 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 THE
REGISTRATION STATEMENT FILED HEREWITH AND ANY OR ALL AMENDMENTS TO SAID
REGISTRATION STATEMENT (INCLUDING POST-EFFECTIVE AMENDMENTS AND REGISTRATION
STATEMENTS FILED PURSUANT TO RULE 462 AND OTHERWISE), AND TO FILE THE SAME,
WITH ALL EXHIBITS THERETO AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH
THE SECURITIES AND EXCHANGE COMMISSION GRANTING UNTO SAID ATTORNEYS-IN-FACT
AND AGENTS THE FULL POWER AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT
AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOUT THE FOREGOING, AS
FULL TO ALL INTENTS AND PURPOSES AS HE OR SHE MIGHT OR COULD DO IN PERSON,
HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-IN-FACT AND AGENTS OR
ANY OF THEM, OR HIS SUBSTITUTE, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.

WITNESS OUR HANDS ON THE DATE SET FORTH BELOW.

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
--------- ----- ----
<S> <C> <C>
/s/ Gregory W. Blaine Chairman of the Board, Chief October 30, 1996
____________________________________ Executive Officer and
Gregory W. Blaine Director (Principal
Executive Officer)

/s/ Gerald M. O'Connell President, Chief Operating October 30, 1996
____________________________________ Officer and Director
Gerald M. O'Connell

/s/ Michael F. Bogacki Executive Vice President, October 30, 1996
____________________________________ Chief Financial Officer
Michael F. Bogacki and Director (Principal
Financial and Accounting
Officer)

/s/ Robert M. Greenberg Director October 30, 1996
____________________________________
Robert M. Greenberg

</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
/s/ Douglas C. Ahlers Director October 30, 1996
____________________________________
Douglas C. Ahlers
/s/ Robert C. Allen, II Director October 30, 1996
____________________________________
Robert C. Allen, II

/s/ Martin F. Reidy Director October 30, 1996
____________________________________
Martin F. Reidy

/s/ Mitchell T. Engel Director October 30, 1996
____________________________________
Mitchell T. Engel

/s/ Bruce Mason Director October 30, 1996
____________________________________
Bruce Mason
</TABLE>

II-5
<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports, as listed below, and to all references to our Firm included in or
made a part of this Registration Statement.

a. Report dated September 23, 1996 (except with respect to the matters
discussed in Note 7, to which the date is October 23, 1996) for Modem Media
Advertising Limited Partnership as of December 31, 1994 and 1995 and the
related statements of income, partners' capital and cash flows for each of the
three years in the period ended December 31, 1995,

b. Report dated September 30, 1996 (except with respect to the matter
discussed in Note 10, to which the date is October 21, 1996) for the Combined
True North Units, consisting of the businesses described in Note 1 to the
combined financial statements, as of December 31, 1994 and 1995 and the
related statements of income (loss) and retained earnings (deficit) and cash
flows for the years then ended,

c. Report dated October 2, 1996 for R/GA Interactive, Inc. as of December
31, 1993 and 1994 and June 30, 1995, and the related statements of operations
and retained deficit and cash flows for the period from inception through
December 31, 1993, the year ended December 31, 1994, and the six months ended
June 30, 1995, and

d. Report dated September 23, 1996 for Christiansen, Fritsch, Giersdorf,
Grant & Sperry, Inc. as of December 31, 1993 and March 31, 1994 and the
related statements of loss and retained deficit and cash flows for the year
ended December 31, 1993 and the three months ended March 31, 1994.

ARTHUR ANDERSEN LLP

Chicago, Illinois
October 29, 1996

II-6
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S> <C>
1.1* Form of Underwriting Agreement.
2.1* Acquisition Agreement dated as of October 10, 1996 among
Registrant, True North Communications Inc. and Douglas C.
Alhers, Robert C. Allen, II, Gerald M. O'Connell and Kraft
Enterprises LTD.
3.1* Certificate of Incorporation of Registrant.
3.2* Bylaws of Registrant.
4.1* Form of Registrant's Class A Common Stock Certificate.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, regarding legality of the securities being issued.
10.1* Reorganization Agreement dated as of October 10, 1996 among
Registrant, True North Communications Inc. and Douglas C.
Ahlers, Robert C. Allen, II, Gerald M. O'Connell and Kraft
Enterprises LTD.
10.2* Administrative Services Agreement between the Registrant and
True North Communications Inc.
10.3* Space Sharing Agreement between the Registrant and certain
affiliates of True North Communications Inc.
10.4* Intercompany Credit Agreement between the Registrant and True
North Communications Inc.
10.5* Intellectual Property Agreement between the Registrant and True
North Communications Inc.
10.6* Tax Matters Agreement between the Registrant and True North
Communications Inc.
10.7 Lease between Lennar Northeast Partners Limited Partnership and
Modem Media Advertising Limited Partnership dated June 1995.
10.8* Form of Employment Agreement between Registrant and each of
Gerald M. O'Connell, Douglas C. Ahlers and Robert C. Allen, II.
10.9* Form of Covenant Not to Compete or Solicit Business Between the
Registrant and each of Gerald M. O'Connell, Douglas C. Ahlers
and Robert C. Allen, II.
10.10* Form of Employment Agreement between Registrant and Michael F.
Bogacki.
10.11* Form of Employment Allocation Agreement among Registrant, True
North Communications Inc. and Robert M. Greenberg.
10.12* Form of Employment Allocation Agreement among Registrant, True
North Communications Inc. and Gregory W. Blaine.
10.13 Form of Indemnification Agreement.
10.14* 1996 Stock Option Plan.
10.15* 1996 Employee Stock Purchase Plan.
11.1* Statement re computation of per share earnings.
21.1 List of subsidiaries.
23.1* Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP, Independent Public Accountants
(see page II-6).
24.1 Power of Attorney (included on page II-4).
27.1 June 30, 1996 Financial Data Schedule.
27.2 December 31, 1995 Financial Data Schedule.
</TABLE>
- --------
*To be filed by amendment.
<PAGE>

Inside Front Cover Page of Prospectus. On this page will be paragraphs which
read as follows with a picture above each paragraph depicting the description
in the paragraph:

The Company is a leader in digital interactive marketing, having developed
over 500 of such marketing programs since 1987. Through its operating
divisions, the Company combines its core competencies in strategic marketing
(Modem Media, Northern Lights Interactive and Cf2GS), technology development
(Relationship Technology Group) and digital design and production (R/GA
Interactive) to deliver comprehensive solutions which address its clients'
digital interactive marketing and communications needs.

In 1995, Modem Media planned and executed the award-winning zima.com Web site
for Coors Brewing Company.

Modem Media has completed award-winning international Web sites and Internet
advertising campaigns for AT&T, including these promoting AT&T's sponsorship of
the 1996 Centennial Olympic Games.

Modem Media has developed interactive marketing programs to enable Delta Air
Lines to advertise and transact with customers via the Delta Air Lines Web site.

Northern Lights Interactive and RG/A Interactive have planned and executed
numerous interactive communications assignments for Levi Strauss, including
Levi's Web sites, levis.com and dockers.com.
<PAGE>

Inside Back Cover Page of Prospectus. On this page will be paragraphs which read
as follows with a picture above each paragraph depicting the description in the
paragraph:

Cf2GS provides strategic marketing and integrated advertising services for Royal
Caribbean Cruises Ltd.

The Company provides digital interactive marketing services to companies that
are impacting or being impacted by the emerging digital network infrastructure,
in industries such as health care and financial services.

The Company develops and operates digital marketing communications solutions to
established companies including MyPartner, an AT&T sales force communications
solution, as well as a corporate intranet for S.C. Johnson, containing advanced
multimedia features.

The Company has a six-year relationship with JC Penney, assisting JC Penney in
developing, testing and introducing electronic commerce vehicles on a wide
variety of digital communications platforms, including the Internet.

<PAGE>

EXHIBIT 10.7

LEASE BETWEEN

LENNAR NORTHEAST PARTNERS
LIMITED PARTNERSHIP

AND

MODEM MEDIA ADVERTISING L.P.
<PAGE>

TABLE OF CONTENTS

PAGE
----
<S> <C> <C>

1. PREMISES................................................................ 1

2. TERM.................................................................... 1

3. RENTAL.................................................................. 4

4. UTILITIES............................................................... 5

5. RENEWAL OPTION.......................................................... 7

6. ADDITIONAL RENT......................................................... 9

7. USE OF PREMISES........................................................ 18

8. [MISSING].............................................................. 19

9. TENANT'S IMPROVEMENTS AND ALTERATIONS.................................. 19

10. COMPLIANCE WITH INSURANCE REQUIREMENTS................................. 22

11. COMPLIANCE WITH LAW.................................................... 22

12. SERVICES............................................................... 23

13. INSURANCE.............................................................. 24

14. LIABILITY OF LANDLORD.................................................. 26

15. REPAIRS................................................................ 27

16. DESTRUCTION, FIRE AND OTHER CAUSES..................................... 28

17. EMINENT DOMAIN......................................................... 30

18. ASSIGNMENT, MORTGAGE, ETC.............................................. 31

19. CONDITIONS OF LIMITATION............................................... 34

20. REMEDIES OF LANDLORD................................................... 36
</TABLE>

-i-
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
----

<S> <C> <C>
21. REMEDIES OF TENANT...................................................... 38

22. RULES AND REGULATIONS................................................... 38

23. REPRESENTATIONS BY LANDLORD............................................. 38

24. QUIET ENJOYMENT......................................................... 39

25. ACCESS; RIGHT TO EXHIBIT PREMISES; NAME................................. 39

26. SUBORDINATION........................................................... 40

27. SURRENDER OF THE PREMISES............................................... 42

28. BROKERAGE............................................................... 42

29. FORCE MAJEURE........................................................... 42

30. ESTOPPEL CERTIFICATE.................................................... 43

31. HOLDOVER................................................................ 44

32. NOTICES................................................................. 44

33. WAIVER OF TRIAL BY JURY................................................. 45

34. LATE PAYMENTS........................................................... 45

35. EFFECTS OF WAIVERS OF DEFAULT........................................... 46

36. LANDLORD'S RIGHT TO CURE DEFAULTS....................................... 46

37. SECURITY DEPOSIT........................................................ 46

38. PARKING................................................................. 47

39. COMMERCIAL TRANSACTION.................................................. 47

40. PARTIES BOUND........................................................... 47
</TABLE>

-ii-
<PAGE>

TABLE OF CONTENTS
(CONTINUED)

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
41. MISCELLANEOUS........................................................... 48

42. ENTIRE AGREEMENT, ETC................................................... 49
</TABLE>

-iii-
<PAGE>

OFFICE LEASE

This Lease dated June___, 1995, by and between LENNAR NORTHEAST PARTNERS
LIMITED PARTNERSHIP, having an address c/o GRP Realty Company, 1150 Summer
Street, Stamford, CT 06905, (hereinafter called the "Landlord"), and MODEM MEDIA
ADVERTISING, L.P., having an office at 12 South Main Street, South Norwalk, CT
06854, (hereinafter called the "Tenant").

W I T N E S S E T H:

1. PREMISES

The Landlord does hereby lease and demise to Tenant and Tenant does hereby
hire and take from Landlord for the term and upon the rentals hereinafter
specified:

A. all of the office space on the second floor in the building
(which building is hereinafter called "the Building" and located on land in the
Town of Westport, State of Connecticut commonly known as 228 Saugatuck Avenue,
being more particularly described in Exhibit A-1 annexed hereto and made a part
hereof, hereinafter referred to as the "Land"), consisting of approximately
11,640 rentable square fee as shown on the floor plan(s) annexed hereto as
Exhibit A-2 and made a part hereof, or initialed by the parties and incorporated
hereby by reference (which space is hereinafter called the "Phase One Space");

B. the office space on the first floor in the Building consisting of
approximately 6,600 rentable square feet as shown on the floor plan(s) annexed
hereto as Exhibit A-3 and made a part hereof, or initialized by the parties and
incorporated hereby by reference (which space is hereinafter called the "Phase
Two Space"); and

C. the office space on the first floor in the Building consisting of
approximately 4,996 rentable square feet as shown on the floor plan(s) annexed
hereto as Exhibit A-4 and made a part hereof, or initialized by the parties and
incorporated hereby by reference (which space is hereinafter called the "Phase
Three Space").

The Phase One Space, Phase Two and Phase Three Space are sometimes
collectively referred to in this Lease as the "Demised Premises," and at other
times individually referred to as "Phase" of the Demised Premises or "Phases" of
the Demised Premises.

2. TERM

A. The term of this Lease shall be for FIVE (5) years commencing on
August 1, 1995 ("Commencement Date"), and ending on July 31, 2000 ("Expiration
Date"), with exclusively occupancy of the Demised Premises to be delivered to
Tenant as follows:
<PAGE>

(1) for the Phase One Space, occupancy commencing on August 1,
1995 ("Phase One Occupancy Date"), and ending on the Expiration Date, with
payment of rent commencing on October 1, 1995;

(2) for the Phase Two Space, occupancy commencing on November 1,
1995 ("Phase Two Occupancy Date"), and ending on the Expiration Date, with
payment of rent commencing on November 1, 1995; and

(3) for the Phase Three space, occupancy commencing on August 1,
1996 ("Phase Three Occupancy Date"), and ending the Expiration Date, with
payment of rent commencing on August 1, 1996.

B. Landlord shall diligently prepare each Phase of the Demised
Premises in accordance with Exhibit B-1 for timely occupancy by Tenant. If any
particular Phase of the Demised Premises is not ready for occupancy (as such
term is defined below) on the dates set forth as the Occupancy Dates:

(1) PHASE ONE: The Phase One Occupancy Date and the rent
commencement date for such Phase, and the Expiration Date, shall be delayed by
the period of time between August 1, 1995 and the date the Phase One Space is
ready for occupancy. However, if such delay is caused by any act or omission of
Tenant or any of its employees, agents, or contractors, including, but not
limited to, failure by Tenant to act promptly when any consent or approval may
be requested by Landlord, Tenant's obligation to pay rent for such Phase shall
commence on the appropriate rent commencement date nevertheless and the
Expiration Date set forth in Section 2A shall remain as set forth therein. If
the Phase One Space is not ready for occupancy on or before August 14, 1995,
Tenant shall be entitled to a rent abatement in the amount of $646.67 for each
day after August 14, 1995 until the Phase One is ready for occupancy. Within
five (5) business days after Phase One is ready for occupancy Landlord and
Tenant shall sign a letter specifying the date that Phase One was ready for
occupancy and specifying the Lease Expiration Date.

(2) PHASE TWO: The Phase Two Occupancy Date and the rent
commencement date for such Phase shall be delayed by the period of time between
the scheduled Phase Two Occupancy Date and the date the Phase Two Space is ready
for occupancy. However, if such delay is caused by any act or omission of Tenant
or any of its employees, agents, or contractors, including, but not limited to,
failure by Tenant to act promptly when any consent or approval may be requested
by Landlord, Tenant's obligation to pay rent for such Phase shall commence on
the appropriate rent commencement date nevertheless. If the Phase Two Space is
not ready for occupancy on or before a date four (4) weeks after the scheduled
Phase Two Occupancy Date, Tenant shall be entitled to a rent abatement in the
amount of $366.67 for each day after such four (4) week period has expired until
the Phase Two Space is ready for occupancy.

(3) PHASE THREE: The Phase Three Occupancy Date and the rent
commencement date for such Phase shall be delayed by the period of time between
the scheduled Phase Three Occupancy Date and the date the Phase Three Space is
ready for occupancy. However,

-2-
<PAGE>

if such delay is caused by any act or omission of Tenant or any of its
employees, agents, or contractors, including, but not limited to, failure by
Tenant to act promptly when any consent or approval may be requested by
Landlord, Tenant's obligation to pay rent for such Phase shall commence on the
appropriate rent commencement date nevertheless. If the Phase Three Space is not
ready for occupancy on or before a date four (4) weeks after the scheduled Phase
Three Occupancy Date, Tenant shall be entitled to a rent abatement in the amount
of $277.56 for each day after such four (4) week period has expired until the
Phase Three Space is ready for occupancy.

For the purposes of this Section 2B, the architect preparing the
construction plans and specifications shall be deemed to be Landlord's agent.

C. Tenant, at its option, may accelerate the Occupancy Date for
Phase Two and Phase Three of the Demised Premises by giving Landlord written
notice at least ninety (90) days prior to its desired Occupancy Date for each
such Phase, and by delivering plans and specifications for the construction of
such Phase to Landlord at least sixty (60) days prior to the accelerated
Occupancy Date. If Tenant accelerates any Occupancy Date as provided herein,
then:

(1) the date set forth in Exhibit B-1 for the delivery of plans and
specifications by Tenant for each Phase shall be amended to a date sixty (60)
days prior to the accelerated Occupancy Date for such Phase; and

(2) the Phase Allowance as set forth in Exhibit B-1 shall be
increased by $0.014 per rentable square foot for each day that the Occupancy
Date for such Phase has been accelerated.

D. Landlord agrees to give Tenant reasonable access to each Phase of
the Demised Premises prior to the Occupancy Date for each Phase in order for
Tenant to perform the installation of security, telephone, computer and other
systems (Tenant's Installations) reasonably required by Tenant, subject to the
following conditions:

(1) All such Tenant's Installations shall be done pursuant to
plans and specifications approved by Landlord, shall be completed at Tenant's
full cost and expense, shall comply with all applicable governmental rules and
regulations, shall be done by Landlord or contractors, subcontractors and
mechanics approved by Landlord (such approvals not to be unreasonably withheld
or delayed), shall be done in a good and workmanlike manner to Landlord's
reasonable satisfaction, shall be done in a manner which will assure labor
harmony at the Building and which will not in any way cause any delay in the
completion of the work required of Landlord pursuant to Exhibit B-1, shall be
consistent with the uses permitted under this Lease, and in all other respects
shall comply with the terms and provisions of this Lease.

(2) If any mechanic's lien is filed against the Demised Premises
or the Landlord's Building for work claimed to have been done for, or materials
claimed to have been furnished to Tenant for Tenant's Installations, Tenant, at
its sole cost and expense, shall commence legal proceedings to discharge such
liens within thirty (30) days after the earlier to occur of receipt of

-3-
<PAGE>

notice of the filing of the lien from the lienor or the receipt of written
notice of the filing of the lien from Landlord. If Tenant shall fail to commence
legal proceedings to discharge any such lien within such thirty (30) day period,
then Landlord shall have the right, but not the obligation, to discharge such
lien, by payment, bond or otherwise, and the actual cost thereof shall be
charged to Tenant, and such sum due Landlord shall be deemed additional rent and
shall be paid by Tenant within 10 (ten) days of being billed therefor.

(3) Landlord shall not be liable for any failure of any Building
facilities or services caused by alterations, installations, and/or additions by
Tenant, and Tenant shall promptly correct any such failure after written notice.
In the event Tenant shall not promptly correct same within 10 days after notice,
Landlord may make such correction and charge Tenant for the actual cost thereof.
Such sum due Landlord shall be deemed additional rent and shall be paid by
Tenant promptly upon being billed therefor.

(4) Tenant shall indemnify and save harmless Landlord (and each
Superior Lessor or Superior Mortgagee) from and against any and all liability
and damages, and from and against any and all suits, claims and demands of every
kind and nature, including reasonable attorney's fees and expenses, by or on
behalf of any person, firm, association or corporation arising out of or based
upon the installation of Tenant's Installations, unless caused by or due to the
negligence or willful misconduct of Landlord, or Landlord's agents, contractors,
servants or employees.

E. Each Phase of the Demised Premises shall be deemed ready for
occupancy at such time as (i) Landlord presents the Tenant with a Certificate of
Occupancy of the Town of Westport for such Phase in the Demised Premises; and
(ii) the work to be performed by Landlord in accordance with the provisions of
Section 8 herein has been substantially completed. The terms "substantially
completed" and "substantial completion" and terms of similar import whenever
used in this Lease shall be deemed to mean that stage of the progress of the
work to be done by Landlord as shall enable Tenant to commence its use or
occupancy of all of each Phase of the Demised Premises for its normal business
purposes without material interference by reason of the completion of unfinished
details. In the event there are incomplete items ("Punch List") to be performed
by Landlord subsequent to the Tenant's commencement of occupancy for each Phase,
said work shall be done in a diligent manner and shall be completed in a
reasonable time.

3. RENTAL

A. Subject to the terms and conditions of Section 2, Tenant shall
pay to Landlord a fixed periodic base rent as follows ("Minimum Rent"):

-4-
<PAGE>

<TABLE>
<CAPTION>
==========================================================================
DEMISED PREMISES
- --------------------------------------------------------------------------
YEAR SQUARE COST SQ FT MONTHLY RENT PERIOD RENT
FEET
--------------------------------------------------
<S> <C> <C> <C> <C>
October 1, 1995 to 11,640 $ 20.00 $ 19,400.00 $ 19,400.00
October 31, 1995

--------------------------------------------------
Phase Two Occupancy 18,240 $ 20.00 $ 30,400.00 $ 273,600.00
Date (scheduled to be
November 1, 1995) to
July 31, 1996

--------------------------------------------------
Phase Three Occupancy 23,236 $ 20.00 $ 38,726.67 $1,858,880.00
Date (Scheduled to be
August 1, 1996) to the
Expiration Date
==========================================================================
</TABLE>

B. Tenant agrees to pay the first month's Minimum Rent for the Phase
One Space upon the execution of this Lease.

C. The annual rent shall be paid in twelve (12) equal installments
in advance without notice on the first day of each calendar month during said
term. Tenant shall pay the pro rata monthly portion of said rent for any
fractional period of a month or fractional period of a lease year.

D. In addition to said Minimum Rent, Tenant agrees to pay Landlord
such Additional Rent, if any, as provided in this Lease (including, without
limitation, the Additional Rent provided for in Sections 4 and 5).

4. UTILITIES

A. Tenant shall pay to Landlord for all electricity used in the
Demised Premises as follows:

<TABLE>
<CAPTION>
========================================================================================
DEMISED PREMISES ELECTRICITY PAYMENTS
- ----------------------------------------------------------------------------------------
SQUARE MONTHLY PERIOD
YEAR FEET COST SQ FT ELECTRIC ELECTRIC
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
August 1, 1995 to October 31, 1995 11,640 $ 1.50 $1,455.00 $ 4,365.00
- ----------------------------------------------------------------------------------------
Phase Two Occupancy Date (scheduled to 18,240 $ 1.50 $2,280.00 $ 20,520.00
be November 1, 1995) to July 31, 1996
- ----------------------------------------------------------------------------------------
Phase Three Occupancy Date (scheduled to 23,236 $ 1.50 $2,904.50 $139,416.00
be August 1, 1996) to the Expiration Date
========================================================================================
</TABLE>

-5-
<PAGE>

These payments are to be considered as Additional Rent and are due and
payable on the first of each month without notice. Notwithstanding anything to
the contrary contained herein, Tenant shall have no obligation to pay for
electricity or other utilities for any Phase prior to the date that such Phase
is ready for occupancy.

B. If Tenant installs any electrical equipment in the Demised
Premises other than typewriters, copy machines, word processing equipment,
personal computers, personal computer networking systems and phone systems,
telecopy machines, and such other equipment as is considered standard and
customary for general office use, Tenant shall pay Landlord as further
Additional Rent a monthly amount equal to the estimated cost to run such
electrical equipment. Said monthly amount shall be calculated by the local
utility service from which electric power is purchased by Landlord by way of a
survey conducted by such utility.

C. Other than the electrical facilities servicing the Demised
Premises on the Commencement Date, any additional risers, feeders or other
equipment or service proper or necessary to supply the Demised Premises in
excess of 6 watts per square foot, upon written request of Tenant, will be
installed by Landlord, at the sole cost and expense of Tenant, if, in Landlord's
reasonable judgment, the same are necessary and will not cause permanent damage
or injury to the Building or the Demised Premises, or cause or create a
dangerous or hazardous condition, or entail excessive or unreasonable
alterations, repairs or expenses or interfere with or disturb other Tenants or
occupants.

D. Unless due to the act or neglect of Landlord or its agent,
Landlord shall not in any way be liable or responsible to Tenant for any loss or
damage or expense which Tenant may sustain or incur if either the quantity or
character of electric service is changed or is no longer available or suitable
for Tenant's requirements.

E. Except as elsewhere provided in this Lease, Tenant agrees not to
make or perform or permit any alteration to wiring installations or other
electrical facilities serving the Demised Premises, nor to connect any
additional electrical equipment of any type to the Building's electrical
distribution system, beyond such as exists in the Demised Premises on the
Commencement Date, other than lamps, typewriters, copy machines, word processing
equipment, personal computers, telecopy machines, computer networking equipment
(excluding mainframe computers), and other small office machines which consume
comparable amounts of electricity, without the Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed. In no event shall
Tenant use or install any fixtures, equipment or machines the use of which in
conjunction with other fixtures, equipment and machines in the Demised Premises
would result in an overload of the electrical circuits servicing the Demised
Premises.

F. Tenant covenants and agrees that at all times its use of electric
current shall never exceed the capacity of the feeders to the Building or the
risers or wiring installation. Landlord shall furnish, install and replace, as
required, all lighting tubes, lamps, bulbs and ballasts required in the Demised
Premises, at Tenant's sole cost and expense. All lighting tubes, bulbs and
ballasts so installed shall become Landlord's property upon the expiration or
sooner termination of this Lease.

-6-
<PAGE>

5. RENEWAL OPTION

A. Tenant shall have the option (the "Renewal Option") to extend the
term of this Lease for two additional five (5) year periods (the "First Renewal
Term" and the "Second Renewal Term," respectively). The Renewal Option granted
Tenant herein may be exercised with respect to the entire Demised Premises only.

B. The First Renewal Term shall commence on the date immediately
succeeding the Expiration Date and end on the date which falls on the fifth
anniversary of the Expiration Date.

C. Tenant shall exercise its Renewal Option for the First Renewal
Term by giving Landlord written notice (the "Renewal Notice") of Tenant's
election to exercise the Renewal Option at least nine (9) months prior to the
Expiration Date, provided that Tenant is not in default under any of the terms,
covenants, or conditions of this Lease on Tenant's part to be observed or
performed which remain uncured after any applicable cure period (i) on the date
Tenant gives Landlord the Renewal Notice, and (ii) on the Expiration Date.

(1) If Tenant does not exercise its Renewal Option for the First
Renewal Term, Tenant shall pay to Landlord as Additional Rent, by bank check,
certified check or wire transfer, the sum of $19,984.00, such payment to be made
by Tenant within twenty (20) days of receipt of written notice from Landlord
that such sum is due and owing. Tenant's failure to make this payment shall be
deemed a failure to pay Additional Rent pursuant to this Lease.

D. Provided Tenant has exercised its Renewal Option for the First
Renewal Term, the Second Renewal Term shall commence on the date which falls on
the fifth anniversary of the date immediately succeeding the Expiration Date and
end on the date which falls on the tenth anniversary of the Expiration Date.

E. Tenant shall exercise its Renewal Option for the Second Renewal
Term by giving Landlord written notice (the "Renewal Notice") of Tenant's
election to exercise the Renewal Option at least nine (9) months prior to the
expiration date of the First Renewal Term of the Lease, provided that Tenant is
not in default under any of the terms, covenants, or conditions of this Lease on
Tenant's part to be observed or performed which remain uncured after any
applicable cure period (i) on the date Tenant gives Landlord the Renewal Notice,
and (ii) on the expiration date of the First Renewal Term of the Lease.

F. If the term of this Lease is renewed as aforesaid, the Renewal
Terms shall be upon the same terms, covenants, and conditions as those contained
in this Lease insofar as the same may be applicable and relevant, except that
(i) there shall be no further right of renewal after the Second Renewal Option
and (ii) the Minimum Rent to which reference is made in section 4 hereof for
each Renewal Term shall be ninety-five percent (95%) of an annual fair market
rental value as determined below.

-7-
<PAGE>

G. Fair market rental value for each Renewal Term shall be determined
as follows:

(1) Sixty days prior to the commencement of each Renewal Term
Landlord shall submit to Tenant in writing its determination of
the fair market rental value of the Demised Premises. If Tenant
disputes Landlord's determination of fair market rental value,
Tenant shall, prior to the commencement of each Renewal Term,
submit its own determination of fair market rental value to
Landlord, in writing. If Tenant fails to dispute Landlord's
determination by the commencement of each Renewal Term, then
Landlord's determination of fair market rental value shall be
conclusive upon the parties.

(2) If Tenant disputes the Landlord's determination of fair market
rental value and the parties are unable to agree on fair market
rental value, it shall be determined by way of real estate
appraisers. Either party may commence the appraisal process by
selecting a real estate appraiser to determine the fair market
rental value, and shall give written notice of such selection to
the other party. The other party shall then have fifteen (15)
days to select its own appraiser. The appraisers shall together
determine the fair market rental value of the Demised Premises
within 30 days of the selection of the second appraiser. If the
other party fails to select an appraiser within the 15 day time
period, the first appraiser shall determine the fair market
rental value and its decision shall be conclusive upon the
parties.

(3) If the appraisers cannot agree on the fair market rental value,
then they shall together appoint a third appraiser having at
least five (5) years experience as an MAI commercial real estate
appraiser in Fairfield County, Connecticut, who shall, within 30
days of his being appointed, determine the fair market rental
value, which value shall not exceed nor be lower than the two
original appraisals. Each party shall be responsible for the fees
of the appraiser it selects, and shall evenly divide the fees of
the third appraiser, should one be selected.

(4) If the determination of fair market rental value requires the use
of appraisers, Tenant shall continue to pay rent to the Landlord
at the last established Minimum Rent together with 75% of the
proposed rent increase (if any) as calculated from the Landlord's
determination of fair market rental value until a new Minimum
Rent is determined. Once the new Minimum Rent is determined:

(a) Tenant shall pay to Landlord any amounts due as a result of
the new Minimum Rent within 15 days of its determination,
less any

-8-
<PAGE>

amounts paid by the Tenant to the Landlord pursuant to this
section; or

(b) Landlord shall credit any amounts that Tenant paid to
Landlord pursuant to this section in excess of the Minimum
Rent due based upon the determination of fair market rental
value against the next Minimum Rent due and owing pursuant
to the Lease.

6. ADDITIONAL RENT

Landlord and Tenant agree that the rent stated in Section 3 about is a
Minimum Rent subject to a periodic increase, if any, as herein set forth (all
such increases shall constitute rent hereunder and are hereinafter collectively
referred to as "Additional Rent"):

A. Operating Expenses

(1) For the purposes of this Lease, the "Operating Expense Base"
shall be determined by using actual Building operating costs
to the extent available, otherwise using Landlord's best
estimates of one year's operating costs under current
conditions adjusted to 90% occupancy. Landlord shall provide
Tenant with a copy of a breakdown of the actual and/or
estimated itemized expenses compiled to determine the
Operating Expense Base. Landlord shall give written notice,
which notice shall contain all of the calculations relating
thereto, of any adjustments made to the Operating Expenses
Base.

(2) The term "Lease Year" for the purpose of Section 6A shall
mean each calendar year succeeding the Base Year and the
final period of twelve (12) months or less commencing with
January 1 immediately preceding the Expiration Date. The
term "Base Year" shall mean the calendar year 1996.

(3) "Tenant's Proportionate Operating Share" shall be as
follows:

(a) for the period of time that the Phase One Space is
deemed ready for occupancy, (50.0946%), which
percentage has been computed on the basis of a
fraction, the numerator of which is the agreed rentable
square foot area of Phase One in the amount of 11,640
square feet, and the denominator of which is the agreed
rentable square foot area of the Building in the amount
of 23,236 square feet;

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<PAGE>

(b) for the period of time that the Phase One and Phase Two
Spaces are deemed ready for occupancy, (78.4988%), which
percentage has been computed on the basis of a fraction, the
numerator of which is the agreed rentable square foot area
of Phase One and Phase Two in the amount of 18,240 square
feet, and the denominator of which is the agreed rentable
square foot area of the Building in the amount of 23,236
square feet;

(c) for the period of time that the entire Demised Premises are
deemed ready for occupancy, (100%), which percentage has
been computed on the basis of a fraction, the numerator of
which is the agreed rentable square foot area of the Demised
Premises in the amount of 23,236 square feet, and the
denominator of which is the agreed rentable square foot area
of the Building in the amount of 23,236 square feet.

(4) Prior to the commencement of each Lease Year, Landlord shall
estimate any anticipated increase in Operating Expenses of the
Building for such Lease Year over the Operating Expenses Base,
and during such Lease Year or portion thereof Tenant shall pay to
Landlord as Additional Rent, an amount per month equal to one
twelfth (1/12th) of the sum obtained by multiplying such
estimated increase in Operating Expenses by Tenant's
Proportionate Operating share.

(5) As soon as practicable following the end of each Lease Year,
Landlord shall determine the actual Operating Expenses of the
Building for such Lease Year and the increase in the actual
Operating Expenses for such Lease Year over the Operating
Expenses Base, if any. If the total payments made by Tenant to
Landlord on account of anticipated increased Operating Expenses
during any Lease Year shall exceed the amount of increased
Operating Expenses incurred by Landlord such excess shall be
credited by Landlord against the next succeeding installment(s)
of Minimum Rent and Additional Rent payable by Tenant pursuant to
Section 6A. If, however, said payments made by Tenant were not
sufficient to pay said increased actual Operating Expenses for
the applicable Lease Year, then Tenant agrees to pay to Landlord
the amount necessary to make up the deficiency within thirty (30)
days after notice of such deficiency.

Regardless of the amount of time that passes before Landlord
makes its determination of Operating Expenses, Tenant will not be
relieved of its responsibility to pay the increase that may be
due, if any.

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<PAGE>

(6) The notice described in Section 6A.(5) shall contain a true
and accurate statement itemized by expense category
("Landlord's Operating Statement"), setting forth the
amount, if any, due to Landlord or Tenant under the
provisions of Section 6A.

(7) Landlord's Operating Statement shall be conclusive and
binding upon Tenant unless within thirty (30) days after
receipt of Landlord's Operating Statement: (a) Tenant shall
pay the amount shown on such Landlord's Operating Statement,
and (b) simultaneously with such payment, Tenant shall
notify Landlord that it disputes the correctness of the
statement, specifying the respect in which the statement is
claimed to be incorrect. Any such disputed payment shall be
without prejudice to Tenant's position.

(8) If Tenant notifies Landlord that it disputes the amount
shown on Landlord's Statement in accordance with sub-section
6A.(7), then, within 30 days of such notice of dispute,
Landlord and Tenant shall select an independent Certified
Public Accountant having real estate experience reasonably
acceptable to both Landlord and Tenant to resolve such
dispute, which resolution shall be conclusively binding upon
Landlord and Tenant. Landlord shall afford such accountant
reasonable access to Landlord's books and records to the
extent such account deems necessary in order to reach its
decision. The fees and expenses involved in such resolution
shall be borne by the unsuccessful party (and if both
parties are partially unsuccessful, the accountant shall
apportion the fees and expenses between the parties based
upon the degree of success of each party).

(9) Landlord agrees to maintain books and records reflecting
Operating Expenses, which books and records may be examined
and photocopied (at Tenant's sole cost and expense) by
Tenant, its authorized agents or accountants, after notice
and during regular business hours, for the purpose of
verifying the information contained in Landlord's Operating
Statement.

(10) If the dispute shall be determined in Tenant's favor, the
amount of Tenant's overpayment of Additional Rent resulting
from compliance with Landlord's Operating Statement shall be
credited by Landlord against the next succeeding
installment(s) of Minimum Rent and Additional Rent payable
by Tenant pursuant to Section 6A.

(11) Landlord and Tenant shall each pay for their own expenses
paid or incurred in connection with such dispute.

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<PAGE>

(12) For the purposes of determining any Additional Rent pursuant to
the terms hereof, the term "Operating Expenses" shall include
reasonable operating expenses paid or incurred by Landlord
(exclusive of all expenses for which Landlord is reimbursed
directly by Tenant or any other Tenant in Building) for the
normal operation of Landlord's Building and are herein defined to
include, but are not limited to, the following:

(a) Salaries, wages, bonuses, hospitalization, medical, surgical
and general welfare benefits (including group insurance and
retirement benefits and all other fringe benefits) for non-
executive employees of Landlord or any contractor of
Landlord engaged in the operation, cleaning, repair, safety,
management and security of Landlord's Building, and any
social security, unemployment and other payroll or
government taxes which may be levied on account of any of
the foregoing.

(b) All janitorial supplies, tools and materials (including
uniforms and work clothes) used and necessary in the
operation and maintenance of Landlord's Building.

(c) The cost of water and sewage, gas, electricity and such
other fuel for the heating, lighting, ventilating and air-
conditioning of Landlord's Building.

(d) The cost of all necessary maintenance, repair and service
agreements on equipment, including protection service,
window cleaning and elevator maintenance, exterminating,
rubbish removal, janitorial service, landscaping and carpet
cleaning.

(e) Insurance premiums for workman's compensation, employer's
liability insurance, comprehensive general liability and
fire and extended coverage insurance and all other insurance
coverage that Landlord may reasonably deem necessary for the
operation of Landlord's building.

(f) The cost of non-capital and non-structural repairs,
replacements and general maintenance of the Building and the
real property described in Schedule A attached hereto
hereinafter referred to as the ("Land"), exclusive of
expenses of alterations of premises for the accommodation of
a specific Tenant or Tenants.

(g) Legal, accounting and other professional fees and
disbursements incurred in connection with the operation and
management of

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<PAGE>

Landlord's Building (but not including legal fees and
disbursements incurred in connection with leases to Tenants
or potential Tenants of the Building, or disputes with
Tenants of the Building).

(h) Management fees paid to entities which are not affiliated
with Landlord (provided, however, that if no managing agent
is employed by Landlord, or if the managing agent is
affiliated with Landlord a sum in lieu thereof which is not
in excess of five (5%) percent of all rental income payable
to Landlord in connection with the Building, including,
without limitation, all Minimum Rent, Additional Rent for
Operating Expenses and utility service, as well as all other
escalations and special charges payable to Landlord.

(i) The cost of the rental of equipment designed to result in a
savings or reduction in the amount of Operating Expenses.

(j) Expenditures for capital improvements to the Building or any
part thereof, designed to result in a reduction in Operating
Expenses, amortized over their useful life as determined by
the Landlord in its reasonable discretion.

(k) Expenditures pursuant to Section 11B, amortized over their
useful life as determined by the Landlord in its reasonable
discretion.

(13) Notwithstanding the foregoing provisions of Section 6A, the
following costs, expenses and items shall be deemed to be
excluded from the calculation of Operating Expenses:

(a) any amortization or depreciation of Landlord's acquisition
cost, development expenses or adjusted basis of the Building
(including, without limitation, any of the furnishings and
fixtures whereunto);

(b) interest and principal payments on debt of the Landlord or
debt which is secured with a lien on the Building, including
late fees, default interest and other costs charged to
Landlord with respect to such indebtedness excepting any
costs included in such indebtedness which are otherwise
defined as Operating Expenses;

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<PAGE>

(c) any items otherwise properly constituting an Operating
Expense to the extent payment therefor is received from or
payable by tenants for services rendered or performed
directly for the account or such tenants;

(d) the cost of any repairs or alterations necessitated by a
condemnation action, eminent domain proceeding or other
taking by any governmental agency;

(e) marketing, advertising expenses and brokerage commissions;

(f) legal and accounting fees and court costs related to
disputes with tenants, the enforcement of any tenant leases,
the defense of Landlord's title to or interest in the
building or procuring new tenants or prospective new tenants
for the Building;

(g) the cost of any work or services performed exclusively for
any other tenant(s) of the Building;

(h) the cost of electricity to any portion of the Building paid
by tenant(s) of the Building;

(i) the cost of any work or service performed to the extent
related to any building or facility other than the Building,
unless such work or service benefits the Land, Building, or
Demised Premises;

(j) the cost of any Operating Expenses to the extent Landlord is
reimbursed by insurance, manufacturer's warranty, judgment,
award, other tenants, settlement, tax rebate or otherwise;

(k) insurance premiums to the extent Landlord is reimbursed
therefor;

(l) costs included in Operating Expenses representing an amount
paid to a person, firm, corporation or other entity related
to Landlord which is in excess of the amount which would
have been paid in the absence of such relationship (solely
to the extent of such excess);

(m) lease payments for rented equipment, the cost of which
equipment would constitute a capital improvement if the
equipment were purchased;

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<PAGE>

(n) the incremental cost of HVAC, janitorial or other services
provided to or upon the direction of Tenant or one or more
other tenants of the Building during other than hours during
which such services are generally available to tenants of
the Building and the Tenant or tenant(s) requesting the
service have made direct payment to Landlord specifically
for such overtime usage;

(o) expenses attributable to defaults by any tenant of the
building other than Tenant, or any sums reimbursable to
Landlord by Tenant or any other tenant of the Building;

(p) costs and expenses which Landlord is required to or elects
to incur under Section 16 (Destruction, Fire and Other
Causes) and Section 17 (Eminent Domain) of this Lease;

(q) the costs of Landlord's Work pursuant to Exhibit B-1 hereto;

(r) ground rent paid by Landlord under any superior lease of the
Building;

(s) expenses incurred in connection with the financing,
refinancing, sale, transfer or other disposition of the
Building or the Land, or of the Landlord's interest therein;

(t) transfer, gains, franchise, gift, inheritance, estate, sales
and income taxes imposed upon Landlord or its property
manager;

(u) leasing commissions;

(v) the cost of tenant installations and decorations incurred in
preparing space for a tenant;

(w) administrative salaries, benefits and other compensation of
Landlord's employees above the grade of building manager,
and salaries of employees working in or managing any
commercial concession operated by Landlord or located in the
building;

(x) the cost of any work or services performed or other expenses
incurred in connection with installing, operating or
maintaining any specialty facility, unless Tenant is
permitted to make use of such facility without additional
cost; and

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<PAGE>

(y) the cost of investigating and remediating any environmental
contamination and all costs of defending, challenging and
complying with any governmental orders requiring the
remediation of any environmental contamination;

(z) the cost of structural and capital repairs, discretionary
improvements, and capital or structural additions and
alterations, except to the extent they are includable in
Operating Expenses pursuant to sub-sections 6A.(12)(j) or
6A.(12)(k).

B. Tax Escalation

(1) For purposes of Section 6B:

(a) "Taxes" shall mean:

(i) all real estate taxes and assessments (special or
otherwise), and any other governmental imposition
or charge of a similar or dissimilar nature,
which may be assessed, levied or imposed upon all
or any part of the Building and/or Land, whether
or not the same constitute one or more tax lots;

(ii) a tax, assessment, levy, imposition or charge
measured by or based in whole or in part upon the
Demised Premises and imposed on Landlord;

(iii) Except for taxes set forth in Section 6A(13)(t),
any other tax, assessment, levy, imposition,
charge or licensing fee, however described or
imposed; and

(iv) excluding any income, franchise, estate,
inheritance, gift or sales taxes.

(b) "Base Tax Rate" shall mean the Taxes due for the twelve
month period from July 1, 1995 to June 30, 1996.

(c) "Tax Year" shall mean the twelve (12) month period
commencing July 1 of each year, or such other period of
twelve (12) months as may be duly adopted as the fiscal year
for real estate tax purposes in the Town of Westport.

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<PAGE>

(d) "Tenant's Proportionate Tax Share" shall be as follows:

(i) for the period of time that the Phase One Space
is deemed ready for occupancy, (50.0946%), which
percentage has been computed on the basis of a
fraction, the numerator of which is the agreed
rentable square foot area of Phase One in the
amount of 11,640 square feet, and the denominator
of which is the agreed rentable square foot area
of the Building in the amount of 23,236 square
feet;

(ii) for the period of time that the Phase One and
Phase Two Spaces are deemed ready for occupancy,
(78.4988%), which percentage has been computed on
the basis of a fraction, the numerator of which
is the agreed rentable square foot area of Phase
One and Phase Two in the amount of 18,240 square
feet, and the denominator of which is the agreed
rentable square foot area of the Building in the
amount of 23,236 square feet;

(iii) for the period of time that the entire Demised
Premises are deemed ready for occupancy, (100%),
which percentage has been computed on the basis
of a fraction; the numerator of which is the
agreed rentable square foot area of the Demised
Premises in the amount of 23,236 square feet, and
the agreed denominator of which is the rentable
square foot area of the Building in the amount of
23,236 square feet.

(2) If the Taxes for any Tax Year shall be more than the Base Tax
Rate, Tenant shall pay, as Additional Rent for such Tax Year, an
amount equal to Tenant's Proportionate Tax Share of the amount by
which the Taxes for such Tax Year are greater than the Base Tax
Rate (the Tax Payment). The Tax Payment shall be prorated, if
necessary, to correspond with that portion of a Tax Year
occurring within the Term. Tenant agrees to pay to Landlord the
Tax Payment within twenty (20) days after notice of such Tax
Payment.

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<PAGE>

Regardless of the amount of time that passes before Landlord
makes its determination of the Tax Payment, Tenant will not
be relieved of its responsibility to pay the Tax Payment
that may be due, if any.

(3) If there shall be any increase in taxes for any Tax Year,
whether during or after such tax year, or if there shall be
any decrease in Taxes for any Tax Year during such Tax Year,
Landlord may furnish a revised Tax Statement for such Tax
Year, and Tenant's Tax Payment for such Tax Year shall be
adjusted in the same manner as provided in section 14.

(4) Tenant shall also pay to Landlord upon demand, as Additional
Rent, any occupancy tax or rent tax now in effect or
hereafter enacted, if payable by Landlord in the first
instance or hereafter required to be paid by Landlord
provided such tax is not in the nature of an income tax
assessed against the Landlord.

(5) Tenant shall pay to Landlord that portion of the real estate
tax levied pursuant to C.G.S. section 12-53a attributable to
the improvements made to the Demised Premises by or on
behalf of Tenant in excess of building standard
improvements. The real estate taxes resulting from such
assessment(s) shall be computed separately and billed to
Tenant, and shall be payable by Tenant as additional rent
within thirty (30) days of the rendition of the bill, at
each time that real estate taxes are payable by Landlord
with respect to the Demised Premises during the term of this
Lease.

C. Except as otherwise specifically provided herein, all Minimum
Rent and Additional Rent payable under this Lease shall be payable in advance
without notice, setoff or deduction of any kind.

7. USE OF PREMISES

Tenant shall use the Demised Premises for office use, interactive computer
"on-line" marketing, computer "on-line" retail sales, other computer "on-line"
retail functions, and for no other purpose. Tenant shall not use or occupy or
suffer or permit the use or occupancy of any part of the Demised Premises for:

A. the commercial preparation of food or the conducting of a retail
business of any kind; or

B. the conduct of business in any other manner which in Landlord's
judgment would:

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<PAGE>

(1) materially adversely affect the proper and economical
rendition of any service required to be furnished to any
Tenant in the building;

(2) materially adversely affect the use and enjoyment of any
part of the Building by any other Tenant;

(3) materially adversely affect the appearance, character or
reputation of the Building as a first-class institutional
office building;

(4) make fire casualty and general liability insurance
unobtainable at standard rates from any reputable insurance
company authorized to do business in Connecticut;

(5) cause, or be likely to cause, injury or damage to the
Building or to any Building equipment on the Demised
Premises;

(6) constitute a public or private nuisance;

(7) emit objectionable noise, fumes, vibrations, heat, chilled
air, vapors or odors, into or from the Building or the
Building equipment; or

(8) materially impair or interfere with any of the Building
services provided by Landlord, including the furnishing of
electrical energy, or the proper and economical cleaning,
heating and ventilating, air-conditioning or other services
of the Building.

C. The restrictions imposed by section 7, and the application
thereof, shall not be limited or modified by the terms of any
other provisions of this Lease.

D. No signs of any kind shall be installed or maintained by Tenant
on the interior halls, doors nor exterior of the Building in
which the Demised Premises are located, including the windows
thereof, unless Landlord, in the exercise of its absolute
discretion, shall give Tenant prior written consent to the
installation or maintenance of such sign, such consent not to be
unreasonably withheld or delayed. Landlord shall provide one sign
for the benefit of Tenant on the door to the Demised Premises and
shall further provide a directory of Tenants in the lobby of the
Building.

(1) Landlord hereby expressly gives its consent to Tenant to the
installation of Tenant's name on the Building, provided such
installation shall be completed at Tenant's full cost and
expense, shall comply with all applicable governmental rules
and regulations, shall be done only by Landlord or
contractors, sub-contractors and mechanics approved by
Landlord (such approval not to be unreasonably withheld or
delayed),

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<PAGE>
and shall be done in a good and workmanlike manner to
Landlord's reasonable satisfaction.

8. FIT UP

A. Landlord will prepare the Demised Premises for occupancy by
Tenant in accordance with Exhibit B-1, said improvements to be at Landlord's
expense.

B. Landlord agrees to diligently complete the work as set forth in
Section 8A hereof for Tenant's timely occupancy of the Demised Premises on the
Occupancy Dates and to complete the work in a good and workmanlike manner.

C. Landlord, at its sole cost and expense, shall paint the exterior
of the Building.

D. Landlord, at its sole cost and expense, shall complete the
landscaping of the property upon which the Building is located.

E. Landlord shall install a security system in the Building as set
forth on plans and specifications provided by Tenant to Landlord. Such plans and
specifications must be approved by Landlord, such approval not to be
unreasonably withheld or delayed. Landlord shall pay the cost and expense of
installing such system, such cost not to exceed the sum of $2,000.00. In the
event the cost of such installation is more than $2,000.00, Tenant shall pay
such excess amount to Landlord within 15 days of Landlord's submission to Tenant
of a written statement of such amount. Tenant shall own and maintain such
security system during the term of this Lease at Tenant's sole cost and expense.
At the expiration or sooner termination of this Lease, such security system
shall remain in the Demised Premises and shall become the property of the
Landlord. Landlord shall not be liable for any failure of such security system,
and Tenant shall indemnify and save harmless Landlord (and each Superior Lessor
or Superior Mortgagee) from and against any and all liability and damages, and
from and against any and all suits, claims and demands of every kind and nature,
including reasonable attorneys' fees and expenses, by or on behalf of any
person, firm, association or corporation arising out of or based upon the
installation, ownership and maintenance of such security system, unless caused
by or due to the negligence or willful misconduct of Landlord, or Landlord's
agents, contractors, servants or employees. Tenant hereby agrees that it will
provide Landlord with all necessary keys, codes or other information or items
necessary to allow Landlord reasonable access to the Demised Premises to perform
Landlord's obligations pursuant to this Lease.

9. TENANT'S IMPROVEMENTS AND ALTERATIONS

A. Tenant shall not make any alterations, additions, installments,
substitutions or improvements ("Tenant's Improvements") to the Demised Premises
without Landlord's prior written consent, such consent not to be unreasonably
withheld or delayed. Tenant's Improvements shall include all alterations,
installations, additions or improvements to the Demised Premises occurring

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<PAGE>

after the Commencement Date of this Lease exclusive of the improvements to be
constructed pursuant to Section 8.

B. All such Tenant's Improvements shall be done pursuant to plans
and specifications approved by Landlord, shall be completed at Tenant's full
cost and expense, shall comply with all applicable governmental rules and
regulations, shall be done only by Landlord or contractors, sub-contractors and
mechanics selected solely by Landlord, shall be done in a good and workmanlike
manner to Landlord's reasonable satisfaction, using new materials and equipment
at least equal in quality and class to the original installations in the
Building, shall be done in a manner which will assure labor harmony at the
Building, shall be consistent with the uses permitted under this Lease, and in
all other respects shall comply with the terms and provisions of this Lease.

C. Tenant shall have the right to obtain three competitive bids from
contractors or sub-contractors other than Landlord for the construction of
Tenant's Improvements. If Tenant elects to obtain such bids, it shall submit to
Landlord copies of the competitive bids to Landlord. Landlord and Tenant agree
that GRP REALTY COMPANY, Landlord's property manager, shall then have the
absolute right, to be exercised within 10 business days of receipt of copies of
such bids from Landlord, to elect to perform such Tenant's Improvements at the
same cost and upon the same terms as shown in said contracts and sub-contracts.

D. If GRP REALTY COMPANY elects not to perform the construction of
such improvements itself, then Landlord and Tenant shall together select a
contractor or contractors from those bids procured by Tenant.

E. If any mechanics' lien is filed against the Demised Premises or
the Landlord's Building for work claimed to have been done for, or materials
claimed to have been furnished to Tenant, Tenant, at its sole cost and expense,
shall commence legal proceedings to discharge such liens within thirty (30) days
after the earlier to occur of receipt of notice of the filing of the lien from
the lienor or the receipt of written notice of the filing of the lien from
Landlord. If Tenant shall fail to commence legal proceedings to discharge any
such lien within such thirty (30) day period, then Landlord shall have the
right, but not the obligation, to discharge such lien, by payment, bond or
otherwise, and the actual cost thereof shall be charged to Tenant, and such sum
due Landlord shall be deemed additional rent and shall be paid by Tenant within
10 (days) of being billed therefore.

F. Landlord shall not be liable for any failure of any Building
facilities or services caused by alterations, installations, and/or additions by
Tenant, and Tenant shall promptly correct any such failure after written notice.
In the event Tenant shall not promptly correct same within 10 days after notice,
Landlord may make such correction and charge Tenant for the actual cost thereof.
Such sum due Landlord shall be deemed additional rent and shall be paid by
Tenant promptly upon being billed therefor. Tenant shall reimburse Landlord for
all reasonable expenses (including, without limitation, fees and expenses of any
architect or engineer) incurred by Landlord in connection with its decisions as
to whether to approve the proposed Tenant's Improvements.

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<PAGE>

G. In addition to the foregoing, with respect to Tenant's
Improvements estimated to cost more than $5,000.00, Tenant shall pay to
Landlord, as Additional Rent, on receipt of an invoice, ten (10%) percent of the
cost of such Tenant's Improvements for indirect job costs, supervision and
coordination of the work performed in connection with such Tenant's
Improvements.

H. Prior to commencing any work pursuant to the provisions of
Section 9, Tenant shall furnish to Landlord:

(1) Six (6) copies of plans and specifications for all such
work, which plans and specifications shall be subject to
Landlord's written approval;

(2) A certificate evidencing that Tenant (or Tenant's
contractor(s) has (have) procured workers' compensation
insurance covering all persons employed in connection with
the work who might assert claims for death or bodily injury
against Landlord, Tenant, or the Building; and

(3) Such additional personal injury and property damage
insurance as Landlord may reasonably require because of the
nature of the work to be done by Tenant.

I. Except as provided in Section 9K, all Tenant's Improvements upon
the Demised Premises and any replacements therefore made by either party,
including all paneling, decorations, partitions, railing, mezzanine floors,
galleries and the like, affixed to the land shall, unless Landlord elects
otherwise (which election shall be made by giving written notice to Tenant not
less than thirty (30) days prior to the expiration or other termination of this
Lease or any renewal or extension thereof), become the property of Landlord and
shall remain upon, and be surrendered with the Demised Premises in the same
condition as when constructed or installed, reasonable wear and tear and damage
for which Tenant is not liable as set forth in this Lease excepted, as a part
thereof at the termination of this Lease, without compensation to Tenant.

J. In the event such Tenant's Improvements shall be removed by
Tenant, either at Tenant's choice or Landlord's request, Tenant shall be
responsible for the cost to Landlord to repair and restore the Demised Premises
to their initial fit up condition as per Section 8 herein, ordinary wear and
tear excepted, and save Landlord harmless from, all damages to the Demised
Premises caused by such removal, and all such removal, repair and restoration
shall be performed at Tenant's sole expense in a good and workmanlike manner to
Landlord's reasonable satisfaction. Any such Tenant's Improvements not so
removed by Tenant shall be deemed abandoned by Tenant and shall become the
property of Landlord and any costs incurred by Landlord to remove Tenant's
Improvements which removal was requested by Landlord shall be the responsibility
of the Tenant.

K. Where furnished by or at the expense of Tenant, all movable
property, furniture, equipment, business machines, furnishings and trade
fixtures, including those affixed to the Land (including any vault), shall
remain the property of Tenant and shall be removed by Tenant at its expense at
or any time before the expiration of the Term of this Lease and in case of
damage by such

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<PAGE>

removal, Tenant shall, at its sole expense, restore the Demised Premises and
Landlord's Building to their initial fit up condition as per Section 9 herein,
ordinary wear and tear excepted.

L. Tenant shall not place a load upon the first floor of the Demised
Premises that exceeds 100 pounds live weight per square foot. Tenant shall not
place a load upon the second floor of the Demised Premises that exceeds 50
pounds live weight per square foot without Landlord's consent, such consent not
to be unreasonably withheld or delayed. Subject to the preceding sentence, if
Tenant wishes to place any safes or vaults in the Demised Premises, it may do so
at its own expense after giving notice to Landlord, but Landlord reserves the
right to prescribe their weight and position.

M. Business machines and mechanical equipment in the Demised
Premises shall be placed and maintained by Tenant, at Tenant's sole expense, in
such manner as shall be sufficient, in Landlord's reasonable judgment, to
prevent excessive vibration, noise, annoyance and inconvenience to Landlord and
the other tenants of the Building.

N. Tenant's Improvements shall be performed in such a manner as not
to unreasonably interfere with or delay, and (unless Tenant shall indemnify
Landlord therefore to the latter's reasonable satisfaction) as not to impose any
additional expense upon, Landlord in the maintenance, security, cleaning,
repair, safety, management or operation of the Building, and if any such
additional expense shall be incurred by Landlord as a result of Tenant's
actions, such expense shall be paid by Tenant on demand as Additional Rent.

10. COMPLIANCE WITH INSURANCE REQUIREMENTS

A. Tenant shall not do nor permit to be done any act or thing upon
the Demised Premises which will invalidate or be in conflict with fire, public
liability or other insurance policies covering the Building and shall not do, or
permit to be done, any act or thing upon the Demised Premises which shall or
might subject Landlord to any liability or responsibility for injury to any
person or to property by reason of any business or operation being carried on at
the Demised Premises or for any reason.

B. Tenant at its sole expense shall comply with all rules, orders,
regulations and requirements of the boards of fire underwriters or other similar
body or authority having jurisdiction and shall not do or permit anything to be
done, in or upon the Demised Premises, or bring or keep anything therein, which
is prohibited by the fire department or any of such boards of fire underwriters
or other body or authority and which would increase the rate of fire insurance
applicable to the Building over that in effect on the Commencement Date of this
Lease.

C. If by reason of failure to comply with the provisions of Section
10 or by reason of the use or occupancy of the Demised Premises by Tenant the
fire insurance rate shall on the Commencement Date of this Lease or at any time
thereafter be higher than it otherwise would be, then Tenant upon demand of
Landlord shall reimburse Landlord, as Additional Rent under this Lease, for that
part of all fire insurance premiums thereafter paid by Landlord which shall have
been charged because of such failure or use of the Demised Premises by Tenant.

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<PAGE>

11. COMPLIANCE WITH LAW

A. Tenant at its sole cost and expense shall provide safe and
healthful working conditions for the employees of Tenant and Tenant shall comply
with all laws, orders and regulations of Federal, State, County and Municipal
Authorities and with any direction of any duly authorized public officer or
officers having jurisdiction pursuant to law which shall impose any violation,
order or duty, upon Landlord or Tenant with respect to the Demised Premises and
arising from Tenant's specific use or occupancy thereof.

B. Except as set forth in Section 11A, Landlord shall comply with
all legal requirements applicable to the Demised Premises and/or the Building at
its sole cost and expense which shall not be included in Operating Expenses,
except to the extent that such cost and expense is related to compliance with a
life, health or safety code, rule, law or regulation imposed, ordered or
directed by an appropriate governmental authority, in which case the such cost
and expense shall be included in Operating Expenses as set forth in sub-section
6A.(12)(k).

12. SERVICES

A. The Demised Premises will be serviced by one elevator and Tenant
shall have access to the Demised Premises at all times during the term of this
Lease or any extension hereof.

B. Landlord shall, through the air-conditioning system of the
Building, furnish to the Demised Premises on an all-year-round basis, air
cooling, ventilation and heating, in accordance with the following standards:

Inside Condition Outside Condition
- --------------------------------------------------------------
<S> <C> <C>
Summer Cycle 76 Degrees D.B.F. 95 Degrees D.B.F.
50% R.H. 75 Degrees W.B.F.
- --------------------------------------------------------------
Winter Cycle 72 Degrees D.B. F. minimum 0 Degrees F.
75 Degrees D.B.F. maximum
- --------------------------------------------------------------
</TABLE>

C. Landlord will maintain the heating, ventilating and air-
conditioning system in a manner befitting a first-class office building and will
use all reasonable care to keep the same in proper and efficient operating
condition. Tenant shall cooperate fully with Landlord at all times and abide by
all regulations and requirements which Landlord may reasonably prescribe for the
proper functioning and protection of the heating, ventilating and air-
conditioning systems.

D. Notwithstanding anything to the contrary contained in this Lease,
Landlord shall not be obligated to provide services of any kind to the Tenant
except Monday through Friday of each week, between the hours of 8:00 A.M. and
6:00 P.M., and Saturday of each week between the hours of 9:00 A.M. and 1:00
P.M. Any such services shall be provided by the Landlord beyond said

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<PAGE>

hours upon twenty four (24) hours' notice and shall be charged to the Tenant at
an hourly rate and payable upon demand as Additional Rent in the amount of
$30.00 per hour.

E. Landlord agrees to provide, except on Saturdays, Sundays and
State and Federal Holidays, cleaning service to the Demised Premises and the
common areas of the Building in accordance with Exhibit C attached hereto.

F. Except as otherwise provided below, Landlord shall provide the
services mentioned in Section 12 so long as Tenant is not in default under any
of the covenants of this Lease. Landlord reserves the right upon reasonable
notice to stop service of the heating, air conditioning, elevators, plumbing and
electric systems, when necessary, by reason of accident, or emergency, or for
repairs, alterations, replacements or improvements, in the reasonable and good
faith judgment of Landlord desirable or necessary to be made, until said
repairs, alterations, replacements or improvements shall have been completed.

G. Provided the Landlord uses reasonable efforts to minimize
inconvenience, annoyance, disturbance, loss of business or other damage to
Tenant, Landlord shall have no responsibility or liability, except at provided
for herein, for failure to supply heat, air conditioning, elevator, plumbing,
electric and cleaning services, when said failure is due to strikes, accidents
or emergencies, or to repairs, alterations, replacements or improvements, in the
reasonable, good faith judgment of Landlord desirable or necessary to be made,
until said repairs, alterations, replacements, or improvements shall have been
completed. In the event a failure to supply such services to all or a portion of
the Demised Premises continues for a period of seven (7) consecutive days and
the affected portion of the Demised Premises is rendered untenantable due to
such failure, Tenant shall be entitled to an abatement of Rent and Additional
Rent otherwise due and payable hereunder on a per diem basis, in an amount
equivalent to the proportion which the affected area of the Demised Premises
bears to the total area of the Demised Premises.

13. INSURANCE

A. Tenant shall not violate, or permit the violation of, any
condition imposed by the standard fire insurance policy then issued for office
buildings in the Town of Westport and shall not do, or permit anything to be
done, or keep or permit anything to be kept in the Demised Premises which would
subject Landlord to any liability or responsibility for personal injury or death
or property damage, or which would increase the fire or other casualty insurance
rate on the Building or the property therein over the rate which would otherwise
then be in effect (unless Tenant pays the resulting premium as provided in
Section 10), or which would result in insurance companies of good standing
refusing to insure the Building or any of such property in amounts reasonably
satisfactory to Landlord.

B. Tenant covenants to provide on or before the Commencement Date
and to keep in force during the Term at its own cost and expense, the following
insurance coverages:

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<PAGE>

(1) A Landlord's protective liability insurance policy naming
Landlord (Landlord's agent, and all Superior Lessors and
Superior Mortgagees, if any) as insureds, and protecting
Landlord (Landlord's agent, and all Superior Lessors and
Superior Mortgagees) and Tenant against any liability
whatsoever occasioned by accident on or about the Demised
Premises or any appurtenances thereto. Such policy is to be
written by good and solvent insurance companies authorized
to do business in the State of Connecticut and the limits of
liability thereunder shall not be less than the amount One
Million ($1,000,000.00) Dollars in respect of any one
person, in the amount of Three Million ($3,000,000.00)
Dollars in respect of any one accident, and in the amount of
One Million ($1,000,000.00) Dollars in respect of property
damage. Such insurance may be carried under a blanket policy
covering the Demised Premises and other locations of Tenant,
if any, provided that the protection to be provided to
Landlord (Landlord's agent, and all Superior Lessors and
Superior Mortgagees) pursuant to Section 13B shall not be
diminished by virtue of such blanket policy or the joinder
of other parties as insureds thereunder;

(2) Fire and extended coverage insurance in an amount adequate
to cover the full cost of replacement of all personal
property, furnishings equipment, and Tenant's Work located
in the Demised Premises. Such policy shall be written by
good and solvent insurance companies authorized to do
business in the State of Connecticut.

C. Prior to the time any insurance specified in Section 13 is first
required to be carried by Tenant and thereafter, at least fifteen (15) days
prior to the expiration of such policies, Tenant agrees to deliver to Landlord
either duplicate originals of the aforesaid policies or certificates evidencing
such insurance, together with evidence of payment for the policies. Tenant's
failure to provide and keep in force the aforementioned insurance shall be
regarded as a material default hereunder, entitling Landlord to exercise any or
all of the remedies as provided in this Lease in the event of Tenant's default.

D. In addition to the foregoing, upon failure of Tenant to procure,
maintain or place such insurance and pay all premiums and charges therefore,
Landlord, after reasonable advance notice to Tenant, may do so (but shall not be
obligated to do so) and in such event Tenant agrees to pay the amount therefore,
plus interest thereon at a rate equal to the lesser of two (2%) percent over the
prime rate then in effect at Chase Manhattan Bank, N.A., or the maximum legal
rate then prevailing (the "Interest Rate"), from the date of such payment by
Landlord until payment in full by Tenant to Landlord as Additional Rent, which
payment shall be due upon demand.

E. The parties hereto do hereby waive, any and all rights of
recovery against the other, or against the officers, shareholders, employees,
partners, agents and representatives of the other, for loss of or damage to the
property of the waiving party to the extent such loss or damage is

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<PAGE>

insured against under any insurance policy carried by Landlord or Tenant
hereunder. In addition, the parties hereto shall procure an appropriate clause
in, or endorsement on, any fire or extended coverage insurance covering the
Demised Premises, the Building and personal property, fixtures and equipment
located thereon or therein, pursuant to which the insurance companies waive
subrogation or consent to a waiver of right of recovery, and, subject to
obtaining such clauses or endorsements of waiver of subrogation or consent to a
waiver of right of recovery, hereby agree not to make any claim against or seek
to recover from the other for any loss or damage to its property or the property
of others resulting from fire or other hazards covered by such fire and extended
coverage insurance. If the payment of an additional premium is required for the
inclusion of such waiver of subrogation or consent to waiver provision, each
party shall advise the other of the amount of any such additional premiums and
the other party, at its own election may, but shall not be obligated to, pay the
same. If such other party shall not elect to pay such additional premium, the
first party shall not be required to obtain such waiver of subrogation or
consent to waiver provision.

F. As to each party hereto, provided such party's right of full
recovery under the applicable insurance policy is not adversely affected, such
party hereby releases the other (its servants, agents, contractors, employees
and invites) with respect to any claim (including a claim for negligence) which
it might otherwise have against the other party for loss, damages or destruction
of the type covered by such insurance with respect to its property by fire or
other casualty; i.e., in the case of Landlord, as to the Building, and in the
case of Tenant, as to Tenant's property (including rental value or business
interruption, as the case may be) occurring during the Term of this Lease.

G. Landlord shall maintain in effect throughout the Lease Term and
any Renewal Term 100% replacement cost fire and other hazard insurance on the
Building and, until such time as Tenant occupies 100% of the Building, liability
insurance with respect to the vacant Phases of the Building in the forms and
amounts specified in Section 13B above.

14. LIABILITY OF LANDLORD

A. Landlord and its agents shall not be liable for any damage to
property of Tenant or of others entrusted to employees of the Building, nor for
the loss or damage to any property of Tenant by theft or otherwise. Landlord and
its agents shall not be liable for any injury or damage to persons or property
resulting from fire, explosion, falling plaster, steam, gas, electricity, water,
rain, or snow or leaks from any part of the Building or from the pipes,
appliances, or plumbing works or from the roof, street, or subsurface or from
any other place or by dampness or by any other cause of whatsoever nature,
unless caused by or due to the negligence or wilful misconduct of Landlord, its
agents, contractors, servants or employees; nor shall Landlord or its agents be
liable for any such damage caused by operations in construction of any private,
public or quasi-public work; nor shall Landlord be liable for any latent defect
in the Demised Premises or in the Building or in its surrounding grounds;
provided, however, that Landlord shall remedy such defect at its sole cost and
expense, if the terms of this Lease require such remediation. Tenant's
obligations hereunder shall survive the termination or expiration of this Lease.

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<PAGE>

B. Tenant shall give immediate notice to Landlord in case of
accidents in the Demised Premises or in the Building or defects discovered
therein or in any fixtures or equipment. Tenant (and the partners constituting
Tenant, jointly and severally) shall indemnify and save harmless Landlord (and
each Superior Lessor or Superior Mortgagee) from and against any and all
liability and damages, and from and against any and all suits, claims and
demands of every kind and nature, including reasonable attorneys' fees and
expenses, by or on behalf of any person, firm, association or corporation
arising out of or based upon any accident, injury or damage, however occurring,
which shall or may happen on or about the Demised Premises during the term of
this Lease, and from and against any matter or thing growing out of the
condition, maintenance, repair, alteration, use, occupation or operation of the
Demised Premises by Tenant, unless caused by or due to the negligence or willful
misconduct of Landlord, or Landlord's agents, contractors, servants or
employees.

C. Tenant shall have no obligation or liability under this Lease by
reason of any environmental condition (including, but not limited to, the
presence of any hazardous substances or hazardous waste, polychlorinated
biphenyls, or materials containing asbestos) present or existing on or in any
portion of the Building, Demised Premises or any adjoining land or wetlands on
the Commencement Date, or which may migrate onto any portion of the Land,
Building or Premises subsequent to the Commencement Date, unless due to the
actions or non-actions of Tenant. Landlord shall indemnify and hold Tenant
harmless from and against any and all loss, damages, cost, claim, liability or
expense (including without limitation, reasonable attorneys fees and court
costs) commenced or asserted against Tenant and arising out of any environmental
condition which comes within the scope of the first sentence of this section.
Landlord's obligations hereunder shall survive the termination or expiration of
this Lease.

D. There shall be absolutely no personal liability on the part of
Landlord to Tenant with respect to any of the terms, covenants and conditions of
this Lease and Tenant shall look solely to the equity of Landlord or any
successor in interest to Landlord in the fee or leasehold estate which the
Landlord has in the Building, as the case may be, for the satisfaction of each
and every remedy of the Tenant in the event of any breach by Landlord or by any
successor in interest to Landlord of any of the terms, covenants and conditions
of the Lease to be performed by Landlord. Such exculpation of personal liability
is to be absolute and without any exception whatsoever.

15. REPAIRS

A. Tenant shall, at its sole cost and expenses, make such repairs to
the Demises Premises and the fixtures and appurtenances therein as are
necessitated by the willful misconduct, omission, or negligence of Tenant (and
except for fire or other casualty caused by Tenant's negligence, if the fire or
other casualty insurance policies insuring Landlord are not invalidated by this
provision) or by the use of the Demised Premises in a manner contrary to the
purposes for which same are leased to Tenant, as and when needed to preserve
them in good working order and condition.

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<PAGE>

B. All damage or injury to the Demised Premises and to its fixtures,
appurtenances and equipment caused by Tenant moving property in or out of the
Building or by installation or removal of furniture, fixtures or other property,
and for which Landlord has not been and will not be reimbursed by insurance,
shall be repaired, restored or replaced promptly by Tenant at its sole cost and
expense, which repairs, restorations and replacements shall be in quality and
class equal to the original work or installations.

C. If Tenant fails to make such repairs, restorations or
replacements, Landlord, after ten (10) days advance notice to Tenant, may make
such repairs, restorations or replacements at the expense of Tenant and such
expense shall be collectible as additional rent and shall be paid by Tenant
within fifteen (15) days after rendition of a bill therefor. Landlord, at its
expense, shall effect all necessary repairs in and to the Demised Premises which
are not the obligation of Tenant hereunder.

D. The exterior walls of the building, the portions of any window
sills outside the windows and the windows are not part of the Demised Premises
and Landlord reserves all rights to such parts of the Building. Landlord shall
be responsible for the maintenance and repair of such exterior walls, portions
of the window sills and windows, except for any repair required as a result of
the negligence or willful acts of Tenant, its agents or employees, which repair
Landlord shall effect at Tenant's sole cost and expense.

E. All repairs made by or on behalf of Tenant, or any person
claiming through or under Tenant, shall be made and performed in conformity with
the provisions of Section 15 and Section 11 and shall be at least equal in
quality and class to the original work or installation or the then standards for
the Building established by Landlord.

16. DESTRUCTION, FIRE AND OTHER CAUSES

A. If the Demised Premises and/or access thereto shall be partially
or totally damaged or destroyed by fire, by casualties, by the elements, or Acts
of God, Landlord shall, subject to its rights and Tenant's rights under Section
16C hereof, repair the damage and restore and rebuild the Demised Premises
and/or access thereto, as nearly as may be reasonably practical, to its
condition and character immediately prior to such damage or destruction, with
reasonable diligence, after notice to it of the damage or destruction.

B. If the Demised Premises and/or access thereto shall be partially
or totally damaged or destroyed by fire, by casualties, by the elements, or Acts
of God, not attributable to the fault, negligence or misuse of the Demised
Premises by the Tenant, its agents, employees, visitors or invitees under the
provisions of this Lease, the rents and all other charges imposed on and payable
by Tenant hereunder shall be abated to the extent that the Demised Premises
shall have been rendered untenantable and from the date of such damage or
destruction to the date the damage shall be substantially repaired or restored
or rebuilt. Should Tenant re-occupy a portion of the Demised Premises during the
period that the repair, restoration, or rebuilding is in progress and prior to
the

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<PAGE>

date that the same are made completely tenantable, rents allocable to such
portion shall be payable by Tenant from the date of such occupancy to the date
Demised Premises are made Tenantable.

C. In case of substantial or total damage or destruction of the
Demised Premises:

(1) Landlord shall, within sixty (60) days of such damage or
destruction, notify Tenant, in good faith and in writing, as
to whether or not such damage or destruction can be
renovated or reconstructed within ninety (90) days from the
date of said written notice.

(2) If, in Landlord's reasonable judgment, such damage or
destruction cannot be renovated or reconstructed within said
ninety (90) day period, then either Tenant or Landlord may,
at its option, terminate this Lease and the term and estate
hereby granted, by notifying the other party in writing of
such termination within ten (10) days after the date of
Landlord's notice. Such termination shall be effective ten
(10) business days after the date of the termination notice,
and this Lease will terminate as if the date of termination
were the Expiration Date, and all rights, duties and
obligations of the parties pursuant to this Lease shall be,
in effect as if the Lease had expired on the Expiration
Date.

(3) If such damage or destruction occurs during the last year of
the Term or, of any Renewal Term, Tenant may, at its option,
terminate this Lease and the term and estate hereby granted,
by notifying the Landlord in writing of such termination
within ten (10) days after the date of such damage or
destruction. Such termination shall be effective ten (10)
business days after the date of the termination notice, and
this Lease will terminate as if the date of termination were
the Expiration Date, and all rights, duties and obligations
of the parties pursuant to this Lease shall be in effect as
if the Lease had expired on the Expiration Date.

D. If Landlord's notice states that the damage can be renovated or
reconstructed within ninety (90) days from the date of said notice, then
Landlord shall promptly proceed, with all due diligence, to restore and rebuild
the Demised Premises; and this Lease shall continue in full force and effect and
rent shall abate pursuant to Section 16B. In the event that the premises are not
fully repaired and restored within said ninety (90) day period, and the Landlord
has proceeded with all due diligence but has been delayed by adjustment of
insurance, labor trouble, governmental controls, Acts of God, or any other cause
beyond Landlord's control (excluding financial inability), then the time for
Landlord to complete said reconstruction and repair shall be extended by such
additional time as equals the aggregate period the Landlord has been delayed,
unless such delay exceeds 180 days from the date of such notice, in which event
Tenant may terminate this Lease upon, 10 days written notice to Landlord.

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<PAGE>

E. If at any time prior to Landlord giving Tenant such notice of
termination pursuant to Section 16C above or commencing the repair and
restoration pursuant to Section 15.1 above, the holder of a superior mortgage or
any person claiming under or through the holder of such superior mortgage takes
possession of the building through foreclosure or otherwise, such holder or
person shall have a further period of ten (10) days from the date of so taking
possession to terminate this Lease by appropriate notice to Tenant. In the event
that such a notice of termination shall be given pursuant to Section 16C, this
Lease and term and estate hereby granted shall expire as of the date of such
termination with the same effect as if that were the date set forth as the
expiration of the term of this Lease and the fixed and additional rent due and
to become due hereunder shall be apportioned as of such date if not earlier
abated pursuant to Section 16B.

F. During the period of repair and restoration of the Demised
Premises, Landlord shall use its best efforts to assist Tenant in securing
alternate office space, provided that Tenant shall have no obligation to lease
such alternate space from Landlord.

G. No damages, compensation, or claim shall be payable by Landlord
for inconvenience, loss of business, or annoyance arising from any repair or
restoration of any portion of the Demised Premises or of the Building pursuant
to this Section. Landlord shall use its best efforts to effect such repair or
restoration promptly and in such manner as to not unreasonably interfere with
Tenant's use and occupancy.

H. Landlord will not carry insurance of any kind on Tenant's
property, and, except as provided by law or its breach of any of its obligations
hereunder, shall not be obligated to repair any damage thereto or replace the
same.

I. The provisions of this section shall be considered an express
agreement governing any case of damage or destruction of the Demised Premises by
fire, by casualties, by the elements, or Acts of God, and any law to the
contrary, now or hereafter in force, shall have no application in such case.

J. Notwithstanding any of the foregoing provisions of this section,
if Landlord or the holder of any superior mortgage shall be unable to collect
all of the insurance proceeds (including rent insurance proceeds) applicable to
damage or destruction of the Demised Premises or the Building by fire or other
cause, by reason of negligence on the part of Tenant, or any of its employees,
agents, visitors, invitees, or contractors, then, without prejudice to any other
remedies which may be available against Tenant, the abatement of Tenant's rents
provided for in this section shall not be effective to the extent of any
insurance deductible paid by Landlord.

17. EMINENT DOMAIN

A. In the event (i) the whole of the Demised Premises, or (ii) a
portion of the Demised Premise large enough to prevent Tenant from continuing to
operate its business in a reasonable manner, be acquired or condemned by eminent
domain for any public or quasi-public use

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<PAGE>

or purpose, then and in that event, the Term of this Lease shall cease and
terminate from the date of title vesting in such proceeding or the termination
of the right to possession, whichever is earlier.

B. In the event any substantial part thereof or of Landlord's
Building or of the structure of which Landlord's Building is a part is so
acquired or condemned as to render the Demised Premises untenantable or in the
event that a part of Landlord's Building, other than the Demised Premises, shall
be so condemned or taken and if, in the opinion of Landlord, the Building should
be restored in such a way as to alter the Demised Premises materially, the
Landlord may terminate this Lease and the Term and the estate hereby granted by
notifying Tenant in writing of such termination, not less than thirty (30) days
after giving such notice, as fully and completely as if such date were the date
hereinbefore set forth for the expiration for the term of this Lease, and the
rent hereunder shall be apportioned as of said date.

C. Tenant shall have no claim against Landlord for the value of any
unexpired Term of said Lease, nor a claim to any part of an award in such
proceeding and rent shall be adjusted and paid to the date of such
determination.

D. Nothing herein contained shall be deemed to affect or be in
derogation of any right or rights of Tenant against the condemning authority to
claim and recover damages, if any, to or for the taking of its movable fixtures
and equipment or expenses or removal or relocation resulting from any such
condemnation or acquisition, provided that any such damages awarded to Tenant
shall not reduce the award payable to Landlord.

18. ASSIGNMENT, MORTGAGE, ETC.

A. Tenant may, without the necessity of obtaining the Landlord's
consent and without the same being deemed an event of default hereunder:

(1) assign or sublet its interest in this Lease, in whole or in
part, to:

(a) any person or persons owning a majority of the
partnership interest of Tenant on the date this Lease is
executed;

(b) any entity in which the majority of the total interest
is owned by the owner or owners of the majority of the
partnership interest of the Tenant on the date this
Lease is executed;

(c) any transferee of a majority of the Tenant's business
assets, providing such transferee assumes Tenant's
liabilities and has a net worth not less than that of
the Tenant immediately prior to such transfer; and

(2) transfer a majority, or all of the partnership interest of
the Tenant, voluntarily or involuntarily, to any individual
or individuals related to

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<PAGE>

the holder or holders of a majority of the partnership
interest of the Tenant on the date this Lease is executed.

B. Except as set forth in Section 18A, if Tenant intends to (i)
assign all of its interest under the Lease, or (ii) sublet more than seventy-
five percent (75%) of the area of the Demised Premises for substantially all of
the then unexpired Term of this Lease, then in either such event, Tenant shall
provide Landlord with written notice of Tenant's intention and Landlord shall
have the exclusive option, for a period of twenty (20) days from and after
receipt of such notice from Tenant, to elect to terminate this Lease effective
forty-five (45) days (the "Termination Date") after written notice of such
termination election is delivered to Tenant, in which event Tenant shall quit,
surrender and vacate the Demised Premises as of the Termination Date as if such
date were the scheduled Expiration Date hereunder. Landlord's failure to notify
Tenant of Landlord's election to terminate this Lease within the time and in the
manner provided above shall be deemed to constitute Landlord's election not to
terminate this Lease in which event Tenant may, within the next one hundred
twenty (120) days, subject to the terms and conditions of Section 18C, assign or
sublet this Lease. If Tenant does not assign or sublet this Lease within such
one hundred twenty (120) day period, then Landlord's termination option shall be
deemed to be reinstated.

C. Except as set forth in Sections 18A and 18B, Tenant, for itself,
its heirs, legal representatives, successors and assigns, expressly covenants
that it shall not assign, mortgage, pledge, encumber or otherwise transfer this
Lease, nor sublet, or suffer or permit the Demised Premises or any part thereof
to be used by others, nor advertise any part of the Demised Premises as being
available to Tenants or subtenants, without the prior written consent which
shall not be unreasonably withheld or delayed by Landlord in each instance,
provided:

(1) That Tenant shall not be in default beyond any applicable
notice or cure periods of any provision of this Lease;

(2) That Tenant shall furnish Landlord with the name and address
of the proposed subtenant, a counterpart of the proposed
subleasing agreement, and reasonably satisfactory
information with respect to the nature and character of the
business of the proposed subtenant together with current
financial information and references reasonably satisfactory
to Landlord;

(3) In the reasonable judgment of Landlord the proposed
subtenant is of a character and engaged in a business such
as are in keeping with the standards of Landlord in those
respects for the building;

(4) The purposes for which the proposed subtenant intends to use
the portion of the premises sublet to it are uses expressly
permitted by and not expressly prohibited by this Lease and
shall not be substantially more intense (by virtue of
density of occupancy, hours of use, or otherwise) than that
of the Tenant;

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<PAGE>

D. Except as set forth in Sections 18A and 18B, Landlord shall have
a right of first refusal to sublet the Demised Premises from Tenant. If Tenant
is successful in obtaining a prospective sublessee for the Demised Premises,
Tenant shall first give notice to Landlord that it has obtained such prospective
sublessee and the material terms of the sublease. Landlord shall then have 30
days from the date of receipt of such notice to exercise its right in writing to
sublease the Demised Premises from the Tenant on the same terms. If Landlord
fails to exercise its right of first refusal, Tenant may then proceed to
effectuate the proposed sublease in accordance with the terms of Section 18.

E. If this Lease be assigned, or if the Demised Premises or any part
thereof be sublet or occupied by anybody other than Tenant, Landlord may, after
default by Tenant, collect rent from the assignee, subtenant or occupants of
Tenant and apply the net amount collected to the rent herein reserved, but no
such assignment, subletting, occupancy or collection shall be deemed a waiver of
this covenant, or the acceptance of the assignee, subtenant or occupants of
Tenant, or a release of Tenant from the further performance by Tenant of the
covenants on the part of Tenant herein contained.

F. In the event that Tenant at any time desires to have Landlord
sublet the Demised Premises for Tenant's account, Landlord or Landlord's agents
are authorized to receive keys for such purposes without releasing Tenant from
any of the obligations under this Lease. The consent by Landlord to an
assignment or subletting shall not in any way be construed to relieve Tenant
from obtaining the express consent in writing of Landlord to any further
assignment or subletting.

G. Each permitted assignee or transferee shall assume and be deemed
to have assumed this Lease and shall be liable for the payment of the Minimum
Rent and Additional Rent and for the due performance of all the terms,
covenants, conditions and agreement herein contained on Tenant's part to be
performed for the Term of this Lease arising from and after the date of such
assignment.

H. No assignment shall be binding on Landlord unless such assignee
or Tenant shall deliver to Landlord a duplicate original of the instrument of
assignment, in form reasonably satisfactory to Landlord, containing a covenant
of assumption by the assignee of all of the obligations aforesaid and shall
obtain from Landlord the aforesaid written consent, prior thereto.

I. In no event shall any permitted sublessee assign or encumber its
sublease or further sublet all or any portion of its sublet space, or otherwise
suffer or permit the sublet space or any part thereof to be used or occupied by
others, without Landlord's prior written consent in each instance.

J. Any assignment, sublease, mortgage, pledge, encumbrance or
transfer in contravention of the provisions of Section 18 shall be void.

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K. The original named Tenant covenants that, notwithstanding any
assignment or transfer, whether or not in violation of the provisions of this
Lease, and notwithstanding the acceptance of Minimum Rent and/or Additional Rent
by Landlord from an assignee, transferee, or any other party, the original named
Tenant shall remain fully liable for the payment of the Minimum Rent and
Additional Rent and for the other obligations of this Lease on the part of
Tenant to be performed or observed.

L. If Landlord shall give its consent to any assignment of this
Lease or to any sublease, Tenant shall in consideration therefore, pay to
Landlord, as Additional Rent:

(1) In the case of an assignment, fifty percent (50%) of the
amount by which all sum and other considerations including,
without limitation, sums designated by the assignee as paid
for the purchase of Tenant's property, less the then net
unamortized or undepreciated cost thereof determined on the
basis of Tenant's federal income tax returns, or, if Tenant
does not file such returns, on the same basis as carried on
Tenant's books) paid to Tenant by the assignee for or by
reason of such assignment exceeds the brokerage commissions
actually paid by Tenant in connection with such assignment
and other expenses (including legal fees) reasonably
incurred by Tenant in connection with such assignment; and

(2) In the case of a sublease, fifty percent (50%) of the amount
by which any rents, additional charges or other
consideration paid to Tenant by the sublessee in respect of
the sublet space exceeds the sum of (a) the Minimum Rent and
Additional Rent accruing during the term of the sublease in
respect of the sublease space (at the rate per rentable
square foot payable by Tenant hereunder), (b) brokerage
commissions actually paid by Tenant in connection with the
sublease (amortized over the term of the sublease), and (c)
other expenses (including legal fees) reasonably incurred by
Tenant in connection with the sublease. The sums payable
under Section 18L.(2) shall be paid to Landlord as and when
payable by Tenant.

M. If Tenant is a corporation, the provisions of Section 18C shall
apply to a transfer (by one or more transfers) of a majority of the stock of
Tenant as if such transfer of a majority of the stock of Tenant were an
assignment of this Lease. For purposes of determining whether a majority of the
stock of Tenant has been transferred, the attribution rules set forth by the
Internal Revenue Code as in effect on the date hereof, shall be applied.

N. If Tenant is a partnership, the provisions of Section 18C shall
apply to a transfer (by one or more transfers) of any interest in the
partnership, as if such transfer were an assignment of this Lease.

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19. CONDITIONS OF LIMITATION

A. This Lease and the Term and estate hereby granted are subject to
the limitation that if any one or more of the following events (herein sometimes
called "Events of Default" shall happen:

(1) If Tenant fails to make due and punctual payment of any
Minimum Rent, or Additional Rent payable under this Lease or
any part thereof for a period of ten (10) days after notice
from Landlord to Tenant specifying the items in default; or

(2) If Tenant fails in the performance or compliance with any of
the agreements, terms, covenants or conditions in this Lease
provided, other than those referred to in the foregoing
Section 19A.(1) for a period of ten (10) days after notice
from Landlord to Tenant specifying the items in default, or
in the case of a default or a contingency which cannot with
due diligence be cured within said ten (10) day period to
cure the same and thereafter to prosecute the curing of such
default with due diligence (it being intended in connection
with a default not susceptible of being cured with due
diligence within said ten (10) day period that the time of
Tenant within which to cure the same shall be extended for
such period as may be necessary to complete the same with
all due diligence); or

(3) Whenever Tenant shall abandon the Demised Premises (unless
as a result of a casualty or taking) for a period of thirty
(30) consecutive days, or shall fail to take occupancy of
the Demised Premises within thirty (30) days after the
Commencement Date;

then and in any such event Landlord at any time thereafter may
give written notice to Tenant specifying such event of default or
events of default and stating that this Lease and the Term hereby
demised shall expire and terminate on the date specified in such
notice, which shall be at least ten (10) days after the giving of
such notice, and upon the date specified in such notice this
Lease and the Term hereby demised and all rights of Tenant under
this Lease, including any renewal privileges whether or not
exercised, shall expire and terminate, and Tenant shall remain
liable as hereinafter provided.

B. Whenever Tenant shall make an assignment of the property of
Tenant for the benefit of creditors, or whenever a permanent receiver of Tenant
or of or for the property of Tenant shall be appointed, or if Tenant claims that
it is unable to pay its debts as they become due, then, Landlord, (a) at any
time after receipt of notice of the occurrence of any such event, or (b) if such
event occurs without the acquiescence of Tenant, at any time after the event
continues for ninety (90) days, may give Tenant a notice of Landlord's intention
to end the term of this Lease at the expiration

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of five (5) days from the date of service of such notice of intention, and upon
the expiration of said five (5) day period this Lease and the Term and estate
hereby granted, whether or not the Term shall theretofore have commenced, shall
terminate with the same effect as if that day were the Expiration Date, but
Tenant shall remain liable for damages as provided in Section 20.

C. If this Lease shall be assumed or assigned by a trustee pursuant
to the provisions of Title 11 of the United States Code ("Bankruptcy Code"), the
trustee shall cure any default under this Lease and shall provide such adequate
assurance of future performance of this Lease as are provided in Section
365(b)(3) of the Bankruptcy Code.

20. REMEDIES OF LANDLORD

A. In case of any such default pursuant to Section 19 of this Lease,
re-entry, expiration, and/or dispossession by summary process or otherwise:

(1) The rent shall become due thereupon and be paid up to the
time of such re-entry, dispossession, and/or expiration,
together with such reasonable expenses as Landlord may incur
for legal expenses, reasonable attorneys' fees, brokerage,
and/or putting the Demised Premises in good order or for
preparing the same for re-rental;

(2) Landlord may re-let the premises, or any part or parts
thereof, as Tenant's agent, in the name of Landlord, or
otherwise, for a term or terms which may, at Landlord's
option, be less than or exceed the period which would
otherwise have constituted the balance of the term of this
Lease and may grant free concessions or free rent as may be
reasonable; and/or

(3) Tenant, or the legal representatives of Tenant, shall also
pay Landlord, as liquidated damages for the failure of
Tenant to observe and perform Tenant's covenants herein
contained, any deficiency between the rent hereby reserved
and/or covenanted to be paid and the net amount, if any, of
the rents collected on account of the Lease of the Demised
Premises for each month of the period which would otherwise
have constituted the balance of the term of this Lease. The
failure of Landlord to re-let the premises, or any part or
parts thereof, shall not release or affect Tenant's
liability for damages.

(4) In computing such liquidated damages, there shall be added
to said deficiency such reasonable expenses as Landlord may
incur in connection with re-letting, such as legal expenses,
reasonable attorneys' fees, brokerage fees, and for keeping
the Demised Premises in good order or for preparing the same
for re-letting. Any such liquidated damages shall be due and
payable on the basis of the rent which had

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become due and payable for the month prior to the default,
and any suit brought to collect the amount of the deficiency
for any month shall not prejudice in any way the rights of
Landlord to collect the deficiency for any subsequent month
by a similar proceeding.

(5) Landlord, at Landlord's option, may make such reasonable
alterations, repairs, replacements, and/or decorations in
the Demised Premises as Landlord, in Landlord's reasonable
judgment, considers advisable and necessary for the purpose
of re-letting the Demised Premises; and the making of such
alterations and/or decorations shall not operate or be
construed to release Tenant from liability hereunder as
aforesaid.

(6) Landlord shall in no event be liable in any way whatsoever
for failure to relet the Demised Premises, or in the event
that the Demised Premises are relet, for failure to collect
the rent thereof under such reletting, provided Landlord
uses reasonable efforts to mitigate its damages if the Lease
is terminated.

(7) In the event of a breach or threatened breach by Tenant to
any of its obligations under this Lease, Landlord shall also
have the right of injunction. The special remedies to which
Landlord may resort hereunder are cumulative and are not
intended to be exclusive of any other remedies or means of
redress to which Landlord may evoke any remedy allowed at
law or in equity as if specific remedies were not provided
for herein.

(8) If this Lease shall terminate under the provisions of
Section 19, or if Landlord shall re-enter the Demised
Premises under the provisions of Section 20, or in the event
of the termination of this Lease, or of re entry, by or
under any summary dispossess or other proceeding or action
or any provision of law by reason of default hereunder on
the part of Tenant, Landlord shall be entitled to all
monies, if any, paid by Tenant to Landlord, whether as
advance rent, security or otherwise, but such monies shall
be credited by Landlord against any Minimum Rent or
Additional Rent due from Tenant at the time of such
termination or re-entry or, at Landlord's option, against
any damages payable by Tenant under Section 20B or pursuant
to law.

B. If Tenant shall default in the observance or performance of any
term or covenant of this Lease and Tenant has failed to cure said default under
the terms of this Lease, Landlord may immediately, or at any time thereafter,
and without notice (except as herein provided), perform the same for the account
of Tenant, and, if Landlord makes any expenditures or incurs any obligations for
the payment of money, including, but not limited to, attorneys' fees,
instituting, prosecuting, or defending any action or proceeding, such sums paid
or obligations incurred, with

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interest and costs, shall be deemed to be additional rent hereunder and shall be
paid by Tenant to Landlord within thirty (30) days of rendition of any bill or
statement to Tenant.

C. If the Landlord reenters the premises for any cause or if Tenant
abandons or vacates the premises, any property left in the premises by Tenant
shall be deemed to have been abandoned by Tenant, and Landlord shall have the
right to retain or dispose of such property in any manner and without any
obligation to account therefore to Tenant.

21. REMEDIES OF TENANT

If Landlord shall default in the observance or performance of any term or
covenant of this Lease and Landlord has failed to cure said default within 30
days of receipt of written notice of such default, Tenant may, provided Tenant
shall have complied with the notice provisions of section 34 of this Lease,
perform the same, and, if Tenant makes any reasonable expenditures or incurs any
reasonable obligations for the payment of money to cure such default, such sums
paid or obligations incurred may be setoff against the next payment of Minimum
Rent and Additional Rent due under this Lease.

22. RULES AND REGULATIONS

To the extent not inconsistent with this Lease, Tenant and Tenant's
servants, employees, agents, visitors, and licensees shall observe faithfully,
and comply strictly with, the Rules and Regulations set forth in Exhibit D
annexed hereto and made a part hereof, and such further reasonable Rules and
Regulations as Landlord or Landlord's agents may, from time to time, adopt that
are generally applicable to all Tenants. Notice of any Rules or Regulations
shall be given in writing. Landlord shall not be discriminatory in the
enforcement of the Rules and Regulations. Landlord shall not be liable to
Tenant for the violation of the Rules and Regulations by any other Tenant, its
servants, employees, agents, visitors or licensees.

23. REPRESENTATIONS BY LANDLORD

A. Landlord represents and warrants to Tenant that as of the
Commencement Date:

(1) the Landlord is the owner, in fee simple, of the Building
and the person(s) executing this Lease on behalf of Landlord
have the authority to cause Landlord to enter into this
Lease.

B. Landlord represents and warrants to the best of its knowledge and
belief to Tenant that as of the Commencement Date:

(1) there are no restrictions in any agreement not of record to
which the Landlord is a party which prohibits any of the terms of this Lease or

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which prohibits or restricts the Tenant's use of the Demised
Premises for the uses permitted in Section 7; and

(2) this Lease and the terms hereof are not prohibited under the
terms of any superior lease of the Building or any space
therein including the Demised Premises, or any mortgage or
other financing document, constituting a lien against the
Building.

C. Tenant expressly acknowledges and agrees that Landlord has not
made and is not making, and Tenant, in executing and delivering this Lease, is
not relying upon, any warranties, representations, promises or statements,
except to the extent that the same are expressly set forth in this Lease or in
any other written agreement which may be made between the parties concurrently
with the execution and delivery of this Lease and shall expressly refer to this
Lease. This Lease and said other written agreement(s) made concurrently
herewith are hereinafter referred to as the "Lease Documents." It is understood
and agreed that all understandings and agreements heretofore had between the
parties are merged in the Lease Documents, which alone fully and completely
express their agreements, and that the same are entered into after full
investigation, neither party relying upon any statement or representation not
embodied in the Lease Documents, made by the other.

24. QUIET ENJOYMENT

Landlord represents and covenants that Landlord has full right, power and
authority to enter this Lease for the Term herein granted and Landlord covenants
and agrees with Tenant that upon Tenant paying the Minimum Rent and Additional
Rent and observing and performing all the terms, covenants and conditions on
Tenant's part to be observed and performed, Tenant may peaceably and quietly
enjoy the Demised Premises, free from any interference, molestation or acts of
Landlord or anyone claiming by, through or under Landlord, subject,
nevertheless, to the terms and conditions of this Lease and to any superior
leases or superior mortgages.

25. ACCESS; RIGHT TO EXHIBIT PREMISES; NAME

A. Landlord or Landlord's agent or designee shall have the right to
enter the Demised Premises at all reasonable times upon reasonable advance
notice to Tenant (except in case of emergency when no notice shall be required,
whether or not during normal business hours), for the purpose of performing any
obligation of Landlord or exercising any right reserved to Landlord in this
Lease and:

(1) to examine the Demised Premises;

(2) to exhibit the Demised Premises to others (including
prospective mortgagees, purchasers, and ground lessees) and
in the case of prospective Tenants for the Demised Premises,
within the last nine (9) months of the term;

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(3) to make, or cause to be made such repairs or improvements,
or to perform such maintenance, including the maintenance of
Building equipment, as Landlord may deem necessary or
desirable;

(4) to take all material that may be required in connection with
any such repairs, improvements or maintenance into the
Demised Premises, and store same in the Demised Premises;
and

(5) to alter, renovate and decorate the Demised Premises at any
time during the Term upon ten (10) days prior notice to
Tenant, if Tenant shall have removed all or substantially
all of Tenant's property from the Demised Premises. Landlord
agrees that all such repairs, improvements and maintenance
shall be made with a minimum of inconvenience to Tenant and
that Landlord will diligently proceed therewith to
completion but without obligation to employee overtime labor
and subject to delays beyond Landlord's control. If after
such ten (10) day notice, Tenant, its agents or employees
shall not be present or shall not permit an entry into the
Demised Premises at any time when such entry shall be
permissible, Landlord may use a master key to enter the
Demised Premises.

(6) Locks shall not be changed without prior approval of
Landlord and must conform to the building master key system.

B. Landlord or Landlord's agents shall have the right to permit
access to the Demised Premises at any time, whether or not Tenant shall be
present, to any representative of the fire, police, building, sanitation or
other department or instrumentality of any borough, city, state, or federal
government. Nothing contained in, nor any action taken by Landlord under,
Section 25B shall be deemed to constitute recognition by Landlord that any
person other than Tenant has any right or interest in this Lease or the Demised
Premises.

C. Landlord reserves the right, at any time, without incurring any
liability to Tenant therefore, to make such changes in or to the Building and
the fixtures and equipment thereof, as well as in or to the street entrances,
halls, passages, elevators, escalators, stairways, toilets and other public
parts of the Building, as it may be necessary or desirable, provided such work
and such changes do not materially interfere with or materially reduce Tenant's
use or access to the Demised Premises.

D. Landlord may adopt any name for the Building. Landlord reserves
the right to change the name or address of the Building at any time. Tenant
agrees not to refer to the Building by any name or address other than as
designated by Landlord.

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26. SUBORDINATION

A. This Lease, and all rights of Tenant hereunder, are and shall be
subject and subordinate in all respects to all ground leases, operating leases,
overriding leases and underlying leases of the Land and/or the Building (or any
portions thereof) now or hereafter existing, and to all mortgages (and
construction loan agreements), and to all renewals, modifications, replacements,
substitutions and extensions of such leases and mortgages, and to all spreaders
and consolidations of such mortgages. Section 24A. shall be self-operative and
no further instrument of subordination shall be required. In particular, with
regard to the mortgagee owning a mortgage interest in the Land as of the date of
this Lease, a certain Subordination Agreement has been executed between
Landlord, Tenant, and Wells Fargo Bank which agreement sets forth the specific
terms, conditions and obligations between the parties and is attached hereto as
Exhibit E.

B. In confirmation of such subordination, Tenant shall promptly
execute and deliver at Landord's cost and expense any instrument, in recordable
form if requested, that Landlord, the lessor of any such lease or the holder of
any such mortgage or any of their respective successors in interest may
reasonably request to evidence such subordination, and if Tenant fails to
execute, acknowledge or deliver any such instrument within ten (10) days after
request therefore, Tenant hereby irrevocably constitutes and appoints Landlord
as Tenant's attorney-in-fact, coupled with an interest, to execute, acknowledge
and deliver such instrument for and on behalf of Tenant.

C. The leases to which this Lease is, at the time referred to,
subject and subordinate pursuant to Section 26 are hereinafter sometimes called
"Superior Leases" and the mortgages to which this lease is, at the time referred
to, subject and subordinate and hereinafter sometimes called "Superior
Mortgages." The lessor under any superior lease is sometimes hereinafter
referred to as a "Superior Lessor," and the mortgagee under any superior
mortgage is hereinafter sometimes referred to as a "Superior Mortgagee."

D. If, in connection with the obtaining, continuing or renewing of
any financing for which the Building, the Land or the interest of the lessee
under any Superior Lease represents collateral, in whole or in part, any bank,
insurance company, pension fund or other lending institution shall request
reasonable modifications of this Lease as a condition of its granting such
financing, Tenant will not unreasonably withhold its consent thereto, provided
that such modifications do not (1) increase the rental obligations or other
costs and expenses payable by Tenant under this Lease, (2) increase or decrease
the area of the Demised Premises or the Term, (3) decrease the services required
to be provided by Landlord hereunder, (4) increase any of Tenant's other
obligations under this Lease, or (5) adversely affect any of Tenant's other
rights under this Lease. In the event Landlord is successful in obtaining such
financing, Landlord agrees to use its best efforts to obtain a usual and
customary non-disturbance agreement from such lender for the benefit of Tenant.

E. In the event of any act or omission of Landlord which would give
Tenant the right, immediately or after the lapse of a period of time, to cancel
or terminate this Lease, or to claim a partial or a total eviction, Tenant
agrees that Tenant shall not exercise such right;

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(1) until it has given written notice of such act or omission to
the holder of each Superior Lessee or Superior Mortgagee
whose name and address shall previously have been furnished
to Tenant in writing; and

(2) unless such act or omission shall be one which is not
capable of being remedied by Landlord or any such Superior
Lessor or Superior Mortgagee within a reasonable period of
time, until a reasonable period for remedying such act or
omission shall have elapsed following the giving of such
notice and following the time the such Superior Mortgagee or
Superior Lessor shall have become entitled under its
superior mortgage or superior lease, as the case may be, to
remedy the same (which reasonable period shall in no event
be less than the period to which Landlord would be entitled
under this Lease or otherwise, after similar notice, to
effect such remedy), provided such Superior Mortgagee or
Superior Lessor shall with due diligence give Tenant written
notice of its intention to, and commence and continue to,
remedy such act or omission.

27. SURRENDER OF THE PREMISES

Except as otherwise herein provided, at the expiration of the Term, Tenant
will peacefully yield up to Landlord the Demised Premises, broom clean, in as
good order and repair as when delivered to Tenant in accordance with Exhibit B-
1, damage by fire, casualty, war, or insurrection or act upon the part of any
governmental authority, ordinary wear and tear, and damage by the elements,
excepted. Any property left by the Tenant in the Demised Premises shall be
deemed abandoned by Tenant, except as otherwise provided in this Lease.

28. BROKERAGE

Tenant covenants, warrants and represents that there was no broker except
GRP REALTY COMPANY and DECIMAL POINT REAL ESTATE SERVICES ("Broker(s)")
instrumental in consummating this Lease and that no negotiations were had with
any broker except the Broker(s) concerning the renting of the Demised Premises.
Tenant agrees to indemnify and hold Landlord and the Broker(s) harmless from and
against any claims, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) for a brokerage commission arising out
of any conversations or negotiations had by Tenant with any broker or finder
except the Broker(s), or arising as a result of any inaccuracy of the foregoing
representation. Based upon the foregoing representation, Landlord has agreed to
pay brokerage commissions to the Broker(s) pursuant to separate agreements, and
agrees to indemnify Tenant against liability from such agreements. Landlord
further agrees to pay Decimal Point Real Estate Services a commission in the
amount of two percent (2%) of the Base Rent for the First Renewal Term and one
percent (1%) of the Base Rent for the Second Renewal Term within 30 days of the
determination of the Base Rent for each Renewal Term as set forth in this Lease.

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29. FORCE MAJEURE

Landlord and Tenant, respectively, shall not be in default hereunder, if
Landlord, or as the case may be, Tenant, is unable to fulfill or is delayed in
fulfilling any of its obligations to complete the Building, to supply any
services hereunder, or to make repairs or replacements hereunder, if Landlord,
or as the case may be, Tenant, is prevented from fulfilling or is delayed in
fulfilling such obligations by reason of fire or other casualty, strikes or
labor troubles, governmental preemption in connection with a national emergency,
shortage of supplies or materials, or by reason of any rules, order or
regulation of any governmental authority, or by reason of the condition of
supply and demand affected by war or other emergency, or any other cause beyond
its reasonable control (excluding financial inability). Such inability of delay
by Landlord or Tenant in fulfilling any of their respective obligations
hereunder shall not affect, impair or excuse the other party hereto from the
performance of any of the terms, covenants, conditions, limitations, provisions
or agreements hereunder on its part to be performed, nor result in any abatement
of rents or Additional Rents payable hereunder except as otherwise provided
herein.

30. ESTOPPEL CERTIFICATE

A. At any time and from time to time upon not less than ten (10)
business days' prior notice by Landlord or any Superior Lessor or Superior
Mortgagee to Tenant, Tenant shall, without charge, execute, acknowledge and
deliver to Landlord a statement in writing and in recordable form, prepared by
Landlord addressed to such party as Landlord may designate or in form
satisfactory to Landlord, certifying any or all of the following:

(1) that this Lease is unmodified and in full force and effect
(or if there have been modifications, that the same is in
full force and effect as modified and stating the
modifications);

(2) whether the Term has commenced and Minimum Rent and
Additional Rent have become payable hereunder and, if so,
the dates to which they have been paid;

(3) whether or not, to the best knowledge of the signer of such
certificate, Landlord is in default in performance of any of
the terms of this Lease and, if so, specifying each default
of which the signer may have knowledge;

(4) whether Tenant has accepted possession of the Demised
Premises;

(5) whether there exist any offsets or defenses against
enforcement of any of the terms of this Lease upon the part
of the Tenant to be performed, and if so, specifying the
same; and

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(6) such further information with respect to the Lease or the
Demised Premises as Landlord may reasonably request or any
Superior Mortgagee or Superior Lessor may require, it being
intended that any such statement delivered pursuant hereto
may be relied upon by any prospective purchaser of the Land
or the Building or any part thereof or of the interest of
Landlord in any part thereof by any mortgagee or prospective
mortgagee thereof, by any lessor or prospective lessor
thereof, by any lessee or prospective lessee thereof, or by
any prospective assignee of any mortgage thereof.

B. If Tenant shall fail to execute, acknowledge, and deliver such
statement within said ten (10) business day period, Landlord may give Tenant a
second notice, enclosing a copy of the notice given pursuant to Section 30A,
specifying that Tenant's failure to execute, acknowledge and deliver such
statement shall constitute an acknowledgment of the facts as set forth by
Landlord, and the failure of Tenant to execute, acknowledge and deliver to
Landlord a statement in accordance with the provisions of this Section 30B
within five (5) business days after receipt of such second notice shall
constitute an acknowledgment by Tenant, which may be relied on by any person who
would be entitled to rely upon any such statement, that such statement as
submitted by Landlord is true and correct. Notwithstanding such acknowledgment,
Tenant shall, at Landlord's option, be in default hereunder for its failure to
execute such statement.

31. HOLDOVER

After the expiration of the Term of this Lease, if not extended, or
extended term, if extended, if Tenant shall continue in possession thereafter,
such possession shall be on a month-to-month basis upon the same terms of this
Lease but at twice the Minimum Rent and Additional Rent paid during the
preceding expired term until terminated at the end of a month by either party
upon thirty (30) days advance written notice to the other party.

If Tenant shall hold-over or remain in possession beyond the Expiration
Date of this Lease, Tenant shall be subject not only to a summary proceeding and
all damages related thereto, but also to any damages arising out of any lost
opportunities (and/or new leases) by Landlord to relet the Demised Premises (or
any part thereof). All damages to Landlord by reason of such holding over by
Tenant may be the subject of a separate action and need not be asserted by
Landlord in any summary proceedings against Tenant.

32. NOTICES

All notices, demands and requests under this Lease shall be in writing and
shall be either hand delivered or sent by Courier or United States Mail and
addressed as follows:

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<PAGE>

To Tenant: Modem Media Advertising L.P.
228 Saugatuck Avenue
Westport, CT 06880

Attention: Peter Massey

Copy To: Cummings & Lockwood
Four Stamford Plaza
107 Elm Street
Stamford, CT 06902-3851

Attention: Geoffrey F. Fay, Esquire

To Landlord: Lennar Northeast Partners Limited Partnership
600 Peachtree Street, N.E.
Atlanta, GA 30308

Attention: Director of REO

Copy to: GRP Realty Company
1150 Summer Street
Stamford, CT 06905

Attn: Gino R. Partenza

Copy to: Brian D. Rosenfeld
Attorney at Law
196 North Street
Stamford, CT 06901

Either party may, by notice given to the other party in accordance with
this Section 32, designate a new address to which notices, demands, and requests
shall be sent. Notices, demands, and requests which shall be served upon
Landlord or Tenant in the manner aforesaid shall be deemed to have been served
or given for all purposes under this Lease on the earlier of actual receipt, or
five (5) days after such notice, demand or request shall be hand delivered or
sent by Courier or United States Mail as aforesaid.

33. WAIVER OF TRIAL BY JURY

Landlord and Tenant shall and hereby do waive trail by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other in any matter arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Demised
Premises, any claim of injury or damage and any emergency or any other statutory
remedy.

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<PAGE>

34. LATE PAYMENTS

If Tenant shall fail to pay when due any installment or payment of Minimum
Rent or Additional Rent required to be paid hereunder for a period of ten (10)
days after the date on which such installment shall have become due, Tenant
shall pay interest on such late payment at the Interest Rate, from the date such
payment was to be made until payment in full by Tenant to Landlord as Additional
Rent, which payment shall be due upon demand. Failure to comply with said
provisions shall be a default pursuant to Section 19.

35. EFFECTS OF WAIVERS OF DEFAULT

No consent or waiver, express or implied, by Landlord to or of any breach
of any term, covenant or condition of this Lease on the part of Tenant, shall be
construed as a consent or waiver to or of any other breach of the same or any
other terms, covenant or condition, unless in writing signed by Landlord. The
failure of Landlord to insist in any one or more instances upon the strict
performance of any one or more of the agreements, terms, covenants, conditions
or obligations of this Lease, or to exercise any right, remedy or election
herein contained, shall not be construed as a waiver or relinquishment for the
future performance of such one or more obligations of this Lease or of the right
to exercise such election, but the same shall continue and remain in full force
and effect with respect to any subsequent breach, act or omission whether to a
similar nature or otherwise.

36. LANDLORD'S RIGHT TO CURE DEFAULTS

Landlord may, but shall not be obligated to, cure, at any time, upon ten
(10) days' notice to Tenant, or in the event of an emergency, without notice to
Tenant, any default by Tenant under this Lease, and whenever Landlord so elects,
all costs and expenses incurred by Landlord in curing a default, including,
without limitation, reasonable attorneys' fees and disbursements, and interest
thereon, calculated at the Interest Rate, from the date of the expenditure by
Landlord, until payment in full, shall be paid by Tenant to Landlord on demand,
and shall be recoverable as Additional Rent.

37. SECURITY DEPOSIT

A. Tenant has deposited with Landlord a certain standby irrevocable
Letter of Credit issued by Chemical Bank of New York in the amount of
$160,000.00 in favor of the Landlord as security for the performance by Tenant
of the terms of this Lease, a copy of which is attached hereto as Exhibit F and
made a part hereof (hereinafter the "Security"). Provided that Tenant has not
committed any monetary Events of Default pursuant to this Lease for a period of
twenty-four (24) consecutive months, and further provided that there are no
pending defaults by Tenant on the 25th month of this Lease which remain uncured
after any applicable cure period, the amount of the Letter of Credit may be
reduced to $120,000.00. Provided Tenant has not committed any monetary Events of
Default pursuant to this Lease for a further period of twelve (12) consecutive
months, and further provided that there are no pending defaults by Tenant on the
37th month of this Lease which remain uncured after any applicable cure period,
the amount of the Letter of Credit may be further reduced to

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<PAGE>

$80,000.00. This Letter of Credit shall remain in full force and effect
throughout the term of this Lease, including all Renewal Terms.

B. After the expiration of all applicable notice and cure periods
under this Lease, Landlord may use any part of the Security to satisfy any
default of Tenant and any expenses arising from such default, including but not
limited to any damages or rent deficiency before or after re-entry by Landlord.

C. In the event Landlord draws against the Letter of Credit, Tenant
shall, upon demand, deposit with Landlord the full amount so drawn used to be
held by Landlord as additional Security, in order that Landlord shall have the
full amount of Security available at all times during the term of this Lease. If
Tenant shall comply fully with the terms of this Lease, the Security shall be
returned to Tenant after the date fixed as the end of the Lease. In the event of
a sale or lease of the Building, Landlord shall transfer the Security to the
purchaser or lessee, and Landlord shall thereupon be released from all liability
for the return of the security. This provision shall apply to every transfer or
assignment of the Security to a new Landlord. Tenant shall have no legal power
to assign or encumber the Security herein described. The Security described
herein shall be delivered upon execution of this Lease.

38. PARKING

A. Except as otherwise set forth in this Lease, Tenant shall have
the right to the exclusive use of all parking spaces located on the Land on
which the Demised Premises are located on a twenty-four (24) hour, seven (7) day
a week basis, subject to the Landlord's right to reasonable temporary use of the
parking areas to perform its obligations pursuant to this Lease. Prior to the
Commencement Date, Landlord shall request that the adjacent property owner
remove the Visitors parking sign indicating that visitors parking is available
on the Property.

B. On or after the Phase Three Occupancy Date, if Landlord is
directed to comply with an order of a governmental entity regarding
environmental remediation of a portion of the parking area greater than 25%,
Landlord agrees to provide alternate parking to Tenant reasonably sufficient to
accommodate Tenant's then existing parking requirements and reasonable
transportation to and from such alternate parking site and the Demised Premises,
all at Landlord's sole cost and expense which shall not be included in Operating
Expenses. Landlord shall supply such alternate parking and transportation until
75% or more of the parking area is made available to Tenant.

C. In the event 25% or more of the parking area continues to be
unavailable to Tenant for parking for more than six (6) weeks due to the
environmental remediation, Tenant shall be entitled to a rent abatement in the
amount of $200.00 per day for each day such unavailability exceeds the six (6)
week period.

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<PAGE>

39. COMMERCIAL TRANSACTION

Tenant hereby acknowledges that the execution and delivery of this Lease is
for commercial purposes and waives any right to notice or hearing under
Connecticut General States Sections 52-278a through 52-278m, inclusive, as now
or hereafter amended, or any successor act thereto, and authorizes the attorney
of Landlord to issue a writ for a prejudgment remedy without court order or
prior hearing, and further waives all rights under any statute of limitations.

40. PARTIES BOUND

The obligations of this Lease shall bind and benefit the successors and
permitted assigns of the parties with the same effect as if mentioned in each
instance where a party is named or referred to, except that no violation of the
provisions of Section 19 shall operate to vest any rights in any successor or
assignee of Tenant and that the provisions of Section shall not be construed as
modifying the conditions of limitation contained in Section 19. However the
obligations of Landlord under this Lease shall not be binding upon Landlord
herein named with respect to any period subsequent to the transfer (by operation
of law or otherwise) of its interest in the Building as owner or lessee thereof
and in the event of such transfer said obligations shall thereafter be binding
upon each transfer of the interest of Landlord herein named as such owner or
lessee of the Building, but only with respect to the period ending with a
subsequent transfer within the meaning of this Section.

41. MISCELLANEOUS

A. If Tenant is a corporation, each person executing this Lease on
behalf of Tenant hereby covenants, represents and warrants that Tenant is a duly
incorporated or duly qualified (if foreign) corporation and is authorized to do
business in the State of Connecticut (a copy or evidence thereof to be supplied
to Landlord upon Request); and that each person executing this Lease on behalf
of Tenant is an officer of Tenant and that he or she is duly authorized to
execute, acknowledge and deliver this Lease to Landlord (a copy of a resolution
to that effect to be supplied to Landlord upon request).

B. If Tenant is a partnership (or is comprised of two or more
persons), or if Tenant's interest in this Lease shall be assigned to a
Partnership (or to two or more persons, individually, or as joint venturers)
pursuant to Section 18, the following provisions of Section 41B shall apply to
such "Partnership Tenant":

(1) the liability of each of the parties comprising Partnership
Tenant (excluding limited partners) shall be joint and
several;

(2) each of the parties comprising Partnership Tenant hereby
consents in advance to, and agrees to be bound by, any
written modifications, termination, discharge or surrender
of this Lease which may hereafter be made and executed by a
duly authorized general partner of Tenant, and by any
notices, demands, requests, or other communications which

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<PAGE>

may hereinafter be given, by Partnership Tenant or by any of
the parties comprising Partnership Tenant;

(3) any bills, statements, notices, demands, requests, or other
communications given or rendered to Partnership Tenant or to
any of the parties comprising Partnership Tenant shall be
deemed given or rendered to Partnership Tenant and shall be
binding upon Partnership Tenant and all parties;

(4) if Partnership Tenant shall add new general partners, all
such new general partners shall, by their admission to
Partnership Tenant, be deemed to have assumed performance of
all the terms, covenants, and conditions of this Lease on
Tenant's part to be observed and performed;

(5) Partnership Tenant shall give prompt notice to Landlord of
the admission of any such new general partners, and upon
demand of Landlord, shall cause each such new general
partner to execute and deliver to Landlord an agreement in
form satisfactory to Landlord, wherein each such new general
partner shall assume performance of all the terms,
covenants, and conditions of this Lease on Tenant's part to
be observed and performed (but neither Landlord's failure to
request any such agreement nor the failure of any such new
partner to execute or deliver any such agreement shall
violate the provisions of Section 41B.(4).

C. Tenant may record a notice of this Lease in accordance with
C.G.S.A. (S) 47-19.

42. ENTIRE AGREEMENT, ETC.

This Lease and the Exhibits annexed hereto set forth the entire agreement
between the parties. This Lease becomes effective as a lease only when duly
signed by both Landlord and Tenant and a counterpart thereof shall have been
delivered to Tenant. All exhibits annexed to this Lease are hereby incorporated
into this Lease.

Lennar Northeast II
Limited Partnership
By LNP Real Estate Corporation,
- ----------------------------- its sole general partner

/s/ Cathy Horton By /s/ Mark A. Griffith
- ----------------------------- ----------------------------------
Mark A. Griffith
Vice President

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<PAGE>

/s/ Tom Feeley Moderm Media Advertising L.P.
- ----------------------------- By
its general partner

/s/ T.P. Skidd, Jr. By /s/ Douglas Ahlers
- ----------------------------- ---------------------------
Douglas Ahlers
its President

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<PAGE>

EXHIBIT A-1

SEE SITE PLAN
<PAGE>

EXHIBIT A-2

228 SAUGATUCK AVENUE - 2ND FLOOR

See original for diagrams
<PAGE>

EXHIBITS A-3 AND A-4

228 SAUGATUCK AVENUE - 1ST FLOOR

See original for diagrams
<PAGE>

EXHIBIT B-1

1. PHASE ONE SPACE

A. Landlord shall perform all work necessary to make the HVAC and
mechanical systems for the Phase One Space as they presently exist fully
operational for occupancy by Tenant.

B. Landlord shall complete certain additional work in the Phase One
Space by the Phase One Commencement Date as set forth on plans and
specifications provided by Tenant to Landlord on or before June 13, 1995.
Such plans and specifications must be approved by Landlord, such approval
not to be unreasonably withheld or delayed. Landlord shall pay the cost and
expense of producing these plans and specifications and of completing the
work set forth therein, such cost not to exceed the sum of $69,840.00 (the
"Phase One Allowance").

C. In the event the cost of the work to be performed as set forth in
section 1.B is less than $69,840.00, Tenant shall be entitled to a credit
against any Minimum Rent next due under this Lease in the amount of the
difference between the actual cost of such work and the Phase One
Allowance.

D. In the event the cost of the work to be performed as set forth in
section 1.B is more than $69,840.00, Tenant shall pay such excess amount to
Landlord within 15 days of Landlord's submission to Tenant of a written
statement of such amount.

2. PHASE TWO SPACE

A. Landlord shall complete the fit up of the Phase Two Space by the
Phase Two Commencement Date as set forth on plans and specifications
provided by Tenant to Landlord on or before August 1, 1995. Such plans and
specifications must be approved by Landlord, such approval not to be
unreasonably withheld or delayed. Landlord shall pay the cost and expense
of producing these plans and specifications and of completing the work set
forth therein, such cost not to exceed the sum of $132,000.00 (the "Phase
Two Allowance").

B. Landlord shall perform at its sole cost and expense all work
necessary to install the HVAC and mechanical systems for the Phase Two
Space, and to soundproof the mechanical room.

C. In the event the cost of the work to be performed as set forth in
section 2.A is less than $132,000.00, Tenant shall be entitled to a credit
against any Minimum Rent next due under this Lease in the amount of the
difference between the actual cost of such work and the Phase Two
Allowance.

D. In the event the cost of the work to be performed as set forth in
section 2.A is more than $132,000.00, Tenant shall pay such excess amount
to Landlord within 15 days of Landlord's submission to Tenant of a written
statement of such amount.
<PAGE>

3. PHASE THREE SPACE

A. Landlord shall complete the fit up of the Phase Three Space by
the Phase Three Commencement Date as set forth on plans and specifications
provided by Tenant to Landlord on or before April 1, 1996. Such plans and
specifications must be approved by Landlord, such approval not to be
unreasonably withheld or delayed. Landlord shall pay the cost and expense
of producing these plans and specifications and of completing the work set
forth therein, such cost not to exceed the sum of $99,920.00 (the "Phase
Three Allowance").

B. Landlord shall perform at its sole cost and expense all work
necessary to install the HVAC and mechanical systems for the Phase Three
Space.

C. In the event the cost of the work to be performed as set forth in
section 3.A is less than $99,920.00, Tenant shall be entitled to a credit
against any Minimum Rent next due under this Lease in the amount of the
difference between the actual cost of such work and the Phase Three
Allowance.

D. In the event the cost of the work to be performed as set forth in
section 3.A is more than $99,920.00, Tenant shall pay such excess amount to
Landlord within 15 days of Landlord's submission to Tenant of a written
statement of such amount.

4. CONSTRUCTION PROVISIONS

A. All construction to be performed pursuant to this Exhibit B shall
be done pursuant to plans and specifications approved by Landlord, shall
comply with all applicable governmental rules and regulations, shall be
done only by Landlord or contractors, sub-contractors and mechanics
reasonably approved by Landlord, shall be done in a good and workmanlike
manner to Landlord's reasonable satisfaction, using new materials and
equipment at least equal in quality and class to the original installations
in the Building, shall be done in a manner which will assure labor harmony
at the Building shall be consistent with the uses permitted under this
Lease, and in all other respects shall comply with the terms and provisions
of this Lease.

B. Tenant shall have the right to obtain three competitive bids from
contractors or sub-contractors other than Landlord for the cost of the
construction to be performed pursuant to this Exhibit B-1. If Tenant elects
to obtain such bids, it shall submit to Landlord copies of the competitive
bids on or before the dates that it is to submit its plans and
specifications for each Phase of the work to Landlord. Landlord and Tenant
agree that GRP REALTY COMPANY, Landlord's property manager, shall then have
the absolute right, to be exercised within 10 business days of receipt of
copies of such bids from Landlord, to elect to perform such Tenant's
Improvements at the same cost and upon the same terms as shown in said
contracts and sub-contracts.

C. If GRP REALTY COMPANY elects not to perform the construction of
such improvements itself, then Landlord and Tenant shall together select a
contractor or contractors from those bids procured by Tenant.

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<PAGE>

D. Landlord agrees to use its best efforts to secure a one year
warranty against defects in materials and workmanship from its contractors
for a period of one year from the date of the completion of the work for
each Phase, and it further agrees to assign any such warranties to Tenant
upon the completion of such work for each Phase.

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<PAGE>

EXHIBIT C

CLEANING SERVICE
228 Saugatuck Avenue
Westport, CT

GENERAL

Empty wastebaskets and recycling containers and damp wipe ashtrays Monday
through Friday, excluding legal holidays.

Dust jambs and sill. Same are to be high dusted semi-annually.

Vacuum rugs Monday through Friday, excluding legal holidays.

LAVATORIES

Sanitize drinking fountains, toilet room floors, basins, bowls, seats, urinals
Monday through Friday, excluding legal holidays.

Refill toilet room receptacles as required.

Paper towels, toilet tissue and soap will be supplied at Landlord's expense.

Paper towels and sanitary disposal receptacles emptied and cleaned Monday
through Friday, excluding legal holidays.

Clean, polish and wash metal partitions and walls when necessary.

Clean mirrors Monday through Friday, excluding legal holidays.

WINDOWS

Wash windows inside and out twice per annum.
<PAGE>

EXHIBIT D

RULES AND REGULATIONS

1. The sidewalks, entrances, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or encumbered by any
tenant or used for any purpose other than ingress or egress to and from the
Demised Premises.

2. No awnings or other projections shall be attached to the outside walls of
the building. No curtains, blinds, shades or screens shall be attached to or
hung in, or used in connection with any window or door of the Demised Premises,
without the prior written consent of Landlord. Such awnings, projections,
curtains, blinds, shades, screens or other fixtures must be of a quality, type,
design and color and attached in the manner approved by the Landlord, which
approval shall not be unreasonably withheld nor delayed.

3. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any tenant on any part of the outside or inside
of the Demised Premises, building or parking areas without the prior written
consent of Landlord which shall not be unreasonably withheld or delayed. In the
event of the violation of the foregoing of any tenant, Landlord, after five (5)
days prior notice to Tenant, may remove same without any liability, and may
charge the expense incurred by such removal to the tenant violating this rule.
Interior signs on doors and directory tablet shall be inscribed, painted, or
affixed for each tenant by the Landlord at the expense of such tenant and shall
be of a size, color and style acceptable to the Landlord, except as provided in
the Lease.

4. The sashes, sash doors, skylights, windows, and doors that reflect or admit
light and air into the halls, passageways or other public places in the building
shall not be covered or obstructed by any tenant. Tenant shall use its best
efforts to prevent the placement of any bottles, parcels, plants or other
articles be placed on the window sills.

5. No showcases or other articles shall be put in front of or affixed to any
part of the exterior of the building, nor placed in the halls, corridors or
vestibules without the prior written consent of the Landlord.

6. The water and wash closets and other plumbing fixtures shall not be used
for any purpose other than those for which they were constructed, and no
sweepings, rubbish, rags or other substances shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by the tenant
who, or whose servants, employees, agents, visitors or licensees, shall have
caused the same.

7. No tenant shall deface any part of the Demised Premises or the building of
which they form a part. No tenant shall lay linoleum, or other similar floor
covering. The use of cement or other adhesive material for affixing floor
covering to the floor is expressly prohibited, except that a paste or
<PAGE>

other material soluble in water may be used. Notwithstanding the above
provisions, Tenant may install normal decorative wall hangings in the Demised
Premises.

8. No bicycles, vehicles, birds or animals of any kind shall be brought into
or kept in or about the Building, and no commercial cooking shall be done or
permitted by any tenant on the Demised Premises. No tenant shall cause or permit
any unusual or objectionable odors to be produced upon or permeate from the
Demised Premises or any nuisance of any kind thereon.

9. No space in the building shall be used for manufacturing, for the storage
of merchandise, or for the sale of merchandise, goods or property of any kind at
auction.

10. No tenant shall make, or permit to be made, any unseemly or disturbing
noises or disturb or interfere with occupants of this or neighboring buildings
or premises or those having business with them whether by the use of any musical
instrument, radio, talking machine, television set, unmusical noise, whistling,
singing, or in any other way. No tenant shall throw anything out of the doors,
windows, or skylights or down the passageways.

11. No flammable, combustible or explosive fluid, chemical or substance other
than normal cleaning and office use fluids shall at any time be brought or kept
upon the premises by any tenant or by the servants, employees, agents, visitors
or licensees of any tenant.

12. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any tenant nor shall any changes be made in existing locks
or the mechanism thereof without Landlord's consent. Each tenant must, upon
termination of his tenancy, restore to the Landlord all keys of stores, offices
and toilet rooms, either furnished to, or otherwise procured by such tenant and
in the event of the loss of any keys, so furnished, such tenant shall pay to the
Landlord the cost thereof.

13. Unless Tenant is the only occupant of the Building, all removals, or the
carrying in or out of any safes, freight, furniture or bulky matter of any
description must take place during hours other than regular business hours upon
arrangement with the Landlord, The Landlord reserves the right to inspect all
freight to be brought into the building and to exclude from the building all
freight which violates these Rules and Regulations.

14. No tenant shall purchase spring water, ice, towels, or other like service,
from any company or persons not approved by Landlord.

15. Landlord shall have the right to prohibit any advertising by any tenant,
which, in the Landlord's opinion, reasonably exercised, tends to impair the
reputation of the building or its desirability as a building for offices, and
upon written notice from the Landlord, tenant shall refrain from or discontinue
such advertising.

16. Legal holidays: Thanksgiving Day, Christmas Day, New Years Day, Memorial
Day, Independence Day, and Labor Day.

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<PAGE>

17. Each tenant, before closing and leaving the said premises at any time,
shall see that all doors are closed and all lights are turned off.

18. The premises shall not be used for lodging or sleeping or for any immoral
or illegal purpose.

19. The requirements of tenants will be attended to only upon application at
the office of the building. Employees shall not perform any work or do anything
outside of the regular duties, unless under special instructions from the office
of the Landlord.

20. Canvassing, soliciting and peddling in the building is prohibited, and each
tenant shall cooperate to prevent the same.

21. Unless Tenant is the sole occupant of the Building, moving into and out of
the building can only occur on weekends or after 5:30 P.M. on weekdays. All
moving must be arranged, in writing, at least three working days in advance.
Tenant must include building personnel at its sole cost to supervise building
during move.

22. Tenant agrees to separate, segregate or otherwise handle its waste and
garbage in accordance with standards issued by Landlord in order to comply with
any recycling laws, regulations or ordinances that may be in effect from time to
time.

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<PAGE>

EXHIBIT 10.13

TN TECHNOLOGIES INC.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement ("Agreement") is made as of this ___ day of
____, 1996, by and between TN Technologies Inc., a Delaware corporation (the
"Company"), and _________________________ ("Indemnitee").

WHEREAS the Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;

WHEREAS the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited; and

WHEREAS the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.

NOW, THEREFORE, in consideration for Indemnitee's services as an officer or
director of the Company, the Company and Indemnitee hereby agree as follows:

1. Indemnification.

(a) Third Party Proceedings. The Company shall indemnify Indemnitee
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or any alternative
dispute resolution mechanism, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Company) by reason
of the fact that Indemnitee is or was a director, officer, employee or agent of
the Company, or any subsidiary of the Company, by reason of any action or
inaction on the part of Indemnitee while an officer or director or by reason of
the fact that Indemnitee is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be unreasonably
withheld) actually and reasonably incurred by Indemnitee in connection with such
action, suit or proceeding if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe Indemnitee's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not act in good faith and in a manner which
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that Indemnitee's conduct was unlawful.
<PAGE>

(b) Proceedings By or in the Right of the Company. The Company shall
indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Company or any subsidiary of the Company to procure a judgment in
its favor by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company, by reason of
any action or inaction on the part of Indemnitee while an officer or director or
by reason of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) and, to the fullest extent permitted by law, amounts
paid in settlement actually and reasonably incurred by Indemnitee in connection
with the defense or settlement of such action or suit if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, except that no indemnification
shall be made in respect of any claim, issue or matter as to which Indemnitee
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery of the State of Delaware or such other court shall
deem proper.

(c) Mandatory Payment of Expenses. To the extent that Indemnitee has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Subsections (a) and (b) of this Section 1, or in
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.

2. Agreement to Serve. In consideration of the protection afforded by
this Agreement, if Indemnitee is a director of the Company he agrees to serve at
least for the six months after the effective date of this Agreement as a
director and not to resign voluntarily during such period without the written
consent of a majority of the Board of Directors. If Indemnitee is an officer of
the Company not serving under an employment contract, he agrees to serve in such
capacity at least for the balance of the current fiscal year of the Company and
not to resign voluntarily during such period without the written consent of a
majority of the Board of Directors. Following the applicable period set forth
above, Indemnitee agrees to continue to serve in such capacity at the will of
the Company (or under separate agreement, if such agreement exists) so long as
he is duly appointed or elected and qualified in accordance with the applicable
provisions of the Bylaws of the Company or any subsidiary of the Company or
until such time as he tenders his resignation in writing. Nothing contained in
this Agreement is intended to create in Indemnitee any right to continued
employment.

3. Expenses; Indemnification Procedure.

(a) Advancement of Expenses. The Company shall advance all expenses
incurred by Indemnitee in connection with the investigation, defense, settlement
or appeal of any civil or criminal action, suit or proceeding referenced in
Section 1(a) or (b) hereof (but not amounts actually paid in settlement of any
such action, suit or proceeding). Indemnitee hereby undertakes to repay

-2-
<PAGE>

such amounts advanced only if, and to the extent that, it shall ultimately be
determined that Indemnitee is not entitled to be indemnified by the Company as
authorized hereby. The advances to be made hereunder shall be paid by the
Company to Indemnitee within thirty (30) days following delivery of a written
request therefor by Indemnitee to the Company.

(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to his right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the President of the
Company at the address shown on the signature page of this Agreement (or such
other address as the Company shall designate in writing to Indemnitee). Notice
shall be deemed received three business days after the date postmarked if sent
by domestic certified or registered mail, properly addressed, five business days
if sent by airmail to a country outside of North America; otherwise notice shall
be deemed received when such notice shall actually be received by the Company.
In addition, Indemnitee shall give the Company such information and cooperation
as it may reasonably require and as shall be within Indemnitee's power.

(c) Procedure. Any indemnification and advances provided for in
Section 1 and this Section 3 shall be made no later than thirty (30) days after
receipt of the written request of Indemnitee. If a claim under this Agreement,
under any statute, or under any provision of the Company's Certificate of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Company within thirty (30) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and, subject to Section 14 of this Agreement, Indemnitee shall also
be entitled to be paid for the expenses (including attorneys' fees) of bringing
such action. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action,
suit or proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable law for
the Company to indemnify Indemnitee for the amount claimed. However, Indemnitee
shall be entitled to receive interim payments of expenses pursuant to Subsection
3(a) unless and until such defense may be finally adjudicated by court order or
judgment from which no further right of appeal exists. It is the parties'
intention that if the Company contests Indemnitee's right to indemnification,
the question of Indemnitee's right to indemnification shall be for the court to
decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Company (including it Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.

(d) Notice to Insurers. If, at the time of the receipt of a notice of
a claim pursuant to Section 3(b) hereof, the Company has director and officer
liability insurance in effect, the Company

-3-
<PAGE>

shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies.

(e) Selection of Counsel. In the event the Company shall be obligated
under Section 3(a) hereof to pay the expenses of any proceeding against
Indemnitee, the Company, if appropriate, shall be entitled to assume the defense
of such proceeding, with counsel approved by Indemnitee, upon the delivery to
Indemnitee of written notice of its election to do so. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such counsel
by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with
respect to the same proceeding, provided that (i) Indemnitee shall have the
right to employ his counsel in any such proceeding at Indemnitee's expense; and
(ii) if (A) the employment of counsel by Indemnitee has been previously
authorized by the Company, (B) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee in the
conduct of any such defense, or (C) the Company shall not, in fact, have
employed counsel to assume the defense of such proceeding, then the fees and
expenses of Indemnitee's counsel shall be at the expense of the Company.

4. Additional Indemnification Rights; Nonexclusivity.

(a) Scope. Notwithstanding any other provision of this Agreement, the
Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's Certificate
of Incorporation, the Company's Bylaws or by statute. In the event of any
change, after the date of this Agreement, in any applicable law, statute, or
rule which expands the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, such changes shall be, ipso facto, within
the purview of Indemnitee's rights and Company's obligations, under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.

(b) Nonexclusivity. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested Directors, the General Corporation Law of
the State of Delaware, or otherwise, both as to action in Indemnitee's official
capacity and as to action in another capacity while holding such office. The
indemnification provided under this Agreement shall continue as to Indemnitee
for any action taken or not taken while serving in an indemnified capacity even
though he may have ceased to serve in such capacity at the time of any action,
suit or other covered proceeding.

5. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments,

-4-
<PAGE>

fines or penalties actually or reasonably incurred by him in the investigation,
defense, appeal or settlement of any civil or criminal action, suit or
proceeding, but not, however, for the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion of such expenses, judgments,
fines or penalties to which Indemnitee is entitled.

6. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.

7. Officer and Director Liability Insurance. The Company shall, from
time to time, make the good faith determination whether or not it is practicable
for the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies providing the officers and directors of the
Company with coverage for losses from wrongful acts, or to ensure the Company's
performance of its indemnification obligations under this Agreement. Among
other considerations, the Company will weigh the costs of obtaining such
insurance coverage against the protection afforded by such coverage. In all
policies of director and officer liability insurance, Indemnitee shall be named
as an insured in such a manner as to provide Indemnitee the same rights and
benefits as are accorded to the most favorably insured of the Company's
directors, if Indemnitee is a director; or of the Company's officers, if
Indemnitee is not a director of the Company but is an officer. Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a
subsidiary or parent of the Company.

8. Severability. Nothing in this Agreement is intended to require or
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law. The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement. The provisions of this Agreement shall be severable as provided
in this Section 8. If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.

9. Exceptions. Any other provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

(a) Claims Initiated by Indemnitee. To indemnify or advance expenses
to Indemnitee with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except with respect to
proceedings brought to establish or enforce a right to

-5-
<PAGE>

indemnification under this Agreement or any other statute or law or otherwise as
required under Section 145 of the Delaware General Corporation Law, but such
indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors has approved the initiation or bringing
of such suit; or

(b) Lack of Good Faith. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

(c) Insured Claims. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company.

(d) Claims Under Section 16(b). To indemnify Indemnitee for expenses
and the payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.

10. Construction of Certain Phrases.
-------------------------------

(a) For purposes of this Agreement, references to the "Company" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, Indemnitee shall stand in
the same position under the provisions of this Agreement with respect to the
resulting or surviving corporation as Indemnitee would have with respect to such
constituent corporation if its separate existence had continued.

(b) For purposes of this Agreement, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to "serving at the request of the Company" shall include any
service as a director, officer, employee or agent of the Company which imposes
duties on, or involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in the interest of the participants and beneficiaries of an
employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not
opposed to the best interests of the Company" as referred to in this Agreement.

11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

-6-
<PAGE>

12. Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.

13. Attorneys' Fees. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.

14. Notice. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.

15. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Delaware.

16. Choice of Law. This Agreement shall be governed by and its provisions
construed in accordance with the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware without regard to the conflict of law principles thereof.

17. Period of Limitations. No legal action shall be brought and no cause
of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

18. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall

-7-
<PAGE>

execute all documents required and shall do all acts that may be necessary to
secure such rights and to enable the Company effectively to bring suit to
enforce such rights.

19. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed
by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.

20. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.

-8-
<PAGE>

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

TN TECHNOLOGIES INC.

By:______________________________________

Its:_____________________________________

Address: 228 Saugatuck Avenue
Westport, CT 06880

-9-
<PAGE>

AGREED TO AND ACCEPTED:

INDEMNITEE:

[_____________________________]

______________________________
(signature)

Address: ______________________________
______________________________

-10-

<PAGE>

EXHIBIT 21.1

Subsidiaries of the Registrant

Christiansen, Fritsch, Giersdorf, Grant and Sperry, Inc. (Washington), "Cf2GS"
Northern Lights Interactive Inc. (Delaware)
Northern Lights Interactive Inc. (Ontario, Canada)
TN Technologies Limited (Hong Kong)
TN Technologies Limited (United Kingdom)

<PAGE>

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