DOCUCORP INC, S-4/A, 1997-04-01

DOCUCORP INC
S-4/A, 1997-04-01
PREPACKAGED SOFTWARE

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 1, 1997

REGISTRATION NO. 333-22225
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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

AMENDMENT NO. 1

TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------
DOCUCORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 7372 75-2690838
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.)
INCORPORATION OR CODE NUMBER)
ORGANIZATION)
5910 NORTH CENTRAL EXPRESSWAY
SUITE 800
DALLAS, TX 75206
(214) 891-6500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

---------------
MICHAEL D. ANDERECK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DOCUCORP, INC.
5910 NORTH CENTRAL EXPRESSWAY
SUITE 800
DALLAS, TX 75206
(214) 891-6500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

---------------
COPIES OF ALL COMMUNICATIONS TO:
THOMAS J. SHARBAUGH, ESQ. BRUCE H. HALLETT, ESQ.
MORGAN, LEWIS & BOCKIUS LLP CROUCH & HALLETT, L.L.P.
2000 ONE LOGAN SQUARE 717 N. HARWOOD, SUITE 1400
PHILADELPHIA, PA 19103-6993 DALLAS, TX 75201
(215) 963-5000 (214) 922-4120

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

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]

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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT(1) PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Class A Common Stock,
$.01 par value......... 4,450,179 $1.26 $5,607,226 $1,699.41(3)
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Class B Common Stock,
$.01 par value......... 4,700,786 $1.26 $5,922,990 $1,794.85(3)
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</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(2) under the Securities Act of 1933, as
amended, calculated based on the book value, on February 21, 1997, of the
securities to be received by the Registrant in the Merger.

(2) The Registration Statement also covers an indeterminate number of shares
of Class A Common Stock issuable upon conversion of Class B Common Stock.
Presently, 4,700,786 shares of Class A Common Stock would be issuable upon
conversion of Class B Common Stock.

(3) Paid with original filing.

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, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SUCH SECTION 8(A), MAY DETERMINE.
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<PAGE>

IMAGE SCIENCES, INC.
5910 NORTH CENTRAL EXPRESSWAY
SUITE 800
DALLAS, TEXAS 75206

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD APRIL 30, 1997

To the Stockholders of
Image Sciences, Inc.:

Notice is hereby given that a Special Meeting of Stockholders (the "Image
Sciences Special Meeting") of Image Sciences, Inc. ("Image Sciences") will be
held at , at a.m., local time, on Wednesday, April 30, 1997, for the
following purposes:

(1) To consider and vote upon a proposal, recommended by the Board of
Directors of Image Sciences, to approve the Agreement and Plan of Merger
dated January 15, 1997 (the "Merger Agreement") among DocuCorp, Inc., a
Delaware corporation ("DocuCorp"), ISI Merger Corp., a Texas corporation
and wholly-owned subsidiary of DocuCorp (the "Texas Sub"), FormMaker
Acquisition Corp., a Georgia corporation and wholly-owned subsidiary of
DocuCorp (the "Georgia Sub"), Image Sciences and FormMaker Software, Inc.,
a Georgia corporation ("FormMaker"), providing for the merger (the
"Merger") of (i) the Texas Sub with and into Image Sciences and (ii) the
Georgia Sub with and into FormMaker.

(2) To transact such other business as may properly come before the Image
Sciences Special Meeting and any adjournments thereof.

Stockholders of record at the close of business on , 1997 will be entitled
to notice of and to vote at the Image Sciences Special Meeting, or any
adjournment or adjournments thereof. Stockholders are cordially invited to
attend the Image Sciences Special Meeting in person. Those who will not attend
and who wish their shares to be voted are requested to sign, date and mail
promptly the enclosed proxy for which a stamped return envelope is provided.
The specific details of the Merger are fully described in the accompanying
Joint Proxy Statement/Prospectus and in the Merger Agreement. A copy of the
Merger Agreement is attached to the Joint Proxy Statement/Prospectus as
Appendix A.

By Order of the Board of Directors

Joan P. Moore, Secretary

Dallas, Texas
, 1997

WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE IMAGE SCIENCES SPECIAL MEETING,
YOU ARE URGED TO SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY. IF YOU
ATTEND THE IMAGE SCIENCES SPECIAL MEETING, YOU CAN VOTE EITHER IN PERSON OR BY
YOUR PROXY.

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[LETTERHEAD OF IMAGE SCIENCES, INC.]

To the Stockholders of Image Sciences, Inc.:

You are hereby asked to consider and act upon a proposal to approve an
Agreement and Plan of Merger dated as of January 15, 1997 (the "Merger
Agreement") providing for the merger (the "Merger") of (i) ISI Merger Corp.
(the "Texas Sub"), a Texas corporation and wholly-owned subsidiary of
DocuCorp, Inc., a Delaware corporation ("DocuCorp"), with and into Image
Sciences, Inc., a Texas corporation ("Image Sciences"), and (ii) FormMaker
Acquisition Corp. (the "Georgia Sub"), a Georgia corporation and wholly-owned
subsidiary of DocuCorp, with and into FormMaker Software, Inc., a Georgia
corporation ("FormMaker").

If the Merger Agreement is approved by (i) the holders (the "Image Sciences
Stockholders") of Image Sciences Common Stock, par value $.01 per share
("Image Sciences Common Stock"), and Image Sciences Preferred Stock, par value
$.10 per share ("Image Sciences Preferred Stock"), and (ii) the holders (the
"FormMaker Stockholders") of FormMaker Common Stock, par value $.01 per share
("FormMaker Common Stock"), the Texas Sub will be merged with and into Image
Sciences and the Georgia Sub will be merged with and into FormMaker, with
Image Sciences and FormMaker surviving as wholly-owned subsidiaries of
DocuCorp. Pursuant to the Merger and assuming that there are no dissenting
Image Sciences Stockholders or FormMaker Stockholders, (i) each issued and
outstanding share of Image Sciences Common Stock will be converted into 1.4432
shares of DocuCorp Class B Common Stock, par value $.01 per share ("DocuCorp
Class B Common Stock") (assuming for such purposes that 477,851 shares of
Image Sciences Common Stock and options to purchase 560,607 shares of Image
Sciences Common Stock have been repurchased by Image Sciences pursuant to a
tender offer); (ii) each issued and outstanding share of Image Sciences
Preferred Stock will be converted into 1.029 shares of DocuCorp Class B Common
Stock; and (iii) each issued and outstanding share of FormMaker Common Stock
will be converted into .7144 shares of DocuCorp Class A Common Stock, par
value $.01 per share ("DocuCorp Class A Common Stock, and together with the
DocuCorp Class B Common Stock, the DocuCorp Common Stock"). Shares of DocuCorp
Class A Common Stock and DocuCorp Class B Common Stock are identical in all
respects except that shares of DocuCorp Class B Common Stock have a redemption
feature exercisable at the option of the holder of such shares upon the
occurrence of certain events.

The affirmative vote of at least two-thirds of the outstanding shares of
Image Sciences Common Stock and Image Sciences Preferred Stock, voting as
separate classes, is required to approve the Merger Agreement. After careful
consideration, the Board of Directors of Image Sciences has determined that
the Merger and the transactions contemplated thereby are in the best interests
of Image Sciences and the Image Sciences Stockholders. The directors and
executive officers of Image Sciences, who beneficially own in the aggregate
41% of the Image Science Common Stock on the record date for the Image
Sciences Special Meeting have advised Image Sciences that they intend to vote
the shares of Image Sciences Common Stock held by them in favor of the Merger.
Certain Stockholders of Image Sciences owning an aggregate of approximately
39% of the outstanding Image Sciences Common Stock and 100% of the outstanding
Image Sciences Preferred Stock as of the record date for the Image Sciences
Special Meeting have agreed pursuant to a Voting and Lockup Agreement dated
January 15, 1997 to vote their shares in favor of the Merger.

Enclosed is a Joint Proxy Statement/Prospectus containing detailed
information concerning the Merger and the transactions contemplated thereby.
Please sign, date and return the enclosed proxy at your earliest convenience.

THE BOARD OF DIRECTORS OF IMAGE SCIENCES UNANIMOUSLY RECOMMENDS THAT THE
IMAGE SCIENCES STOCKHOLDERS APPROVE THE MERGER.

Sincerely,

Michael D. Andereck
President and Chief Executive
Officer

YOU ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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FORMMAKER SOFTWARE, INC.
2300 WINDY RIDGE PARKWAY
SUITE 400 NORTH
ATLANTA, GEORGIA 30339

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD APRIL 30, 1997

To the Stockholders of
FormMaker Software, Inc.:

Notice is hereby given that a Special Meeting of Stockholders (the
"FormMaker Special Meeting") of FormMaker Software, Inc. ("FormMaker") will be
held at , at a.m., local time, on Wednesday April 30, 1997, for the
following purposes:

(1) To consider and vote upon a proposal, recommended by the Board of
Directors of FormMaker, to approve the Agreement and Plan of Merger dated
January 15, 1997 (the "Merger Agreement") among DocuCorp, Inc., a Delaware
corporation ("DocuCorp"), ISI Merger Corp., a Texas corporation and wholly-
owned subsidiary of DocuCorp (the "Texas Sub"), FormMaker Acquisition
Corp., a Georgia corporation and wholly-owned subsidiary of DocuCorp (the
"Georgia Sub"), Image Sciences, Inc., a Texas corporation ("Image
Sciences") and FormMaker, providing for the merger (the "Merger") of (i)
the Texas Sub with and into Image Sciences and (ii) the Georgia Sub with
and into FormMaker.

(2) To transact such other business as may properly come before the Image
Sciences Special Meeting and any adjournments thereof.

Stockholders of record at the close of business on , 1997 will be
entitled to notice of and to vote at the FormMaker Special Meeting, or any
adjournment or adjournments thereof. Stockholders are cordially invited to
attend the FormMaker Special Meeting in person. Those who will not attend and
who wish their shares to be voted are requested to sign, date and mail
promptly the enclosed proxy for which a stamped return envelope is provided.
The specific details of the Merger are fully described in the accompanying
Joint Proxy Statement/ Prospectus and in the Merger Agreement. A copy of the
Merger Agreement is attached to the Joint Proxy Statement/Prospectus as
Appendix A.

By Order of the Board of Directors

R. Lee Morris, Secretary

Atlanta, Georgia
, 1997

WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE FORMMAKER SPECIAL MEETING, YOU
ARE URGED TO SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY. IF YOU ATTEND
THE FORMMAKER SPECIAL MEETING, YOU CAN VOTE EITHER IN PERSON OR BY YOUR PROXY.
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[LETTERHEAD OF FORMMAKER SOFTWARE, INC.]

To the Stockholders of FormMaker Software, Inc.:

If the Merger Agreement is approved by (i) the holders (the Image Sciences
Stockholders ) of Image Sciences Common Stock, par value $.01 per share
("Image Sciences Common Stock"), and Image Sciences Preferred Stock, par value
$.10 per share ("Image Sciences Preferred Stock"), and (ii) the holders (the
"FormMaker Stockholders") of FormMaker Common Stock, par value $.01 per share
("FormMaker Common Stock"), the Texas Sub will be merged with and into Image
Sciences and the Georgia Sub will be merged with and into FormMaker, with
Image Sciences and FormMaker surviving as wholly-owned subsidiaries of
DocuCorp. Pursuant to the Merger and assuming that there are no dissenting
Image Sciences Stockholders or FormMaker Stockholders, (i) each issued and
outstanding share of Image Sciences Common Stock will be converted into 1.4432
shares of DocuCorp Class B Common Stock, par value $.01 per share ("DocuCorp
Class B Common Stock") (assuming for such purposes that 477,851 shares of
Image Sciences Common Stock and options to purchase 560,607 shares of Image
Sciences Common Stock have been repurchased by Image Sciences pursuant to a
tender offer); (ii) each issued and outstanding share of Image Sciences
Preferred Stock will be converted into 1.029 shares of DocuCorp Class B Common
Stock; and (iii) each issued and outstanding share of FormMaker Common Stock
will be converted into .7144 shares of DocuCorp Class A Common Stock, par
value $.01 per share ("DocuCorp Class A Common Stock," and together with the
DocuCorp Class B Common Stock, the "DocuCorp Common Stock"). Shares of
DocuCorp Class A Common Stock and DocuCorp Class B Common Stock are identical
in all respects except that shares of DocuCorp Class B Common Stock have a
redemption feature exercisable at the option of the holder of such shares upon
the occurrence of certain events.

The affirmative vote of at least a majority of the outstanding shares of
FormMaker Common Stock is required to approve the Merger. After careful
consideration, the Board of Directors of FormMaker has determined that the
Merger and the transactions contemplated thereby are in the best interests of
FormMaker and the FormMaker Stockholders. The directors and executive officers
of FormMaker, who beneficially own in the aggregate 22% of the FormMaker
Common Stock on the record date for the FormMaker Special Meeting, have
advised FormMaker that they intend to vote the shares of FormMaker Common
Stock held by them in favor of the Merger. Certain stockholders of FormMaker
owning an aggregate of approximately 80% of the outstanding FormMaker Common
Stock on the record date for the Special Meeting of FormMaker have agreed
pursuant to a Voting and Lockup Agreement dated January 15, 1997 to vote their
shares in favor of the Merger. Therefore, approval of the Merger by the
FormMaker Stockholders has been assured.

THE BOARD OF DIRECTORS OF FORMMAKER UNANIMOUSLY RECOMMENDS THAT THE
FORMMAKER STOCKHOLDERS APPROVE THE MERGER.

Sincerely,

John D. Loewenberg
Chief Executive Officer and
President

YOU ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>

JOINT PROXY STATEMENT
FOR
IMAGE SCIENCES, INC.
AND
FORMMAKER SOFTWARE, INC.
FOR MEETINGS OF THEIR RESPECTIVE
STOCKHOLDERS TO BE HELD

ON APRIL 30, 1997

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DOCUCORP, INC.
PROSPECTUS

FOR

4,450,179 SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE, ISSUABLE
IN CONNECTION WITH THE MERGER

4,700,786 SHARES OF CLASS B COMMON STOCK, PAR VALUE $.01 PER SHARE, ISSUABLE
IN CONNECTION WITH THE MERGER

This Joint Proxy Statement/Prospectus of Image Sciences, Inc., a Texas
corporation ("Image Sciences"), is being furnished to holders of outstanding
shares of Common Stock of Image Sciences, par value $.01 per share (the "Image
Sciences Common Stock"), and holders of outstanding shares of Preferred Stock
of Image Sciences, par value $.10 per share (the "Image Sciences Preferred
Stock"), in connection with the solicitation of proxies from all such holders
(the "Image Sciences Stockholders") by the Board of Directors of Image
Sciences (the "Image Sciences Board") for use at the Special Meeting of
Stockholders of Image Sciences (the "Image Sciences Special Meeting") to be
held on April 30, 1997, at at a.m., local time, and any adjournment
thereof.

This Joint Proxy Statement/Prospectus of FormMaker Software, Inc., a Georgia
corporation ("FormMaker"), is being furnished to holders (the "FormMaker
Stockholders") of outstanding shares of Common Stock of FormMaker, par value
$.01 per share (the "FormMaker Common Stock"), in connection with the
solicitation of proxies from all such holders by the Board of Directors of
FormMaker (the "FormMaker Board") for use at the Special Meeting of
Stockholders of FormMaker (the "FormMaker Special Meeting") to be held on
April 30, 1997, at at a.m., local time, and any adjournment thereof.

This Joint Proxy Statement/Prospectus also constitutes a prospectus filed as
part of a Registration Statement (defined below) of DocuCorp, Inc., a Delaware
corporation ("DocuCorp"), filed with the Securities and Exchange Commission
(the "Commission") in connection with the issuance of 4,450,179 shares of
Class A Common Stock of DocuCorp, par value $.01 per share (the "DocuCorp
Class A Common Stock"), and 4,700,786 shares of Class B Common Stock, par
value $.01 (the "DocuCorp Class B Common Stock," and together with the
DocuCorp Class A Common Stock, the "DocuCorp Common Stock"), issuable pursuant
to the Merger (defined below).

IN EVALUATING THE MERGER, THE IMAGE SCIENCES STOCKHOLDERS AND THE FORMMAKER
STOCKHOLDERS SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED BEGINNING ON PAGE
11 UNDER "RISK FACTORS."

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 JOINT PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Joint Proxy Statement/Prospectus is , 1997.
<PAGE>

(cover continued from previous page)

The Image Sciences Stockholders and the FormMaker Stockholders will be asked
to consider and act upon a proposal to approve an Agreement and Plan of Merger
dated as of January 15, 1997 (the "Merger Agreement"), among DocuCorp, Inc., a
Delaware corporation ("DocuCorp"), Image Sciences, FormMaker, ISI Merger
Corp., a Texas corporation and a wholly-owned subsidiary of DocuCorp (the
"Texas Sub"), and FormMaker Acquisition Corp., a Georgia corporation and a
wholly-owned subsidiary of DocuCorp (the "Georgia Sub"), providing for the
merger (the "Merger") of (i) the Texas Sub with and into Image Sciences and
(ii) the Georgia Sub with and into FormMaker, with Image Sciences and
FormMaker surviving as wholly-owned subsidiaries of DocuCorp.

The affirmative vote of the holders of at least two-thirds of the
outstanding shares of Image Sciences Common Stock and Image Sciences Preferred
Stock, voting as separate classes, is required to approve the Merger
Agreement. The affirmative vote of the holders of at least a majority of the
outstanding shares of FormMaker Common Stock is required to approve the Merger
Agreement. Certain stockholders of Image Sciences and FormMaker owning an
aggregate of approximately 39% of the outstanding Image Sciences Common Stock,
100% of the Image Sciences Preferred Stock and 80% of the outstanding
FormMaker Common Stock as of February 1, 1997 have agreed pursuant to a Voting
and Lockup Agreement dated as of January 15, 1997 (the "Voting and Lockup
Agreement") to vote their shares in favor of the Merger Agreement. Therefore,
approval of the Merger Agreement by the FormMaker Stockholders has been
assured. As of February 1, 1997, the directors and executive officers of Image
Sciences owned of record approximately 41% of the Image Sciences Common Stock
entitled to vote at the Image Sciences Special Meeting and the directors and
executive officers of FormMaker owned of record approximately 22% of the
FormMaker Common Stock entitled to vote at the FormMaker Special Meeting.

The Image Sciences Stockholders and the FormMaker Stockholders will have
dissenters' rights of appraisal in connection with the Merger. See "The Merger
and Related Transactions--Dissenters' Rights." In order to exercise such
dissenters' rights of appraisal properly, a dissenting Image Sciences
Stockholder or FormMaker Stockholder, as the case may be, must refrain from
voting, by proxy or in person, his or her shares in favor of the Merger
Agreement.

There has not been, nor is there expected to be upon consummation of the
Merger, a public market for the DocuCorp Common Stock. Immediately after the
consummation of the Merger, the Image Sciences Stockholders, in the aggregate,
will own approximately 51% of the then outstanding shares of DocuCorp Common
Stock (51% on a fully diluted basis) and the FormMaker Stockholders will own
approximately 49% of the then outstanding shares of DocuCorp Common Stock (49%
on a fully diluted basis).

This Joint Proxy Statement/Prospectus and the accompanying forms of proxies
are first being mailed to the stockholders of Image Sciences and FormMaker on
or about , 1997.

THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT COVER ANY RESALES OF DOCUCORP
CLASS A COMMON STOCK OR DOCUCORP CLASS B COMMON STOCK TO BE RECEIVED BY THE
HOLDERS OF IMAGE SCIENCES COMMON STOCK, IMAGE SCIENCES PREFERRED STOCK OR
FORMMAKER COMMON STOCK UPON CONSUMMATION OF THE PROPOSED MERGER AND NO PERSON
IS AUTHORIZED TO MAKE ANY USE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IN
CONNECTION WITH ANY SUCH RESALES.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY DOCUCORP,
IMAGE SCIENCES OR FORMMAKER. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITY OTHER THAN THE SECURITIES COVERED BY THIS JOINT PROXY
STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A PROXY FROM ANY PERSON IN ANY
JURISDICTION WHERE IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN
OFFER OR PROXY. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS
NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION ABOUT DOCUCORP, IMAGE SCIENCES OR FORMMAKER CONTAINED IN THIS
JOINT PROXY STATEMENT/PROSPECTUS SINCE THE DATE HEREOF.

2
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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY.................................................................... 5
The Parties.............................................................. 5
The Special Meetings..................................................... 6
Risk Factors............................................................. 6
The Merger and Related Transactions...................................... 6
Effective Time........................................................... 7
Conversion of Securities................................................. 7
Recommendations of the Boards of Directors............................... 8
The Merger Agreement..................................................... 8
Exchange of Stock Certificates, Warrants and Option Agreements........... 8
Interests of Certain Persons in Merger................................... 8
Management After the Merger.............................................. 9
Absence of Regulatory Filings and Approvals.............................. 9
Accounting Treatment..................................................... 9
Material Federal Income Tax Consequences................................. 9
Dissenters' Rights....................................................... 9
Comparative Per Share Data............................................... 10
RISK FACTORS............................................................... 11
THE SPECIAL MEETINGS....................................................... 16
Image Sciences Special Meeting........................................... 16
FormMaker Special Meeting................................................ 16
THE MERGER AND RELATED TRANSACTIONS........................................ 18
General.................................................................. 18
Effective Time........................................................... 18
Conversion of Securities................................................. 18
Background of the Merger................................................. 18
Reasons for and Effects of the Merger; Recommendations................... 19
The Merger Agreement..................................................... 20
The Image Sciences Closing Transactions.................................. 24
The Liquidity Agreement.................................................. 24
Interests of Certain Persons in the Merger............................... 25
Exchange of Stock Certificates, Warrants and Option Agreements........... 25
Conversion of Options and Warrants....................................... 25
Management After the Merger.............................................. 26
Absence of Regulatory Filings and Approvals.............................. 26
Accounting Treatment..................................................... 26
Material Federal Income Tax Consequences................................. 26
Consequences Under Federal Securities Laws............................... 30
Dissenters' Rights....................................................... 30
DESCRIPTION OF DOCUCORP CAPITAL STOCK...................................... 35
DocuCorp Common Stock.................................................... 35
DocuCorp Preferred Stock................................................. 36
Limitation on Liability.................................................. 36
Certain Anti-Takeover Provisions......................................... 37
Section 203 of Delaware General Corporation Law.......................... 37
Transfer Agent and Registrar............................................. 37
</TABLE>

3
<PAGE>

<TABLE>
<CAPTION>
PAGE
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<S> <C>
COMPARISON OF STOCKHOLDER RIGHTS.......................................... 37
Removal of Directors.................................................... 38
Call of Special Stockholder Meetings.................................... 38
Dissenters' Rights...................................................... 38
Dividends and Distributions............................................. 39
Indemnification of Officers and Directors............................... 40
Amendment to Certificate of Incorporation............................... 40
Vote Required for Extraordinary Corporate Transactions.................. 40
Class Voting............................................................ 41
Interested Stockholder Transactions..................................... 41
Director Liability...................................................... 42
MARKET PRICE OF AND DIVIDENDS ON DOCUCORP COMMON STOCK AND RELATED
STOCKHOLDER MATTERS...................................................... 43
Market Price............................................................ 43
Dividend Policy......................................................... 43
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA...................... 44
SELECTED FINANCIAL DATA OF IMAGE SCIENCES................................. 51
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF IMAGE SCIENCES............................................. 52
SELECTED FINANCIAL DATA OF FORMMAKER...................................... 58
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF FORMMAKER.................................................. 59
BUSINESS OF DOCUCORP...................................................... 64
BUSINESS OF IMAGE SCIENCES................................................ 65
BUSINESS OF FORMMAKER..................................................... 70
MANAGEMENT OF DOCUCORP.................................................... 76
Compensation of Directors............................................... 77
Executive Compensation.................................................. 78
Employment Agreements................................................... 80
Stock Option Plan....................................................... 80
401(k) Profit Sharing Plan.............................................. 80
Certain Relationships and Related Transactions.......................... 80
PRINCIPAL STOCKHOLDERS OF DOCUCORP........................................ 82
PRINCIPAL STOCKHOLDERS OF IMAGE SCIENCES.................................. 84
PRINCIPAL STOCKHOLDERS OF FORMMAKER....................................... 85
EXPERTS................................................................... 86
LEGAL MATTERS............................................................. 86
ADDITIONAL INFORMATION.................................................... 86
REPORTS TO SECURITY HOLDERS............................................... 86
APPENDIX A MERGER AGREEMENT
APPENDIX B ARTICLES 5.11, 5.12 and 5.13 OF THE TEXAS BUSINESS CORPORATION ACT
APPENDIX C SECTIONS 14-2-1302, 14-2-1303, 14-2-1321 THROUGH 14-2-1323 AND 14-2-
1330 THROUGH 14-2-1332 OF THE GEORGIA BUSINESS CORPORATION CODE
</TABLE>

4
<PAGE>

SUMMARY

The following is a summary of certain significant matters discussed elsewhere
in this Joint Proxy Statement/Prospectus. This summary is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Joint Proxy Statement/Prospectus and the Appendices hereto. Stockholders
are urged to read the entire Joint Proxy Statement/Prospectus, including the
Appendices hereto. Certain terms used in this summary and elsewhere in this
Joint Proxy Statement/Prospectus are used as defined in the Summary or
elsewhere in this Joint Proxy Statement/Prospectus.

Unless the context indicates otherwise, all Image Sciences share and option
data and references to conversion ratios for the Image Sciences Common Stock in
the Merger are based upon the assumption of full participation in the Image
Sciences Tender Offer (described below). All of these items would change if
there was less than full participation in the Image Sciences Tender Offer. See
"The Merger and Related Transactions--The Image Sciences Closing Transaction."

THE PARTIES

DocuCorp

DocuCorp was organized on January 13, 1997 as a holding company in connection
with the Merger. The Merger will be treated as a purchase of FormMaker by Image
Sciences for financial reporting purposes and will become effective upon the
filing of articles of merger and all other necessary documents with the
Secretaries of State of Texas and Georgia and the issuance of a certificate of
merger by the Secretary of State of Texas. No purchase accounting is required
related to the conversion of Image Sciences Common Stock and Image Sciences
Preferred Stock into DocuCorp Common Stock, as Image Sciences is considered the
acquiror for financial reporting purposes. It is expected that all of
DocuCorp's business will be conducted through Image Sciences and FormMaker.

As a result of the Merger, DocuCorp will be a leading national provider of
document automation software and services to the insurance, financial services,
utilities, healthcare and other document-intensive industries. See "Business of
DocuCorp."

DocuCorp's executive offices are located at 5910 North Central Expressway,
Suite 800, Dallas, Texas 75206 and its telephone number is (214) 891-6500.

Image Sciences

Image Sciences develops, markets and supports software products designed to
automate the processing of business forms and documents. See "Business of Image
Sciences."

Image Sciences' executive offices are located at 5910 North Central
Expressway, Suite 800, Dallas, Texas 75206, and its telephone number is (214)
891-6500.

FormMaker

FormMaker develops, markets, installs and services electronic document
automation and imaging systems to meet the needs of insurance, financial
services, utilities, healthcare and other document-intensive industries. See
"Business of FormMaker."

FormMaker's executive offices are located at 2300 Windy Ridge Parkway, Suite
400 North, Atlanta, Georgia 30339, and its telephone number is (770) 859-9900.

5
<PAGE>

THE SPECIAL MEETINGS

Image Sciences Special Meeting. This Joint Proxy Statement/Prospectus of
Image Sciences is being furnished to the Image Sciences Stockholders in
connection with the solicitation of proxies by the Image Sciences Board. The
Image Sciences Special Meeting will be held at a.m., local time on April 30,
1997, at , for the purpose of approving the Merger Agreement.

The affirmative vote of the holders of at least two-thirds of the outstanding
shares of Image Sciences Common Stock and Image Sciences Preferred Stock,
voting as separate classes, is required to approve the Merger Agreement.
Holders of record of Image Sciences Common Stock and holders of record of Image
Sciences Preferred Stock as of the close of business on , 1997 (the "Image
Sciences Record Date") will be entitled to cast one vote for each share of
Image Sciences Common Stock or Image Sciences Preferred Stock held as of such
date. At the Image Sciences Record Date, there were 2,335,082 shares of Image
Sciences Common Stock and 1,963,433 shares of Image Sciences Preferred Stock
outstanding and entitled to vote on the Merger. Holders of approximately 39% of
Image Sciences Common Stock and 100% of the Image Sciences Preferred Stock have
entered into the Voting and Lockup Agreement in which they have agreed to vote
in favor of the Merger Agreement. As of February 1, 1997, the directors and
executive officers of Image Sciences owned of record approximately 41% of the
Image Sciences Common Stock entitled to vote at the Image Sciences Special
Meeting. THE IMAGE SCIENCES BOARD UNANIMOUSLY RECOMMENDS THAT THE IMAGE
SCIENCES STOCKHOLDERS APPROVE THE MERGER AGREEMENT. See "The Special Meetings--
Image Sciences Special Meeting."

FormMaker Special Meeting. This Joint Proxy Statement/Prospectus of FormMaker
is being furnished to the FormMaker Stockholders in connection with the
solicitation of proxies by the FormMaker Board. The FormMaker Special Meeting
will be held at a.m., local time on April 30, 1997, at , for the purpose
of approving the Merger Agreement.

The affirmative vote of the holders of at least a majority of the outstanding
shares of FormMaker Common Stock is required to approve the Merger Agreement.
Holders of record of the FormMaker Common Stock as of the close of business on
, 1997 (the "FormMaker Record Date") will be entitled to cast one vote for
each share of the FormMaker Common Stock held as of such date. At the FormMaker
Record Date, there were 6,229,511 shares of FormMaker Common Stock outstanding
and entitled to vote on the Merger Agreement. Holders of approximately 80% of
the FormMaker Common Stock have entered into the Voting and Lockup Agreement in
which they have agreed to vote in favor of the Merger. As of February 1, 1997,
the directors and executive officers of FormMaker owned of record 22% of the
FormMaker Common Stock entitled to vote at the FormMaker Special Meeting.
Accordingly, the approval of the Merger Agreement by the holders of the
FormMaker Common Stock has been assured. THE FORMMAKER BOARD UNANIMOUSLY
RECOMMENDS THAT THE FORMMAKER STOCKHOLDERS APPROVE THE MERGER AGREEMENT. See
"The Special Meetings--FormMaker Special Meeting."

RISK FACTORS

The Image Sciences Stockholders and the FormMaker Stockholders should
carefully consider certain risk factors in evaluating the Merger. See "Risk
Factors."

THE MERGER AND RELATED TRANSACTIONS

The Image Sciences Stockholders and the FormMaker Stockholders will each vote
separately on the Merger Agreement. Upon the consummation of the Merger, Image
Sciences will be the surviving Texas corporation and FormMaker will be the
surviving Georgia corporation, and each will be a wholly-owned subsidiary of
DocuCorp. See "The Merger and Related Transactions--General."

6
<PAGE>

Since DocuCorp is a Delaware corporation, from and after the Effective Time
(defined below), Delaware law will govern the rights of the former Image
Sciences Stockholders and FormMaker Stockholders rather than Texas and Georgia
law, respectively, except with respect to dissenters' rights applicable to such
Image Sciences Stockholders and FormMaker Stockholders in connection with the
Merger, which will be governed by Texas law and Georgia law, respectively,
after the Effective Time of the Merger. See "The Merger and Related
Transactions--Dissenters' Rights" and "Comparison of Stockholder Rights."

Image Sciences is offering (the "Image Sciences Tender Offer"), conditioned
upon the satisfaction of all conditions precedent to the Merger, to repurchase
up to 477,851 shares of Images Sciences Common Stock and Image Sciences options
to purchase up to 560,607 shares of Image Sciences Common Stock granted prior
to July 31, 1991, and will declare and distribute a cash dividend to the holder
of Image Sciences Preferred Stock (the "Image Sciences Preferred Stock
Dividend," and together with the Image Sciences Tender Offer, the "Image
Sciences Closing Transactions"). See "The Merger and Related Transactions--The
Image Sciences Closing Transactions."

DocuCorp, Safeguard Scientifics (Delaware), Inc., a Delaware corporation
("Safeguard Delaware"), Safeguard Scientifics, Inc., a Pennsylvania corporation
("Safeguard"), Technology Leaders II L.P., a Delaware limited partnership ("TL
II"), and Technology Leaders II Offshore C.V., a Netherlands Antilles limited
partnership ("TL II Offshore," and together with Safeguard Delaware and TL II,
the "SG/TL Stockholders"), have entered into a Liquidity Agreement dated
January 15, 1997 (the "Liquidity Agreement") pursuant to which (i) Safeguard
has agreed to use commercially reasonable efforts to conduct and consummate an
underwritten public offering of rights to purchase shares of DocuCorp Class A
Common Stock ("DocuCorp Rights") in which the managing underwriter values the
equity of DocuCorp at $62.1 million or more (a "Qualified Rights Offering");
(ii) the SG/TL Stockholders have agreed to purchase a certain number of shares
of DocuCorp Class A Common Stock if DocuCorp is required to redeem shares of
DocuCorp Class B Common Stock, and to guarantee an existing line of credit of
FormMaker (to be amended as contemplated by the Merger Agreement); and (iii)
DocuCorp has agreed to grant warrants ("DocuCorp Warrants") to purchase 610,000
shares of DocuCorp Class A Common Stock to the SG/TL Stockholders. See "The
Merger and Related Transactions--the Liquidity Agreement."

EFFECTIVE TIME

As soon as practicable following the satisfaction or waiver of all conditions
to the Merger, the Merger will be consummated upon the filing of articles of
merger and all other necessary documents with the Secretaries of State of Texas
and Georgia and the issuance of a certificate of merger by the Secretary of
State of Texas, the later of which times is referred to herein as the
"Effective Time." See "The Merger and Related Transactions--Effective Time."

CONVERSION OF SECURITIES

Pursuant to the Merger Agreement, (i) each issued and outstanding share of
Image Sciences Common Stock will be converted into 1.4432 shares of DocuCorp
Class B Common Stock (assuming for such purposes that 477,851 shares of Image
Sciences Common Stock and Image Sciences options to purchase 560,607 shares of
Image Sciences Common Stock have been repurchased in the Image Sciences Tender
Offer); and (ii) each issued and outstanding share of Image Sciences Preferred
Stock will be converted into 1.029 shares of DocuCorp Class B Common Stock.
Additionally, pursuant to the Merger Agreement, each issued and outstanding
share of FormMaker Common Stock will be converted into .7144 shares of DocuCorp
Class A Common Stock. Shares of DocuCorp Class A Common Stock and DocuCorp
Class B Common Stock are identical in all respects except that shares of
DocuCorp Class B Common Stock have a redemption feature exercisable at the
option of the holder of such shares upon the occurrence of certain events. See
"Description of DocuCorp Capital Stock."

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<PAGE>

Immediately after the Effective Time, the Image Sciences Stockholders, in the
aggregate, will own approximately 51% of the then outstanding shares of
DocuCorp Common Stock (51% on a fully diluted basis) and the FormMaker
Stockholders, in the aggregate, will own approximately 49% of the then
outstanding shares of DocuCorp Common Stock (49% on a fully diluted basis).

RECOMMENDATIONS OF THE BOARDS OF DIRECTORS

The Image Sciences Board and the FormMaker Board each have unanimously
approved the Merger Agreement and determined that the terms of the proposed
Merger are fair to and in the best interests of their respective stockholders.
The Image Sciences Board and the FormMaker Board each unanimously recommends
that the Image Sciences Stockholders and the FormMaker Stockholders,
respectively, approve the Merger Agreement. See "The Merger and Related
Transactions--Background of the Merger" and "The Merger and Related
Transactions--Reasons for and Effects of the Merger; Recommendations."

THE MERGER AGREEMENT

The Merger Agreement sets forth the principal terms upon which the Merger
will be consummated, the terms upon which shares of Image Sciences Common
Stock, Image Sciences Preferred Stock and FormMaker Common Stock will be
converted into DocuCorp Class A Common Stock or DocuCorp Class B Common Stock,
as the case may be, and also sets forth the terms upon which Image Sciences
options to purchase Image Sciences Common Stock ("Image Sciences Options") and
FormMaker options to purchase FormMaker Common Stock ("FormMaker Options") will
be converted into DocuCorp Options and the terms upon which FormMaker warrants
to purchase FormMaker Common Stock ("FormMaker Warrants") will be converted
into DocuCorp Warrants. The Merger Agreement contains representations,
warranties and agreements of the parties, and provides specific conditions to
the consummation of the Merger and terms under which the Merger may be
terminated. See "The Merger and Related Transactions--The Merger Agreement."

EXCHANGE OF STOCK CERTIFICATES, WARRANTS AND OPTION AGREEMENTS

At the Effective Time, in accordance with the conversion ratios described in
this Joint Proxy Statement/ Prospectus, (i) each holder of shares of Image
Sciences Common Stock, Image Sciences Preferred Stock or FormMaker Common Stock
will be entitled to receive, upon surrender of certificate(s) formerly
representing such Image Sciences or FormMaker capital stock, certificates
representing DocuCorp Common Stock; (ii) each holder of FormMaker Warrants will
be entitled to receive, upon surrender of such warrants, new warrant agreements
with respect to DocuCorp Warrants; and (iii) each holder of Image Sciences
Options or FormMaker Options will be entitled to receive, upon surrender of
agreements representing such options, new option agreements with respect to
DocuCorp Options. See "The Merger and Related Transactions--Exchange of
Securities." Instructions with respect to the surrender of certificates,
warrants and option agreements, together with a letter of transmittal to be
used for this purpose, will be forwarded to the holders of such securities
contemporaneously with the mailing of this Joint Proxy Statement/Prospectus.
Security holders should surrender such certificates, warrants and option
agreements only with an accompanying letter of transmittal. See "The Merger and
Related Transactions--Exchange of Stock Certificates, Warrants and Option
Agreements."

INTERESTS OF CERTAIN PERSONS IN MERGER

No director or executive officer of Image Sciences had or will have a
personal or business relationship with FormMaker prior to the Effective Time.
No director or executive officer of FormMaker had or will have a personal or
business relationship with Image Sciences prior to the Effective Time. In
considering recommendations of the Image Sciences Board and the FormMaker Board
with respect to the Merger, however, the Image Sciences Stockholders and the
FormMaker Stockholders should be aware that certain directors and executive
officers of Image Sciences and FormMaker have an interest in the consummation
of the Merger, as

8
<PAGE>

described in this Joint Proxy Statement/Prospectus. See "Management of
DocuCorp--Certain Relationships and Related Transactions."
MANAGEMENT AFTER THE MERGER

At the Effective Time, the DocuCorp Board of Directors (the "DocuCorp Board")
will consist of seven members: Arthur R. Spector, Michael D. Andereck, Milledge
A. Hart, III, John D. Loewenberg, Warren V. Musser, Sidney B. Landman and one
independent director to be designated immediately prior to the Effective Time.
Mr. Hart is a member of the Image Sciences Board, Mr. Loewenberg is currently
Chief Executive Officer and President of FormMaker. Mr. Landman is Vice
President of Finance for the Production Systems Group at Xerox Corporation, a
New York corporation and the holder of Image Science Preferred Stock ("Xerox"),
and Mr. Musser is Chairman of the Board and Chief Executive Officer of
Safeguard. At the Effective Time, (i) Mr. Spector, Chairman of the FormMaker
Board, will be the Chairman of the DocuCorp Board and of the boards of
directors of Image Sciences and FormMaker; (ii) Mr. Andereck, the President and
Chief Executive Officer of Image Sciences, will be the President and Chief
Executive Officer of DocuCorp, Image Sciences and FormMaker; (iii) Samuel M.
Wilkes, the Chief Operating Officer of FormMaker, will be the Senior Vice
President of Sales and Marketing of DocuCorp, Image Sciences and FormMaker;
(iv) B. Bruce Dale, Vice President of Development of Image Sciences, will be
the Senior Vice President of Products of DocuCorp, Image Sciences and
FormMaker; (v) Kerry LeCrone, the Senior Vice President of Services of
FormMaker, will be the Senior Vice President of Services of DocuCorp, Image
Sciences and FormMaker, (vi) Hsi-Ming Lin, the Senior Vice President of
Research and Development of FormMaker, will be the Senior Vice President of
Research and Development of DocuCorp, Image Sciences and FormMaker; and (vi)
Todd A. Rognes, the Vice President of Finance of Image Sciences, will be the
Senior Vice President of Finance of DocuCorp, Image Sciences and FormMaker. See
"Management of DocuCorp."
ABSENCE OF REGULATORY FILINGS AND APPROVALS

Other than certain filings and approvals which may be required under certain
state securities or "blue sky" laws and the effectiveness of the registration
statement on Form S-4 (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), related to this Joint Proxy
Statement/Prospectus, there are no federal or state regulatory requirements
that must be complied with or approvals that must be obtained in connection
with the Merger. See "The Merger and Related Transactions--Absence of
Regulatory Filings and Approvals."
ACCOUNTING TREATMENT

For historical accounting purposes, Image Sciences will be considered the
survivor in the Merger and no purchase accounting is required related to the
conversion of Image Sciences Common Stock and Image Sciences Preferred Stock
into DocuCorp Common Stock. The merger of FormMaker into a wholly-owned
subsidiary of DocuCorp will be treated as an acquisition of FormMaker by Image
Sciences; accordingly, this transaction will be recorded under the purchase
method of accounting. See "The Merger and Related Transactions--Accounting
Treatment."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES

DocuCorp, Image Sciences and FormMaker intend that the Merger qualify as a
tax-free reorganization. Steptoe & Johnson LLP, special tax counsel to
DocuCorp, has rendered a tax opinion to Image Sciences and FormMaker to the
effect that the Merger will qualify as either a reorganization under Section
368(a) of the Code or an exchange under Section 351(a) of the Code, and that no
gain or loss will be recognized by the Image Sciences Stockholders on the
conversion of Image Sciences Common Stock or Image Sciences Preferred Stock or
by the FormMaker Stockholders on the conversion of FormMaker Common Stock into
DocuCorp Class A Common Stock or DocuCorp Class B Common Stock, as the case may
be. See "The Merger and Related Transactions--Material Federal Income Tax
Consequences."
DISSENTERS' RIGHTS

The Image Sciences Stockholders and the FormMaker Stockholders will have
dissenters' rights of appraisal in connection with the Merger. See "The Merger
and Related Transactions--Dissenters' Rights."

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<PAGE>

COMPARATIVE PER SHARE DATA

The following table sets forth certain unaudited selected financial
information on a pro forma and pro forma equivalent basis per common share and
is derived from, should be read in conjunction with and is qualified in its
entirety by reference to the unaudited pro forma combined financial data of
DocuCorp that appears elsewhere in this Joint Proxy Statement/Prospectus. For
purposes of this presentation, the "DocuCorp--Historical" financial information
represents that of Image Sciences, the surviving entity for financial reporting
purposes, on a historical basis. The information presented in this table is for
informational purposes only and is not necessarily indicative of the financial
position or operating results that would have occurred or that will occur upon
the consummation of the Merger.

<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEAR ENDED MONTHS ENDED
JULY 31, 1996 JANUARY 31, 1997
------------------ ----------------
<S> <C> <C>
DOCUCORP--HISTORICAL
Book value per share(1).............. $ 1.47 $1.68
Cash dividends per share............. 0 0
Earnings per share................... $ 0.43 $0.19
PRO FORMA COMBINED
Book value per share(1)(6)........... $ 0.93 $0.95
Cash dividends per share............. 0 0
Earnings per share(7)................ $ 0.04 $0.04
IMAGE SCIENCES PRO FORMA EQUIVALENT
AMOUNTS(5)
Book value per share(1)(6)........... $ 1.34 $1.37
Cash dividends per share............. 0 0
Earnings per share(7)................ $ 0.06 $0.06

<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1996
------------------
<S> <C>
FORMMAKER--HISTORICAL
Book value per share(1).............. $ 0.76
Cash dividends per share............. 0
Earnings (loss) per share............ $(0.25)
FORMMAKER PRO FORMA EQUIVALENT
AMOUNTS(4)
Book value per share(3)(6)........... $ 0.68
Cash dividends per share............. 0
Earnings per share(2)(7)............. $ 0.03
</TABLE>
- --------
(1) Computed as of balance sheet date at end of period.
(2) Computed using pro-forma combined statements of operations for the year
ended July 31, 1996.

(3) Computed using January 31, 1997 pro-forma combined balance sheet.
(4) Equivalent amounts have been computed using an exchange ratio of one share
of FormMaker Common Stock to .7144 shares of DocuCorp Class A Common Stock.

(5) Equivalent amounts have been computed using an exchange ratio of one share
of Image Sciences Common Stock to 1.4432 shares of DocuCorp Class B Common
Stock.

(6) Computation is based on the value of DocuCorp Class B Common Stock and
associated shares being included in the book value per share computation.
If the book value of this stock and the associated shares are excluded from
the computation, the pro forma combined book value is $(1.39) per share at
July 31, 1996 and $(1.35) per share at January 31, 1997. Under this basis,
Image Sciences pro forma equivalent book value per share is $(2.00) and
$(1.95) at July 31, 1996 and January 31, 1997, respectively, and FormMaker
pro forma equivalent book value per share at January 31, 1997 is $(.96).

(7) Computation is based on shares of DocuCorp Class B Common Stock being
included in the earnings per share computation. If such shares are excluded
from the computation, pro forma combined earnings per share is $.07 for the
year ended July 31, 1996 and $.08 for the six months ended January 31,
1997. Under this basis, Image Sciences pro forma equivalent earnings per
share are $.10 and $.12 for the year ended July 31, 1996 and six months
ended January 31, 1997, respectively, and FormMaker pro forma equivalent
earnings per share for the year ended July 31, 1996 is $.05.

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<PAGE>

RISK FACTORS

The Image Sciences Stockholders and the FormMaker Stockholders should
consider carefully the following risk factors, as well as the other
information contained in this Joint Proxy Statement/Prospectus, in evaluating
the Merger. The occurrence of certain of the events described in these risk
factors may have a material adverse effect on DocuCorp's business, results of
operations and financial condition.

RELIANCE ON A MAJOR CLIENT RELATIONSHIP

A substantial portion of FormMaker's revenues are generated from a marketing
agreement with Policy Management Systems Corporation ("PMSC") under which
FormMaker (i) provides third-party processing and software implementation
services in the insurance industry, (ii) has granted PMSC rights to use,
execute, copy or license certain proprietary software and (iii) has granted
PMSC the exclusive right to market FormMaker's proprietary software in the
insurance industry. In 1994, 1995, and 1996, PMSC represented approximately
85%, 72% and 65%, respectively, of FormMaker's revenues. Beginning on January
1, 1998, PMSC can unilaterally terminate the marketing agreement for any
reason whatsoever by providing 90 days' prior written notice to FormMaker. In
addition, PMSC may terminate the Marketing Agreement as a result of the filing
of the Registration Statement by providing 10 days' prior written notice to
FormMaker. Unless renewed or terminated at an earlier date, the marketing
agreement will terminate on December 31, 1999.

NONEXCLUSIVE PERPETUAL LICENSE

FormMaker has also entered into a license agreement with PMSC under which
FormMaker granted PMSC a non-exclusive, perpetual, royalty-free, worldwide
license to use, execute, copy or license FormMaker's software (and derivatives
thereof) to third parties within the insurance industry and such other
industries in which FormMaker from time to time operates. Therefore, upon
termination of the above-described Marketing Agreement and PMSC's exclusive
rights thereunder, PMSC will continue to have the right to use FormMaker's
software and to compete directly with FormMaker in the insurance industry.
Given that PMSC has financial and other resources significantly greater than
FormMaker, there can be no assurance that FormMaker will be able to withstand
competition from PMSC if PMSC decided to compete directly with FormMaker. See
"Business of FormMaker--Customers and Distributions."

OPERATING HISTORY--RECENT LOSSES

FormMaker incurred net losses of $426,000 and $1,490,000 during the fiscal
years ended December 31, 1995 and 1996. No assurance can be made that
FormMaker will not incur net losses in the future.

INTEGRATION OF IMAGE SCIENCES AND FORMMAKER

DocuCorp is a holding company whose wholly-owned subsidiaries are expected
to conduct the operations of DocuCorp following the consummation of the
Merger. DocuCorp may not be able to integrate successfully the operations,
facilities and management of Image Sciences and FormMaker or realize any
benefits from the Merger. Additionally, the Merger could have an adverse
effect on DocuCorp's relationships with customers, distributors or suppliers
of Image Sciences or FormMaker. See "The Merger and Related Transactions."

INTEGRATION OF PRODUCTS

DocuCorp plans to integrate certain of its products, if practicable.
However, DocuCorp may not be able to accomplish such integration in a timely
manner and such integration may not be technologically feasible. Moreover, the
focus on possible product integration efforts may have an adverse effect on
the development of new product offerings.

DEPENDENCE UPON INSURANCE INDUSTRY

The majority of Image Sciences' and FormMaker's revenues is derived from the
insurance industry. DocuCorp's future growth and financial performance will
depend in part upon its ability to continue to market

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<PAGE>

its products successfully in the insurance industry and to enhance and develop
technologies for distribution in markets other than the insurance market. This
will require DocuCorp to make substantial product development and distribution
channel investments. It is uncertain that new products or product enhancements
intended for markets other than the insurance industry will achieve
acceptance.

FLUCTUATIONS IN OPERATING RESULTS

Following the Merger, DocuCorp's revenue will continue to be difficult to
forecast due to the fact that both Image Sciences' and FormMaker's sales
cycles, from initial evaluation to purchase, vary substantially from customer
to customer. Both Image Sciences and FormMaker typically have operated with
little backlog for licensing revenue because software products generally are
shipped as orders are received. As a result, license revenue in any quarter is
substantially dependent on orders booked and shipped in that quarter. Both
companies have earned a substantial portion of their licensing revenues in the
last weeks of any particular quarter. To the extent this trend continues
following the Merger, the failure to achieve such revenues in the last weeks
of any given quarter will have a material adverse effect on DocuCorp's
financial results for that quarter.

Image Sciences' and FormMaker's sales structure has historically resulted in
revenues for the first quarter of a fiscal year being lower than revenues for
the fourth quarter of the prior fiscal year. Similar fluctuations may occur
again in the future.

DEPENDENCE UPON KEY PERSONNEL

Both Image Sciences and FormMaker believe that the hiring and retaining of
qualified individuals at all levels will be essential to DocuCorp's ability to
manage growth successfully, but DocuCorp may not be successful in attracting
and retaining the necessary personnel. The development of the business of
Image Sciences has been largely dependent on the services of Michael D.
Andereck, the President and Chief Executive Officer of Image Sciences, and the
development of the business of FormMaker has been largely dependent on the
services of Samuel M. Wilkes, Chief Operating Officer of FormMaker. Mr.
Andereck will be the President and Chief Executive Officer of DocuCorp, and
Mr. Wilkes will become the Senior Vice President of Sales and Marketing of
DocuCorp; both of these gentlemen have entered into employment agreements with
DocuCorp. The departure of either Mr. Andereck or Mr. Wilkes could have a
material adverse effect on DocuCorp's results of operations or financial
condition.

MANAGEMENT OF GROWTH

In recent years, Image Sciences and FormMaker have expanded their respective
businesses, and DocuCorp intends to continue to expand its business. To manage
expansion effectively, DocuCorp will be required to evaluate the adequacy of
existing systems and procedures, including, but not limited to, information
management systems, financial and internal control systems, and management
structure. In addition, if DocuCorp enters new markets, DocuCorp will be
required to, among other things, hire personnel and establish distribution
channels. Management may not adequately anticipate all of the changing demands
that growth will impose on DocuCorp's procedures and structure or that
DocuCorp will be able to successfully enter additional markets. In addition,
if DocuCorp expands through acquisitions, it may require further capital
through public or private equity offerings or financings. Additional capital
may not be available to DocuCorp or, if available, may not be on terms
acceptable to DocuCorp. Additional operational and financial risks will arise
if DocuCorp seeks to expand through acquisitions. Such additional operational
risks will include the risk that an acquisition might not provide the benefits
originally anticipated. Such additional financial risks will include the
incurrence of indebtedness and the need to service such indebtedness, the
failure of revenues to parallel increasing expenses, and the decrease in the
percentage of ownership of current stockholders of DocuCorp as new equity is
issued in connection with acquisitions. See "The Merger and Related
Transactions--Reasons For and Effects of the Merger; Recommendations."

RAPID TECHNOLOGICAL CHANGE

The document automation industry is characterized by rapid technological
advances, changes in customer requirements and frequent new product
introductions and enhancements. Such developments will require

12
<PAGE>

DocuCorp to make substantial product development investments. Any failure by
DocuCorp to anticipate or respond adequately to technology developments and
customer requirements or any significant delays in product development or
introduction, could result in a loss of competitiveness or revenue. In
addition, new products or product enhancements intended to respond to
technological change or evolving customer requirements may not achieve
acceptance.

LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

Image Sciences and FormMaker rely on a combination of copyright and
trademark laws, employee and third-party nondisclosure agreements and other
methods to protect their respective proprietary rights. Despite these
precautions, it may be possible for unauthorized third parties to copy certain
portions of their respective products or to obtain and use information that
Image Sciences or FormMaker regards as proprietary.

Image Sciences' and FormMaker's software products are licensed to end-users
on a "right to use" basis pursuant to a perpetual or term license. Certain
license provisions protecting against unauthorized use, copying, transfer and
disclosure of the licensed program may be unenforceable under the laws of
certain jurisdictions and foreign countries. In addition, the laws of some
foreign countries do not protect the proprietary rights to the same extent as
do the laws of the United States.

As the number of software products in the industry increases and the
functionality of these products further overlap, Image Sciences and FormMaker
believe that software programs will increasingly become subject to
infringement claims. Third parties may assert infringement claims against
DocuCorp in the future with respect to current or future products, which could
require DocuCorp. to enter into royalty arrangements or result in costly
litigation.

Each of Image Sciences and FormMaker also relies on certain software that it
licenses from third parties, including software that is integrated with
internally developed software and used in its products to perform key
functions. These third-party software licenses may not continue to be
available to DocuCorp on commercially reasonable terms and the related
software may not continue to be appropriately supported, maintained or
enhanced by the licensors. The loss of licenses to, or the inability to
support, maintain and enhance, any of such software could result in increased
costs, or delays or reductions in product shipments until equivalent software
could be developed or licensed and integrated.

EFFECT OF MERGER ON CUSTOMER ORDERS

The announcement and consummation of the Merger could cause present and
potential customers of Image Sciences or FormMaker to delay or cancel orders
for products as a result of concerns about product evolution, integration and
support of Image Sciences' and FormMaker's software products following the
Merger.

COMPETITION

The market for Image Sciences' and FormMaker's document automation products
is intensely competitive, subject to rapid change and significantly affected
by new product introductions and other market activities of industry
participants. Each company targets its software products at organizations that
require the ability to produce large quantities of customized and personalized
documents in paper or electronic form. DocuCorp expects to face direct and
indirect competition from a broad range of competitors who offer a variety of
products and solutions to current and potential customers. Image Sciences' and
FormMaker's principal competition currently comes from (i) systems developed
in-house by the internal MIS departments of large organizations and (ii)
direct competition from companies such as Document Sciences Corporation (which
is partially owned by Xerox) M&I DataServices, Inc., and Group 1 Software,
Inc.

It is also possible that DocuCorp will face competition from new
competitors. Moreover, as the market for document automation software
develops, current or potential competitors with significantly greater
resources than

13
<PAGE>

DocuCorp could attempt to enter or increase their presence in the market
either independently or by acquiring or forming strategic alliances with
competitors of DocuCorp or otherwise increase their focus on the industry. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase
the ability of their products to address the needs of DocuCorp's current and
prospective customers, and it is possible that new competitors or alliances
among competitors may emerge and rapidly acquire significant market share.
Increased competition may result in price reductions, reduced gross margins
and loss of market share. DocuCorp may not be able to compete successfully
against current or future competitors or withstand competitive pressures
effectively.

RISK OF SOFTWARE DEFECTS

Software products as complex as those offered by Image Sciences and
FormMaker often contain undetected errors or performance problems. Such
defects are most frequently found during the period immediately following
introduction of new products or enhancements to existing products. Despite
extensive product testing prior to introduction, Image Sciences' and
FormMaker's products have in the past contained software errors that were
discovered after commercial introduction. There may be more errors or
performance problems that will be discovered in the future. Any future
software defects discovered after shipment of Image Sciences' or FormMaker's
products could result in loss of revenues or delays in customer acceptance.

ANTI-TAKEOVER ISSUES

Through its ownership of DocuCorp Common Stock, the management of DocuCorp
and the other former stockholders of Image Sciences and FormMaker will have a
significant influence with respect to any decisions regarding a change in
ownership of DocuCorp. Such a concentration of ownership may have the effect
of delaying, deferring or preventing a change of control of DocuCorp and
consequently could adversely affect the value of the DocuCorp Common Stock.
See "Principal Stockholders of DocuCorp."

DocuCorp's Certificate of Incorporation (the "DocuCorp Certificate") and
bylaws (the "DocuCorp Bylaws") contain certain provisions that could delay or
hinder the removal of incumbent directors and could discourage or make more
difficult a proposed merger, tender offer or proxy contest involving DocuCorp.
Pursuant to the DocuCorp Certificate, shares of DocuCorp Preferred Stock (the
"DocuCorp Preferred Stock") may be issued in the future without stockholder
approval and upon such terms and conditions as the DocuCorp Board may
determine. The holders of shares of DocuCorp Common Stock will be subject to,
and may be adversely affected by, the rights of holders of any Preferred Stock
that may be issued in the future. The DocuCorp Board has no present intention
of issuing shares of Preferred Stock. See "Description of DocuCorp Capital
Stock--DocuCorp Preferred Stock." DocuCorp also will be subject to provisions
of Delaware corporate law that will restrict DocuCorp from engaging in certain
business combinations with a person who, together with affiliates and
associates, owns 15% or more of DocuCorp Common Stock, unless certain
conditions are met or the business combination is approved by the DocuCorp
Board or its stockholders in a prescribed manner. See "Description of DocuCorp
Capital Stock."

ABSENCE OF DIVIDENDS

DocuCorp does not anticipate paying any cash dividends in the foreseeable
future. DocuCorp currently intends to retain future earnings to finance
operations and the expansion of its business. Any future determination to pay
dividends will be at the discretion of the DocuCorp Board and will depend upon
DocuCorp's financial condition, operating results, capital requirements and
such other factors as the DocuCorp Board deems relevant. As a holding company
with no material operations of its own and no material assets other than the
stock of FormMaker and Image Sciences, DocuCorp's ability to pay dividends is
wholly dependent on distributions from FormMaker and Image Sciences. Further,
the terms of the revolving credit line that DocuCorp intends to obtain
contemporaneously with the consummation of the Merger are expected to include
restrictions on the ability of DocuCorp to pay dividends. See "Market Price of
and Dividends on DocuCorp Common Stock and Related Stockholder Matters."

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<PAGE>

ABSENCE OF PUBLIC MARKET

DocuCorp does not currently intend to list the DocuCorp Common Stock on any
securities exchange or to seek approval for quotation through any automated
quotation system, nor is there any assurance that the DocuCorp Common Stock
will be eligible for listing on any market. Accordingly, there can be no
assurance as to the development of a trading market for the DocuCorp Common
Stock.

REDEMPTION OF CLASS B COMMON STOCK

In connection with the redemption of shares of DocuCorp Class B Common Stock
upon certain events, the SG/TL Stockholders have agreed to subscribe for a
number of shares of DocuCorp Class A Common Stock at the Redemption Price
equal to the number of shares of DocuCorp Class B Common Stock to be redeemed.
See "The Merger and Related Transactions--The Liquidity Agreement" and
"Description of DocuCorp Capital Stock--DocuCorp Common Stock." If the SG/TL
Stockholders do not perform their obligations to purchase an equal number of
shares of DocuCorp Class A Common Stock, DocuCorp may be unable to meet its
redemption obligation. If the SG/TL Stockholders do subscribe for such shares,
the SG/TL Stockholders will increase their ownership and control of DocuCorp.

15
<PAGE>

THE SPECIAL MEETINGS

IMAGE SCIENCES SPECIAL MEETING

Date, Time and Place of Image Sciences Special Meeting

The Image Sciences Special Meeting will be held at a.m., local time, on
Wednesday, April 30, 1997, at .

Matters to be Considered at the Image Sciences Special Meeting

At the Image Sciences Special Meeting, holders of Image Sciences Common
Stock and Image Sciences Preferred Stock will consider and vote upon the
Merger Agreement. See "The Merger and Related Transactions" and Appendix A.

Voting at the Image Sciences Special Meeting; Record Date

On the Image Sciences Record Date, there were 2,335,082 shares of Image
Sciences Common Stock outstanding and entitled to vote at the Image Sciences
Special Meeting, held by approximately 124 holders of record, and 1,963,433
shares of Image Sciences Preferred Stock outstanding and entitled to vote at
the Image Sciences Special Meeting, held by one holder of record. Each holder
of record of Image Sciences Common Stock and Image Sciences Preferred Stock on
the Record Date is entitled to cast one vote per share on the approval of the
Merger Agreement, exercisable in person or by properly executed proxy, at the
Image Sciences Special Meeting. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of Image Sciences Common Stock
and the holders of a majority of the outstanding shares of Image Sciences
Preferred Stock entitled to vote at the Image Sciences Special Meeting is
necessary to constitute a quorum at the Image Sciences Special Meeting. The
affirmative vote of the holders of two-thirds of the outstanding Image
Sciences Common Stock and of the holders of two-thirds of the outstanding
Image Sciences Preferred Stock, voting as separate classes, is required to
approve the Merger Agreement. Holders of 39% of Image Sciences Common Stock
and the holders of 100% of Image Sciences Preferred Stock have entered into
the Voting and Lockup Agreement in which they have agreed to vote their shares
in favor of the Merger Agreement.

Proxies

This Joint Proxy Statement/Prospectus is being furnished to the Image
Sciences Stockholders in connection with the solicitations of proxies by and
on behalf of the Image Sciences Board for use at the Image Sciences Special
Meeting. Proxies in the form enclosed, which are properly executed and
returned and not subsequently revoked, will be voted at the Image Sciences
Special Meeting, in accordance with the directions specified thereon, and
otherwise in accordance with the judgment of the persons designated as
proxies. If no directions are indicated on a properly executed proxy, such
proxy will be voted in favor of the Merger Agreement. A proxy received by the
Image Sciences Board may be revoked by the person giving it at any time before
it is exercised. An Image Sciences Stockholder may revoke a proxy by
notification in writing to Image Sciences at 5910 North Central Expressway,
Suite 800, Dallas, Texas 75206, Attention: Secretary. A proxy may also be
revoked by execution and delivery of a proxy bearing a later date or by
attendance at the Image Sciences Special Meeting and voting by ballot.

FORMMAKER SPECIAL MEETING

Date, Time and Place of FormMaker Special Meeting

The FormMaker Special Meeting will be held at a.m., local time, on
Wednesday, April 30, 1997, at .

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<PAGE>

Matters to be Considered at the FormMaker Special Meeting

At the FormMaker Special Meeting, holders of FormMaker Common Stock will
consider and vote upon the Merger Agreement. See "The Merger and Related
Transactions" and Appendix A.

Voting at the FormMaker Special Meeting; Record Date

On the FormMaker Record Date, there were 6,229,511 shares of FormMaker
Common Stock outstanding and entitled to vote at the FormMaker Special Meeting
held by approximately 82 holders of record. Each holder of record of FormMaker
Common Stock on the Record Date is entitled to cast one vote per share on the
approval of the Merger Agreement, exercisable in person or by properly
executed proxy, at the FormMaker Special Meeting. The presence, in person or
by proxy, by the holders of a majority of the outstanding shares of FormMaker
Common Stock entitled to vote at the FormMaker Special Meeting is necessary to
constitute a quorum at the FormMaker Special Meeting. The affirmative vote of
the holders of a majority of all the outstanding FormMaker Common Stock is
required to approve the Merger Agreement. Holders of 80% of FormMaker Common
Stock have entered into the Voting and Lockup Agreement in which they have
agreed to vote their shares in favor of the Merger Agreement.

Proxies

This Joint Proxy Statement/Prospectus is being furnished to the FormMaker
Stockholders in connection with the solicitations of proxies by and on behalf
of the FormMaker Board for use at the FormMaker Special Meeting. Proxies in
the form enclosed, which are properly executed and returned and not
subsequently revoked, will be voted at the FormMaker Special Meeting, in
accordance with the directions specified thereon, and otherwise in accordance
with the judgment of the persons designated as proxies. If no directions are
indicated on a properly executed proxy, such proxy will be voted in favor of
the Merger Agreement. A proxy received by the FormMaker Board may be revoked
by the person giving it at any time before it is exercised. A FormMaker
Stockholder may revoke a proxy by notification in writing to FormMaker at 2300
Windy Ridge Parkway, Atlanta, Georgia 30339, Attention: Secretary. A proxy may
also be revoked by execution and delivery of a proxy bearing a later date or
by attendance at the FormMaker Special Meeting and voting by ballot.

17
<PAGE>

THE MERGER AND RELATED TRANSACTIONS

GENERAL

The following is a brief summary of certain aspects of the Merger. This
summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached to this Joint
Proxy Statement/Prospectus as Appendix A and is incorporated herein by
reference. The Image Sciences Stockholders and the FormMaker Stockholders are
urged to read the Merger Agreement carefully.

EFFECTIVE TIME

As soon as practicable following the satisfaction or waiver of all
conditions to the Merger, the Merger will be consummated upon the filing of
articles of merger and all other necessary documents with the Secretaries of
State of Texas and Georgia and the issuance of a certificate of merger by the
Secretary of State of Texas, the later of which times will be the Effective
Time.

CONVERSION OF SECURITIES

Additionally, pursuant to the Merger Agreement, (i) each vested Image
Sciences Option will be converted into a DocuCorp Class B Option, (ii) each
unvested Image Sciences Option will be converted into a DocuCorp Class A
Option, (iii) each FormMaker Option will be converted into a DocuCorp Class A
Option, and (iv) each FormMaker Warrant will be converted into a DocuCorp
Warrant.

At the Effective Time, the current holders of Image Sciences Common Stock
and Image Sciences Preferred Stock, in the aggregate, will own approximately
51% of the then outstanding shares of DocuCorp Common Stock (51% on a fully
diluted basis). At the Effective Time, the current holders of FormMaker Common
Stock, in the aggregate, will own approximately 49% of the then outstanding
shares of DocuCorp Common Stock (49% on a fully diluted basis).

BACKGROUND OF THE MERGER

The terms of the Merger Agreement are the result of arm's-length
negotiations between representatives of Image Sciences and FormMaker. The
following is a brief discussion of the background of these negotiations.

In late May 1996 Joe Rose, FormMaker's then President and Chief Executive
Officer, and Michael D. Andereck, Image Sciences' President and Chief
Executive Officer, initiated discussions relating to a potential transaction
between FormMaker and Image Sciences. Throughout the summer of 1996, executive
officers of each company met to further discuss the potential transaction.

On August 23, 1996, the parties executed a confidentiality agreement and a
proposal letter with respect to the transaction. On August 26, 1996, Image
Sciences and Safeguard executed a confidentiality agreement. The parties
subsequently commenced their due diligence reviews.

On September 24, 1996, FormMaker's legal counsel provided a draft of the
Merger Agreement to Image Sciences and its legal counsel and telephone
conferences and meetings were held among the principals of Image Sciences and
FormMaker, and in certain instances with their respective counsel, to
negotiate the terms of the Merger Agreement on several occasions in the third
and fourth quarters of 1996 and the first quarter of 1997.

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<PAGE>

On January 13, 1997 and December 9, 1996, respectively, the Image Sciences
Board and the FormMaker Board unanimously approved and adopted the Merger
Agreement and the transactions contemplated thereby. DocuCorp, Image Sciences,
FormMaker, the Texas Sub and the Georgia Sub executed the Merger Agreement on
January 15, 1997.

REASONS FOR AND EFFECTS OF THE MERGER; RECOMMENDATIONS

The Image Sciences Board and the FormMaker Board believe that the Merger is
in the best interests of their respective stockholders, and unanimously
recommend to the Image Sciences Stockholders and the FormMaker Stockholders,
respectively, that they approve the Merger Agreement. The Merger will combine
the software products and services of Image Sciences and FormMaker, thus
offering customers a more complete suite of document automation software
products and a broader range of services. Anticipated benefits of the Merger
include the following:

Cost Savings. The combination of the businesses of Image Sciences and
FormMaker will result in the consolidation of certain functions creating cost
savings. For example, certain duplicative administrative functions will be
eliminated.

Economies of Scale. The combination of the businesses of Image Sciences and
FormMaker will provide DocuCorp with increased ability to achieve economies of
scale, including increased purchasing power, which DocuCorp believes will
contribute to increased efficiency and improved profitability.

Knowledgeable and Experienced Personnel. The Merger will bring together a
knowledgeable team of industry executives and sales managers with many years
of experience in the document automation industry and firmly established
customer and distributor relationships.

Expansion of Services of FormMaker. FormMaker engages in consulting, project
management and outsourcing services in addition to providing document
automation software products to its customers. The combined company will have
the ability to offer such consulting, project management and outsourcing
services to Image Sciences' customer base, including Image Sciences' insurance
industry clients.

As discussed below, the Image Sciences Board and the FormMaker Board also
believe that the Merger will facilitate certain strategic objectives of the
companies. Through the Merger, it is DocuCorp's objective to become the
leading provider of document automation software products through strategic
expansion and a focus on high quality, value-added customer service.
Specifically, DocuCorp seeks to: (i) penetrate additional markets through the
expansion of its sales networks; (ii) expand product offerings and services;
and (iii) integrate and exploit its technology to provide its customers with
the most advanced software products and services.

The Image Sciences Board also considered certain potential disadvantages or
negative factors relating to the proposed merger with FormMaker, including the
fact that FormMaker had historic losses, the potential inability of the
companies to integrate successfully their operations, facilities and
management and the possibility that the Merger could have an adverse effect on
the companies' relationships with customers, distributors or suppliers. The
Image Sciences Board believed that these risks were outweighed by the
potential benefits of the Merger. After considering the advantages and
disadvantages of a merger with FormMaker, the Image Sciences Board has
determined that the Merger is in the best interests of Image Sciences and its
stockholders.

The FormMaker Board also considered certain potential disadvantages or
negative factors relating to the proposed merger with Image Sciences,
including the potential inability of the companies to integrate successfully
their operations, facilities and management and the possibility that the
Merger could have an adverse effect on the companies' relationships with
customers, distributors or suppliers. The FormMaker Board believed that these
risks were outweighed by the potential benefits of the Merger. After
considering the advantages and disadvantages of a merger with Image Sciences,
the FormMaker Board has determined that the Merger is in the best interests of
FormMaker and the FormMaker Stockholders.

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<PAGE>

The FormMaker Board also considered the fact that the FormMaker Stockholders
would receive approximately 49% of the DocuCorp Common Stock while Image
Sciences Stockholders would receive approximately 51% of the DocuCorp Common
Stock. The FormMaker Board determined that Image Sciences' results of
operations and steady cash flow justified this difference in percentage of
ownership.

In reaching these conclusions, the Image Sciences Board and the FormMaker
Board considered a number of factors, including among other things, the terms
and conditions of the Merger Agreement; information with respect to the
financial condition, business operations and prospects of both Image Sciences
and FormMaker on both a historical and prospective basis, including
information reflecting the two companies on a pro forma combined basis, and
the views and opinions of their respective managements and financial advisors.

THE IMAGE SCIENCES BOARD RECOMMENDS THAT THE IMAGE SCIENCES STOCKHOLDERS
APPROVE THE MERGER.

THE FORMMAKER BOARD RECOMMENDS THAT THE FORMMAKER STOCKHOLDERS APPROVE THE
MERGER.

THE MERGER AGREEMENT

Plan of Merger

Pursuant to the Merger Agreement, the Texas Sub will be merged with and into
Image Sciences and the Georgia Sub will be merged with and into FormMaker so
that both Image Sciences and FormMaker will become wholly-owned subsidiaries
of DocuCorp. Following the Merger, (i) Image Sciences will continue its
existence under the laws of the State of Texas, and the separate corporate
existence of the Texas Sub will cease and (ii) FormMaker will continue its
existence under the laws of the State of Georgia, and the separate corporate
existence of the Georgia Sub will cease. All shares of capital stock of Image
Sciences and FormMaker will be converted into shares of capital stock of
DocuCorp as described below. All shares of capital stock of the Texas Sub and
the Georgia Sub will be converted into shares of Image Sciences and FormMaker,
respectively, and DocuCorp, as the sole stockholder of the Texas Sub and the
Georgia Sub, will, therefore, own all of the outstanding securities of
FormMaker and Image Sciences following the Merger.

Conversion of Securities

Pursuant to the Merger Agreement, the securities of FormMaker and Image
Sciences, respectively, will be converted into securities of DocuCorp, as
follows:

<TABLE>
<CAPTION>
SECURITIES OWNED AS CONVERTED
PRE-MERGER (1) POST MERGER (2)
- ------------------------------------ -----------------------------------------
NUMBER
OF NUMBER OF
SECURITY SHARES SECURITY SHARES
- -------------------------- --------- ------------------------------- ---------
<S> <C> <C> <C>
Image Sciences Common 2,335,082 DocuCorp Class B Common Stock.. 2,680,413
Stock....................
Image Sciences Preferred 1,963,433 DocuCorp Class B Common Stock.. 2,020,373
Stock....................
Image Sciences Options 1,497,100 DocuCorp Class B Options....... 1,351,576
(vested).................
Image Sciences Options 221,000 DocuCorp Class A Options....... 318,954
(unvested)...............
FormMaker Common Stock.... 6,229,511 DocuCorp Class A Common Stock.. 4,450,179
FormMaker Warrants........ 465,746 DocuCorp Warrants.............. 332,715
FormMaker Options......... 1,141,971 DocuCorp Class A Options....... 815,790
</TABLE>
- --------
(1) Assumes full participation in the Image Sciences Tender Offer with the
repurchase of 477,851 shares of Image Sciences Common Stock and Image
Sciences Options for 560,607 shares of Image Sciences Common Stock.

(2) The Registration Statement also covers an indeterminate number of shares
of DocuCorp Class A Common Stock issuable upon conversion of shares of
DocuCorp Class B Common Stock. Presently, 4,700,786 shares of DocuCorp
Class A Common Stock would be issued upon conversion of Class B Common
Stock. See "Description of DocuCorp Capital Stock."

20
<PAGE>

Representations and Warranties

The Merger Agreement contains representations and warranties by FormMaker
and Image Sciences, relating to, among other things, (a) proper organization
and similar corporate matters; (b) the authorization, delivery, performance
and enforceability of the Merger Agreement and the transactions contemplated
thereby; (c) other than as specified, the absence of any filings, consents or
approvals; (d)(i) the capital structure; (ii) other than as specified, the
absence of options, warrants, calls or similar agreements relating to the
acquisition of capital stock; and (iii) the validity and nonassessability of
issued and outstanding securities; (e) financial statements; (f) title to and
working condition of assets; (g) real estate, personal property and non-real
estate leases; (h) bona fide nature of accounts receivable and the
merchantable quality of all inventory; (i) absence of undisclosed liabilities;
(j) the filing and payment of taxes; (k) subsidiaries; (l) legal proceedings
and compliance with applicable laws and court orders; (m) contracts; (n)
insurance coverage; (o) intellectual property and software products; (p)
absence of labor disputes; (q) employee benefit plans; (r) corporate records;
(s) absence of certain events subsequent to November 30, 1996; (t) the non-
existence of breaches of any express or implied warranties in connection with
the sale or distribution of goods and services; (u) maintenance of customer
relationships; (v) absence of third party broker's or finder's fees arising
from the Merger Agreement or the transactions contemplated thereby; (w)
absence of any materially misleading statement or omission of material fact in
the foregoing representations and warranties; and (x) the inapplicability of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

The Merger Agreement contains further representations and warranties by
DocuCorp, ISI Merger Corp. and FormMaker Acquisition Corp. concerning each
corporation's lack of assets, liabilities or business activity.

Conduct of Business Prior to Merger

FormMaker and Image Sciences have each agreed that, except as otherwise
approved by the parties in writing or provided in the Merger Agreement, it
will not, and, in the case of FormMaker, will cause DocuCorp not to, do any of
the following prior to the closing contemplated by the Merger Agreement (the
"Closing"): (a) amend its charter documents or bylaws; (b) merge or
consolidate with, purchase substantially all of the assets of, or otherwise
acquire any other business entity; (c) issue (other than upon the exercise or
conversion of existing rights) additional shares of, or split, combine or
reclassify, its capital stock; (d) pay any dividends or redeem any of its
outstanding capital stock; (e) enter into any contract or otherwise incur any
liability outside the ordinary course of business unless the executory
obligation in any individual case is less than $100,000; (f) incur any
additional indebtedness for borrowed money outside the ordinary course of
business; (g) discharge or satisfy any encumbrance or pay or satisfy any
material liability except pursuant to the terms thereof; (h) compromise,
settle or otherwise adjust any material claim or litigation unless such
compromise, settlement or adjustment involves a sum of not more than $100,000
in excess of reserves therefor; (i) make capital expenditures of more than
$100,000 in the aggregate; or (j) modify existing benefit plans or enter into
new employment agreements.

Certain Covenants

Pursuant to the Merger Agreement, each of FormMaker and Image Sciences has
agreed that it will use commercially reasonable efforts to fulfill, and, in
the case of FormMaker, to cause DocuCorp to fulfill, the conditions to the
Merger described below. See "--Conditions to the Merger." In this regard,
FormMaker and Image Sciences will, and FormMaker will cause DocuCorp to, (a)
refrain from any actions that would cause any of its representations and
warranties to be inaccurate in any material respect as of the Closing (the
date on which such closing occurs is referred to herein as the "Closing
Date"); (b) execute and deliver certain documents and agreements at the
Closing; (c) comply in all material respects with all applicable laws in
connection with its execution, delivery and performance of the Merger
Agreement and certain transactions contemplated thereby; (d) use commercially
reasonable efforts to obtain in a timely manner all necessary waivers,
consents and approvals required under any laws or contracts; and (e) use
commercially reasonable efforts to take, or cause to be taken, all other
actions reasonably necessary to consummate the transactions contemplated by
the Merger Agreement.

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<PAGE>

FormMaker and Image Sciences also have each agreed (a) to give the other
party full access to its properties, contracts, books, records and affairs
(and, in the case of FormMaker, to cause DocuCorp to give Image Sciences full
access to its properties, contracts, books, records and affairs); (b) not to
solicit, initiate or encourage (including by way of furnishing information)
the making of any inquiry or proposal to acquire in any manner a substantial
equity interest in such company or all or substantially all of its assets, or
participate in any discussions or negotiations with any third person
concerning a tender or exchange offer, merger, consolidation or other business
combination; (c) with respect to its meeting of stockholders to consider the
Merger, to deliver to its stockholders necessary proxy materials and use
reasonable efforts to obtain the necessary stockholder approval of the Merger;
(d) to identify in a letter to DocuCorp all persons who may be deemed
"affiliates" of the Company for the purposes of Rule 145 under the Securities
Act and to use reasonable efforts to cause each such person to acknowledge
their responsibilities as such an affiliate under the Securities Act; (e) to
deliver financial statements to the other party prepared in accordance with
GAAP consistently applied for the twelve-month period ending December 31,
1996; and (f) to deliver to the other party all information listed in Schedule
6.3 to the Merger Agreement not previously delivered and deliver an updated
disclosure schedule incorporating such information therein.

FormMaker and Image Sciences have agreed to pay their own expenses in
connection with the Merger; provided, however, that DocuCorp will pay all such
expenses if the Merger becomes effective. Notwithstanding the above, upon
termination of the Merger Agreement for certain events relating to the breach
of the Merger Agreement, the expenses of the nonbreaching party are payable by
the breaching party. See "--Amendments, Waiver and Termination."

FormMaker has agreed to cause DocuCorp to perform its obligations hereunder
and under certain documents referred to in the Merger Agreement. DocuCorp has
agreed to (a) adopt an employee stock option plan covering 400,000 shares of
DocuCorp Class A Common Stock; (b) file a Registration Statement on Form S-8
for purposes of registering shares of DocuCorp Class A Common Stock issuable
upon exercise of DocuCorp Options as promptly as practicable following
consummation of the Qualified Rights Offering; (c) maintain, for a period of
five years, Image Sciences' and FormMaker's current directors' and officers'
liability insurance covering those officers and directors who were covered on
the Closing Date of the Merger Agreement by such policies and abstain, for a
period of five years, from amending any provision in FormMaker's or Image
Sciences' charter or bylaws providing for indemnification of officers or
directors; and (d) use commercially reasonable efforts to obtain a line of
credit from a bank for $10 million on terms substantially similar to the
existing FormMaker line of credit with NationsBank of Georgia, National
Association. If such a line of credit cannot be obtained, FormMaker has agreed
to use commercially reasonable efforts to amend its line of credit, or obtain
appropriate waivers, to permit the transactions contemplated by the Merger
Agreement and to allow DocuCorp to draw on the entire line of credit for
working capital purposes. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations of Image Sciences--Liquidity and
Capital Resources."

Image Sciences has agreed that it will not distribute to its stockholders
and option holders more than $8 million in connection with the Image Sciences
Closing Transactions.

Conditions to the Merger

The obligations of each of the parties to the Merger Agreement to consummate
the Merger are subject to, among other matters, satisfaction of the following
conditions (unless waived or changed where permissible): (a) no law or court
order shall have been enacted, issued or entered which would have the effect
of making the Merger illegal or otherwise prohibiting the consummation of the
Merger or which would have a material adverse effect on FormMaker or Image
Sciences; (b) the Registration Statement shall have been declared effective,
no stop order suspending the effectiveness of the Registration Statement shall
then be in effect, no proceeding for that purpose shall then be threatened by
the Commission (unless concluded or withdrawn) and all state securities or
blue sky permits or approvals required to carry out the transactions
contemplated by the Merger Agreement shall have been received; (c) the Merger
shall be effective in the States of Texas and Georgia; (d) the stockholders of
each of FormMaker and Image Sciences shall have approved the Merger in
accordance with

22
<PAGE>

applicable law and holders of no more than 8% of the total outstanding common
stock of either company shall have dissented under the applicable state
corporation law; (e) DocuCorp, FormMaker and Image Sciences shall each have
(i) caused its Board of Directors to consist of a total of seven members, (ii)
obtained any necessary resignations of incumbent directors or officers, (iii)
elected the following persons to its board of directors: three persons
designated by Image Sciences, three persons designated by the SG/TL
Stockholders and one independent person mutually designated by Image Sciences
and the SG/TL Stockholders, and (iv) appointed the following persons to the
following offices: Michael D. Andereck--President and Chief Executive Officer
and Arthur R. Spector--Chairman of the Board; (f) the Administrative Services
Agreements between Safeguard and FormMaker and Safeguard and MicroDynamics
shall have been terminated; (g) the representations and warranties of the
other parties shall be true and correct in all material respects on the
Closing Date; (h) all agreements and conditions required by the Merger
Agreement to be performed or satisfied prior to the Closing Date shall be
performed and satisfied; (i) an executive officer of each of FormMaker and
Image Sciences shall certify that the conditions specified in (g) and (h) of
this paragraph have been fulfilled; (j) all approvals and consents required in
connection with the Merger shall have been obtained; (k) FormMaker, Image
Sciences, the Texas Sub, the Georgia Sub and DocuCorp shall have tendered
executed copies of the respective transaction documents contemplated by the
Merger Agreement to which they are parties; (l) DocuCorp, the SG/TL
Stockholders and Xerox shall have tendered executed copies of the
Stockholders' Agreement; (m) Image Sciences shall have tendered a legal
opinion of Crouch & Hallett, L.L.P. in the form of that agreed to as of the
date of the Merger Agreement; and (n) FormMaker shall have tendered a legal
opinion of Morgan, Lewis & Bockius L.L.P. in the form of that agreed to as of
the date of the Merger Agreement.

Survival of Representations, Warranties and Covenants

The Merger Agreement provides that, except with respect to agreements to be
performed at least in part after the consummation of the Merger, the
representations, warranties, covenants and other agreements set forth therein
will not survive the consummation of the Merger.

Amendments, Waiver and Termination

The Merger Agreement may be amended only by written agreement of each of the
parties thereto. FormMaker and Image Sciences intend to resolicit their
respective stockholders if the terms of the Merger Agreement are materially
amended. Any term or provision of the Merger Agreement may be waived at any
time by the party entitled to the benefit thereof by a written instrument duly
executed by such party.

The Merger Agreement may be terminated at any time prior to the Effective
Time (a) by mutual written consent of each of FormMaker and Image Sciences;
(b) by either FormMaker or Image Sciences if (i) the Merger is not consummated
on or before June 30, 1997, provided that the party seeking to terminate the
Merger Agreement is not otherwise in breach in any material respect of any of
its obligations thereunder, (ii) any court of competent jurisdiction has
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or other action has become final and nonappealable; (iii) upon notice in
writing to the other party prior to the tenth business day following delivery
to such other party of the Second Stage Due Diligence Materials that such
materials have revealed matters which could have a material adverse effect on
the combined entity; or (c) by FormMaker if Image Sciences, or by Image
Sciences if FormMaker, the Texas Sub, the Georgia Sub or DocuCorp has
breached, or failed to comply with, any of its obligations under the Merger
Agreement or any representation or warranty made by it shall have been
incorrect in any material respect when made, and such breach, failure or
misrepresentation is not cured within 20 days after notice thereof, and any
such breach, failure or misrepresentation, individually or in the aggregate,
results or would be expected to result in a material adverse effect on
DocuCorp.

If the Merger Agreement is terminated by Image Sciences as a result of a
breach by FormMaker, the Texas Sub, the Georgia Sub or DocuCorp, FormMaker is
required to pay Image Sciences an amount equal to the expenses incurred by
Image Sciences in connection with the Transactions up to a maximum of
$100,000, except that in the case of a termination due to a willful breach by
FormMaker, FormMaker shall pay to Image Sciences

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$500,000. If the Merger Agreement is terminated by Image Sciences or FormMaker
because FormMaker fails to obtain all required approvals of the Merger by its
stockholders, FormMaker must pay to Image Sciences an amount equal to all of
the expenses incurred by Image Sciences in connection with the Transactions up
to a maximum of $100,000.

If the Merger Agreement is terminated by FormMaker as a result of a breach
by Image Sciences, Image Sciences shall pay to FormMaker an amount equal to
all of the expenses incurred by FormMaker in connection with the Transactions
up to a maximum of $100,000, except that in the case of a termination due to a
willful breach by Image Sciences, Image Sciences shall pay to FormMaker
$500,000. Further, if the Merger Agreement is terminated by Image Sciences or
FormMaker as a result of the failure of Image Sciences to obtain all required
approvals of the Merger by Image Sciences stockholders, Image Sciences shall
pay to FormMaker an amount equal to all of the expenses incurred by FormMaker
in connection with the Transactions up to a maximum of $100,000.

THE IMAGE SCIENCES CLOSING TRANSACTIONS

Image Sciences is offering to repurchase in the Image Sciences Tender Offer
(i) shares of Image Sciences Common Stock and (ii) Image Sciences Options that
were granted prior to July 31, 1991 to purchase shares of Image Sciences
Common Stock (collectively, the "Image Sciences Securities") at a price equal
to $5.00 less, in the case of Image Sciences Options, the applicable option
exercise price. Image Sciences has set aside the sum of $5,192,291 for the
repurchase of Image Sciences Securities and will accept (in accordance with
the terms and conditions of the Image Sciences Tender Offer) as many tendered
Image Sciences Securities as may be purchased with such funds.

If the Image Sciences Tender Offer is not fully subscribed, the funds set
aside for the Image Sciences Tender Offer which are not used to repurchase
Image Sciences Securities will be distributed pro rata (after giving effect to
the consummation of the Image Sciences Tender Offer but prior to giving effect
to the consummation of the Merger) to all holders of Image Sciences Common
Stock as a cash dividend and the conversion ratio for such Image Sciences
Common Stock and Image Sciences Options in the Merger will be adjusted
downward accordingly.

Concurrently with the Image Sciences Tender Offer, Image Sciences will
declare and distribute a $2,807,709 cash dividend to Xerox, as the holder of
all outstanding shares of Image Sciences Preferred Stock. In consideration for
its receipt of such Image Sciences Preferred Dividend, Xerox has agreed that
(i) the Image Sciences Preferred Stock will have a less favorable conversion
ratio than the Image Sciences Common Stock in the Merger and (ii) Xerox will
not convert any of its Image Sciences Preferred Stock into Image Sciences
Common Stock.

Image Sciences has accumulated a material amount of cash in the recent years
to fund a potential acquisition. Since the Merger was structured as a stock
transaction, such cash was unnecessary in connection with such transaction.
Therefore, Image Sciences will distribute such cash to its existing
stockholders in the Image Sciences Closing Transactions.

THE LIQUIDITY AGREEMENT

DocuCorp, Safeguard and the SG/TL Stockholders have entered into the
Liquidity Agreement providing that (i) Safeguard will use commercially
reasonable efforts to conduct and consummate a Qualified Rights Offering; (ii)
the SG/TL Stockholders will purchase a certain number of shares of DocuCorp
Class A Common Stock if DocuCorp is required to redeem shares of DocuCorp
Class B Common Stock, and guarantee an existing line of credit of FormMaker
(as amended); and (iii) DocuCorp will grant, at the Closing and upon payment
of $6,100, to the SG/TL Stockholders DocuCorp Warrants to purchase 610,000
shares of DocuCorp Class A Common Stock with an exercise price of $5.00 per
share and a term of three years.

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INTERESTS OF CERTAIN PERSONS IN THE MERGER

No director or executive officer of Image Sciences had or will have a
personal or business relationship with FormMaker prior to the Closing. No
director or executive officer of FormMaker had or will have a personal or
business relationship with Image Sciences prior to the Closing. In considering
recommendations of the Image Sciences and FormMaker Boards with respect to the
Merger, however, the Image Sciences Stockholders and the FormMaker
Stockholders should be aware that certain directors and executive officers of
Image Sciences and FormMaker have an interest in the consummation of the
Merger, as described in this Joint Proxy Statement/Prospectus. See "Management
of DocuCorp--Certain Relationships and Related Transactions."

EXCHANGE OF STOCK CERTIFICATES, WARRANTS AND OPTION AGREEMENTS

As of the Closing, in accordance with the conversion ratios described in
this Joint Proxy Statement/ Prospectus, (i) each holder of shares of Image
Sciences Common Stock, Image Sciences Preferred Stock or FormMaker Common
Stock will be entitled to receive, upon surrender of certificate(s) formerly
representing such Image Sciences or FormMaker capital stock, certificates
representing DocuCorp Class A Common Stock or DocuCorp Class B Common Stock,
as the case may be; (ii) each holder of FormMaker Warrants will be entitled to
receive, upon surrender of such warrants, a new warrant agreement with respect
to DocuCorp Warrants; and (iii) each holder of FormMaker Options or Image
Sciences Options will be entitled to receive, upon surrender of agreements
representing such options, a new option agreement with respect to DocuCorp
Options.

Contemporaneously with the mailing of this Joint Proxy Statement/Prospectus,
DocuCorp, or an exchange agent designated by DocuCorp (DocuCorp or such
exchange agent is referred to herein as the "Exchange Agent"), will mail a
letter of transmittal and instructions with respect to the surrender of
certificates, warrants and option agreements to each former holder of record
of securities of Image Sciences and FormMaker to be used by such holder in
forwarding certificates, warrants and option agreements to the Exchange Agent.
Each stockholder will be required to return a properly completed transmittal
letter, together with any certificates, warrants and option agreements listed
on the transmittal letter and, in the case of optionholders, an option
consent, to the Exchange Agent in order to receive the securities of DocuCorp
issuable in respect of such certificates, warrants and option agreements.
STOCKHOLDERS OF IMAGE SCIENCES AND FORMMAKER SHOULD NOT SEND CERTIFICATES,
WARRANTS OR OPTION AGREEMENTS TO THE EXCHANGE AGENT UNTIL THEY RECEIVE A
TRANSMITTAL LETTER. Any certificate, warrant or option agreement that prior to
the Effective Time represented outstanding securities of Image Sciences or
FormMaker (other than shares of Image Sciences Common Stock or FormMaker
Common Stock, as the case may be, with respect to which dissenters' rights of
appraisal have been duly exercised) will, after the Effective Time and prior
to surrender, be deemed to evidence ownership of the right to receive the
securities of DocuCorp that the holder of such certificate, warrant or option
agreement would be entitled to receive upon surrender of such certificate,
warrant or option agreement. See "--Exchange of Securities."

CONVERSION OF OPTIONS AND WARRANTS

At February 1, 1997, a total of 1,718,100 shares of Image Sciences Common
Stock and 1,141,971 shares of FormMaker Common Stock were reserved for
issuance upon the exercise of options outstanding under the respective Image
Sciences and FormMaker stock option plans. DocuCorp will assume all of Image
Sciences' and FormMaker's obligations under such plans in accordance with
their terms and conditions as in effect at the Effective Time, except that (i)
each option shall thereafter evidence the right to purchase only the number of
shares of DocuCorp Common Stock that would have been issued if the shares of
Image Sciences Common Stock or FormMaker Common Stock (as the case may be)
represented by the option had been outstanding at the Effective Time and (ii)
the exercise price for each share of DocuCorp Common Stock issuable upon
exercise of stock options will be equal to the option price per share in
effect immediately prior to the Effective Time divided by the conversion
ratios for such common stock described above. All Image Sciences Options, or
portions thereof, that are vested at the Effective Time will be converted into
options to purchase DocuCorp Class B Common Stock. All Image Sciences Options,
or portions thereof, that are unvested at the Effective Time, and all

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FormMaker Options will be converted into options to purchase DocuCorp Class A
Common Stock. In accordance with the terms of options outstanding under the
Image Sciences and FormMaker stock option plans, the vesting provisions with
respect to options to purchase an aggregate of 151,800 and 0 shares of Image
Sciences and FormMaker Common Stock, respectively, will be accelerated at the
Effective Time.

At February 1, 1997, a total of 465,746 shares of FormMaker Common Stock
were reserved for issuance upon the exercise of FormMaker Warrants. DocuCorp
will assume FormMaker's obligations under the FormMaker Warrants, except that
(i) each warrant shall thereafter evidence the right to purchase only the
number of shares of DocuCorp Common Stock that would have been issued if the
shares of FormMaker Common Stock represented by the warrant had been
outstanding at the Effective Time and (ii) the exercise price for each share
of DocuCorp Common Stock issuable upon exercise of warrants will be equal to
the warrant price per share in effect for such warrant immediately prior to
the Effective Time divided by the conversion ratios for FormMaker Common Stock
described above.

MANAGEMENT AFTER THE MERGER

At the Effective Time, the DocuCorp Board will consist of the following
seven members: Arthur R. Spector, Michael D. Andereck, Milledge A. Hart, III,
John D. Loewenberg, Warren V. Musser, Sidney B. Landman and one independent
director.

At the Effective Time, (i) Mr. Spector, Chairman of the FormMaker Board,
will be the Chairman of the DocuCorp Board and of the boards of directors of
Image Sciences and FormMaker; (ii) Mr. Andereck, the President and Chief
Executive Officer of Image Sciences, will be the President and Chief Executive
Officer of DocuCorp, Image Sciences and FormMaker; (iii) Samuel M. Wilkes, the
Chief Operating Officer of FormMaker, will be the Senior Vice President of
Sales and Marketing of DocuCorp, Image Sciences and FormMaker; (iv) B. Bruce
Dale, Vice President of Development of Image Sciences, will be the Senior Vice
President of Products of DocuCorp, Image Sciences and FormMaker; (v) Kerry
LeCrone, the Senior Vice President of Services of FormMaker, will be the
Senior Vice President of Services of DocuCorp, Image Sciences and FormMaker,
(vi) Hsi-Ming Lin, the Senior Vice President of Research and Development of
FormMaker, will be the Senior Vice President of Research and Development of
DocuCorp, Image Sciences and FormMaker; and (vi) Todd A. Rognes, the Vice
President of Finance of Image Sciences, will be the Senior Vice President of
Finance of DocuCorp, Image Sciences and FormMaker. See "Management of
Systems--Executive Officers and Directors."

ABSENCE OF REGULATORY FILINGS AND APPROVALS

The Merger is not subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder, which provide that certain merger transactions may not be
consummated until required information and material have been furnished to the
Antitrust Division of the Department of Justice and the Federal Trade
Commission and certain waiting periods have expired or been terminated. Other
than certain filings and approvals which may be required under certain state
securities or "blue sky" laws and the effectiveness of the Registration
Statement, there are no federal or state regulatory requirements that must be
complied with or approvals that must be obtained in connection with the
Merger.

ACCOUNTING TREATMENT

For historical accounting purposes, Image Sciences will be considered the
survivor in the Merger and no purchase accounting is required related to the
conversion of Image Sciences Common Stock and Image Sciences Preferred Stock
into DocuCorp Common Stock. The merger of FormMaker into a wholly-owned
subsidiary of DocuCorp will be treated as an acquisition of FormMaker by Image
Sciences; accordingly, the transaction will be recorded under the purchase
method of accounting.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes the material federal income tax
consequences of the Merger to holders of shares of Image Sciences Common
Stock, Image Sciences Preferred Stock and FormMaker Common Stock

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and holders of Image Sciences Options, FormMaker Options and FormMaker
Warrants. The federal income tax discussion set forth below does not address
all aspects of federal income taxation that may be relevant to particular
categories of holders of shares of Image Sciences Common Stock, Image Sciences
Preferred Stock, FormMaker Common Stock and holders of Image Sciences Options,
FormMaker Options and FormMaker Warrants who are subject to special treatment
under the Code, including, without limitation, tax-exempt organizations and
holders who are not citizens or residents of the United States, nor does the
discussion address the effect of any applicable foreign, state, local or other
tax laws. This discussion assumes that holders of shares of Image Sciences
Common Stock, Image Sciences Preferred Stock and FormMaker Common Stock and
holders of Image Sciences Options, FormMaker Options and FormMaker Warrants
hold their shares, options and/or warrants as capital assets within the
meaning of Section 1221 of the Code. HOLDERS OF SHARES OF IMAGE SCIENCES
COMMON STOCK, IMAGE SCIENCES PREFERRED STOCK AND FORMMAKER COMMON STOCK AND
HOLDERS OF IMAGE SCIENCES OPTIONS, FORMMAKER OPTIONS AND FORMMAKER WARRANTS
SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF
THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF FOREIGN, STATE,
LOCAL AND OTHER TAX LAWS.

Steptoe & Johnson LLP, Special Tax Counsel to DocuCorp, has rendered a tax
opinion (the "Tax Opinion") to Image Sciences and FormMaker that the Merger
will qualify either as: (i) a reorganization pursuant to section 368(a) of the
Code, or (ii) an exchange satisfying the requirements of section 351(a) of the
Code. The Tax Opinion will not be binding on the Internal Revenue Service
(IRS) or any court, and will be based upon certain written representations,
which Steptoe & Johnson LLP has not independently verified, of DocuCorp, Image
Sciences and FormMaker. The Tax Opinion is based on provisions of the Code,
income tax regulations, and administrative rulings and court decisions
existing as of the date of the Tax Opinion. All such provisions are subject to
change and such changes may be retroactive. Steptoe & Johnson LLP is not
responsible for notifying any of the parties to the Merger or their
stockholders of any such change which may occur subsequent to the date of the
Tax Opinion. No ruling has been sought from the IRS as to the federal income
tax consequences of the Merger.

Except as otherwise noted, the summary below assumes that the Merger will
qualify either as a reorganization pursuant to section 368(a) of the Code or
as an exchange satisfying the requirements of section 351(a) of the Code,
based upon such Tax Opinion. Subject to the limitations and qualifications
referred to herein, the Tax Opinion addresses and is limited to the following
federal income tax consequences:

Tax Consequences to Image Sciences, FormMaker, DocuCorp, the Texas Sub and
the Georgia Sub. No gain or loss will be recognized for federal income tax
purposes by Image Sciences, FormMaker, DocuCorp, the Texas Sub and the Georgia
Sub as a result of the Merger.

Tax Consequences to Holders of Image Sciences Common Stock. No gain or loss
will be recognized by holders of Image Sciences Common Stock as a result of
the conversion of their shares of Image Sciences Common Stock for shares of
DocuCorp Class B Common Stock pursuant to the Merger. The tax basis of the
shares of DocuCorp Class B Common Stock received by each holder of Image
Sciences Common Stock will equal the tax basis of such holder's shares of
Image Sciences Common Stock converted in the Merger. The holding period for
the shares of DocuCorp Class B Common Stock received by each holder of Image
Sciences Common Stock will include the holding period for the shares of Image
Sciences Common Stock of such holder exchanged in the Merger.

Tax Consequences to Holders of Image Sciences Preferred Stock. No gain or
loss will be recognized by holders of Image Sciences Preferred Stock as a
result of the conversion of their shares of Image Sciences Preferred Stock for
shares of DocuCorp Class B Common Stock pursuant to the Merger. The tax basis
of the shares of DocuCorp Class B Common Stock received by each holder of
Image Sciences Preferred Stock will equal the tax basis of such holder's
shares of Image Sciences Preferred Stock converted in the Merger. The

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holding period for the shares of DocuCorp Class B Common Stock received by
each holder of Image Sciences Preferred Stock will include the holding period
for the shares of Image Sciences Preferred Stock of such holder converted in
the Merger.

Tax Consequences to Holders of FormMaker Common Stock. No gain or loss will
be recognized by holders of FormMaker Common Stock as a result of the
conversion of their shares of FormMaker Common Stock for shares of DocuCorp
Class A Common Stock pursuant to the Merger. The tax basis of the shares of
DocuCorp Class A Common Stock received by each holder of FormMaker Common
Stock will equal the tax basis of such holder's shares of FormMaker Common
Stock converted in the Merger. The holding period for the shares of DocuCorp
Class A Common Stock received by each holder of FormMaker Common Stock will
include the holding period for the shares of FormMaker Common Stock of such
holder converted in the Merger.

Steptoe & Johnson LLP's Tax Opinion that the Merger will qualify as a
reorganization under Section 368(a) of the Code is based on representations of
DocuCorp, Image Sciences and FormMaker, including: (i) that DocuCorp will
acquire the Image Sciences Common Stock, Image Sciences Preferred Stock and
FormMaker Common Stock solely in exchange for its own voting common stock;
(ii) that to the best knowledge and belief of the management of Image Sciences
and FormMaker, there is no plan or intention on the part of the stockholders
of their respective company to sell, exchange, or otherwise dispose of a
number of shares of DocuCorp stock received in the Merger that would reduce
the stockholders' ownership of DocuCorp stock to a number of shares having a
value (as of the date of the Merger) of less than 50 percent of the value of
all formerly outstanding stock of the company (taking into account for this
purpose (as of the same date) shares of stock that are surrendered by
dissenters or exchanged for cash in lieu of fractional shares of DocuCorp and
shares of stock that are sold, redeemed, or otherwise disposed of within the
two years prior to the Merger); and (iii) following the Merger, DocuCorp will
own all of the stock of Image Sciences and FormMaker. If the IRS successfully
asserts that one or more of the representations is not accurate with respect
to either Image Sciences or FormMaker, or if the stockholders of Image
Sciences or FormMaker act in a manner contrary to the knowledge and belief of
the company's management, the Merger with respect to that company may
nonetheless qualify for tax-free treatment under section 351(a) of the Code,
provided shares of DocuCorp issued in the Merger and representing more than
20% of the voting power of all classes of DocuCorp voting stock (or more than
20% of total shares of any class of DocuCorp nonvoting stock issued in the
Merger) are not, pursuant to a plan or commitment in existence at the time of
the Merger, sold or otherwise disposed of to a person who has not made a
significant transfer of property to DocuCorp pursuant to the Merger.

If the Merger with respect to a company does not qualify for tax-free
treatment under either section 368(a) or 351(a), (i) the stockholders of that
company who convert their stock in that company into DocuCorp stock pursuant
to the Merger will recognize gain or loss equal to the difference between the
fair market value on the date of the Merger of the DocuCorp stock they receive
and their tax basis in the stock that is converted into DocuCorp stock in the
Merger; (ii) the tax basis of the DocuCorp stock received in the Merger will
equal the fair market value of that stock on the date of the Merger; and (iii)
the holding period for each share of DocuCorp stock will begin on the date
following the date of the Merger.

Although the summary below addresses certain tax consequences to holders of
Image Sciences Options, FormMaker Options, FormMaker Warrants, and holders of
stock acquired pursuant to the exercise of certain of such options, Steptoe &
Johnson LLP's Tax Opinion does not address such additional tax issues.

Tax Consequences to Holders of Image Sciences Options, FormMaker Options,
FormMaker Warrants, and Holders of Stock Acquired Pursuant to the Exercise of
Certain of Such Options. Section 83 of the Code provides the rules for the
taxation of stock options and warrants that do not qualify as incentive stock
options and that are transferred in connection with the performance of
services ("nonstatutory options"). Under these rules, for Image Sciences
Options, FormMaker Options and FormMaker Warrants that constitute nonstatutory
stock options (collectively, the "Original Nonstatutory Options"), the
conversion of such options into DocuCorp Options and DocuCorp Warrants will
have no federal income tax consequences to the holder assuming that such
Original Nonstatutory Options did not have, and the DocuCorp Options
substituted therefor will not have, a

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readily ascertainable fair market value at the time of grant. For this
purpose, options that are not actively traded on an established market and
that are not transferable by the optionee generally do not have a readily
ascertainable fair market value.

For Image Sciences Options and FormMaker Options that constitute incentive
stock options ("ISOs"), the conversion of such options into DocuCorp Options
will not disqualify the new DocuCorp Options from ISO status, assuming the
following conditions are met: (i) the plan under which the option was received
met the requirements of section 422 of the Code before the Merger, and the new
options to acquire DocuCorp stock after the conversion meet the requirements
of section 422 of the Code including the requirement that the DocuCorp
shareholders approve the stock option plan; (ii) immediately after the
conversion, the excess of the aggregate fair market value of the shares of
DocuCorp stock subject to the option over the option price for such stock will
not be more than the excess of the aggregate fair market value will not be
more than the excess of the aggregate fair market value of all shares of stock
subject to the option immediately before its conversion over the aggregate
option price for such stock; (iii) the holder of such option will not receive
any additional benefits as a result of the conversion of the option into an
option to purchase stock of DocuCorp; and (iv) or a share-by-share comparison,
the ratio of the option price to the fair market value of the DocuCorp stock
subject to the option immediately after the conversion will not be more
favorable to the holder than the ratio of the option price to the fair market
value of the stock subject to the option immediately before the conversion.

For stockholders of Image Sciences and FormMaker who acquired their Image
Sciences Common Stock and FormMaker Common Stock pursuant to the exercise of
an ISO ("Option Stock"), the conversion of such stock into DocuCorp stock will
have the same federal income tax consequences noted above for other holders of
Image Sciences Common Stock and FormMaker Common Stock, provided the Merger
qualifies with respect to that company as a reorganization under section
368(a) of the Code. If, however, the Merger qualifies with respect to a
company as an exchange under section 351(a) of the Code, the conversion of
Option Stock in that company for DocuCorp stock will be a disqualifying
disposition of the stock under section 424 of the Code and thus will be
taxable. In such case, if the conversion is within either one year of the date
in which the option was exercised or within two years of the date in which the
option was granted, the holder of such Option Stock will recognize: (i)
ordinary income on the difference (up to the amount of gain actually realized)
between the fair market value of the stock at the time of the exercise and the
option price, and (ii) capital gain on any additional difference between the
amount received in the disposition and the basis of the Option Stock. If the
conversion is more than one year after the exercise of the option and more
than two years after the grant of the option, the holder of such Option Stock
will recognize capital gain on the difference between amount received in the
disposition and the basis of the Option Stock.

For holders of Image Sciences Options, FormMaker Options and FormMaker
Warrants that are not ISOs nor non-statutory options subject to section 83
("Investment Options and Warrants"), the federal income tax consequences of
the conversion of such options and warrants into DocuCorp options and warrants
are unclear. The IRS has issued proposed regulations, which if finalized in
their present form, would permit the tax-free substitution of warrants in a
reorganization under section 368 of the Code. The IRS has indicated, however,
that these regulations will apply only on a prospective basis once finalized.
Thus, if the Merger occurs before the proposed regulations become effective,
or to the extent the Merger occurs after the effective date but does not
qualify as a reorganization, the IRS may take the position that the conversion
of the Investment Option or Warrant into a DocuCorp option or warrant
constitutes a taxable exchange within the meaning of section 1001 of the Code.
If the IRS were to take such a position, and such position were sustained by a
court, a holder of an Investment Option or Warrant would recognize capital
gain or loss to the extent that the fair market value of the DocuCorp Option
or Warrant received was more or less, respectively, than the holder's tax
basis in the Investment Option or Warrant surrendered.

HOLDERS OF IMAGE SCIENCES OPTIONS, FORMMAKER OPTIONS, AND FORMMAKER WARRANTS
SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF THE
MERGER TRANSACTIONS.

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CONSEQUENCES UNDER FEDERAL SECURITIES LAWS

The shares of DocuCorp Class A Common Stock and DocuCorp Class B Common
Stock issuable in connection with the Merger have been registered under the
Securities Act. Accordingly, there will be no federal securities law
restrictions upon the resale or transfer of such shares by former Image
Sciences or FormMaker stockholders except for those stockholders who are
deemed "affiliates" of Image Sciences or FormMaker, as that term is defined in
Rule 144 and Rule 145 under the Securities Act. The parties have agreed in the
Merger Agreement to use commercially reasonable efforts to cause their
"affiliates" to enter into agreements pursuant to which they acknowledge their
responsibilities under the Securities Act. See "Principal Stockholders of
DocuCorp." This Joint Proxy Statement/Prospectus is not intended be used for
resale of shares registered hereby.

DISSENTERS' RIGHTS

Image Sciences. Any Image Sciences Stockholder of record may exercise
dissenters' rights in connection with the Merger by properly complying with
the requirements of Articles 5.11, 5.12 and 5.13 of the Texas Business
Corporation Act, as amended (the "TBCA"). By exercising dissenter's rights,
any such Image Sciences Stockholder would be entitled to have the "fair value"
of his or her shares of Image Sciences Common Stock and/or Image Sciences
Preferred Stock determined by a court and paid to him or her in cash.

In order to exercise his or her dissenter's rights properly, a dissenting
Image Sciences Stockholder must refrain from executing the Image Sciences
Proxy or voting his or her shares in favor of the Merger in person at the
Image Sciences Special Meeting. The execution and return by an Image Sciences
Stockholder of the Image Sciences proxy or voting in favor of the Merger
Agreement at the Image Sciences Special meeting will evidence such
stockholder's consent to the Merger, and as a consequence thereof, such
stockholder will be foreclosed from exercising his or her rights as a
dissenting stockholder. The execution and return by an Image Sciences
Stockholder of a proxy marked against the Merger or voting against the Merger
at the Image Sciences Special Meeting will not foreclose such stockholder from
exercising his or her dissenter's rights.

The following is a summary of the statutory procedures that a stockholder of
a Texas corporation must follow in order to exercise his or her dissenter's
rights under Texas law in connection with the Merger. This summary is not
complete and is qualified in its entirety by reference to Articles 5.11, 5.12
and 5.13 of the TBCA, the text of which is set forth in full in Appendix B of
this Joint Proxy Statement/Prospectus.

The TBCA provides that a stockholder of a Texas corporation, who holds
shares of a class or series that is entitled to vote with respect to a plan of
merger as a class or otherwise, has the right to dissent from such plan of
merger. Any such stockholder who wishes to dissent to a plan of merger may
exercise the rights and remedies of a dissenting stockholder as set forth in
Articles 5.11, 5.12 and 5.13 of the TBCA. Under the TBCA, the surviving
corporation (which, in the present case, would be Image Sciences) shall be
required to mail to each Image Sciences Stockholder who has not executed and
returned the Image Sciences proxy or voted at the Image Sciences Special
Meeting, within 10 days after the Effective Time of the Merger, notice (the
"Notice") of (i) the fact and date of the Merger and (ii) that such Image
Sciences Stockholder may exercise his or her right to dissent from the Merger.
Any Image Sciences Stockholder desiring to exercise his or her right of
dissent must, within 20 days after the mailing of the Notice, make a written
demand on Image Sciences for payment of the fair value of such stockholder's
shares of Image Sciences Common Stock and/or Image Sciences Preferred Stock.
The demand must state the number and class of shares owned by the dissenting
stockholder and the fair value of the shares as estimated by the stockholder.
The fair value of the shares shall be the value thereof as of the date of the
Image Sciences Special Meeting authorizing the Merger was delivered to Image
Sciences, excluding any appreciation or depreciation in anticipation of the
Merger.

ANY WRITTEN DEMAND REQUIRED OF ANY DISSENTING STOCKHOLDER UNDER ARTICLES
5.11 THROUGH 5.13 OF THE TBCA SHOULD BE SENT IN A MANNER THAT ASSURES THAT
SUCH NOTICE IS RECEIVED BY IMAGE SCIENCES NO LATER THAN , 1997, ADDRESSED
TO IMAGE SCIENCES, INC., ATTENTION: PRESIDENT, 5910 NORTH CENTRAL EXPRESSWAY,
SUITE 800, DALLAS, TEXAS 75206.

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Any Image Sciences Stockholder who fails to make such written demand within
the 20-day period will lose the right to dissent and will be bound by the
terms of the Merger. In order to preserve his or her dissenter's rights, a
dissenting Image Sciences Stockholder must also, within 20 days after making a
demand for payment, submit his or her stock certificates to Image Sciences for
notation thereon that such demand has been made. The failure of such
dissenting stockholder to do so shall, at the option of Image Sciences,
terminate the stockholder's rights to dissent and appraisal, unless a court of
competent jurisdiction for good and sufficient cause shown shall direct
otherwise. Image Sciences intends to terminate a stockholder's rights to
dissent and appraisal for failure of any such stockholder to comply with the
statutory deadlines for submission of stock certificates and any other
statutory requirements, unless a court of competent jurisdiction directs
otherwise.

Any Image Sciences Stockholder who has properly demanded payment for his or
her shares will not thereafter have any rights as a stockholder, except the
right to receive payment for his or her shares pursuant to Article 5.12 of the
TBCA and the right to maintain an appropriate action to obtain relief on the
grounds that the Merger and the related transactions were fraudulent.

Within 20 days after its receipt of a demand for payment, Image Sciences
must deliver or mail to the dissenting Image Sciences Stockholder written
notice stating that either (i) Image Sciences agrees to pay the amount of the
stockholder's demand within 90 days after the Effective Time of the Merger
upon receipt of the dissenting stockholder's duly endorsed stock certificates
or (ii) Image Sciences offers to pay its own estimate of the fair value of the
shares within 90 days after the Effective Time of the Merger upon receipt of
the dissenting stockholder's duly endorsed stock certificates and upon receipt
of notice within 60 days after the Effective Time of the Merger that the
dissenting stockholder agrees to accept Image Sciences' estimate. If the
dissenting Image Sciences Stockholder and Image Sciences agree upon the value
of the dissenting stockholder's shares within 60 days after the Effective Time
of the Merger, Image Sciences shall pay the amount of the agreed value to the
dissenting stockholder upon receipt of the dissenting stockholder's duly
endorsed stock certificates within 90 days after the Effective Time of the
Merger. Upon payment of the agreed value, the dissenting stockholder will
cease to have any interest in such shares.

If the dissenting Image Sciences Stockholder and Image Sciences do not agree
upon the value of the dissenting stockholder's shares within 60 days after the
Effective Time of the Merger, then either the dissenting stockholder or Image
Sciences may, within 60 days after the expiration of such 60-day period for
agreement, file a petition in a court of competent jurisdiction in the county
in Texas in which the principal office of Image Sciences is located (Dallas
County), seeking a determination of the fair value of the shares. Within 10
days following its receipt of notice of such a petition filed by a dissenting
stockholder or upon the filing of such a petition by Image Sciences, Image
Sciences must file with the court a list of the names and addresses of all
Image Sciences Stockholders who have demanded payment for their shares and
with whom agreements as to value have not been reached. The clerk of the court
will then give notice of the hearing of any such petition to Image Sciences
and to all of the dissenting Image Sciences Stockholders on the list provided
by Image Sciences. All dissenting Image Sciences Stockholders notified in this
manner and Image Sciences will be bound by the final judgment of the court as
to the value of the shares.

Image Sciences has not yet determined whether it will institute an action
seeking a judicial determination of the fair value of the Image Sciences
Common Stock and/or Image Sciences Preferred Stock in the event that Image
Sciences and dissenting Image Sciences Stockholders do not agree as to the
value of the dissenting stockholders' shares; such determination will depend,
among other considerations, upon the number of dissenting Image Sciences
Stockholders with whom such a disagreement exists and the magnitude of the
difference in the parties' respective opinions as to the value of the
dissenting stockholders' shares.

In considering such a claim, the court will determine which of the
dissenting Image Sciences Stockholders have complied with the provisions of
the TBCA and are entitled to valuation and payment for their shares and will
appoint one or more qualified appraisers to assist in the determination of the
fair value of the shares upon such investigation as the appraisers consider
proper. The appraisers shall afford a reasonable opportunity to the dissenting
Image Sciences Stockholders and Image Sciences to submit evidence as to the
value of the shares.

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Upon receipt of the appraisers' report, the court will by its judgment
determine the fair value of the shares of the dissenting Image Sciences
Stockholders and will direct Image Sciences, upon its receipt of the
dissenting Image Sciences Stockholders' duly endorsed stock certificates, to
pay to the dissenting stockholders the amount of the fair value of their
shares, with interest thereon beginning 91 days after the Effective Time of
the Merger to the date of the judgment. Upon payment of the judgment, the
dissenting Image Sciences Stockholders will cease to have any interest in the
shares or in Image Sciences. The court will allow the appraisers a reasonable
fee as court costs and will allocate all court costs between the parties in
such manner as it determines to be fair and equitable.

Any dissenting Image Sciences Stockholder may withdraw his or her demand at
any time before receiving payment for his or her shares or before a petition
has been filed seeking determination of the fair value of his or her shares.
No such dissenting stockholder may withdraw his or her demand after payment
for the shares has been made or, unless Image Sciences consents to the
withdrawal, after such a petition has been filed.

Image Sciences Stockholders considering appraisal rights should consider
that the payment which they eventually receive in exchange for their shares in
a dissenters' rights proceeding under Texas law could be less than, equal to,
or greater than the eventual market value of the consideration they would
receive as a result of the consummation of the Merger.

Any Image Sciences Stockholder who exercises his or her appraisal rights and
receives cash from Image Sciences in exchange for his or her shares of Image
Sciences Common Stock and/or Image Sciences Preferred Stock will recognize
taxable gain or loss in an amount equal to the difference between (a) the sum
of cash received from Image Sciences and (b) the basis of the shares of Image
Sciences Common Stock and/or Image Sciences Preferred Stock so exchanged. Any
such gain or loss recognized would be long-term capital gain or loss if such
shares constitute capital assets in the hands of the dissenting Image Sciences
Stockholder and have been held by such stockholder for more than one year at
the Effective Time.

IMAGE SCIENCES STOCKHOLDERS WHO ARE CONSIDERING DISSENTING FROM THE MERGER
ARE URGED TO CONSULT THEIR OWN LEGAL COUNSEL.

FormMaker Stockholders. Any FormMaker Stockholder of record may exercise
dissenters' rights in connection with the Merger by properly complying with
the requirements of Sections 14-2-1302, 14-2-1303, 14-2-1321 through 14-2-1327
and 14-2-1330 through 14-2-1332 of the Georgia Business Corporation Code, as
amended (the "GBCC"). By exercising dissenter's rights, any such FormMaker
Stockholder would be entitled to payment of the "fair value" of his or her
shares of FormMaker Common Stock.

In order to exercise his or her dissenter's rights properly, a dissenting
FormMaker Stockholder must refrain from executing the FormMaker Proxy or
voting his or her shares in favor of the Merger Agreement in person at the
FormMaker Special Meeting. The execution and return by a FormMaker Stockholder
of the FormMaker Proxy or voting in favor of the Merger Agreement at the
Special Meeting will evidence such stockholder's consent to the Merger, and as
a consequence thereof, such stockholder will be foreclosed from exercising his
or her rights as a dissenting stockholder. The execution and return by a
FormMaker Stockholder of a proxy marked against the Merger or voting against
the Merger at the FormMaker Special Meeting will not foreclose such
stockholder from exercising his or her dissenter's rights.

The following is a summary of the statutory procedures that a stockholder of
a Georgia corporation must follow in order to exercise his or her dissenter's
rights under Georgia law in connection with the Merger. This summary is not
complete and is qualified in its entirety by reference to Sections 14-2-1302,
14-2-1303, 14-2-1321 through 14-2-1323 and 14-2-1330 through 14-2-1332 of the
GBCC, the text of which is set forth in full in Appendix C of this Joint Proxy
Statement/Prospectus.

The GBCC provides that a stockholder of a Georgia corporation, who holds
shares of a class or series that is entitled to vote with respect to a plan of
merger as a class or otherwise, has the right to dissent from such plan

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of merger. Any such stockholder who wishes to dissent from a plan of merger
may exercise the rights and remedies of a dissenting stockholder as set forth
in Sections 14-2-1302, 14-2-1303, 14-2-1321 through 14-2-1323 and 14-2-1330
through 14-2-1332 of the GBCC.

A FormMaker Stockholder who wishes to exercise his or her dissenter's rights
must deliver to FormMaker, before the FormMaker Special Meeting, written
notice of his or her intent to demand payment for his or her shares if the
Merger is approved. Additionally, such stockholder must not vote his or her
shares in favor of the Merger. A dissenting FormMaker Dissenter who does not
deliver notice of his intention to demand payment for his or her shares, or
votes in favor of the Merger will not be entitled to payment for his or her
shares.

If the Merger Agreement is approved by the FormMaker Stockholders, FormMaker
must deliver, within ten days after the FormMaker Special Meeting, a written
dissenters' notice (the "Dissenters' Notice") to all stockholders who (a)
delivered notice of his or her intention to demand payment and (b) did not
vote in favor of the Merger. The Dissenters' Notice must state where the
payment demand must be sent, when and where certificates for certificated
shares must be deposited and must inform holders of uncertificated shares to
what extent transfer of such shares will be restricted after the payment
demand is received. FormMaker may restrict the transfer of uncertificated
shares from the date the demand for their payment is received until the Merger
is consummated. The Dissenters' Notice must also be accompanied by the
dissenters' rights provisions of the GBCC and must set a date by which
FormMaker must receive payment demand (such date may not be fewer than 30 nor
more than 60 days after the date of delivery by FormMaker of the dissenters'
notice) (the "Demand Due Date").

A dissenting FormMaker Stockholder who receives a Dissenters' Notice, in
order to be entitled to payment for his or her shares under the dissenters'
rights provisions of the GBCC, must demand payment for his or her shares and
deposit his or her certificates as specified in the notice before the Demand
Due Date. A dissenting FormMaker Stockholder who demands payment retains all
other rights of a FormMaker Stockholder until these rights are canceled or
modified by the consummation of the Merger.

ANY WRITTEN DEMAND REQUIRED OF ANY DISSENTING STOCKHOLDER UNDER SECTIONS 14-
2-1302, 14-2-1303, 14-2-1321 THROUGH 14-2-1323 AND 14-2-1330 THROUGH 14-2-1332
OF THE GBCC SHOULD BE SENT IN A MANNER THAT ASSURES THAT SUCH NOTICE IS
RECEIVED BY FORMMAKER NO LATER THAN , 1997, ADDRESSED TO FORMMAKER
SOFTWARE, INC., ATTENTION: PRESIDENT, 2300 WINDY RIDGE PARKWAY, SUITE 400
NORTH, ATLANTA, GEORGIA, 30339.

FormMaker shall send to each FormMaker Stockholder who satisfied the
requirements for demanding payment, notice of an offer to pay such dissenter
the amount the corporation estimates to be the value of the shares immediately
before the consummation of the Merger, excluding any appreciation or
depreciation in anticipation of the Merger (the "fair value"), plus accrued
interest. The offer of payment must be accompanied by FormMaker's balance
sheet as of the end of the fiscal year ending not more than 16 months before
the date of payment, an income statement for such year, a statement of changes
in stockholders' equity for such year, and the latest available interim
financial statements, if any. FormMaker must also send, along with the offer
of payment, a statement of FormMaker's estimate of the fair value of the
shares, an explanation of how the interest was calculated, a statement of the
dissenter's right to demand payment if he or she is dissatisfied with the
offer (discussed below), and a copy of the dissenters' rights provisions of
the GBCC. If a dissenting FormMaker Stockholder accepts FormMaker's offer by
written notice to FormMaker within 30 days after the FormMaker's offer, or is
deemed to have accepted such offer by failure to respond within said 30 days,
payment for his or her shares shall be made within 60 days after the making of
the offer or the consummation of the merger, whichever is later.

If (a) a FormMaker Stockholder believes that FormMaker's offer of payment
for the shares is less than the fair value of his shares and accrued interest
or (b) the Merger is not consummated and FormMaker has not returned the
certificates or released the transfer restrictions within 60 days after the
Demand Due Date, the FormMaker Dissenter may notify FormMaker of his or her
own estimate for the fair value plus accrued interest,

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<PAGE>

and demand payment of such estimate. If a dissenting FormMaker Stockholder
does not notify FormMaker of his or her own estimate within 30 days after
FormMaker's offer, he or she is deemed to have accepted the offer and thus
waives his or her right to demand payment. A FormMaker Stockholder may also
notify FormMaker of his or her own estimate for the fair value of the shares
(and request that FormMaker send the information required in the Dissenters'
Notice) if FormMaker does not offer payment for his or shares within ten days
of (a) the consummation of the Merger or (b) FormMaker's receipt of a payment
demand (whichever is later).

If the Merger is not consummated within 60 days after the Demand Due Date,
FormMaker shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares. If after returning the
certificates and releasing transfer restrictions, FormMaker consummates the
Merger, it must send a new Dissenters' Notice and repeat the payment demand
procedure.

If FormMaker disagrees with the estimate of fair value of the dissenting
FormMaker Stockholder, FormMaker shall commence a proceeding within 60 days
after receiving the payment demand and petition the court to determine the
fair value of the shares and accrued interest. If FormMaker does not commence
the proceeding within the 60 day period, it shall pay each dissenting
FormMaker Stockholder whose demand remains unsettled the amount demanded.

FormMaker has not yet determined whether it will institute a proceeding
seeking a judicial determination of the fair value of the FormMaker Common
Stock in the event that FormMaker and dissenting FormMaker Stockholders do not
agree as to the value of the dissenting stockholders' shares; such
determination will depend, among other considerations, upon the number of
dissenting FormMaker Stockholders with whom such a disagreement exists and the
magnitude of the difference in the parties' respective opinions as to the
value of the dissenting stockholders' shares.

FormMaker, if it chooses to institute an action, shall commence the
proceeding, which shall be a nonjury equitable valuation proceeding, in the
superior court of Fulton County. FormMaker shall make all dissenting FormMaker
Stockholders, whether or not residents of Georgia, whose demands remain
unsettled, parties to the proceeding, which shall have the effect of an action
quasi in rem against their shares. FormMaker shall serve a copy of the
petition in the proceeding upon each dissenting FormMaker Stockholder who is a
resident of Georgia in the manner provided by law for the service of a summons
and complaint, and upon each nonresident FormMaker Stockholder either by
registered or certified mail or by publication, or in any other manner
permitted by law.

The jurisdiction of the court in which the proceeding is commenced is
plenary and exclusive. The court may appoint one or more persons as appraisers
to receive evidence and recommend decision on the question of fair value. Each
dissenting FormMaker Stockholder made a party to the proceeding is entitled to
judgment for the amount which the court finds to be the fair value of shares,
plus interest to the date of judgment.

The court shall determine all costs of the proceeding, including the
reasonable compensation and expenses of appraisers appointed by the court, but
not including fees and expenses of attorneys and experts for the respective
parties. The court shall assess the costs against FormMaker, except that the
court may assess the costs against all or some of the dissenting FormMaker
Stockholders, in amounts the court finds equitable, to the extent the court
finds that the dissenting FormMaker Stockholders acted arbitrarily,
vexatiously, or not in good faith in demanding payment.

The court may also assess the fees and expenses of attorneys and experts for
the respective parties (a) against FormMaker and in favor of any or all
dissenting FormMaker Stockholders if the court finds FormMaker did not
substantially comply with the requirements of the GBCC dissenter's rights
provisions or against either FormMaker or a dissenting FormMaker Stockholder,
in favor of any other party, if the court finds that the party against whom
the fees and expenses are assessed acted arbitrarily, vexatiously, or not in
good faith. If the court finds that the services of attorneys for any
dissenting FormMaker Stockholder were of substantial benefit to other such
dissenters similarly situated, and that the fees for those services should not
be assessed against FormMaker,

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<PAGE>

the court may award to these attorneys reasonable fees to be paid out of the
amounts awarded the dissenting FormMaker Stockholders who were benefited.

No action by any dissenting FormMaker Stockholder to enforce dissenters'
rights shall be brought more than three years after the consummation of the
Merger, regardless of whether notice of the Merger and of the right to dissent
was given by FormMaker in compliance with the provisions of the GBCC.

FormMaker Stockholders considering appraisal rights should consider that the
payment which they eventually receive in exchange for their shares in a
dissenters' rights proceeding under Georgia law could be less than, equal to,
or greater than the eventual market value of the consideration they would
receive as a result of the consummation of the Merger.

Any FormMaker Stockholder who exercises his or her appraisal rights and
receives cash from FormMaker in exchange for his or her shares of FormMaker
Common Stock will recognize taxable gain or loss in an amount equal to the
difference between (a) the sum of cash received from FormMaker and (b) the
basis of the shares of FormMaker Common Stock. Any such gain or loss
recognized would be long-term capital gain or loss if such shares constitute
capital assets in the hands of the FormMaker Dissenter and have been held by
such stockholder for more than one year at the Effective Time.

FORMMAKER STOCKHOLDERS WHO ARE CONSIDERING DISSENTING FROM THE MERGER ARE
URGED TO CONSULT THEIR OWN LEGAL COUNSEL.

DESCRIPTION OF DOCUCORP CAPITAL STOCK

The authorized capital stock of DocuCorp consists of 28,000,000 shares of
DocuCorp Common Stock consisting of 20,000,000 shares of DocuCorp Class A
Common Stock, par value $0.01 per share, and 7,000,000 shares of DocuCorp
Class B Common Stock, par value $0.01 per share, and 1,000,000 shares of
DocuCorp Preferred Stock, par value $0.01 per share. The DocuCorp Class A
Common Stock and the DocuCorp Class B Common Stock are referred to herein
collectively as the "DocuCorp Common Stock." At the Effective Time, there will
be issued and outstanding 4,450,179 shares of DocuCorp Class A Common Stock,
4,700,786 shares of DocuCorp Class B Common Stock and no shares of DocuCorp
Preferred Stock.

DOCUCORP COMMON STOCK

Holders of DocuCorp Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by the stockholders and do not
have cumulative voting rights. The election of directors is determined by a
plurality of the votes cast. Amendments to the DocuCorp Certificate of
Incorporation (the "DocuCorp Certificate") require the approval of the holders
of a majority of the DocuCorp Class A Common Stock and 75% of the DocuCorp
Class B Common Stock. Except as otherwise required by law and as may be
required by the terms of the DocuCorp Preferred Stock, all other matters are
determined by a majority of the votes cast. The holders of DocuCorp Common
Stock are entitled to receive dividends when, as and if declared by the
DocuCorp Board out of funds legally available for the payment thereof, subject
to any preferential dividend rights of outstanding DocuCorp Preferred Stock.
Upon the liquidation, dissolution or winding up of DocuCorp, holders of
DocuCorp Common Stock are entitled to receive ratably the net assets of
DocuCorp available for distribution after preferred distributions, if any, to
the holders of DocuCorp Preferred Stock. The shares of DocuCorp Common Stock
that will be outstanding upon the consummation of the Merger will be, when
issued and paid for, fully paid and nonassessable. The rights, preferences and
privileges of holders of DocuCorp Common Stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of
DocuCorp Preferred Stock which DocuCorp may designate and issue in the future.
See "Risk Factors--Anti-Takeover Provisions" and "--DocuCorp Preferred Stock."

Holders of DocuCorp Common Stock do not have any preemptive or subscription
rights, and holders of DocuCorp Class A Common Stock do not have any
redemption or conversion rights. Holders of issued and

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<PAGE>

outstanding shares of DocuCorp Class B Common Stock will have the option to
have such shares redeemed by following the procedures described in the
following paragraph if DocuCorp does not consummate by January 31, 1998 an
underwritten public offering of securities of DocuCorp in which the managing
underwriter values the equity of DocuCorp immediately prior to the offering at
$62,100,000 or more without taking into account any proceeds to be received
from such offering (a "Qualified Public Offering") until February 1, 1999 at a
price per share of $3.45 (the "Redemption Price"); provided, however, that if
the increase of pro forma combined revenues of Image Sciences and FormMaker
(consolidated with its majority-owned subsidiary, Micro Dynamics, Ltd., a
Delaware Corporation ("Micro Dynamics")) for the twelve month period ending
July 31, 1997 over pro forma combined revenues of such entities for the twelve
months period ending July 31, 1996 exceeds 20%, then the Redemption Price
shall be increased to $4.08 per share. If a Qualified Public Offering occurs
on or prior to February 1, 1999, each issued and outstanding share of DocuCorp
Class B Common Stock will be automatically converted into a share of DocuCorp
Class A Common Stock and all redemption obligations on the part of DocuCorp
with respect to the DocuCorp Class B Common Stock will cease.

If a Qualified Public Offering does not occur by January 31, 1998, DocuCorp
is required to mail to each holder of DocuCorp Class B Common Stock a notice
regarding such holder's right to redeem his or her DocuCorp Class B Common
Stock. DocuCorp will pay the Redemption Price to a holder of shares of
DocuCorp Class B Common Stock, upon receipt of the certificate or certificates
evidencing such shares of DocuCorp Class B Common Stock, within 60 days of
receiving a claim notice (a "Claim Notice") from such holder providing the
following information: (i) such holder's intention to redeem all or a portion
of his or her shares; (ii) the number of shares of DocuCorp Class B Common
Stock owned of record by such holder; (iii) the name and address of the person
to whom the Redemption Price should be mailed; and (iv) the federal tax
identification number of the person receiving payment of the Redemption Price.
The SG/TL Stockholders have agreed in the Liquidity Agreement to subscribe for
a number of shares of DocuCorp Class A Common Stock at the Redemption Price
equal to the number of shares of DocuCorp Class B Common Stock for which a
valid Claim Notice has been received in order to fund the redemption of
DocuCorp Class B Common Stock. See "The Merger and Related Transactions--The
Liquidity Agreement."

DOCUCORP PREFERRED STOCK

DocuCorp has authorized 1,000,000 shares of DocuCorp Preferred Stock which
the DocuCorp Board has discretion to issue in such series and with such
preferences and rights as it may designate without the approval of the holders
of DocuCorp Common Stock. Such preferences and rights may be superior to those
of the holders of DocuCorp Common Stock. For example, the holders of DocuCorp
Preferred Stock may be given a preference in payment upon liquidation of
DocuCorp, or for the payment or accumulation of dividends before any
distributions are made to the holders of DocuCorp Common Stock. As of the date
of this Joint Proxy Statement/ Prospectus, no DocuCorp Preferred Stock has
been designated or issued by DocuCorp, and DocuCorp has no plans, agreements
or understandings for the issuance of DocuCorp Preferred Stock. For a
description of the possible anti-takeover effects of the DocuCorp Preferred
Stock, see "Risk Factors--Anti-Takeover Provisions" and "--Certain Anti-
Takeover Provisions."

LIMITATION ON LIABILITY

The DocuCorp Certificate limits or eliminates the liability of DocuCorp's
directors or officers to DocuCorp or its stockholders for monetary damages to
the fullest extent permitted by the Delaware General Corporation Law, as
amended (the "DGCL"). The DGCL provides that a director of DocuCorp shall not
be personally liable to DocuCorp or its stockholders for monetary damages for
a breach of fiduciary duty as a director, except for liability: (i) for any
breach of such person's duty of loyalty; (ii) for acts or omissions not in
good faith or involving intentional misconduct or a knowing violation of law;
(iii) for the payment of unlawful dividends and certain other actions
prohibited by Delaware corporate law; and (iv) for any transaction resulting
in receipt by such person of an improper personal benefit.

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<PAGE>

DocuCorp intends to apply for directors' and officers' liability insurance
to provide its directors and officers and the directors and officers of
FormMaker and Image Sciences with insurance coverage for losses arising from
claims based on breaches of duty, negligence, error and other wrongful acts to
be effective contemporaneously with the Closing. See "Business of Image
Sciences--Legal Proceedings" for a discussion of pending litigation.

CERTAIN ANTI-TAKEOVER PROVISIONS

The ability of the DocuCorp Board to establish the rights of, and to issue,
substantial amounts of DocuCorp Preferred Stock without the need for
stockholder approval, upon such terms and conditions, and having such rights,
privileges and preferences, as the DocuCorp Board may determine in the
exercise of its business judgment, may, among other things, be used to create
voting impediments with respect to changes in control of DocuCorp or to dilute
the stock ownership of holders of DocuCorp Common Stock seeking to obtain
control of DocuCorp. The rights of the holders of DocuCorp Common Stock will
be subject to, and may be adversely affected by, any DocuCorp Preferred Stock
that may be issued in the future. The issuance of DocuCorp Preferred Stock,
while providing desirable flexibility in connection with possible
acquisitions, financings and other corporate transactions, may have the effect
of discouraging, delaying or preventing a change in control of DocuCorp.
DocuCorp has no present plans to issue any shares of DocuCorp Preferred Stock.
See "Risk Factors--Anti-Takeover Provisions," "--DocuCorp Common Stock" and
"--DocuCorp Preferred Stock."

SECTION 203 OF DELAWARE GENERAL CORPORATION LAW

Section 203 of the DGCL prohibits certain business combinations between a
Delaware corporation and an "interested stockholder," which is defined as a
person who, together with any affiliates or associates of such person,
beneficially owns, directly or indirectly, 15% or more of the outstanding
voting shares of a Delaware corporation. For purposes of Section 203, business
combinations are defined broadly to include mergers, consolidations, sales or
other dispositions of assets having an aggregate value in excess of 10% of the
consolidated assets of the corporation, and certain transactions that would
increase the interested stockholder's proportionate share ownership in the
corporation. Section 203 prohibits any such business combination for a period
of three years commencing on the date the interested stockholder becomes an
interested stockholder, unless: (i) the business combination is approved by
the corporation's board of directors prior to the date the interested
stockholder becomes an interested stockholder; (ii) the interested stockholder
acquired at least 85% of the voting stock of the corporation (other than stock
held by directors who are also officers or by certain employee stock plans) in
the transaction in which it becomes an interested stockholder; or (iii) the
business combination is approved by a majority of the board of directors and
by the affirmative vote of two-thirds of the outstanding voting stock that is
not owned by the interested stockholder. See "Risk Factors--Anti-Takeover
Provisions."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the DocuCorp Common Stock is ,
Dallas, Texas.

COMPARISON OF STOCKHOLDER RIGHTS

At the Effective Time, the stockholders of Image Sciences, a Texas
corporation, and the stockholders of FormMaker, a Georgia corporation, will
become stockholders of DocuCorp, a Delaware corporation, and Delaware law will
govern such stockholders' rights after the Merger, except with respect to
dissenters' rights for the stockholders of Image Sciences and FormMaker in
connection with the Merger, which are governed by Texas law and Georgia law,
respectively, even after the Effective Time. See "The Merger--Dissenters'
Rights." Differences among the DGCL, the TBCA and the GBCC, and among the
DocuCorp Certificate and the DocuCorp Bylaws, Image Sciences's Articles of
Incorporation, as amended, and bylaws, as amended (respectively, the "Image
Sciences Articles" and the "Image Sciences Bylaws"), and FormMaker's Articles
of Incorporation, as amended, and bylaws (respectively, the "FormMaker
Articles" and the "FormMaker Bylaws"), will result in various changes in the
rights of stockholders of Image Sciences and FormMaker.

37
<PAGE>

The following is a summary of material differences between the rights of
stockholders of DocuCorp under Delaware law and the DocuCorp Certificate and
DocuCorp Bylaws, as compared with those of stockholders of Image Sciences
under Texas law and the Image Sciences Articles and Image Sciences Bylaws, and
the stockholders of FormMaker under Georgia law and the FormMaker Articles and
FormMaker Bylaws. This summary does not purport to be a complete description
of the provisions discussed and is qualified in its entirety by the DGCL,
TBCA, GBCC, DocuCorp Certificate, DocuCorp Bylaws, Image Sciences Articles,
Image Sciences Bylaws, FormMaker Articles and FormMaker Bylaws, to which the
stockholders of Image Sciences and FormMaker are referred.

REMOVAL OF DIRECTORS

Under the DGCL, directors generally may be removed, with or without cause,
by a vote of the holders of a majority of the shares then entitled to vote at
an election of directors. Under the DocuCorp Bylaws, directors generally may
be removed, with or without cause, by a vote of the holders of a majority of
the shares then entitled to vote at an election of directors. See "Management
of DocuCorp--Certain Relationships and Related Transactions." Under the TBCA,
a Texas corporation may provide in its articles of incorporation or bylaws
that directors may be removed with or without cause in accordance with the
provisions of the bylaws or articles of incorporation. The Image Sciences
Bylaws provide that directors may be removed with or without cause by a vote
of the holders of the majority of shares then entitled to vote at an election
of directors at any annual or special meeting called for such purpose. Under
the GBCC, stockholders may remove directors with or without cause unless the
articles of incorporation or a bylaw adopted by the stockholders provide that
directors may be removed only for cause. The FormMaker Articles and FormMaker
Bylaws are silent with respect to the removal of directors.

CALL OF SPECIAL STOCKHOLDER MEETINGS

Stockholders of a Delaware corporation do not have a right to call special
meetings unless it is conferred in the corporation's certificate of
incorporation or bylaws. The DGCL provides that special meetings of
stockholders may be called by the board of directors or by a person authorized
by the certificate of incorporation or bylaws. The DocuCorp Bylaws provide
that special stockholder meetings may be called by the chairman of the board,
a majority of the directors, the president or at the written request of
stockholders owning a majority of the amount of the entire capital stock of
the corporation issued and outstanding and entitled to vote. Under the TBCA,
special meetings of stockholders may be called by the president, the board of
directors, a person authorized by the articles of incorporation or bylaws, or
by holders of not less than 10% of all the shares entitled to vote, unless the
articles of incorporation provide otherwise, but in no event may the articles
of incorporation require a number of shares greater than 50% to call a special
meeting. The Image Sciences Bylaws provide that a special meeting may be
called at any time by the chief executive officer or the Board of Directors,
and shall be called by the chief executive officer at the request in writing
by holders of not less than 10% of all the shares entitled to vote. Under the
GBCC, a special meeting may be called by the board of directors, by a person
authorized to do so by the articles of incorporation or bylaws, or by the
holders of at least 25%, or such lesser percentage as may be provided in the
articles of incorporation or bylaws, of all the votes entitled to be cast at
the special meeting. The FormMaker Bylaws provide that a special meeting of
the stockholders may be called by the president or by the directors, and shall
be called by the president at the request of the holders of not less than 25%
of all the outstanding shares entitled to vote at the meeting.

DISSENTERS' RIGHTS

The DGCL generally entitles a stockholder to exercise its appraisal rights
upon a merger or consolidation of the corporation effected pursuant to the
DGCL if the holder complies with the requirements of Section 262 thereof. The
DGCL, however, does not provide appraisal rights for stockholders of a
corporation that engages in (a) a merger or consolidation of the corporation
if the stock of the Delaware corporation is listed on a national securities
exchange or designated as a Nasdaq National Market security, or held of record
by more than 2,000 stockholders; (b) a merger in which a Delaware corporation
is the surviving corporation, if (i) the merger

38
<PAGE>

agreement does not amend the surviving corporation's certificate of
incorporation, (ii) each share of stock of the surviving corporation
outstanding immediately prior to the effective date of the merger is to be an
identical outstanding share of the surviving corporation after the merger, and
(iii) the increase in the outstanding shares as a result of the merger does
not exceed 20% of the shares of common stock of the surviving corporation
outstanding immediately prior to the effective date of the merger; or (c) a
merger or consolidation where the stockholders are required to accept (i)
shares of the corporation surviving or resulting from the merger or
consolidation, (ii) shares of stock of any other corporation which at the
effective date of the merger or consolidation will be listed on a national
securities exchange or designated as a Nasdaq National Market security, or
held of record by more than 2,000 stockholders, (iii) cash in lieu of
fractional shares, or (iv) any combination of shares of stock and cash in lieu
of fractional shares.

The TBCA generally entitles a stockholder to exercise its appraisal rights
upon a merger of the corporation (except for the limited classes of mergers
for which no stockholder approval is required, and as set forth hereunder),
the sale, lease, exchange or other disposition of all, or substantially all,
the property and assets of the corporation, or a share exchange in which the
shares of the stockholder are to be acquired, if the stockholder complies with
the requirements of Articles 5.12 and 5.13 thereof. The TBCA, however, does
not provide appraisal rights for stockholders with respect to any plan of
merger in which there is a single surviving or new domestic or foreign
corporation, or from any plan of exchange, if (a) the shares held by the
stockholder are part of a class of shares which are listed on a national
securities exchange, or held by not less than 2,000 stockholders and (b) the
stockholder is not required by the terms of the plan of merger or exchange to
accept for such stockholder's shares any consideration other than (i) shares
of a corporation that, immediately after the merger or exchange, will be part
of a class or series of shares which are listed, or authorized for listing, on
a national securities exchange, or held of record by not less than 2,000
stockholders, and (ii) cash in lieu of fractional shares otherwise entitled to
be received.

If a stockholder complies with the requirements of Article 13 of the GBCC,
the statute generally entitles the stockholder to exercise its appraisal
rights upon a merger of the corporation (if stockholder approval is required
or if the corporation is a subsidiary that is merged with its parent), the
acquisition of the corporation pursuant to a share exchange (if the
stockholder is entitled to vote on the plan of exchange), the sale or exchange
of all or substantially all of the property of the corporation (if stockholder
approval is required), an amendment of the articles or incorporation that
materially and adversely affects rights in respect of a dissenter's shares in
ways specified in the GBCC, and any corporate action taken pursuant to a
stockholder vote to the extent that the statute, articles of incorporation,
bylaws or resolution of the board of directors provide that voting or
nonvoting stockholders are entitled to dissent and obtain payment for their
shares. The GBCC, however, does not provide appraisal rights for holders of
shares of any class or series which were either listed on a national
securities exchange or held by more than 2,000 stockholders, unless (a) in the
case of a merger or share exchange, the holders of shares of the class or
series are required under the merger or share exchange to accept for their
shares anything other than (i) shares of the surviving corporation or another
publicly held corporation which are either listed on a national securities
exchange or held by more than 2,000 stockholders, or (ii) cash in lieu of
fractional shares, or (b) the articles of incorporation or a resolution of the
board of directors approving the transaction provide otherwise.

DIVIDENDS AND DISTRIBUTIONS

The DGCL provides that a corporation may declare and pay dividends out of
surplus (defined as the excess, if any, of net assets over stated capital) or,
when no surplus exists, out of net profits for the fiscal year in which the
dividend is declared and/or the preceding fiscal year. Dividends may not be
paid out of net profits if the stated capital of the corporation is less than
the amount of stated capital represented by the issued and outstanding stock
of all classes having a preference upon the distribution of assets.

The TBCA provides that distributions may not be made if after giving effect
to the distribution the corporation would be insolvent or the distribution
exceeds the surplus (defined as the excess, if any, of net assets over stated
capital) of the corporation.

39
<PAGE>

The GBCC provides that distributions may not be made if, after giving effect
to the distribution, the corporation would not be able to pay its debts as
they become due in the usual course of business, or if the corporation's total
assets would be less than the sum of its total liabilities plus (unless the
articles of incorporation permit otherwise) the amount that would be needed,
if the corporation were to be dissolved at the time of distribution, to
satisfy the preferential rights upon dissolution of stockholders whose
preferential rights are superior to those receiving the distribution.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The DGCL, the TBCA and the GBCC have similar provisions for indemnification
of directors and officers except with respect to the areas discussed herein.
Under the DGCL, if a director or officer is adjudged to be liable to the
corporation, the person is not entitled to indemnification unless the court of
chancery or the court in which the action was brought determines that, despite
the adjudication of liability, the person is fairly and reasonably entitled to
indemnity for expenses the court deems proper. Under the TBCA, if a director
or officer is found liable to the corporation or is found liable on the basis
that personal benefit was improperly received by the person, the
indemnification is limited to reasonable expenses actually incurred and shall
not be made if the person is found liable for wilful or intentional
misconduct, unless a court orders that the person is entitled to indemnity,
but the indemnification is limited to reasonable expenses actually incurred.
Under the GBCC, a corporation may not indemnify a director or officer who is
adjudicated liable to the corporation or adjudicated liable on the basis that
personal benefit was improperly received, unless a court orders that the
director or officer is entitled to indemnity, but the indemnification is
limited to reasonable expenses actually incurred.

The DGCL, the GBCC and the TBCA provide that expenses incurred in defending
any action or proceeding may be paid by the corporation in advance of the
final disposition upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined that
the director or officer is not entitled to be indemnified by the corporation.
The GBCC and the TBCA also require a written affirmation of good faith belief
that the director or officer has met the standard of conduct necessary for
indemnification.

AMENDMENT TO CERTIFICATE OF INCORPORATION

The DGCL and the GBCC require the approval of the holders of a majority of
the outstanding stock entitled to vote for any amendment to the certificate of
incorporation, unless such level of approval is increased by the certificate
of incorporation. The DocuCorp Certificate provides that approval of the
holders of a majority of the outstanding DocuCorp Class A Common Stock and 75%
of the outstanding DocuCorp Class B Common Stock is required to amend the
DocuCorp Certificate. The TBCA requires the affirmative vote of the holders of
at least two-thirds of the outstanding shares entitled to vote thereon for any
amendment to the articles of incorporation, unless such level is decreased by
the articles of incorporation. The Image Sciences Articles do not decrease
such level. The FormMaker Articles and the FormMaker Bylaws are silent with
respect to amendments to the FormMaker Articles.

VOTE REQUIRED FOR EXTRAORDINARY CORPORATE TRANSACTIONS

Under the DGCL, a merger, consolidation, dissolution or sale or other
disposition of substantially all of a corporation's assets must be approved by
the affirmative vote of the holders of a majority of the outstanding stock
entitled to vote thereon. Additionally, the DGCL provides that no vote of the
stockholders of the surviving corporation is required, unless the certificate
of incorporation provides otherwise, to approve a merger if (a) the agreement
of merger does not amend in any respect the corporation's certificate of
incorporation; (b) each share of the corporation's stock outstanding
immediately prior to the merger is to be an identical outstanding or treasury
share of the surviving corporation after the merger; and (c) either (i) no
shares of common stock of the surviving corporation and no shares, securities
or obligations convertible into such stock are to be issuable as a result of
the merger or (ii) the increase in the outstanding shares as a result of the
merger does not exceed 20% of the shares of common stock of the surviving
corporation outstanding immediately prior to the effective date of the merger.
The DocuCorp Certificate and DocuCorp Bylaws do not alter these requirements.

40
<PAGE>

Under the TBCA, a merger or exchange requires the approval of two-thirds of
the shares entitled to vote (unless the board of directors requires a greater
vote) of each constituent corporation, unless the certificate of incorporation
provides otherwise, except if the domestic corporation meets the following
requirements: (a) the corporation will be the sole surviving corporation in
the merger; (b) the articles of incorporation will remain unchanged after the
merger; (c) each stockholder will hold the same number of shares, with
identical designations, preferences, limitations and relative rights,
immediately after the merger; (d) the voting power of outstanding voting
shares immediately after the merger plus the voting power of the total number
of voting shares issuable as a result of the merger will not exceed by more
than 20% of the voting power of the total number of voting shares outstanding
before the merger; (e) the number of outstanding participating shares
immediately after the merger plus the number of participating shares issuable
as a result of the merger will not exceed by more than 20% the total number of
participating shares outstanding before the merger; and (f) the board of
directors adopts a resolution approving the plan of merger. A dissolution or a
sale, lease, exchange or other disposition of substantially all of the
corporation's assets if not made in the usual and regular course of business
also requires stockholder approval. Such a transaction is in the usual and
ordinary course of business if the corporation shall, directly or indirectly,
either continue to engage in one or more businesses or apply the consideration
received in connection with the transaction to the conduct of a business in
which it engages following the transaction. Under the TBCA, the approval of a
dissolution or the sale of substantially all of the corporation's assets also
requires the affirmative vote of at least two-thirds of the outstanding shares
entitled to vote thereon. The Image Sciences Articles and Image Sciences
Bylaws do not alter these requirements.

Under the GBCC, a merger or exchange requires the approval of a majority of
the shares entitled to vote, voting as a single group. Stockholders of the
surviving corporation need not approve a merger if (i) the articles of
incorporation of the surviving corporation will not differ from its articles
before the merger, (ii) each stockholder of the surviving corporation whose
shares were outstanding immediately before the effective date of the merger
will hold the same number and type of shares immediately after the merger, and
(iii) the number and kind of shares outstanding immediately after the merger,
plus the number and kind of shares issuable as a result of the merger, do not
exceed the total number and kind of shares of the surviving corporation
authorized by its articles of incorporation immediately before the merger. The
FormMaker Articles and FormMaker Bylaws do not alter the requirements.

CLASS VOTING

Under the DGCL and the DocuCorp Certificate, class voting is not required in
connection with amendments to the certificate of incorporation or a merger or
consolidation, except in the case of an amendment of a corporation's
certificate of incorporation which adversely affects a class of shares. Under
the TBCA and GBCC, class voting is required in connection with certain
amendments to a corporation's articles of incorporation, a merger or
consolidation if the plan of merger or consolidation contains any provision
which, if contained in a proposed amendment to a corporation's articles of
incorporation, would require class voting, or certain sales of all or
substantially all of a corporation's assets.

INTERESTED STOCKHOLDER TRANSACTIONS

The DGCL prohibits a "business combination" between the corporation and an
"interested stockholder" within three years of the stockholder becoming an
"interested stockholder." An "interested stockholder" is one who, directly or
indirectly, controls 15% or more of the outstanding voting stock of a
corporation. A "business combination" includes a merger, consolidation, sale
or other disposition of assets having an aggregate value equal to or greater
than 10% of the consolidated assets of the corporation or the aggregate market
value of the outstanding stock of the corporation, and certain transactions
that would increase the interested stockholder's proportionate share ownership
in the corporation. This provision does not apply where (a) the business
combination is approved by the corporation's board of directors prior to the
date the interested stockholder acquired its shares; (b) the interested
stockholder acquired at least 85% of the outstanding voting stock of the
corporation in the transaction in which the stockholder became an interested
stockholder excluding, for determining the number of shares outstanding,
shares held by persons who are directors and also officers and by

41
<PAGE>

employee stock plans in which participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer; (c) the business combination is approved by the
board of directors and the affirmative vote of 66 2/3% of the outstanding
stock entitled to be voted by disinterested stockholders at an annual or
special meeting; (d) the corporation does not have a class of voting stock
that is listed on a national securities exchange, authorized for quotation on
an inter-dealer quotation system of a registered national securities
association, or held by more than 2,000 stockholders unless any of the
foregoing results from action taken, directly or indirectly, by an interested
stockholder; (e) the stockholder became an interested stockholder
inadvertently and (i) as soon as practicable divested itself of ownership of
sufficient shares so that the stockholder ceases to be an interested
stockholder and (ii) would not, at any time within the three- year period
immediately prior to a business combination, have been an interested
stockholder but for the inadvertent acquisition of ownership; or (f) the
corporation has opted out of this provision.

The TBCA has no similar statute currently existing and the Image Sciences
Articles do not contain business combination provisions.

The GBCC prohibits a "business combination" between the corporation and an
"interested stockholder" within five years of the time that such stockholder
became an "interested stockholder." An "interested stockholder" is one which
owns 10% or more of the voting power of the outstanding voting stock of the
corporation, or one which is an affiliate of the corporation and, at any time
within the two-year period immediately prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the then outstanding
voting stock of the corporation. A "business combination" includes a merger,
consolidation or sale, lease, transfer or other disposition, other than in the
ordinary course of business, of 10% or more of the corporation's net assets.
This provision does not apply where (a) the business combination is approved
by the board of directors prior to the time that the stockholder became an
interested stockholder; (b) the interested stockholder became the beneficial
owner of at least 90% of the voting stock of the corporation in the
transaction in which the stockholder became an interested stockholder,
excluding for purposes of determining the number of shares outstanding those
shares owned by (i) directors, officers, their affiliates or associates, (ii)
subsidiaries of the corporation, and (iii) any employee stock plan under which
participants do not have the right to determine confidentially the extent to
which the shares held under such plan will be tendered in a tender or exchange
offer; (c) the stockholder became an interested stockholder inadvertently and
(i) as soon as practicable, divested sufficient shares so that the stockholder
ceased to be an interested stockholder and (ii) would not, at any time within
the five-year period immediately prior to the business combination, have been
an interested stockholder but for the inadvertent acquisition; or (d)
subsequent to becoming an interested stockholder, such stockholder acquired
additional shares resulting in the interested stockholder being the beneficial
owner of at least 90% of the outstanding voting stock of the corporation, and
the business combination was approved at a meeting of the stockholders by the
holders of a majority of the voting stock entitled to vote thereon. Those
shares owned by (i) directors, officers, their affiliates or associates; (ii)
subsidiaries of the corporation; and (iii) any employee stock plan under which
participants do not have the right to determine confidentially the extent to
which the shares held under such plan will be tendered in a tender or exchange
offer, shall be excluded for purposes of determining the number of shares
outstanding when calculating the interested stockholder's 90%, and when
calculating the number of votes at the meeting approving the business
combination. This statute applies only to corporations who have adopted a
bylaw expressly providing for the statute's applicability. FormMaker has not
adopted such a bylaw.

DIRECTOR LIABILITY

The DGCL, the Texas Miscellaneous Corporation Laws Act and the GBCC provide
that a corporation may include in its certificate or articles of incorporation
a provision which limits or eliminates the liability of directors to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided such liability does not arise from certain
proscribed conduct, including intentional misconduct and breach of the duty of
loyalty.

The DocuCorp Certificate, Image Sciences Articles and the FormMaker Articles
provide that the liability of directors shall be eliminated or limited to the
fullest extent permitted by Delaware, Texas and Georgia law, respectively,
including any changes in the law after adoption of the certificate or
articles.

42
<PAGE>

MARKET PRICE OF AND DIVIDENDS ON DOCUCORP COMMON STOCK
AND RELATED STOCKHOLDER MATTERS

MARKET PRICE

There has not been, and following the consummation of the Merger, there will
not be, an established public trading market for the DocuCorp Common Stock.

At the Effective Time, the directors, executive officers and holders of 5%
or more of the DocuCorp Common Stock will own approximately 78% of the then
outstanding shares of DocuCorp Common Stock (71% on a fully diluted basis).
See "Principal Stockholders of DocuCorp."

It is anticipated that there will be approximately 200 beneficial holders of
record of DocuCorp Common Stock at the Effective Time.

DIVIDEND POLICY

DocuCorp does not anticipate paying any cash dividends in the foreseeable
future. DocuCorp currently intends to retain future earnings to finance
operations and the expansion of its business. Any future determination to pay
cash dividends will be at the discretion of the DocuCorp Board and will be
dependent upon DocuCorp's financial condition, operating results, capital
requirements and such other factors as the DocuCorp Board deems relevant.
Further, the terms of the revolving credit line that DocuCorp intends to
obtain contemporaneously with or shortly after the consummation of the Merger
may include, restrictions on the ability of DocuCorp to pay dividends. See
"Risk Factors--Absence of Dividends."

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<PAGE>

SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

DocuCorp is a holding company organized in 1997 in connection with the
acquisition of FormMaker by Image Sciences. For historical accounting
purposes, Image Sciences will be considered the survivor in the Merger and no
purchase accounting is required related to the conversion of Image Sciences
Common Stock and Image Sciences Preferred Stock into DocuCorp stock. The
merger of FormMaker into a wholly-owned subsidiary of DocuCorp will be treated
as an acquisition of FormMaker by Image Sciences; accordingly this transaction
will be recorded under the purchase method of accounting. The selected
unaudited pro forma combined financial data of DocuCorp reflect the
acquisition of FormMaker by Image Sciences and the effect of the Image
Sciences tender offer and preferred stock dividend. The unaudited pro forma
combined income statement data of DocuCorp for and as of the year ended July
31, 1996 has been derived from the audited financial statements of Image
Sciences and the unaudited financial statements of FormMaker. The unaudited
pro forma combined statements of operations and balance sheet data of DocuCorp
as of and for the six months ended January 31, 1997 has been derived from the
unaudited financial statements of each of Image Sciences and FormMaker, which
in the opinion of management of Image Sciences and FormMaker, respectively,
reflect all adjustments (consisting only of normal recurring adjustments) that
are necessary for a fair presentation of the results for such periods.

The selected unaudited pro forma combined financial data do not give effect
to any cost savings that may result from the Merger. During the periods
presented, Image Sciences and FormMaker were not under common control or
management and, as a result, the selected unaudited pro forma combined
financial data are not necessarily indicative of or comparable to the
financial position or operating results that would have occurred had the
Merger occurred as of or at the beginning of the periods presented or that
will occur following the Merger. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations of Image Sciences," "Selected
Financial Data of Image Sciences," "Selected Financial Data of FormMaker,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of FormMaker," and the related unaudited pro forma combined
financial statements of DocuCorp, and the notes thereto, and the audited and
unaudited financial statements of each of Image Sciences and FormMaker, and
the notes thereto, appearing elsewhere in this Joint Proxy
Statement/Prospectus.

44
<PAGE>

DOCUCORP, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED JULY 31, 1996
-------------------------------------------------------------------
HISTORICAL PRO FORMA
----------------------- ------------------------------------------
CLOSING
IMAGE TRANSACTIONS MERGER
SCIENCES FORMMAKER ADJUSTMENTS ADJUSTMENTS COMBINED
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Professional
services............. $ 819,034 $11,377,585 $12,196,619
License............... 4,793,031 3,634,386 8,427,417
Maintenance and other
recurring............ 5,858,256 1,433,572 7,291,828
----------- ----------- -----------
TOTAL REVENUES...... 11,470,321 16,445,543 27,915,864
----------- ----------- -----------
EXPENSES
Professional
services............. 605,504 9,880,459 10,485,963
Product development
and support.......... 3,981,156 1,577,796 $ 32,781 (G) 5,591,733
Selling and
marketing............ 1,568,129 2,258,007 3,826,136
General and
administrative....... 1,899,156 4,355,796 521,534 (I) 6,776,486
----------- ----------- --------- -----------
Total expenses...... 8,053,945 18,072,058 554,315 26,680,318
----------- ----------- --------- -----------
Operating income
(loss)............. 3,416,376 (1,626,515) (554,315) 1,235,546
Other income (expense).. 239,904 (308,163) $(333,906)(J) (402,165)
----------- ----------- --------- --------- -----------
Income (loss) before
income taxes....... 3,656,280 (1,934,678) (333,906) (554,315) 833,381
Provision for income
taxes.................. 1,335,000 (412,193) (120,000)(L) (420,000)(K) 382,807
----------- ----------- --------- --------- -----------
Net income (loss)... $ 2,321,280 $(1,522,485) $(213,906) $(134,315) $ 450,574
=========== =========== ========= ========= ===========
Net income per share of
common stock........... $ 0.43 $ 0.04
=========== ===========
Weighted average number
of shares of common
stock and common stock
equivalents used in
calculating earnings
per share.............. 5,468,941 11,101,773
=========== ===========
</TABLE>

See accompanying notes to unaudited pro forma combined financial data.

45
<PAGE>

DOCUCORP, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED JANUARY 31, 1997
------------------------------------------------------------------
HISTORICAL PRO FORMA
---------------------- ------------------------------------------
CLOSING
IMAGE TRANSACTIONS MERGER
SCIENCES FORMMAKER ADJUSTMENTS ADJUSTMENTS COMBINED
---------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Professional
services............. $ 371,656 $ 9,085,289 $ 9,456,945
License............... 2,042,849 2,418,735 4,461,584
Maintenance and other
recurring............ 3,210,650 1,240,361 4,451,011
---------- ----------- -----------
TOTAL REVENUES...... 5,625,155 12,744,385 18,369,540
---------- ----------- -----------
EXPENSES
Professional
services............. 281,775 7,338,294 7,620,069
Product development
and support.......... 2,031,316 1,431,603 $(254,178)(G) 3,208,741
Selling and
marketing............ 792,599 2,085,578 2,878,177
General and
administrative....... 1,079,291 2,391,880 83,587 (I) 3,554,758
---------- ----------- --------- -----------
Total expenses...... 4,184,981 13,247,355 (170,591) 17,261,745
---------- ----------- --------- -----------
Operating income.... 1,440,174 (502,970) 170,591 1,107,795
Other income (expense).. 205,739 (310,314) $(207,449)(J) (312,024)
---------- ----------- --------- --------- -----------
Income (loss) before
income taxes....... 1,645,913 (813,284) (207,449) 170,591 795,771
Provision for income
taxes.................. 601,000 0 (80,000)(K) (211,000)(K) 310,000
---------- ----------- --------- --------- -----------
Net income (loss)... $1,044,913 $ (813,284) $(127,449) $ 381,591 $ 485,771
========== =========== ========= ========= ===========
Net income per share of
common stock........... $ 0.19 $ 0.04
========== ===========
Weighted average number
of shares of common
stock and common stock
equivalents
used in calculating
earnings
per share.............. 5,415,683 11,101,773
========== ===========
</TABLE>

See accompanying notes to unaudited pro forma combined financial data.

46
<PAGE>

DOCUCORP, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
JANUARY 31, 1997
-------------------------------------------------------------------------
HISTORICAL PRO FORMA
-------------------------- ---------------------------------------------
CLOSING
TRANSACTIONS MERGER
IMAGE SCIENCES FORMMAKER ADJUSTMENTS ADJUSTMENTS COMBINED
-------------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash
equivalents........... $ 6,531,562 $ 112,904 $(5,025,118)(A) $ 6,100 (M) $ 1,625,448
Short-term
investments........... 2,974,882 0 (2,974,882)(A) 0
Accounts receivable,
net of allowance...... 2,920,265 5,260,812 8,181,077
Current portion of
deferred taxes........ 299,367 0 299,367
Other current assets... 180,296 551,724 1,050,000 (A) 1,782,020
----------- ----------- ----------- ----------- -----------
Total current
assets.............. 12,906,372 5,925,440 (6,950,000) 6,100 11,887,912
Fixed assets, net of
accumulated
depreciation........... 774,722 2,528,153 3,302,875
Software, net of
amortization........... 1,845,904 4,994,807 205,193 (G) 7,045,904
Deferred taxes.......... 0 420,000 1,950,000 (C) 2,370,000
Goodwill................ 0 3,865,362 2,283,630 (I) 6,148,992
Other assets............ 16,209 75,813 92,022
----------- ----------- ----------- ----------- -----------
$15,543,207 $17,809,575 $(6,950,000) $ 4,444,923 $30,847,705
=========== =========== =========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable....... $ 162,831 $ 1,721,661 $ 150,000 (H) $ 2,034,492
Accrued liabilities.... 704,760 1,617,864 2,322,624
Income taxes payable... 178,516 329,516 508,032
Current portion of
notes payable......... 0 6,876,384 6,876,384
Current portion of
obligations under
capital leases........ 0 597,365 597,365
Deferred revenue....... 4,832,356 907,080 5,739,436
----------- ----------- ----------- ----------- -----------
Total current
liabilities......... 5,878,463 12,049,870 150,000 18,078,333
Obligations under
capital leases......... 0 219,157 219,157
Deferred taxes.......... 557,969 0 500,000 (G) 1,057,969
Other long term
liabilities............ 0 950,546 950,546
Common Stock--Class B 0 0 19,179,207 (B) 19,179,207
Stockholders' equity
Preferred stock........ 196,343 0 (196,343)(B) 0
Common stock--Class
A..................... 23,351 62,295 $ (4,779)(A) (18,572)(B) 44,502
44,502 (D)
(62,295)(E)
Additional paid-in
capital............... 1,345,764 7,312,427 (2,384,476)(A) (18,964,292)(B) 5,158,594
5,200,000 (C)
19,955,498 (D)
(7,312,427)(E)
6,100 (M)
Retained earnings
(deficit)............. 7,541,317 (2,713,545) (4,560,745)(A) (3,250,000)(C) (13,769,428)
2,713,545 (E)
(13,500,000)(F)
Notes receivable--
stockholders.......... 0 (71,175) (71,175)
----------- ----------- ----------- ----------- -----------
Total stockholders'
equity.............. 9,106,775 4,590,002 (6,950,000) (15,384,284) (8,637,507)
----------- ----------- ----------- ----------- -----------
$15,543,207 $17,809,575 $(6,950,000) $ 4,444,923 $30,847,705
=========== =========== =========== =========== ===========
</TABLE>

See accompanying notes to unaudited pro forma financial data.

47
<PAGE>

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

DocuCorp was organized on January 13, 1997 as a holding company in
connection with the acquisition of FormMaker by Image Sciences. For historical
accounting purposes, Image Sciences will be considered the survivor in the
Merger and no purchase accounting is required related to the conversion of
Image Sciences Common Stock and Image Sciences Preferred Stock into DocuCorp
Common Stock. The merger of FormMaker into a wholly-owned subsidiary of
DocuCorp will be treated as an acquisition of FormMaker by Image Sciences;
accordingly this transaction will be recorded under the purchase method of
accounting. DocuCorp's business will be conducted through Image Sciences and
FormMaker. The following brief descriptive financial information for DocuCorp
assumes the businesses of Image Sciences and FormMaker have been combined.

The following is a summary of the purchase price and the allocation of the
purchase price to the net assets to be acquired as a result of the Merger:

<TABLE>
<S> <C>
Purchase Price:
Fair value of shares of FormMaker Common Stock.................. $20,000,000
Estimated transaction costs..................................... 150,000
Assumed liabilities............................................. 13,719,573
-----------
Total purchase price.......................................... $33,869,573
===========
Allocation of the Purchase Price:
Current Assets.................................................. $ 5,925,440
Property and equipment.......................................... 2,528,153
Purchased technology............................................ 5,200,000
Goodwill and other intangible assets............................ 6,644,805
In-process technology........................................... 13,500,000
Notes receivable from stockholders.............................. 71,175
-----------
$33,869,573
===========
</TABLE>

In accordance with the provisions of APB Nos. 16 and 17, all identifiable
assets acquired, including identifiable intangible assets, were assigned a
portion of the cost of the acquired enterprise on the basis of their fair
values. Specifically, purchased in-process research and development was valued
using its expected income generating ability, target markets and associated
risks. In accordance with Interpretation 4 of SFAS No. 2, the projects were
evaluated individually to determine if technological feasibility had been
achieved and if there were any alternative future uses.

The periods presented represent Image Sciences fiscal year ended July 31,
1996 and six month period ended January 31, 1997. FormMaker's fiscal year end
is December 31. For purposes of pro forma presentation, FormMaker's historical
results have been accumulated based on the 12 month period ended July 31, 1996
and the six month period ended January 31, 1997.

Pro forma adjustments to pro forma combined financial statements:

(a) The pro forma combined balance sheet reflects the acquisition of
FormMaker as if the Merger and Image Sciences Tender Offer and Image
Sciences Preferred Stock Dividend had occurred on January 31, 1997. Pro
forma adjustments related to the tender offer and preferred stock dividend
transactions have been reflected as Closing Transactions Adjustments. Pro
forma adjustments related to the merger transactions have been reflected as
Merger Adjustments. The pro forma adjustment to reflect the excess of the
purchase price over the estimated fair value of the identifiable assets of
FormMaker has been recorded as goodwill. The ultimate allocation of the
purchase price to the assets acquired is subject to change based on the
final determination of their respective fair values.

48
<PAGE>

(b) The pro forma combined statements of operations have been prepared
assuming the acquisition of FormMaker occurred on August 1, 1995. Pro forma
adjustments to the pro forma statements of operations do not give effect to
(i) an anticipated charge for in-process technology, which is non-
deductible for tax purposes and which is expected to be charged to the
operations upon consummation of the Merger, or (ii) compensation expense
related to the repurchase of options to purchase Image Sciences Common
Stock discussed in Note A and compensation expense related to the creation
of a new measurement date for outstanding options to purchase Image
Sciences Common Stock deemed to be converted to options to purchase
DocuCorp Class B Common Stock at consummation of the Merger. The
anticipated charges described above are currently expected to amount to
$13,500,000 and $5,000,000 (net of the resulting income tax benefit)
respectively. The allocation of the purchase price to the fair value of the
in-process technology related to FormMaker is subject to change based on
the final determination of the fair values of the assets of FormMaker.

The following pro forma adjustments are reflected in the unaudited pro forma
combined financial statements.

(A) To record cash payments totaling $8,000,000, and the associated tax
benefit, related to (i) the repurchase of approximately 477,851 shares of
Image Sciences Common Stock, and options to purchase 506,607 shares of
Common Stock, at a price of $5 per share, and (ii) the declaration and
payment of a dividend to the Image Sciences Preferred Stock holder in the
amount of $2,807,709. Such payments have been recorded as a reduction in
cash and cash equivalents of $5,025,118 and short-term investments of
$2,974,882. A compensation charge of $1,753,036, after the associated tax
benefit of $1,050,000, has been recorded to retained earnings in
conjunction with the repurchase of the options to purchase 506,607 shares
of Image Sciences Common Stock. The resulting charge to retained earnings
of $4,560,745 represents the preferred stock dividend of $2,807,709 and the
net compensation charge related to repurchase of outstanding options of
$1,753,036. The associated tax benefit, created upon the repurchase of
options to purchase Image Sciences Common Stock, has been recorded as an
income tax receivable under other assets.

(B) To record the issuance in the Merger of an estimated 4,700,786 shares
of DocuCorp Class B Common Stock in exchange for outstanding Image Sciences
Common Stock and Image Sciences Preferred Stock.

(C) To record estimated compensation expense, and associated deferred tax
asset, related to the estimated fair value of the options to purchase
DocuCorp Class B Common Stock deemed to be exchanged for the outstanding
vested options to purchase Image Sciences Common Stock as a result of the
creation of a new measurement date. A new measurement date results because
holders of vested options will receive the right to purchase DocuCorp Class
B Common Stock, which is redeemable at specified prices if an initial
public offering is not consummated. The pro forma combined statements of
operations does not give effect to this adjustment, which is expected to be
charged to operations upon consummation of the Merger. If this charge was
reflected as if the Merger had been consummated on August 1, 1995, the pro
forma combined net income per common share for the year ended July 31, 1996
would be reduced by $0.29. Unvested Image Sciences Options will be
converted into options to purchase DocuCorp Class A Common Stock of
DocuCorp. No new measurement date results from the conversion of these
options as the holder is in the same economic position after the conversion
with no additional rights. Accordingly, no compensation expense will result
from the conversion of unvested Image Sciences Options.

(D) To record the issuance in the Merger of 4,450,179 shares of DocuCorp
Class A Common Stock in exchange for outstanding FormMaker Common Stock.

(E) To eliminate FormMaker's stockholders' equity.

(F) To record the impact to retained earnings of the charge for acquired
in-process technology of $13,500,000. The pro forma combined statements of
operations do not give effect to this adjustment, which is expected to be
charged to operations upon consummation of the Merger. If this charge was
reflected as if the Merger had been consummated on August 1, 1995, the pro
forma combined net income per common share for the year ended July 31, 1996
would be reduced by $1.22. The acquired in-process

49
<PAGE>

technology charge is based on a valuation analysis of technologies related
to FormMaker's document automation platform and Micro Dynamics' multi-user
archival and retrieval system. The in-process development projects acquired
primarily relate to developing substantial version enhancements to
FormMaker's existing software products and tools. The Company believes the
development efforts required to complete these projects into commercially
viable products will be principally comprised of internally staffed
software engineering efforts, with targeted completion dates ranging from
six months to two years from the date of the FormMaker transaction. Total
costs are estimated to be approximately $8 million and will be incurred
over the next two years.

(G) To record the estimated fair value of acquired completed technology
of $5,200,000, less the amount currently recorded in the financial
statements, the related deferred tax liability, and to adjust amortization
expense over the remaining estimated useful life of six (6) years.

(H) To record estimated direct transaction costs related to the merger.

(I) To record the excess of the purchase price over the fair value of the
identifiable assets acquired as goodwill, and to adjust amortization of
goodwill over the remaining expected period of benefit of ten (10) years.

(J) To record reduced interest income resulting from the Image Sciences'
Closing Transactions made in connection with the Merger.

(K) To record the income tax effect associated with Notes G and I above
and the income tax effect of combined operations for the entire period
presented.

(L) To record the income tax effect associated with Note J above.

(M) To record the payment received by DocuCorp from SG/TL Stockholders
for DocuCorp Warrants to purchase 610,000 shares of DocuCorp Class A Common
Stock with an exercise price of $5.00 per share and a term of three years.

50
<PAGE>

SELECTED FINANCIAL DATA OF IMAGE SCIENCES

The following selected financial data of Image Sciences as of and for the
years ended July 31, 1992, 1993, 1994, 1995, and 1996 have been derived from
the audited financial statements of Image Sciences. The selected financial
data of Image Sciences as of and for the six months ended January 31, 1996 and
1997 have been derived from the unaudited financial statements of Image
Sciences, which in the opinion of the management of Image Sciences, reflect
all adjustments (consisting only of normal recurring adjustments) that are
necessary for a fair presentation of the results for such periods. The
following data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Image Sciences"
and the audited financial statements of Image Sciences, and the notes thereto,
appearing elsewhere in this Joint Proxy Statement/Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31,
YEARS ENDED JULY 31, (UNAUDITED)
---------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------- ------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
REVENUES
Professional
services............. $ 637 $ 603 $ 549 $ 587 $ 819 $ 311 $ 371
License............... 4,387 4,833 5,608 4,807 4,793 1,910 2,043
Maintenance........... 3,173 3,884 4,717 5,420 5,858 2,827 3,211
------ ------ ------- ------- ------- -------- --------
Total revenues...... 8,197 9,320 10,874 10,814 11,470 5,048 5,625
------ ------ ------- ------- ------- -------- --------
EXPENSES
Professional
services............. 444 357 529 430 606 238 282
Product development
and support.......... 3,490 3,250 3,426 3,560 3,981 1,964 2,031
Selling and
marketing............ 1,472 1,692 1,676 1,834 1,568 733 793
General and
administrative....... 1,149 1,366 1,697 1,832 1,899 874 1,079
------ ------ ------- ------- ------- -------- --------
Total expenses...... 6,555 6,665 7,328 7,656 8,054 3,809 4,185
------ ------ ------- ------- ------- -------- --------
Operating income........ 1,642 2,655 3,546 3,158 3,416 1,239 1,440
Other income (expense),
net.................... (373) (288) (147) 28 240 101 206
------ ------ ------- ------- ------- -------- --------
Income before income
taxes.................. 1,269 2,367 3,399 3,186 3,656 1,340 1,646
Provision for income
taxes.................. 170 560 1,230 1,183 1,335 489 601
------ ------ ------- ------- ------- -------- --------
Net income.............. $1,099 $1,807 $ 2,169 $ 2,003 $ 2,321 $ 851 $ 1,045
====== ====== ======= ======= ======= ======== ========
Net income per share.... $ 0.19 $ 0.31 $ 0.38 $ 0.35 $ 0.43 $ 0.15 $ 0.19
Weighted average number
of shares of common
stock and common stock
equivalents............ 5,852 5,882 5,728 5,742 5,469 5,602 5,416
</TABLE>

<TABLE>
<CAPTION>
JULY 31,
--------------------------------------- JANUARY 31,
1992 1993 1994 1995 1996 1997
------ ------ ------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents,
and short-term
investments.............. $ 852 $2,853 $ 3,310 $ 5,290 $ 7,218 $ 9,506
Accounts receivable, net
of allowance............. 2,786 2,644 4,161 4,109 4,106 2,920
Working capital
(deficit)................ (198) (459) 1,930 4,049 5,640 7,028
Total assets.............. 7,845 9,785 11,572 13,145 14,691 15,543
Total debt including
obligations under capital
lease.................... 4,285 3,158 1,987 1,637 46 0
Stockholders' equity
(deficit)................ (271) 1,326 3,545 5,606 8,037 9,107
</TABLE>

51
<PAGE>

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

Certain information contained herein may include forward-looking statements
that involve risks and uncertainties. Image Sciences' actual results may
differ materially from those discussed in the forward-looking statements.
Potential risks and uncertainties include market responses to pricing
pressures, changes in product and service mix, results from litigation, the
timely development and acceptance of new products and services, and changes in
customer preferences. Consequently, the actual results realized by Image
Sciences could differ materially from the statements made herein. Readers of
this report are cautioned not to place undue reliance on the forward-looking
statements made herein.

RESULTS OF OPERATIONS

The following table sets forth revenue and selected data of Image Sciences
expressed as a percentage of total revenues for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31,
YEARS ENDED JULY 31, (UNAUDITED)
------------------------- ------------------
1994 1995 1996 1996 1997
------- ------- ------- -------- --------
DOLLARS IN THOUSANDS
<S> <C> <C> <C> <C> <C>
REVENUES
Professional services........ $ 549 $ 587 $ 819 $ 311 $ 371
License...................... 5,608 4,807 4,793 1,910 2,043
Maintenance.................. 4,717 5,420 5,858 2,827 3,211
------- ------- ------- -------- --------
Total revenues............. 10,874 10,814 11,470 5,048 5,625
------- ------- ------- -------- --------
PERCENTAGE RELATIONSHIP TO
TOTAL REVENUES
REVENUES
Professional services........ 5% 5% 7% 6% 7%
License...................... 52 45 42 38 36
Maintenance.................. 43 50 51 56 57
------- ------- ------- -------- --------
Total revenues............. 100 100 100 100 100
EXPENSES
Professional services........ 5 4 5 5 5
Product development and
support..................... 31 33 35 39 36
Selling and marketing........ 15 17 14 14 14
General and administrative... 16 17 16 17 19
------- ------- ------- -------- --------
Total expenses............. 67 71 70 75 74
------- ------- ------- -------- --------
Operating income............... 33 29 30 25 26
Other income (expense), net.... (2) 0 2 2 3
------- ------- ------- -------- --------
Income before income taxes..... 31 29 32 27 29
Provision for income taxes..... 11 11 12 10 11
------- ------- ------- -------- --------
Net income................. 20% 18% 20% 17% 18%
======= ======= ======= ======== ========
</TABLE>

SIX MONTHS ENDED JANUARY 31, 1997 COMPARED TO SIX MONTHS ENDED JANUARY 31,
1996

REVENUES

Image Sciences derives its revenues from license fees, recurring maintenance
fees, and professional services related to its software products. License
revenues are derived from perpetual licenses of software products. Maintenance
revenues consist primarily of annual maintenance contracts. Professional
services revenues include fees for consulting, contract programming projects,
education services, and a biennial user group conference.

52
<PAGE>

Total revenues increased 11% for the six months ended January 31, 1997 due
to increases in all revenue types. License revenues increased 7% due to larger
dollar contracts being executed. Maintenance revenues increased 14% due to an
expanding customer base. The 19% increase in professional services revenues is
due to an increase in educational classes and other professional service
offerings.

Image Sciences' backlog consisted primarily of $4,200,000 of revenue for
annual maintenance contracts entitling the end-user to product enhancements
and telephone support as of January 31, 1997. Maintenance contracts may
generally be terminated upon a 30 day notice period; however, Image Sciences
has not historically experienced material cancellations of such contracts.

PROFESSIONAL SERVICES EXPENSE

Professional services expense consists principally of personnel costs and
direct travel and living costs associated with Image Sciences' consulting,
education services, and contract programming projects. For the six month
period ended January 31, 1997, professional services expense increased 18%
which is a result of increased costs to provide increased professional
services. These costs represented 77% and 76%, respectively, of professional
services revenues for the six months ended January 31, 1996 and 1997.

PRODUCT DEVELOPMENT AND SUPPORT EXPENSE

Product development and support expense increased 3% for the six month
period ended January 31, 1997. Before capitalization and amortization, product
development and support expense increased 11% primarily resulting from
increased staffing associated with Image Sciences' continued focus on research
activities and enhancing customer satisfaction through qualified personnel.

SELLING AND MARKETING EXPENSE

An increase of 8% in selling and marketing expense for the six month period
ended January 31, 1997 was the result of increased sales commissions. Sales
commissions increased as a result of higher commission percentages associated
with large dollar contracts being executed.

GENERAL AND ADMINISTRATIVE EXPENSE

General and administrative expense increased 23% for the six month period
ended January 31, 1997. The increase was primarily a result of bad debt
expense. Bad debt expense increased due to writing off old uncollectible
accounts and increasing the allowance account.

OTHER INCOME (EXPENSE), NET

For the six month period ended January 31, 1997, a 104% increase in other
income was due to a 15% increase in interest income and a 98% decrease in
interest expense. Interest expense decreased significantly due to retirement
of all outstanding subordinated debentures in March 1996 and repayment of all
outstanding obligations under capital leases.

PROVISION FOR INCOME TAXES

The income tax provision was calculated utilizing Federal income tax rates
for corporations. Effective tax rates for the six months ended January 31,
1996 and 1997 were approximately 36% for each period. These rates differ from
the Federal statutory rate primarily due to state income taxes. Image Sciences
used a portion of its outstanding tax credits to offset its current tax
liability for the six month period ended January 31, 1996 and 1997.

NET INCOME

Profitability increased 23% during the six month period ended January 31,
1997 as a result of an 11% increase in revenues and a 104% increase in other
income, while expenses increased 10%.

53
<PAGE>

FISCAL YEAR ENDED JULY 31, 1996 COMPARED TO FISCAL YEAR ENDED JULY 31, 1995

REVENUES

Total revenues increased 6% in fiscal 1996 primarily as a result of
increased maintenance revenues and professional services revenues, while
license revenues decreased slightly. Maintenance revenues increased 8% in
fiscal 1996 due to an expanding customer base and retention of existing
customers. In fiscal 1996, professional services revenues increased 40% as a
result of a significant increase in consulting revenues and revenue generated
from Image Sciences' biennial user group conference. The 1996 user group
conference, held in Dallas, Texas, was attended by approximately 165
customers. The conference provides a forum for customers to learn more about
Image Sciences' product and service offerings and to exchange ideas with other
Image Sciences customers. License revenues decreased due to a decrease in
international software license revenues, partially offset by an 8% increase in
North American direct license revenues. Image Sciences terminated its most
significant European distributor agreement in fiscal 1995, and did not replace
the European distributor until fiscal 1996. The new distribution agreement
with The Continuum Company did not generate any material revenues during
fiscal 1996. Image Sciences' maintenance contract backlog totaled
approximately $3,700,000 as of July 31, 1996.

PROFESSIONAL SERVICES EXPENSE

During fiscal 1996, professional services expense increased 41% which was
primarily attributable to the cost associated with Image Sciences' biennial
user group conference and costs associated with Image Sciences' expanding
consulting services. Costs for professional services expenses, before the
effect of the biennial user group conference held in fiscal 1996, represented
73% and 68% of professional services revenues for fiscal 1995 and 1996,
respectively. The decrease in cost as a percentage of professional services
revenue is primarily due to more efficient management of Image Sciences'
consulting resources.

PRODUCT DEVELOPMENT AND SUPPORT EXPENSE

Image Sciences continues to commit significant resources to development and
support activities. The 12% increase in product development and support
expense in fiscal 1996 was a result of increased staffing, a decrease in
capitalizable development efforts, an increase in software amortization, and
costs related to a continued focus on customer support of Image Sciences'
expanding customer base. Product development and support expense before
capitalization and amortization increased 6% as a result of increased staffing
to sustain new product development and to enhance and maintain existing
products. Software capitalization decreased due to increased research of new
technologies, and focusing development efforts on more efficient methods of
maintaining existing products. These efforts are not eligible for
capitalization. Amortization of capitalized software in fiscal 1996 increased
due to the release of several new client/server products at the end of fiscal
1995.

SELLING AND MARKETING EXPENSE

In fiscal 1996, selling and marketing expense decreased 14% primarily as a
result of decreased staffing and related travel costs. The decreased staffing
relates to several unfilled sales and sales management positions that Image
Sciences expects to fill in fiscal 1997. These decreases were partially offset
by an increase related to international expatriate expenses. In September
1995, Image Sciences transferred one employee to the United Kingdom to assume
a sales support function.

GENERAL AND ADMINISTRATIVE EXPENSE

During fiscal 1996, general and administrative expense increased 4% as a
result of increases in corporate office rent and profit sharing bonuses,
partially offset by decreased legal costs. Rent expense increased due to the
renegotiation of Image Sciences' corporate office lease, which included an
approximate 3,000 square feet expansion. Profit-based bonuses increased due to
a 15% increase in net income before taxes. Legal costs associated with two
outstanding lawsuits decreased significantly. One lawsuit is scheduled for
arbitration in 1997 regarding the majority of the claims. A summary judgment
in favor of Image Sciences was entered on certain of

54
<PAGE>

the claims on the other case and is currently under appeal. Image Sciences
intends to vigorously contest these claims and believes that the resolution of
such claims will not have a material adverse effect on its financial condition
or results of operations.

OTHER INCOME (EXPENSE), NET

In fiscal 1996, other income increased $211,757 as a result of a 60%
increase in interest income due to a significant increase in cash, cash
equivalents, and short-term investments. Additionally, interest expense
decreased 48% because of the scheduled January 1996 principal installment
payment and the March 1996 retirement of all outstanding subordinated
debentures.

PROVISION FOR INCOME TAXES

The income tax provisions were calculated utilizing Federal income tax rates
for corporations. Effective tax rates for the years ended July 31, 1995 and
1996 were approximately 37% each year. These rates differ from the Federal
statutory rate due primarily to state income taxes. Image Sciences used a
portion of its outstanding tax credits to offset its current tax liability in
fiscal 1996. The remaining net operating loss carryforward was also used in
fiscal 1994 and 1995.

NET INCOME

Profitability increased 16% in fiscal 1996 due to the 6% increase in
revenues and an approximate $200,000 increase in other income, while expenses
only increased 5%.

FISCAL YEAR ENDED JULY 31, 1995 COMPARED TO FISCAL YEAR ENDED JULY 31, 1994

REVENUES

Total revenues decreased 1% in fiscal 1995 as a result of a 14% decrease in
license revenue offset by a 15% increase in recurring maintenance revenues,
and a 7% increase in professional services revenues. The decrease in license
revenues was essentially attributable to significant turn-over in Image
Sciences' domestic sales force. Maintenance revenues increased by $702,495 due
primarily to an expanding customer base. Professional services revenues
increased 7% in fiscal 1995 due primarily to increases in consulting and
education. The increase was partially offset because Image Sciences did not
hold a user group conference in fiscal 1995.

PROFESSIONAL SERVICES EXPENSE

The 19% decrease in professional services expense during fiscal 1995 was
primarily because Image Sciences did not hold a user group conference in
fiscal 1995. The increase was partially offset by additional staffing and
increased travel costs to support Image Sciences' growing consulting services.
Costs for professional services expense, before the effect of the 1994 user
group conference, represented 91% and 73% of professional services revenues
for fiscal 1994 and 1995, respectively.

PRODUCT DEVELOPMENT AND SUPPORT EXPENSE

Product development and support expense increased 4% during fiscal 1995
primarily as the result of development of new technologies, continued
significant enhancements to Image Sciences' existing client/server and
mainframe platform software product offering, and support costs for Image
Sciences' expanding customer base. Product development and support expense
before capitalization and amortization increased 5% from the previous year.

SELLING AND MARKETING EXPENSE

Selling and marketing expense increased 9% in fiscal 1995 due principally to
expansion of marketing efforts and additional travel expenses, offset by a
decrease in commissions paid to sales representatives. Travel expenses

55
<PAGE>

increased due to international expansion requiring increased international
travel for sales and sales support personnel. The decrease in commissions paid
to sales representatives was a result of a 14% decrease in direct license
revenues from fiscal 1994.

GENERAL AND ADMINISTRATIVE EXPENSE

The 8% increase in general and administrative expense during fiscal 1995 was
primarily the result of increases in compensation, legal, and telephone
expense. Compensation increased due to the additions of an Assistant
Controller and full-time Human Resources positions. Legal expenses increased
due to activity related to two outstanding lawsuits. Telephone expense
increased due primarily to increased international activity.

OTHER INCOME (EXPENSE), NET

Other income increased in fiscal 1995 due to an increase in interest income
and a decrease in interest expense. Interest income increased 129% due to an
increase in cash, cash equivalents, and short-term investment balances.
Interest expense decreased 24% as a result of scheduled repayments of
subordinated debentures and capital lease obligations.

PROVISION FOR INCOME TAXES

The income tax provisions were calculated utilizing Federal income tax rates
for corporations. Effective tax rates for the years ended July 31, 1994 and
1995 were approximately 36% and 37%, respectively. These rates differ from the
Federal statutory rate primarily due to state income taxes. Image Sciences
used a portion of its outstanding tax credits to offset its current tax
liability in fiscal 1995. The remaining net operating loss carryforward was
also used in fiscal 1994 and 1995.

NET INCOME

The 8% decrease in profitability in fiscal 1995 was the result of a 4%
increase in expenses during a period of generally flat revenues.

LIQUIDITY & CAPITAL RESOURCES

At January 31, 1997, Image Sciences' principal sources of liquidity
consisted of cash, cash equivalents, and short-term investments aggregating
$9,506,444.

Cash and cash equivalents increased $4,622,546 during the six month period
ended January 31, 1997 due primarily to net income of $1,044,913 and
maturities of short-term investments of $2,333,924. Working capital increased
$1,388,069 from $5,639,840 at July 31, 1996 to $7,027,909 at January 31, 1997,
primarily as the result of profitable operations.

Cash and cash equivalents decreased $380,964 during 1996 primarily as a
result of investing excess cash in short-term investments and repayment of
subordinated debentures. Cash flows from operating activities generated
$4,347,972 primarily from net income of $2,321,280 and other non-cash items.
Of the $3,198,472 cash used for investing activities, $2,308,806 was used for
the purchase of short-term investments. Short-term investment purchases
consisted of six month commercial paper and treasury bills with staggered
maturity dates. The remaining cash used for investing purposes was for the
purchase of fixed assets and development of software. Cash flows from
financing activities used $1,530,464. Substantially all of this cash was used
for the repayment of the outstanding balance of subordinated debentures
aggregating $1,534,430. Working capital at July 31, 1996 increased by
$1,590,395, primarily as the result of profitable operations.

As of January 31, 1997, Image Sciences has repaid all existing debt. Capital
expenditures have generally not been material. Concurrent with the
consummation of the Merger, Image Sciences expects to disburse $8,000,000 of
its cash, cash equivalents, and short-term investments to its common and
preferred stockholders.

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Consequently, subsequent to the Merger, Image Sciences' working capital and
financial resources will be significantly reduced. Image Sciences' intends to
fund its future operations through its cash from operations and renegotiation
or replacement of the existing FormMaker $10,000,000 line of credit, which has
available funds of approximately $3,900,000 as of December 31, 1996.

RECENTLY ISSUED ACCOUNTING STATEMENTS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), which establishes financial accounting and
reporting standards for stock-based compensation plans. SFAS 123 gives
companies the option to adopt the fair value method for expense recognition of
employee stock options and stock based awards or to continue to account for
such items using the intrinsic value method as outlined under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"), with pro forma disclosures of net income and net income per share
as if the fair value method had been applied. Image Sciences has adopted SFAS
123 effective August 1, 1996 by electing to continue to apply APB 25 for
future stock options and stock based awards, and, accordingly, does not
anticipate that SFAS 123 will have a material impact on its results of
operations or financial position. In accordance with the disclosure provisions
of SFAS 123, Image Sciences will initially present the disclosure required by
SFAS 123 in its financial statements as of and for the periods ending July 31,
1997.

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SELECTED FINANCIAL DATA OF FORMMAKER

The following selected financial data of FormMaker as of and for the years
ended December 31, 1993, 1994, 1995 and 1996 have been derived from the
audited financial statements of FormMaker. The following data should be read
in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations of FormMaker" and the audited financial
statements of FormMaker, and the notes thereto, appearing elsewhere in this
Joint Proxy Statement/Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1992 1993 1994 1995 1996
----------- ------ ------ ------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenue:
Software licenses.............. $ 708 $1,358 $1,700 $ 3,197 $ 4,533
Maintenance and other
recurring..................... 168 264 418 787 2,067
Processing services............ 166 1,058 3,039 4,646 4,555
Professional services and
other......................... 412 672 2,262 5,699 8,714
------ ------ ------ ------- -------
Total revenue................ 1,454 3,352 7,419 14,329 19,869
------ ------ ------ ------- -------
Operating expenses:
Processing services............ 212 1,240 2,615 4,149 4,317
Professional services and
other......................... 387 471 1,580 4,223 7,248
Research and product
development................... 247 483 550 1,254 2,239
Sales and marketing............ 285 413 843 1,578 3,294
General and administrative..... 513 617 923 3,486 3,561
Amortization of goodwill....... 9 -- -- -- 282
------ ------ ------ ------- -------
Total operating expenses..... 1,653 3,224 6,511 14,690 20,941
------ ------ ------ ------- -------
Operating income (loss).......... (199) 128 908 (361) (1,072)
Other income (expense)
Interest expense, net.......... (76) (153) (217) (325) (418)
Other, net..................... (140) 71 -- -- --
------ ------ ------ ------- -------
Income (loss) before income
taxes........................... (415) 46 691 (686) (1,490)
Income tax (benefit)............. -- -- (160) (260) --
------ ------ ------ ------- -------
Net income (loss)............ $ (415) $ 46 $ 851 $ (426) $(1,490)
====== ====== ====== ======= =======
BALANCE SHEET DATA:
Cash and cash equivalents...... $ 15 $ 21 $ 46 $ 2,164 $ 5
Accounts receivable, net of
allowance..................... 338 386 1,680 2,679 4,935
Working capital (deficit)...... (739) (412) (72) 254 (6,232)
Total assets................... 1,739 2,052 5,583 10,137 17,701
Total debt..................... 1,368 1,933 3,361 1,509 7,578
Stockholders' equity........... 104 (193) 659 4,024 4,763
</TABLE>

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

Certain information contained herein may include forward-looking statements
that involve risks and uncertainties. FormMaker's actual results may differ
materially from those discussed in the forward-looking statements. Potential
risks and uncertainties include market responses to pricing pressures, changes
in product and service mix, results from litigation, the timely development
and acceptance of new products and services, and changes in customer
preferences. Consequently, the actual results realized by FormMaker could
differ materially from the statements made herein. Readers of this report are
cautioned not to place undue reliance on the forward-looking statements made
herein.

RESULTS OF OPERATIONS

The following table sets forth revenue, rounded to the nearest thousands,
and income statement data of FormMaker Software expressed as a percentage of
total revenues for the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1994 1995 1996
------- -------- --------
<S> <C> <C> <C>
REVENUE ($ IN THOUSANDS)
Software licenses.............................. $ 1,700 $ 3,197 $ 4,533
Maintenance and other recurring................ 418 787 2,067
Processing services............................ 3,039 4,646 4,555
Professional services and other................ 2,262 5,699 8,714
------- -------- --------
Total revenue................................ $ 7,419 $ 14,329 $ 19,869
======= ======== ========
REVENUE
Software licenses.............................. 23% 22% 23%
Maintenance and other recurring................ 6 6 10
Processing services............................ 41 32 23
Professional services and other................ 30 40 44
------- -------- --------
Total revenue................................ 100% 100% 100%
------- -------- --------
OPERATING EXPENSES
Processing services............................ 35% 29% 22%
Professional services and other................ 21 29 36
Research and product development............... 7 9 11
Sales and marketing............................ 12 11 17
General and administrative..................... 13 25 18
Amortization of goodwill....................... 0 0 1
------- -------- --------
Total operating expenses..................... 88% 103% 105%
------- -------- --------
Operating income (loss)........................ 12 (3) (5)
Interest expense, net.......................... (3) (2) (2)
------- -------- --------
Income (loss) before income taxes............. 9 (5) (7)
Income tax benefit--deferred................... 2 2 0
------- -------- --------
Net income (loss)............................ 11% (3)% (7)%
======= ======== ========
</TABLE>

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Revenue

FormMaker's revenue increased 39% in 1996 to $19,869,063 from $14,328,786 in
1995. Software licensing revenue increased from $3,196,613 in 1995 to
$4,533,276 in 1996. Of this increase in software licensing revenue,

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<PAGE>

$1,232,520 or 92% resulted from licensing revenue generated by Micro Dynamics
Ltd. ("Micro Dynamics") which was acquired in May 1996. Despite the inclusion
of $589,018 related to nonrefundable advance purchases of licenses by PMSC in
1995, 1996 licensing revenues increased 42% over 1995. Maintenance and other
recurring revenue increased from 5.5% of total revenue in 1995 to 10.4% in
1996 due primarily to the inclusion of Micro Dynamics revenue because Micro
Dynamics has a greater percent of maintenance and other recurring revenue in
relation to total revenue. Professional services revenue increased by 53%,
from $5,699,287 in 1995 to $8,713,797 in 1996 resulting from implementation
services provided to customers installing new systems. Revenue from processing
services decreased slightly from $4,645,420 in 1995 to $4,555,189 in 1996
because there was a reduction in transactions due to changes in the rate
structure of high risk insurance in the State of Texas. Lower rates on
voluntary coverage makes the assigned risk pool, which represents the business
that FormMaker handles, less attractive. The reduction in this business was
partially offset by new customers added.

Backlog for FormMaker's products and services is comprised of recurring
software licenses for ongoing maintenance and support of the product, software
implementation services and processing services. Recurring maintenance and
support backlog at December 31, 1996 approximated $9.0 million, up 120% over
1995. The increase in maintenance and support backlog is principally the
result of new software licenses entered into during 1996 and the FormMaker
portion of such maintenance and support fees increasing under the terms of the
new marketing agreement with PMSC, effective January 1, 1997. Software
implementation services backlog, which are principally performed under time
and material type agreements of which some have cancellation provisions, were
$4.1 million at December 31, 1996 compared to $3.5 million in 1995. In the
event of cancellation, there would be no impact on revenue recognition as
revenue is recognized as services are performed. FormMaker's agreements for
processing services generally provide that fees are charged on a per
transaction basis and the related backlog totaled $4.0 million at December 31,
1996, a decrease of 15% compared to 1995. The estimated future revenue with
respect to FormMaker's software implementation and processing services are
based on management's estimate of revenue over the remaining life of the
respective contracts. See "Risk Factors--Reliance on a Major Client
Relationship."

Professional and Processing Services Expense

Professional services expense as a percent of professional services revenue
increased from 74% in 1995 to 83% in 1996 due to a significant addition of
personnel primarily in the last half of 1996 and the related recruiting fees
and training expense incurred as a result. Processing services expense as a
percent of processing revenue increased from 89% in 1995 to 95% in 1996 due to
investments made in new equipment and the moving of the print center to
Atlanta.

Research and Product Development Expense

Product development and support costs consist primarily of amortization of
capitalized software development costs, costs associated with development
projects for which technological feasibility has not yet been achieved, and
other product support costs. During 1996, total product development costs of
$3,046,000 were incurred of which $2,414,000 relating to the enhancement of
FormMakers' existing base technology were capitalized and $632,000 was charged
to expense. Development costs expensed related to integration of FormMaker's
modules with the Internet, development of systems for use in the utilities and
financial services industries, and other efforts. Product development expenses
increased 79% primarily due to the effect of the acquisition of Micro
Dynamics, development efforts associated with positioning FormMaker in new
markets, and increased amortization associated with the acquisition of Micro
Dynamics and other increased investments in the maintenance support area
associated with the growth in FormMaker's installed base.

Sales and Marketing Expense

Sales and marketing expenses increased by 109% over last year due to the
inclusion of Micro Dynamics selling costs and to the investments made in 1996
in developing new markets.

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<PAGE>

General and Administrative Expense

Total general and administrative expenses were up slightly from last year;
however, 1995 included a non-recurring expenses of $1,100,000 for the
repurchase from PMSC of certain marketing rights to the healthcare industry.
Other general and administrative expenses in 1996 increased 49% over 1995 due
primarily to the inclusion of Micro Dynamics in 1996.

Amortization of Goodwill

Goodwill amortization reported in 1996 was the result of the acquisition of
Micro Dynamics in May of 1996.

Operating Income

The operating loss in 1996 increased from ($360,771) in 1995 to ($1,071,671)
in 1996 due to continued investment in new technology and new markets.
Additionally, the higher growth rate of the lower margin services business
also had a negative impact on operating margins.

Other Income (Expense)

Other income (expense) increased to ($418,356) in 1996 from ($324,726) in
1995 due to an increase in interest expense resulting from increased debt
levels incurred with the acquisition of Micro Dynamics.

Income Taxes

FormMaker did not recognize an income tax benefit with respect to its pretax
losses in 1996. SFAS No. 109 requires that a valuation allowance be recorded
against tax assets which are not likely to be realized. Specifically,
FormMaker's net operating loss and other carryforwards expire at specific
future dates and utilization of certain carryforwards is limited to specific
amounts each year. Due to the uncertain nature of the ultimate realization of
the incremental net operating loss carryforwards generated in 1996 considering
past performance and expiration dates, FormMaker has increased its valuation
allowance in 1996 to the extent there was an increase in the deferred tax
assets associated with the incremental carryforwards.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Revenue

FormMaker's overall revenue increased 93% to $14,328,786 in 1995 from
$7,419,192 in 1994. Licensing revenue increased 88% to $3,196,613 in 1995 from
$1,699,718 in 1994. FormMaker attributes this increase primarily to greater
demand for its client server product solutions in the marketplace.

On October 13, 1995, FormMaker and PMSC entered into an amendment to their
Marketing Agreement, whereby PMSC purchased software licenses for inventory
and prospective sublicensing to end users in the amount of $2 million. Under
this amendment PMSC was to receive credit in the amount of $2.6 million
against amounts which would otherwise have been due FormMaker on future
licenses. FormMaker recorded $2 million in licenses fee revenue with respect
to this transaction. On December 31, 1995, FormMaker and PMSC agreed to
further amend their Marketing Agreement to provide for (a) the return of $1
million of this inventory and the elimination of the $600,000 credit, (b) the
elimination of PMSC's exclusive right to market and sublicense FormMaker's
software within a particular industry segment and (c) the elimination of
$750,000 in credits which were to be applied against future service billings.
As a result of this amendment, FormMaker paid $2.1 million to PMSC on January
3, 1996. FormMaker recorded, in the 1995 financial statements, the $1 million
in returned inventory as a reduction of revenue and a charge to general and
administrative expense in the amount of $1.1 million as a result of this
latter amendment. The net effect to 1995 revenue related to non-refundable
advance purchases of licenses by PMSC, net of licenses actually sold by PMSC,
was $589,018.

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<PAGE>

FormMaker's maintenance and other recurring fee revenue represented
approximately 5.5% of total revenue in both 1995 and 1994. Processing revenue
increased to $4,645,420 in 1995 from $3,039,177 in 1994. This increase is
directly attributable to additional applications being utilized by one
customer requiring FormMaker's processing services. Professional services
revenue in 1995 was $5,699,287 compared to $2,262,145 in 1994, a 252% increase
over 1994. The increase in professional services revenue is principally the
result of increased software license revenue and the associated implementation
services provided to these new customers.

Professional and Processing Services Expense

Professional services expense in 1995 increased 167% over 1994 on a 152%
increase in professional services revenue. Professional services expense as a
percent of professional services revenue increased slightly from 70% in 1994
to 74% in 1995. Processing services expenses also increased 59% for the period
on a 53% increase in processing services revenue. Processing services margins
remained relatively unchanged from 1994 to 1995.

Research and Product Development Expense

Product development and support expenses increased by 128% due to additional
investments in enhancements and the development of the DAP technology platform
and a larger customer base to support. Total product development costs of
$1,784,405 was incurred of which $1,366,000 were capitalized and $419,000 was
charged to expense.

Sales and Marketing Expense

Sales and marketing expenses in 1995 increased 87% over the prior year which
was in line with the increase in total revenue during the same period.

General and Administrative Expense

General and administrative expenses reflect a payment of $1,100,000 in 1995
for the purchase by FormMaker of certain marketing rights and the elimination
of previously agreed upon discounting of future licensing and service fees
with PMSC. Office lease costs increased from $216,844 in 1994 to $891,502 in
1995 due to FormMaker's move to expanded offices during the year and current
recognition of all estimated future costs associated with vacated facilities
under lease. Increases in salary expense was due to the addition of new
executive and senior officers.

Operating Income

Operating income for 1995 decreased $1,268,464 from $907,694 for 1994. Net
of the effect of the non-recurring transaction described above, operating
income would have been approximately $739,000 for 1995. The general reason for
the decrease in profitability in 1995 is FormMaker's increased investment in
new markets and technology, as well as, the overall higher growth rate of the
lower margin services business in relation to its software revenue.

Other Income (Expense)

The overall increase in other expense is primarily attributable to an
increase in interest expense incurred during 1995 over 1994. Additional
interest expense was incurred due to increased outstanding balances on
FormMaker's lines of credit, as well as new capitalized lease obligations
during 1995; all of which were required to fund working capital requirements
and investments in new markets and technology.

Income Taxes

For 1995, FormMaker's income tax benefit approximated the income tax benefit
calculated at statutory tax rates. For 1994, FormMaker recognized an income
tax benefit due to a change in the net deferred tax asset valuation allowance
from December 31, 1993 and the realization of a portion of net operating loss
carryforwards.

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<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents at December 31, 1996 was $4,925 compared to
$2,163,548 a year earlier. Availability under FormMaker's line of credit at
the end of 1996 was $3,916,297.

Cash used in operating activities was $2,725,772 in 1996 compared to
$2,843,676 generated in 1995. Operating losses and increases in accounts
receivable incurred due to the increase in revenue caused a usage of cash. At
December 31, 1995, FormMaker had $2,100,000 of cash available resulting from
the purchase by PMSC of software licenses for inventory and prospective
sublicensing purposes that was repaid to PMSC on January 3, 1996. This
transaction increased operating cash flow in 1995 while decreasing it in 1996
by the same amount.

Cash used in investing activities related primarily to capital expenditures
used to expand the processing center and offices to accommodate added
personnel, development expenditures that were capitalized and the Micro
Dynamics acquisition. On May 17, 1996, FormMaker acquired 99.89% of the
outstanding shares of common stock of Micro Dynamics. FormMaker issued 653,033
shares of FormMaker Common Stock valued at $2.90 per share in exchange for
4,029,417 shares of MDL stock valued at $.47 per share. FormMaker also paid
cash of $947,232 in exchange for 2,015,388 shares of MDL common stock. This
transaction was accounted for using the purchase method of accounting.

On December 20, 1995 FormMaker completed a recapitalization which generally
provided $3,333,333 in cash in exchange for the issuance of Common Stock.
Approximately $2,850,000 of the recapitalization proceeds were used to repay
bank and stockholder debt. Concurrent with the recapitalization, FormMaker
established a bank line of credit which provides $10,000,000 in availability
to fund future working capital requirements and acquisitions. At December 31,
1996 this outstanding balance of this credit line was $6,083,703 leaving
$3,916,297 available.

FormMaker's liquidity needs will arise primarily from funding the continued
enhancement and development of the enterprise document automation software
offering and the selling and marketing costs associated principally with
FormMaker's continued entry into new vertical markets. Capital expenditures
are generally not significant. Although management believes that FormMaker's
cash and availability under its line of credit will be sufficient to meet cash
flow requirements for the remainder of 1997, there can be no assurances that
additional capital will not be required to secure FormMaker's future in
today's environment.

Presently a significant portion of FormMaker's software license fee revenue
is derived under the terms of FormMaker's marketing agreement with PMSC. There
can be no assurances that such license fee revenue will continue at historical
levels. In the event that historical revenue levels decrease or the PMSC
marketing agreement is otherwise terminated as provided by its terms; then
FormMaker's liquidity requirements would be increased accordingly. In
addition, after expiration of the PMSC marketing agreement on December 31,
1999, FormMaker will not be entitled to revenue or the related cash associated
with newly entered into software licenses between PMSC with third party end
users. Although management believes that any such additional liquidity
requirements would be short term in nature there can no assurance that
additional capital would not be required. See "Risk Factors--Reliance on a
Major Client Relationship and Business of FormMaker--Marketing, Customers and
Distributions."

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<PAGE>

BUSINESS OF DOCUCORP

DocuCorp was organized on January 13, 1997 in connection with the Merger. It
is expected that all of DocuCorp's business will be conducted through Image
Sciences and FormMaker. As a result of the Merger, DocuCorp believes that it
will be a leading national provider of document automation software and
services to the insurance, financial services, utilities, healthcare and other
document-intensive industries.

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<PAGE>

BUSINESS OF IMAGE SCIENCES

GENERAL

Image Sciences develops, markets, and supports software products designed to
automate the processing of business forms and documents. Image Sciences
software and services offer solutions to the challenges associated with
enterprise-wide document production which emerged with the rapid growth of
laser printing and imaging technologies. Image Sciences' mainframe and
client/server software products are utilized by some of the largest
corporations in the insurance, telecommunications, transportation, and
financial services industries.

Well over half of the 200 largest insurance companies in the U.S. utilize
the Image Sciences DocuMerge software product to automate strategic
applications within their businesses. Image Sciences' end user customers
include 7 of the top 10 life insurance companies and 9 of the top 10 property
and casualty insurance companies in the U.S.

Image Sciences principally licenses its software products domestically
through a direct sales force and internationally through distributors and
direct sales.

Image Sciences was incorporated in the state of Texas in 1982. Xerox
currently owns approximately 35% of Image Sciences' fully-diluted outstanding
stock. Image Sciences also has a joint marketing agreement with Xerox. Image
Sciences' executive offices are located at 5910 N. Central Expressway, Suite
800, Dallas, TX 75206.

PRODUCTS

Image Sciences offers corporate-wide integrated solutions for electronic
publishing and archival. Image Sciences' software products are compatible with
leading document composition products, laser printers, mail-handling
equipment, and imaging systems.

Image Sciences' DocuFlex family of mainframe software products includes
DocuMerge, ImageCreate, and I.R.I.S. DocuMerge, historically the largest
source of revenue, has been marketed primarily to the insurance industry as a
tool enabling companies to print entire insurance policies on in-house laser
printers.

Image Sciences' initial applications were all designed to be processed on
mainframe computers. In the early 1990s, many of Image Sciences' end-user
customers began significant migrations to LAN (Local Area Network) and WAN
(Wide Area Network) client/server environments. In response to the changing
computing environments of Image Sciences' existing and potential customers,
Image Sciences developed software products to run in client/server
environments. The client/server products are compatible with Image Sciences'
existing mainframe products, allowing portability and cooperative processing.
The significant expansion of the product line allows customers the flexibility
to process the document wherever they like.

The client/server products include DocuMerge, DocuSolve, DocuView, I.R.I.S.,
and ImageCreate. These products operate under Microsoft Windows, IBM OS/2,
and/or several UNIX platforms, allowing personal computers to manage host data
and interface with high-speed Xerox Metacode, Windows and IBM AFP laser
printers.

Image Sciences also offers numerous mainframe and client/server based
utility products. Image Sciences' product offerings can be classified in the
following categories:

Publishing Products

DocuMerge. DocuMerge is a scalable, high performance product designed for
centralized and distributed enterprise-wide publishing of documents that may
be tailored for each recipient. DocuMerge applications include insurance
policies, bank statements, utility bills, bills of lading and other
customized, high-volume documents

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<PAGE>

that must be repeatedly produced under tight deadlines. DocuMerge can be
integrated with existing application systems to automate high-volume merging,
collating, assembling, printing, and managing of complex documents. DocuMerge
operates under MVS, VSE, Microsoft Windows, IBM OS/2, HP-UX and AIX operating
systems.

DocuSolve. DocuSolve is an interactive forms fill, data editing and document
collation application that runs under Microsoft Windows. DocuSolve can be used
as a stand-alone application for customizing large volumes of documents, or as
a product that can be tightly integrated with DocuMerge to enable data and
forms that are not available initially to DocuMerge to be provided
interactively by DocuSolve.

Imaging and Archiving Products

ImageCreate. ImageCreate is an imaging software product that converts print
datastreams into indexed documents for storage in leading imaging systems.
ImageCreate applications include indexing and archiving telephone bills,
insurance documents, and customer statements. ImageCreate accepts documents in
IBM Advanced Function Presentation (AFP), Xerox Metacode, and 3211 line
printer data formats. The software then indexes and transforms them into a
format for storage in imaging systems such as Cirrus, FileNet, ImagePlus,
KeyFile, Sigma, ViewStar and WANG. Additionally, ImageCreate comes with an API
for custom storage and FAX Server integration. ImageCreate operates under MVS,
IBM OS/2, HP-UX, and AIX operating systems.

I.R.I.S. I.R.I.S. is an imaging software product that converts images from
imaging systems to print datastreams. I.R.I.S. applications include the
conversion of scanned or archived images into print objects for inclusion in
bank statements, life insurance policies, and invoices. I.R.I.S. accepts
images from scanners, fax or imaging systems and converts the images to a
format required by IBM AFP and Xerox Metacode printers. Also, I.R.I.S. comes
with an API to provide integration support with almost any imaging or document
management system. I.R.I.S. operates under MVS, IBM OS/2, HP-UX, and AIX
operating systems.

DocuView. DocuView includes the DocuView Client and DocuSave Server.
DocuView allows users to archive, retrieve, view, and reprint internally
generated documents utilizing their original resources (e.g., fonts) at a
fraction of the cost of traditional imaging systems. Documents are archived in
their native print stream formats rather than in large raster formats.
DocuView can be integrated with traditional imaging systems when necessary.
The DocuView client operates under Microsoft Windows. The DocuSave server
operates under AIX and OS/2.

Utility Products

The Commander series of publishing utilities are tools that enable customers
to integrate existing industry-standard publishing and communications products
with Image Sciences products.

DocuGraph. DocuGraph uses variable data to dynamically generate two and
three-dimensional graphs that can be incorporated into documents and printed
on high-speed Xerox or IBM laser printers. DocuGraph operates on MVS,
Microsoft Windows, IBM OS/2, and UNIX platforms.

DocuWord. DocuWord performs as a stand-alone multi-platform document
composition system, or in conjunction with DocuMerge to produce highly
personalized documents. DocuWord operates on MVS, Microsoft Windows, IBM OS/2,
and UNIX platforms.

PrintCommander. PrintCommander is a print driver for Microsoft Windows that
allows the user to use Windows-based composition products for printing on
high-speed production Xerox Metacode and IBM AFP printers. PrintCommander also
enables the user to convert fonts, create forms, and normalize documents for
use with DocuMerge and DocuSolve.

TagCommander. TagCommander for Windows enables OLE-compatible Windows
composition tools to automate the insertion of variable data spaces for use by
DocuMerge and DocuSolve.

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<PAGE>

RuleCommander. RuleCommander for Windows gives DocuMerge users an easy-to-
use graphical user interface (GUI) to set up and maintain document assembly
rules for DocuMerge.

GrafxCommander. GrafxCommander for Windows creates graphic print resources
for IBM AFP and Xerox Metacode printers from Windows applications, and
converts AFP and Metacode print resources for use by Windows applications.

CommCommander. CommCommander provides peer-to-peer communication
capabilities between mainframe and client/server based Image Sciences
applications.

PRODUCT DEVELOPMENT

Since its inception, Image Sciences has made substantial investments in
research and product development. Image Sciences' product development efforts
are focused on enhancing and broadening it's current software product
offerings, as well as developing new products to compliment existing products
and provide additional functionality.

In fiscal 1996 and 1995, Image Sciences incurred total software development
costs of approximately $2,385,000 and $2,094,000, respectively, of which Image
Sciences capitalized approximately $534,000 and $668,000, respectively, and
expensed approximately $1,851,000 and $1,426,000, respectively. During fiscal
1996 and 1995, Image Sciences charged to expense approximately $814,000 and
$736,000, respectively, related to the amortization of capitalized computer
software development costs.

CUSTOMERS AND DISTRIBUTION

Image Sciences markets its products through various channels, including
direct sales, marketing alliances, and distributors. Image Sciences employs
direct sales representatives that operate from the corporate headquarters in
Dallas, Texas, except for one sales representative located in California.

Image Sciences generally markets to large and mid-size organizations that
have a need for integrated solutions for the production of insurance policies,
bank statements, credit card statements, direct mail, bills of lading,
invoices, and many other document publishing applications. Currently, the
majority of Image Sciences revenue is generated from the insurance industry.
For the year ended July 31, 1996, 85% of Image Sciences' revenues were derived
from customers in the insurance industry. No one customer accounted for more
than 10% of revenue for the year ended July 31, 1996.

Outside of North America, Image Sciences relies heavily on distributor
relationships to market its products. Distributor relationships are
established in Europe, South Africa, and Asia. Image Sciences' most
significant marketing alliance is with The Continuum Company for the insurance
and financial services industries in Europe and most of Asia.

EMPLOYEES

As of January 31, 1997, Image Sciences had 64 full-time employees. Image
Sciences believes its future success will depend in part on its continued
ability to attract and retain highly qualified personnel in a competitive
market for experienced and talented software engineers and sales and marketing
personnel. None of Image Sciences' employees are represented by a labor union
or subject to a collective bargaining agreement.

COMPETITION

The market for Image Sciences document automation products is intensely
competitive, subject to rapid change and significantly affected by new product
introductions and other market activities of industry participants. Image
Sciences' software products are targeted at organizations that require the
ability to produce large quantities of customized and personalized documents
in paper or electronic form. Image Sciences faces

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direct and indirect competition from a broad range of competitors who offer a
variety of products and solutions to Image Sciences' current and potential
customers. Image Sciences' principal competition currently comes from (i)
systems developed in-house by the internal MIS departments of large
organizations, and (ii) direct competition in a number of its vertical
markets, including Document Sciences Corporation (which is partially owned by
Xerox), M&I DataServices, Inc., and Group 1 Software, Inc.

It is also possible that the company will face competition from new
competitors. Moreover, as the market for document automation software
develops, current or potential competitors with significantly greater
resources than Image Sciences, could attempt to enter or increase their
presence in the company's market either independently or by acquiring or
forming strategic alliances with competitors of Image Sciences or to otherwise
increase their focus on the industry. In addition, current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties to increase the ability of their products to
address the needs of Image Sciences' current and prospective customers, and it
is possible that new competitors or alliances among competitors may emerge and
rapidly acquire significant market share. Increased competition may result in
price reductions, reduced gross margins and loss of market share, any of which
could have a material adverse effect on Image Sciences' business, operating
results and financial condition. There can be no assurance that Image Sciences
will be able to compete successfully against current or future competitors or
that competitive pressures faced by Image Sciences will not materially
adversely affect its business, operating results and financial condition. See
"Risk Factors--Competition."

INTELLECTUAL PROPERTY, TRADEMARKS AND PROPRIETARY RIGHTS

Image Sciences relies on a combination of copyright, trademark and trade
secret laws, employee and third-party nondisclosure agreements and other
methods to protect their respective proprietary rights. Despite these
precautions, it may be possible for unauthorized third parties to copy certain
portions of Image Sciences' products or obtain and use information Image
Sciences regards as proprietary. While Image Sciences' competitive position
may be affected by its ability to protect its proprietary information, Image
Sciences believes that trademark and copyright protections are less
significant to Image Sciences' success than other factors, such as the
knowledge, ability, and experience of Image Sciences' personnel, name
recognition, and ongoing product development and support.

Image Sciences software products are licensed to end-users on a "right to
use" basis pursuant to a perpetual license, which is signed by the end-user
and Image Sciences. The laws of some foreign countries do not protect Image
Sciences' proprietary rights to the same extent as do the laws of the United
States. See "Risk Factors--Limited Protection of Intellectual Property and
Proprietary Rights."

As the number of software products in the industry increases and the
functionality of these products further overlap, Image Sciences believes that
software programs will increasingly become subject to infringement claims.
There can be no assurance that third parties will not assert infringement
claims against Image Sciences in the future with respect to current or future
products. Any such assertion could require Image Sciences to enter into
royalty arrangements or result in costly litigation.

Image Sciences also relies on certain software that it licenses from third
parties, including software that is integrated with internally developed
software and used in its products to perform key functions. There can be no
assurances that these third-party software licenses will continue to be
available to Image Sciences on commercially reasonable terms, or that the
software will be appropriately supported, maintained or enhanced by the
licensors.

FACILITIES

Image Sciences leases approximately 23,000 square feet of office space in
Dallas, Texas for its corporate headquarters, including administrative, sales,
services, and product development. This lease expires April 30, 2005, but may
be terminated May 31, 2000. Office space is also leased in California for a
sales office. Image

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Sciences believes that its existing office facilities and additional space
available to it are adequate to meet its requirements, and that in any event,
suitable additional or alternative space adequate to serve Image Sciences'
foreseeable needs will be available on commercially reasonable terms.

LEGAL PROCEEDINGS

In August 1992, a customer brought a lawsuit against Image Sciences,
International Business Machines Corp. ("IBM") and IBM's sales manager seeking
substantial actual damages and punitive damages relating to the performance of
its computer system. Image Sciences was a subcontractor to an agreement
between IBM and such customer to provide a computer hardware and software
system for image processing, among other functions. The customer also signed a
license agreement with Image Sciences for certain image processing software.
Although summary judgment has been granted in favor of Image Sciences as to
certain claims, this has been appealed and other claims, as well as the
appeal, remain pending.

In December 1995, a former employee and her family filed a lawsuit against
Image Sciences, certain current and former officers of Image Sciences, IBM and
related parties, alleging, among other claims, breach of a settlement
agreement in a prior lawsuit. The plaintiffs seek unspecified actual and
punitive damages.

Image Sciences intends to continue to vigorously contest these claims and
believes that the resolution of such claims will not have a material adverse
effect on its financial condition or results of operations.

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BUSINESS OF FORMMAKER

GENERAL

FormMaker develops, markets, installs and services electronic document
automation and imaging systems to meet the needs of insurance, financial
services, utility and other document-intensive industries. FormMaker's
Document Automation Platform ("DAP") software technology was developed
specifically for paper-intensive industries to reduce manual procedures,
improve workflow and reduce the costs associated with paper-based
transactions. DAP components can be implemented on either a departmental or
enterprise-wide basis. DAP offers support for multiple hardware platforms and
operating environments to provide a high degree of flexibility and
scalability. DAP's electronic images can be used on a "front-end" and "back-
end" basis. On the front-end, electronic images can be used to collect and
edit data. On the back-end, the electronic images can accept data from the
business applications and match the data to the forms or documents. Documents
can then be assembled into sets and properly sequenced to print, sorted in
recipient order. DAP has the ability to electronically store and later
retrieve every printed document on-line saving cost when compared with the
storage and retrieval of paper documents. User's can also reduce costs by not
printing paper which would have to be manually filed and retrieved. The
archive and retrieval technology of DAP can also replace inefficient storage
methods such as microfiche.

FormMaker's imaging products are marketed under the Micro Dynamics MARS/NT
("Micro Dynamics MARS/NT"), Micro Dynamics MARS/2000 ("Micro Dynamics
MARS/2000") and Micro Dynamics FreeForm ("FreeForm") names. Micro Dynamics
MARS/NT is a highly scalable, cross platform archival document imaging system
with a client-server architecture. FreeForm adds content based searching to
Micro Dynamics MARS/NT, and Micro Dynamics MARS/2000 adds full document
management and workflow capabilities to Micro Dynamics MARS/NT.

Micro Dynamics MARS/NT systems are typically installed at the departmental
level in large organizations. Application areas vary widely and include
managing manufacturing records for quality control, storing student records in
secondary education, and providing litigation support in corporate legal
departments. Micro Dynamics MARS/NT includes an Application Program Interface
that allows third parties to customize Micro Dynamics MARS/NT functionality.
The FormMaker imaging products use a client-server architecture connected over
TCP/IP networks including LANS, company intranets and wide area networks such
as the Internet. They support Windows (3.1.x, 95 and NT) and Macintosh desktop
computers with servers running on Windows NT of Macintosh operating systems.

FormMaker was founded in 1983 under the name Turnkey Computers, Inc. an
Alabama corporation. Turnkey, a systems consulting and custom development
company, became FormMaker Software, Inc. On December 31, 1988, FormMaker
merged with Software Partners, an Atlanta-based firm. Software Partners
contributed key management and technical personnel to the merger and
substantially broadened FormMaker's technology base. In late 1991, FormMaker
consolidated operations in Atlanta and established itself as a Georgia
corporation. On May 18, 1996, FormMaker acquired Micro Dynamics through a
purchase transaction for an aggregate purchase price of $3,225,000, consisting
of $1,124,887 in cash and 653,033 shares of FormMaker stock.

PRODUCTS

FormMaker's document automation products include proprietary and third party
software which are integrated to automate paper-intensive business
transactions, principally for insurance, financial services, utilities and
healthcare industries. Through the acquisition of Micro Dynamics, FormMaker
develops and markets fully scalable, cross platform imaging, document
management and workflow products and services under the Micro Dynamics
MARS/2000 name to the education, government, legal and corporate market.
FormMaker's document automation products are based upon a core technology of
software that can be configured to automate and document a variety of business
transactions. Base architecture is based upon the concept of "resource
libraries."

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These libraries contain the electronic document images for the forms, data
definitions for the data elements to be processed with these images, and the
processing logic for the manner in which these electronic documents will be
"filled out," routed, assembled and, if necessary, printed. FormMaker provides
a comprehensive set of software tools to develop and maintain these resource
libraries.

FormMaker's document automation software enables end-users to share
documents, pass data through systems, maintain version control when revising
or updating a form or document, improve and create more efficient internal
workflows, eliminate manual assembly, document filing and document retrieval,
and eliminate the necessity of physical space to file and store paper
documents. Key features of FormMaker's software include graphical user
interface to display electronic documents and support data entry; automation
of business procedures with "processing rules"; tools for error checking,
storage, handling and routing of incomplete transactions; the ability to
provide output fully sorted and collated; the support of distributed,
centralized and client/server document operations; the support of multiple
hardware platforms and operating systems; and the inclusion of software tools
for creating, editing and maintaining electronic document libraries.

The FormMaker system license fee typically ranges from $5,000 for a small
departmental system to in excess of $1.0 million for a large enterprise-wide
system. Most customers expand their systems with additional product options
and services which may exceed the original system purchase price. FormMaker's
document automation software products are written in C programming languages
and operate on a variety of platforms, including Microsoft Windows, Microsoft
Windows 95, IBM OS/2, Microsoft Windows NT, UNIX, IBM AS/400 and IBM MVS.
FormMaker's mainframe and midrange product supports systems running on
operating environments which range from IBM, HP, AT&T, UNISYS, PCs or other
workstations.

The components of FormMaker's DAP may be generally described as follows:

Entry/Display Module. The display consists of an electronic document image
on the computer screen in WYSIWYG format, allowing fill-in of data directly
onto the document image. "Intelligent" features speed data and entry and
improve accuracy. These features are designed for non-technical data entry
personnel and include guidance of users from field to field, bypassing fields
that do not require the user's attention; format masks to automatically assign
values such as currency, commas or data formats; automatic fill-in of
repetitive data, such as a client's name, to reduce data entry errors; and
easy to use scripting language to perform calculations and create pop-up
messages. The Entry/Display module operates in stand-alone, LAN or
client/server environments under IBM OS/2 or Microsoft Windows.

Work-In Process Module. The Work-in-Process module stores incomplete or
pending work for later completion, error correction and electronic routing.
Work-in-Process operates in stand-alone, LAN or client/server configurations
under IBM OS/2 or Microsoft Windows. It also interfaces with cc:Mail and
Microsoft Mail.

Print/Merge Module. The Print/Merge module provides hard copy printing and
data merge capabilities. This module prints individual forms or documents and
allows documents to be grouped into "sets." It supports both on-demand and
batch printing. Prior to printing, the Print/Merge module accesses the
selected documents and merges the electronic images with the variable data.
The module sequences the documents so that output is printed fully collated by
recipient and sorted in the correct document order. Print/Merge printer
support includes IBM Advanced Function Printing, Hewlett Packard PCL, Xerox
Metacode and Postscript. The module operates in stand-alone, LAN,
client/server, midrange and mainframe environments under UNIX, IBM AS/400, IBM
OS/2, Microsoft Windows or MVS operating systems.

Archive and Retrieval Module. The Archive and Retrieval module provides
permanent storage and retrieval for all documents which have been printed.
Data can be stored to a hard disk, optical disk or other media in compressed
format. The data is archived once for each transaction, while the document
image is stored just once. When the document is needed again, the system
retrieves the data, merges the document images with the Library Manager and
displays the document for on-screen review, reprinting or importing into
another

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application. Archive functions in stand-alone, LAN, client/server, midrange
and mainframe environments under UNIX, IBM AS/400, IBM OS/2, Microsoft Windows
or IBM MVS operating systems.

Rules Processors Module. The Rules Processor module manages the execution of
the other modules and gives DAP its flexibility. As the most powerful system
component, the Rules Processor executes rules which are integrated
specifically for a particular system. Rules may include when to process a
certain kind of job, how to define a particular document set, what to do with
a specific form or document and how to process a certain data field. The
module operates in workstation, mid-range and mainframe environments under IBM
OS/2, Microsoft Windows, UNIX, IBM AS/400 and IBM MVS operating systems.

Micro Dynamics MARS/NT. Micro Dynamics MARS/NT offers high volume scanning
of paper documents, indexing of documents in a database and document storage
on high capacity devices (including Write Once Read Multiple optical disks).
Once documents are in the system, Micro Dynamics MARS/NT allows flexible
searching to locate documents on workstations connected to servers by the
network.

Micro Dynamics FreeForm. Freeform is an optional component of Micro Dynamics
MARS/NT that offers high performance searching through the full text of a
document. Using optical character recognition, document images are converted
to document text. FreeForm then creates an index of every word in each page of
each document, then any word or phrase in the collection can be located
instantly. FreeForm is used to quickly navigate through many kinds of text
documents (e.g., legal transcripts, contracts, collected correspondence and
technical documentation).

Micro Dynamics MARS/2000. Micro Dynamics MARS/2000 extends the Micro
Dynamics MARS/NT system to include full document management and workflow
allowing users to control access to documents, route them through a sequence
of steps involving other users, organize them into folders, and track versions
and revisions of changing documents. Micro Dynamics MARS/2000 is an optional
extension to the Micro Dynamics MARS/NT imaging system and incorporates the
OpenText LiveLink product.

Consulting Services. FormMaker offers a full range of services, including
consulting, implementation, custom development, print outsourcing, training
and electronic document library development. FormMaker's consulting services
group works with clients to develop and define document automation strategies.
They have developed a unique six phased approach to build a document
automation strategy. FormMaker's print outsourcing services utilizes
FormMaker's software to provide customers with a solution for handling high
volume, complex print, finish and mailing requirements.

Outsourcing Services. FormMaker offers print outsourcing services which
utilize FormMaker's software in providing to customers a solution for handling
high volume, complex print, finish and mailing requirements. FormMaker
operates one print production center in Atlanta which uses high volume
printers, and takes electronic output from customers for printing of policies
and other customer mailings, and bundles the output for bulk mailings.

MARKETING, CUSTOMERS AND DISTRIBUTION

FormMaker currently sells its products and services directly through its own
sales organization, which presently consists of eleven salespersons, and
through its marketing alliance partners in the insurance and financial
services industries. FormMaker is committed to expanding its presence in these
and other industries through pursuing additional marketing partnerships and by
continuing to market directly to businesses within the document-intensive
industries.

FormMaker's marketing alliance partner is PMSC for the insurance industry.
FormMaker's marketing alliance partner has entered into a marketing agreement
whereby the partner provides a range of marketing, sales, implementation and
support services. PMSC, markets FormMaker's products and services primarily to
the insurance industry. Revenues from PMSC represented 65% of FormMaker's
total 1996 revenues.

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Effective January 1, 1997, FormMaker entered into a marketing agreement with
PMSC. Under the terms of the marketing agreement, PMSC was granted the
exclusive worldwide right to market and license FormMaker's non-imaging
software within the property and casualty and life insurance markets.
Additionally, PMSC has a world-wide non-exclusive right to market and license
such software in industries other than the aforementioned markets, but only
for so long as FormMaker does not grant exclusive rights with respect to a
particular territory or industry to FormMaker sales personnel or a third
party. In consideration, PMSC pays FormMaker a portion of the end-user license
fees for the software received by PMSC. Under a subcontractor agreement and a
related agreement with PMSC, FormMaker provides third party processing and
other services to end-users and PMSC. In consideration, PMSC pays service fees
to FormMaker. The three-year term of the marketing agreement and subcontractor
agreement expires on December 31, 1999, unless earlier terminated in
accordance with such agreement. The related agreement expires in June 1997
unless extended by mutual agreement of the parties. Revenues for fiscal year
1996 for FormMaker were approximately $8.3 million from the marketing
agreement and the subcontractor agreement and approximately $4.6 million from
the related agreement. See "Risk Factors--Reliance on a Major Client
Relationship." The marketing agreement also contains representations and
warranties, default provisions, indemnification provisions and other standard
provisions in contracts of this type.

FormMaker has also entered into a license agreement with PMSC granting PMSC
a perpetual, non-exclusive, royalty-free, worldwide license to use or license
FormMaker's software (and derivatives thereof) to third parties within the
insurance industry. FormMaker is compensated by PMSC under the license
agreement when PMSC licenses FormMaker's software to third parties or uses
FormMaker's software to provide outsourcing services to its customers.
FormMaker is obligated to provide PMSC with all object code, source code and
documentation relating to FormMaker's software as it currently exists and as
it shall be improved or modified during the term of the marketing agreement
described in the preceding paragraph. The license agreement contains
representations and warranties, indemnification provisions and other standard
provisions in licenses of this type. Under the terms of the marketing
agreement and the license agreement, PMSC is the sole third party distributor
of FormMaker's software products. FormMaker recently renegotiated the
marketing agreement which had existed since 1993. Under the new terms,
FormMaker is allowed to sell directly into the insurance market. This allows
FormMaker to receive revenues from certain customers without sharing the
revenues with PMSC. It is anticipated that the new agreement will increase
overall revenues while decreasing the percentage of FormMaker's overall
revenues which come from PMSC.

Under the terms of the marketing agreement and the license agreement between
FormMaker and PMSC, FormMaker shall not be entitled to revenues from PMSC use
or licensing of FormMaker's software once the marketing agreement terminates,
but PMSC shall have the right to continue to use and license such software.
See "Risk Factors--Reliance on a Major Client Relationship." After expiration
of the marketing agreement, which expires on December 31, 1999, both parties
can choose to renew the agreement, or to cancel. If the marketing agreement is
renewed, revenues are anticipated to continue on pace with historical
performance. If the marketing agreement expires, FormMaker will receive no
revenues from new licenses sold through PMSC. Maintenance revenues, however,
will continue on existing contracts. Although it is anticipated that new
revenues from PMSC will cease, FormMaker will then have the ability to sell
directly to the insurance marketplace without sharing revenues with PMSC.

FormMaker's sales resources for both direct and indirect sales are organized
based upon the industry markets being pursued by FormMaker described above.
When working with a marketing alliance partner, FormMaker's sales persons work
as a complementary extension of the partner's sales assistants. FormMaker
requires the marketing organizations to provide technical product
demonstrations, public relations assistance, assistance at trade shows,
advertising assistance, assistance in development of marketing collateral and
assistance with proposal development.

FormMaker targets customers world-wide, although emphasis is placed upon
sales to clients in the United States and Canada. FormMaker's sales force and
sales support staff conduct multiple presentations of the DAP technology.
FormMaker's consulting services group may be utilized to conduct requirement
studies or needs analysis. In the large account insurance market place, the
sales cycle is generally from six to nine months.

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FormMaker's customers include businesses in the insurance, financial
services, and utilities industries. In 1996, 71% of FormMaker's revenues were
derived from customers in the insurance industry. As of December 31, 1996,
FormMaker had approximately 383 end-user customers worldwide with the primary
customer concentration being in the United States and Canada. FormMaker's end-
user customers include the Internal Revenue Service, American Home Assurance
Company, Kemper Corporation, Prudential Insurance Company, Commonwealth Bank,
Unisys Corporation, Royal Bank and ABN Amro.

In 1996, PMSC accounted for approximately 65% of the Company's total
revenues. No other customers accounted for more than 10% of total revenues in
such fiscal year. In the year ended December 31, 1995, PMSC accounted for
approximately 72% of the Company's total revenues. See "Risk Factors--Reliance
on a Major Client Relationship."

COMPETITION

FormMaker competes with other document automation and imaging companies, as
well as producers of pre-printed forms mainly on the basis of product
functionality and compatibility, services capability and cost savings
potential. The document automation marketplace is characterized by different
technology clusters and no single vendor dominates all the clusters.

FormMaker's competitors include many companies which are larger and more
established and have substantially more resources than FormMaker. FormMaker
believes that its ability to provide a comprehensive, modular, enterprise-wide
solution consisting of the components described above distinguishes
FormMaker's software from that of its competitors. See "Risk Factors--
Nonexclusive Perpetual License" and "--Competition."

RESEARCH AND DEVELOPMENT

FormMaker's software development efforts are focused primarily on enhancing
existing products and developing new technology in a manner which will better
reposition FormMaker to penetrate new markets.

FormMaker's research and development efforts are influenced significantly by
customer requirements. New features may be customized initially for delivery
to a single customer and then incorporated into future versions of its
products. FormMaker recently completed development of an improved, higher
capacity version of its batch printing system and intends to extend the
document routing and tracking capability of its software.

New research and development includes the integration of FormMaker's modules
with the Internet to provide an enterprise Internet solution and development
of systems for use in the utility and financial services industries. FormMaker
also intends to extend support beyond traditional Microsoft Windows, OS/2
client workstation to operating environments based on the Internet.

In 1996 and 1995, FormMaker incurred total software development costs of
approximately $3,046,000 and $1,784,000 respectively, of which FormMaker
capitalized approximately $2,414,000 and $1,366,000, respectively, and
expensed approximately $632,000 and $418,000, respectively. Separately during
1996 and 1995, FormMaker expensed approximately $1,134,000 and $519,000,
respectively, related to the amortization of capitalized computer software
development costs.

INTELLECTUAL PROPERTY

FormMaker regards its software as proprietary and relies primarily on a
combination of copyrights, trade secrets, distribution, software license
agreements and other intellectual property protection methods to safeguard its
software products. See "Risk Factors--Nonexclusive Perpetual License" and "--
Protection of Intellectual Property."

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As a result of the merger of FormMaker's predecessor corporation into
FormMaker in June 1992, FormMaker owns the federal trademark FORMMAKER.
FormMaker is in the process of filing documentation with the United States
Patent and Trademark Office to update its records with respect to the chain of
title for such trademark.

EMPLOYEES

As of December 31, 1996, FormMaker employed 236 full-time employees and five
contract employees. Approximately 195 of FormMaker's employees are located in
Atlanta. None of FormMaker's employees are represented by a labor union or are
subject to a collective bargaining agreement. FormMaker has never experienced
a work stoppage and believes that its employee relations are good.

LEGAL PROCEEDINGS

As of the date of this Joint Proxy Statement/Prospectus, FormMaker is not a
party to any legal proceedings.

PROPERTIES

FormMaker's principal administrative, sales, marketing and research and
development departments occupy approximately 55,396 square feet of office
space located at 2300 Windy Ridge Parkway, Suite 400 North, Atlanta, Georgia
30339. The lease for this space expires on December 31, 2002. FormMaker's
print outsourcing facility is located at 100 Tradeport Boulevard, Suite 1011,
Atlanta, Georgia 30354. This facility occupies approximately 10,000 square
feet under a lease which expires on November 16, 2000. FormMaker's staff in
New Hampshire is located in a 1,700 square foot facility situated at 6 Bedford
Farms, Kilton Road, Bedford, New Hampshire 03110. The lease for this facility
expires on February 28, 1998. FormMaker's Micro Dynamics facility is located
at 8455 Colesville Road, Silver Springs, Maryland 20910. This facility
occupies approximately 10,271 square feet under a lease which expires December
31, 2001.

FormMaker believes that its facilities are suitable and adequate for its
current operations.

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MANAGEMENT OF DOCUCORP

The following table sets forth information with respect to each person who
will serve as a director or an executive officer of DocuCorp and their ages as
of January 31, 1997:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Arthur R. Spector....... 56 Chairman of the Board
Michael D. Andereck..... 44 President, Chief Executive Officer and Director
Samuel M. Wilkes........ 52 Senior Vice President, Sales and Marketing
B. Bruce Dale........... 33 Senior Vice President, Products
Kerry LeCrone........... 50 Senior Vice President, Services
Hsi-Ming Lin............ 40 Senior Vice President, Research and Development
Todd A. Rognes.......... 33 Senior Vice President, Finance
Milledge A. Hart, III... 62 Director
John D. Loewenberg...... 56 Director
Warren V. Musser........ 69 Director
Sidney B. Landman....... 50 Director
</TABLE>

DocuCorp is currently evaluating other director candidates and anticipates
that one independent director and one Xerox designated director will be added
to the DocuCorp Board upon the Closing or as soon thereafter as practicable.

Each director will hold office until the next annual meeting of stockholders
of DocuCorp or until his successor has been elected and qualified. The
executive officers of DocuCorp are elected by the DocuCorp Board and serve at
the DocuCorp Board's discretion.

ARTHUR R. SPECTOR has been Chairman of the Board and a Director of FormMaker
since December 1995 when Safeguard Delaware acquired stock in FormMaker. Since
January 1997, Mr. Spector has been the managing director of TL Ventures LLC, a
fund management company organized to manage the day-to-day operations of TL
Ventures III L.P. and TL Ventures III Offshore L.P., which are recently
organized venture capital partnerships investing in tandem. Mr. Spector has
also served as an executive officer of several of TL Ventures III L.P.'s and
TL Venture III Offshore L.P.'s portfolio companies. From January 1995 through
December 1996, Mr. Spector served as Director of Acquisitions of Safeguard
Scientifics, Inc. and since November 1994 has been Chairman of the Board of
USDATA Corporation, a multinational supplier of applications development
tools, distribution management software and integration devices. He also
serves as Chairman of the Board of HDS Network Systems Inc., a manufacturer of
network computers and a provider of desktop computing services. From July 1992
until May 1995, Mr. Spector served as Vice Chairman and Secretary of Casino &
Credit Services, Inc. From October 1991 to December 1994, Mr. Spector was
Chief Executive Officer and a director of Perpetual Capital Corporation, a
merchant banking organization. Mr. Spector is a graduate of the Wharton School
of the University of Pennsylvania.

MICHAEL D. ANDERECK has been President and Chief Executive Officer of Image
Sciences since 1984. He joined Image Sciences as Vice President-Finance in
1983, and was elected to the Board of Directors and named Treasurer of Image
Sciences shortly thereafter. In 1984, Mr. Andereck assumed the position of
President and Chief Executive Officer. From 1975 through 1983, Mr. Andereck
was with KPMG Peat Marwick, where he dealt extensively with initial and
recurring registrations with the Securities and Exchange Commission and
attained the position of senior manager. Mr. Andereck holds a Bachelor of
Business Administration degree in Accounting and Information Sciences from the
University of North Texas.

SAMUEL M. WILKES became Vice Chairman and Chief Operating Officer of
FormMaker in December 1995. He has been a director of FormMaker since 1988 and
served as President from such date through December 1995. Mr. Wilkes founded
Software Partners, Inc. in 1986, which merged into FormMaker in 1988. From
1985 to 1986, Mr. Wilkes was President of Automation Solutions, Inc., a
software company, and from 1979 to 1985,

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<PAGE>

he served as Chief Operating Officer of Leader Systems, Inc., a software
company. Mr. Wilkes holds a B.S. degree in chemistry and an M.B.A. in
International Marketing from the University of Florida.

B. BRUCE DALE has served as Vice President of Product Development of Image
Sciences since 1994. He joined Image Sciences in 1986 as a Client Services
Custom Software Developer. Since 1988, Mr. Dale has held several management
positions within Client Services, Marketing and Product Development. In 1992,
he was appointed Director of Product Direction. Mr. Dale received a Bachelor
of Science degree in Computer Science from Western Kentucky University.

KERRY LECRONE became Senior Vice President, Technical and Processing
Services of FormMaker in March 1995. Between 1974 and 1990, Mr. LeCrone served
in various capacities for several insurance and financial service businesses
with primarily responsibilities for software development and operations. In
1990, Mr. LeCrone co-founded Adam Investment Services, a financial services
company that became a leading retail investment management organization with
more than $1.0 billion in assets under management.

HSI-MING LIN joined FormMaker in 1987 as Manager of Development and is
credited with developing FormMaker's current technology. He became Senior Vice
President, Research and Development of FormMaker in January 1994, and in such
capacity has responsibility for designing, developing and providing
programming service. Prior to joining FormMaker, Mr. Lin held various
management and programming positions with other software and service
companies. Mr. Lin received a B.E. in Computer Science from TamKang
University, Taiwan, R.O.C. and an M.S. degree in Information and Computer
Science from Georgia Tech University.

TODD A. ROGNES has been Vice President of Finance and Administration of
Image Sciences since 1994. Mr. Rognes joined Image Sciences in 1986 as a Staff
Accountant and was appointed Controller in 1991. Prior to joining Image
Sciences, Mr. Rognes was a staff accountant with IBP, Inc. Mr. Rognes holds a
Bachelor of Business Administration degree in Accounting from Iowa State
University. Mr. Rognes is a Certified Public Accountant.

MILLEDGE A. HART, III has been a member of Image Sciences' Board of
Directors since 1985. Mr. Hart is founder and Chairman of the Board of Hart
Group, Inc., Rmax, Inc., and Axon, Inc. He also serves on the Board of
Directors of Home Depot and the Board of Trustees of Southern Methodist
University. Mr. Hart served as President of Electronic Data Systems from 1970
until his retirement in 1977.

JOHN D. LOEWENBERG is currently Chief Executive Officer and President of
FormMaker. Before that he served as Executive Vice President and Chief
Administrative Officer of Connecticut Mutual, a life insurance company, from
May 1995 through March 1996. Prior to joining Connecticut Mutual, Mr.
Loewenberg served as Senior Vice President of Aetna Life and Casualty, a
multi-line insurer, and as Chief Executive Officer of Aetna Information
Technology, the information systems company of Aetna Life and Casualty, from
March 1989 to May 1995. Mr. Loewenberg was Chairman of Precision Systems, Inc.
until April 1996 and is currently a member of the Board of CompuCom Systems,
Inc., Diamond Technology Partners, Sanchez Computer Associates and Imetrix. He
is also a trustee of several not for profit organizations.

WARREN V. MUSSER has been Chairman of the Board and Chief Executive Officer
of Safeguard since 1953. Mr. Musser is also the Chairman of the Board of
Cambridge Technology Partners (Massachusetts), Inc., a director of Coherent
Communications Systems Corporation and CompuCom, and a trustee of Brandywine
Realty Trust. Mr. Musser also serves on a variety of civic, educational and
charitable Boards of Directors including the Board of Overseers of The Wharton
School of the University of Pennsylvania and serves as Vice
President/Development, Cradle Liberty Council, Boy Scouts of America, as Vice
Chairman of The Eastern Technology Council, and as Chairman of the
Pennsylvania Council on Economic Education.

SIDNEY B. LANDMAN has served as the Vice President of Finance and Chief
Financial Officer for the Production Systems Group at Xerox from January 1996
to present. Mr. Landman is responsible for all financial, planning, internal
control and accounting activities in the Production Systems Group and is a
senior member of

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<PAGE>

the Divisions Policy, Strategy and Operating Councils. In addition, Mr.
Landman acts as the senior financial advisor to the Production Systems Group
President and Senior Staff. Mr. Landman served as Vice President of Finance
and Chief Financial Officer for Xerox's Xerox Production Systems Division from
April 1995 to January 1996. Mr. Landman served as Vice President of Finance
and Chief Financial Officer of Xerox's Document Production Systems Division
from June 1994 to April 1995 and as Vice President of Business Operations of
Xerox's Document Production Systems Division from December 1993 to April 1994.
From February 1992 until joining Xerox in December of 1993, Mr. Landman served
as the Chief Financial Officer of Amtote, International. Mr. Landman holds a
Bachelor of Arts degree in Economics and finance from the City University of
New York, and an MBA degree in Finance from Loyola College of Baltimore.

COMPENSATION OF DIRECTORS

It has not yet been determined whether and to what extent directors will be
compensated for their services to DocuCorp.

EXECUTIVE COMPENSATION

The following table sets forth, for the periods set forth below, the
compensation paid to those individuals that DocuCorp believes will be its five
most highly compensated officers (the "Named Executive Officers"). The
information set forth below relating to Messrs. Andereck and Dale relate to
the fiscal year ended July 31, 1996 and the information relating to Messrs.
Wilkes, LeCrone and Lin relate to the fiscal year ended December 31, 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------- ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION(1)
--------------------------- ------------------- ---------------
<S> <C> <C> <C>
Michael D. Andereck.................... $ 200,000 $ 100,000 $ 4,121
President and Chief Executive Officer
Samuel M. Wilkes ...................... 150,000 27,432 10,955
Senior Vice President, Sales and
Marketing
B. Bruce Dale ......................... 90,000 20,000 571
Senior Vice President, Products
Kerry LeCrone ......................... 110,000 27,000 1,946
Senior Vice President, Services
Hsi Ming Lin........................... 120,000 23,614 2,047
Senior Vice President, Research and
Development
</TABLE>
- --------
(1) Includes: (i) contributions of $2,453 and $571 to Image Sciences' 401(k)
tax-qualified employee savings and retirement plan on behalf of Mr.
Andereck and Mr. Dale, respectively, and contributions of $2,375, $1,946
and $2,047 to FormMaker's 401(k) tax-qualified employee savings and
retirement plan on behalf of Messrs. Wilkes, LeCrone and Lin,
respectively; (ii) premiums paid by Image Sciences in the amount of $1,668
for term life insurance on behalf of Mr. Andereck; (iii) payment of $2,100
for country club fees by FormMaker on behalf of Mr. Wilkes; and (iv)
payment of $6,480 for a car allowance by FormMaker on behalf of Mr.
Wilkes.

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<PAGE>

The following table sets forth certain information regarding stock options
granted, during the year ended as identified below, to the Named Executive
Officers. The information relating to Messrs. Andereck and Dale relate to the
fiscal year ended July 31, 1996 and the information relating to Messrs.
Wilkes, LeCrone and Lin relate to the fiscal year ended December 31, 1996.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR PER SHARE DATE
---- ----------- ---------------- -------------- ----------
<S> <C> <C> <C> <C>
Michael D. Andereck...... -- -- -- --
Samuel M. Wilkes(1)...... 175,000 16.5 3.48 09/29/06
B. Bruce Dale(2)......... 20,000 10.0 1.25 03/01/06
Kerry LeCrone(1)......... 25,000 2.4 3.48 01/01/06
Hsi-Ming Lin(1).......... 25,000 2.4 3.48 01/01/06
</TABLE>
- --------
(1) These options were granted under FormMaker's stock option plan and
generally vest in four annual installments. DocuCorp will assume all of
FormMaker's obligations under such plan in accordance with its terms and
conditions as in effect at the Effective Time. See "The Merger and Related
Transactions--Conversion of Options."
(2) These options were granted under Image Sciences' stock option plan and
vest in five annual installments. DocuCorp will assume all of Image
Sciences' obligations under such plan in accordance with its terms and
conditions as in effect at the Effective Time. See "The Merger and Related
Transactions--Conversion of Options."

The following table sets forth certain information regarding options held by
each of the Named Executive Officers as of the end of the last fiscal year.
The information for Messrs. Andereck and Dale relate to the fiscal year ended
July 31, 1996 and the information for Messrs. Wilkes, LeCrone and Lin relate
to the fiscal year ended December 31, 1996.

FISCAL YEAR-END OPTIONS

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED OPTIONS
AT FISCAL YEAR-END (#)
-------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------
<S> <C> <C>
Michael D. Andereck(1)............................... 600,000 --
Samuel M. Wilkes(2).................................. 43,750 131,250
B. Bruce Dale(1)..................................... 102,300 61,200
Kerry LeCrone(2)..................................... 36,250 48,750
Hsi-Ming Lin(1)...................................... 38,750 38,750
</TABLE>
- --------
(1) These options were granted under Image Sciences' stock option plan.
DocuCorp will assume all of Image Sciences' obligations under such plan in
accordance with its terms and conditions as in effect at the Effective
Time. See "The Merger and Related Transactions--Conversion of Options."
(2) These options were granted under FormMaker's stock option plan. DocuCorp
will assume all of FormMaker's obligations under such plan in accordance
with its terms and conditions as in effect at the Effective Time. See "The
Merger and Related Transactions--Conversion of Options."

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<PAGE>

EMPLOYMENT AGREEMENTS

In January 1997, DocuCorp entered into employment agreements with Michael D.
Andereck and Samuel M. Wilkes providing for base salaries of $225,000 and
$157,500 per year, respectively. Each employment agreement has an indefinite
term and provides that the employee's salary is to be reviewed annually by the
Board of Directors. In addition to base salary, the agreements allow for
discretionary bonuses, participation in any 401(K) plan and stock option plan
maintained by DocuCorp and other fringe benefits that DocuCorp maintains for
its top-level executives. Both agreements contain severance provisions which,
if triggered, entitle the employees to monthly severance payments in an amount
equal to the affected employees then-current monthly salary for a period of up
to 12 months. The severance payments are triggered by the occurrence of any of
the following events: termination of employment by DocuCorp without cause,
termination of employment by the employee for good reason (which includes a
material failure of DocuCorp to observe or perform any material term of the
employment agreement, the exclusion of the employee from participation in any
new compensation or benefit arrangement offered to similarly situated
employees or a reduction in the employee's level of responsibility, position,
authority or duties), resignation by the employee with 60 days' notice, and,
in the case of Mr. Andereck, total disability. Each employment agreement also
provides a non-competition provision prohibiting the employee from competing
against DocuCorp while employed by DocuCorp and for one year following the
termination of employment.

STOCK OPTION PLAN

DocuCorp intends to adopt a stock option plan prior to the consummation of
the Merger. See "The Merger and Related Transactions--The Merger Agreement"
and "--Conversion of Options."

401(K) PROFIT SHARING PLAN

DocuCorp intends to adopt a 401(k) Profit Sharing Plan, or combine the
existing 401(k) Profit Sharing Plans of Image Sciences and FormMaker, which
plan generally will be available to all full-time employees of DocuCorp and
its subsidiaries and will provide for discretionary contributions by DocuCorp
to such employees.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

DocuCorp, Safeguard and the SG/TL Stockholders entered into the Liquidity
Agreement providing that (i) Safeguard will use commercially reasonable
efforts to conduct and consummate a Qualified Rights Offering; (ii) the SG/TL
Stockholders will purchase a certain number of shares of DocuCorp Class A
Common Stock if DocuCorp is required to redeem shares of DocuCorp Class B
Common Stock, and guarantee an existing line of credit of FormMaker (as
amended); and (iii) DocuCorp will grant, at the Closing and upon payment of
$6,100, to the SG/TL Stockholders DocuCorp Warrants to purchase 610,000 shares
of DocuCorp Class A Common Stock with an exercise price of $5.00 per share and
a term of three years.

FormMaker has entered into an administrative services agreement with
Safeguard providing for the payment of a fee to Safeguard equal to .75% of the
sales of FormMaker through May 31, 1997 and 1% of sales of FormMaker
thereafter. The administrative services agreement will terminate upon
consummation of the Merger.

Micro Dynamics currently owes Safeguard $275,000 and $300,000 under two term
notes. The term notes bear interest at prime plus 1% and are due in monthly
installments through January 1, 2000.

Pursuant to an agreement between Mr. Andereck and Xerox Corporation, the
three Xerox designees to the DocuCorp Board will consist of a designee of Mr.
Andereck (who shall initially be Mr. Andereck), a designee of Xerox
Corporation (who shall initially be Sidney B. Landman) and a mutually
acceptable designee of Xerox and Mr. Andereck (who shall initially be Milledge
A. Hart III).

Pursuant to the Voting and Lockup Agreement, Xerox, Michael D. Andereck, the
SG/TL Stockholders, Joe A Rose, Samuel M. Wilkes and Arthur R. Spector have
(i) agreed to vote shares held by them in favor of the

80
<PAGE>

Merger; (ii) appointed Michael D. Andereck and Arthur R. Spector as attorney-
in-fact and proxy to vote such shares as necessary to approve the Merger and
the transactions contemplated thereby; and (iii) agreed not to transfer or
sell their shares or the shares they receive pursuant to the terms of the
Merger for a period of time.

The Merger Agreement requires as a condition to Closing that certain
existing stockholders enter into a stockholders' agreement requiring such
parties to vote shares they will receive of DocuCorp in such a manner as to
maintain the election to the DocuCorp Board of three designees of Xerox, three
designees of the SG/TL Stockholders and one independent designee mutually
agreed upon by the other six.

Pursuant to a Stock Purchase Agreement between Samuel M. Wilkes, TL II and
TL II Offshore dated January 15, 1997, Mr. Wilkes has agreed to sell
immediately prior to the consummation of the Merger 502,640 shares of
FormMaker Common Stock to TL II and TL II Offshore at a price per share of
$3.09.

Pursuant to a Co-Sale Agreement by and among the SG/TL Stockholders and
Samuel M. Wilkes dated January 15, 1997, the SG/TL Stockholders granted to Mr.
Wilkes the right to "tag-along" in any sale of DocuCorp Common Stock by the
SG/TL Stockholders.

Image Sciences and Xerox Corporation, a stockholder of Image Sciences,
entered into a Cooperative Marketing Agreement in August 1994. Under the terms
of the agreement, Image Sciences and Xerox agree to pay each other commissions
on sales of each others products resulting from successful referrals.

All future transactions between DocuCorp and its officers, directors and
principal stockholders or their affiliates will be on terms no less favorable
to DocuCorp than may be obtained from unrelated third parties, and any such
transactions will be approved by a majority of the disinterested directors of
DocuCorp.

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<PAGE>

PRINCIPAL STOCKHOLDERS OF DOCUCORP

The following table sets forth certain information regarding the beneficial
ownership of the DocuCorp Common Stock after giving effect to the Merger and
the Image Sciences Tender Offer, by (i) each person known to own beneficially
5% or more of the outstanding shares of DocuCorp Common Stock; (ii) each
director of DocuCorp; (iii) each Named Executive Officer; and (iv) all
executive officers and directors as a group. Each of such stockholders has
sole voting and investment power as to shares shown, unless otherwise noted.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
AFTER MERGER AND OFFERING
---------------------------
NAME(1) SHARES(2) PERCENT
------- --------------- -----------
<S> <C> <C>
Safeguard Delaware................................ 2,649,199 25
Xerox Corporation................................. 2,234,692 21
Michael D. Andereck(3)(5)......................... 1,484,235 14
Technology Leaders II(4).......................... 1,287,616 12
Samuel M. Wilkes(6)............................... 390,325 4
B. Bruce Dale(3).................................. 151,828 1
Hsi-Ming Lin...................................... 117,760 1
Arthur R. Spector................................. 107,156 1
Milledge A. Hart, III(3).......................... 101,026 *
Kerry LeCrone..................................... 52,685 *
John D. Loewenberg(7)............................. 0 *
Warren V. Musser.................................. 0 *
Sidney B. Landman................................. 0 *
All Directors, Named Executive Officers, and other
executive officers
as a group (11 persons).......................... 2,498,745 23
</TABLE>
- --------
* Represents less than 1%

(1) The address of Messrs. Andereck, Dale, Hart, LeCrone, Lin, Loewenberg and
Wilkes is c/o DocuCorp, 5910 N. Central Expressway, Suite 800, Dallas, TX
75206. The address of Messrs. Spector and Musser and the address of
Safeguard Delaware and Technology Leaders II is c/o Safeguard Scientifics,
Inc., The Safeguard Building, 435 Devon Park Drive, Wayne, PA 19087. The
address of Xerox Corporation is P.O. Box 1600, Stamford, CT 06904.
Safeguard Delaware is a wholly-owned subsidiary of Safeguard and the
holder of a 4.4% limited partnership interest in Technology Leaders II.

(2) Includes 1,632,899 shares issuable pursuant to outstanding options and
warrants exercisable within 60 days.
(3) Assumes pro-rata participation in the Image Sciences Tender Offer.

(4) Technology Leaders II consists of Technology Leaders II L.P. and
Technology Leaders II Offshore C.V. Gives effect to the purchase of
502,640 shares of FormMaker Common Stock from Samuel M. Wilkes concurrent
with the closing of the Merger. Technology Leaders II Management L.P., a
limited partnership, is the sole general partner of Technology Leaders II
L.P. and co-general partner of Technology Leaders II Offshore C.V.
Technology Leaders II L.P. and Technology Leaders II Offshore C.V. are
venture capital funds that are required by their governing documents to
make all investment, voting and disposition actions in tandem. Technology
Leaders II Management L.P. has sole authority and responsibility for all
investment, voting and disposition decisions for Technology Leaders II.
The general partners of Technology Leaders II Management, L.P. are (i)
Technology Leaders Management, Inc., a wholly-owned subsidiary if
Safeguard, (ii) Robert E. Keith, Gary J. Anderson, M.D., Ira M. Lubert and
Mark J. DeNino, and (iii) four other corporations (the "TLA Corporations")
owned by natural persons, one of whom is a director of Safeguard.
Technology Leaders II Management L.P. is managed by an executive
committee, by whose decisions the general partners have agreed to be
bound, which consists of ten voting members including (i) Warren V.
Musser, who is a designee of Technology Leaders Management, Inc., (ii) Mr.
Keith, Dr. Anderson, Mr. Lubert, Mr. DeNino, Christopher Moller, Ph.D.,
individually, and (iii) one designee of each of the TLA Corporations and
(as a non-voting member) Clayton S. Rose. Technology Leaders Management,
Inc. is the administrative manager of Technology Leaders II, subject to
the control and direction of the executive committee of Technology Leaders
II Management L.P. Mr. Keith is a director of Safeguard. Technology
Leaders Management, Inc. holds a 34% general partnership interest in
Technology Leaders II Management L.P.

82
<PAGE>

(5) Includes beneficial ownership, of which 72,162 shares are held in a trust
which is not in Mr. Andereck's control. Mr. Andereck disclaims any
beneficial ownership as to such shares.
(6) Gives effect to the sale of 502,640 shares of FormMaker Common Stock to
Technology Leaders II concurrent with the Closing.
(7) Under the terms of an employment agreement with FormMaker, Mr. Loewenberg
is to be issued options entitling him to purchase 30,000 shares of
DocuCorp Common Stock. Such options will be granted within the next 60
days, however, it is not presently known when such options will become
exercisable. If exercisable within 60 days, such interest would
approximate 1%.

83
<PAGE>

PRINCIPAL STOCKHOLDERS OF IMAGE SCIENCES

The following table sets forth certain information regarding the beneficial
ownership of the Image Sciences Common Stock as of the Image Sciences Record
Date by (i) each person known to own beneficially 5% or more of the
outstanding shares of Image Sciences Common Stock; (ii) each director of Image
Sciences; (iii) each executive officer of Image Sciences; and (iv) all
executive officers and directors as a group. Each of such stockholders has
sole voting and investment power as to shares shown, unless otherwise noted.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
---------------------------
NAME(1) SHARES(2) PERCENT
------- --------------- -----------
<S> <C> <C>
Xerox Corporation(3).............................. 2,111,933 40
Michael D. Andereck(4)............................ 1,401,014 26
B. Bruce Dale..................................... 138,275 3
Elliott S. Tucker................................. 127,225 2
J.E.R. Chilton, III............................... 110,015 2
Todd A. Rognes.................................... 94,200 2
William E. Weatherford............................ 90,215 2
Milledge A. Hart, III............................. 83,656 2
All executive officers and directors as a group (7
persons)......................................... 2,044,600 38
</TABLE>
- --------
(1) The address of all executive officers and directors is c/o Image Sciences,
5910 N. Central Expressway, Suite 800, Dallas, TX 75206. The address of
Xerox Corporation is P.O. Box 1600, Stamford, CT 06904.
(2) Includes 1,046,400 shares issuable pursuant to outstanding options and
warrants exercisable within 60 days.
(3) Includes 1,963,433 shares of Image Sciences Preferred Stock and 148,500
shares of Image Sciences Common Stock.
(4) Includes beneficial ownership, of which 50,000 shares are held in a trust
which is not in Mr. Andereck's control. Mr. Andereck disclaims any
beneficial ownership as to such shares.

84
<PAGE>

PRINCIPAL STOCKHOLDERS OF FORMMAKER

The table below sets forth certain information regarding the beneficial
ownership of the Common Stock of FormMaker as of the FormMaker Record Date by:
(i) each person known by FormMaker to own beneficially more than 5% of the
outstanding Common Stock; (ii) each director of FormMaker; (iii) each
executive officer of FormMaker; and (iv) all of FormMaker's executive officers
and directors as a group. Each of such stockholders has sole voting and
investment power as to the shares shown.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-----------------------------
NAME (1) SHARES PERCENT
-------- --------------- -------------
<S> <C> <C>
Safeguard Delaware(2)(6)... 3,073,992 48
Technology Leaders II(2)(6)... 1,080,357 17
N.G. Wade Investment
Company(3)................ 435,000 7
John D. Loewenberg(5)...... 0 *
Samuel M. Wilkes III(6).... 1,049,030 17
Michael S. Rupe............ 18,750 *
R. Lee Morris.............. 157,250 3
Hsi-Ming Lin............... 164,844 3
Kerry LeCrone.............. 73,750 1
James Tebay................ 6,250 *
Randy Skinner.............. 98,000 2
Arthur R. Spector(4)....... 150,000 2
Bernard Morgan(4).......... 0 *
Robert E. Keith, Jr.(4).... 0 *
All executive officers and
directors as a group (11
persons).................. 1,717,874 26
</TABLE>
- --------
* Represents less than 1%.
(1) The address of Messrs. Loewenberg, Wilkes, Rupe, Morris, Lin, LeCrone,
Tebay and Skinner is c/o FormMaker Software, Inc., 2300 Windy Ridge
Parkway, Suite 400N, Atlanta, GA 30339. The address of Messrs. Spector,
Morgan and Keith and the address of Safeguard Delaware and Technology
Leaders II is c/o Safeguard Scientifics, Inc., The Safeguard Building, 435
Devon Park Drive, Wayne, Pennsylvania 19087. The address of N. G. Wade
Investment Company, its affiliate Wade Securities, Inc. and D. W. McArthur
is 569 Edgewood Avenue South, Jacksonville, Florida 32245.
(2) Technology Leaders II consists of Technology Leaders II L.P. and
Technology Leaders Offshore C.V. These entities are venture capital funds
that are required by their governing documents to make all investment,
voting and disposition actions in tandem. Technology Leaders II Management
L.P., the sole general partner of Technology Leaders L.P. and the co-
general partner of Technology Leaders II Offshore C.V., exercises through
its executive committee, sole investment and voting power with respect to
the shares owned by those entities.
(3) Includes 250,000 shares held by N. G. Wade Investment Company and 150,000
shares held by its affiliate, Wade Securities, Inc., and 35,000 shares
owned by D. W. McArthur, D. W. McArthur is an officer, director and
stockholder of both entities and may be deemed to be a beneficial owner of
the shares held by such entities.
(4) Mr. Keith is an officer and director of Safeguard Delaware. Mr. Keith is
one of the 11 voting members of the executive committee of Technology
Leaders II Management L.P., which has the sole authority and
responsibility for all investment, voting and disposition decisions for
Technology Leaders II. Messrs. Spector, Morgan and Keith disclaim any
beneficial ownership in the shares of the Company held by Safeguard
Delaware and Technology Leaders II.

(5) Under the terms of an employment agreement with FormMaker, FormMaker will
grant to Mr. Loewenberg options to purchase 41,964 shares of Common Stock
of FormMaker. Such options will be granted within the next 60 days;
however, it is not presently known when such options will become
exercisable. If exercisable within sixty 60 days such interest would
approximate 1%.
(6) Under the terms of a Stock Purchase Agreement dated January 15, 1997,
Technology Leaders II has agreed to purchase 502,640 shares of stock owned
by Mr. Wilkes. The contemplated purchase of Mr. Wilkes' stock is to occur
immediately prior to the consummation of the Merger.

85
<PAGE>

EXPERTS

The financial statements of Image Sciences, Inc. as of July 31, 1995 and
1996 and for each of the three years in the period ended July 31, 1996
included in this Prospectus have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

The consolidated balance sheets of FormMaker as of December 31, 1995 and
1996 and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1996, included in this prospectus, have been included herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.

The balance sheets of Micro Dynamics Ltd. as of December 31, 1995 and 1994,
and the related statements of operations, stockholders' equity, and cash flows
for the years then ended, including in this prospectus, have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein, and are included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.

LEGAL MATTERS

Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania will render an
opinion with respect to the validity of the securities to be issued in
connection with the Merger. Steptoe & Johnson, Washington, D.C. will render an
opinion with respect to tax matters.

ADDITIONAL INFORMATION

DocuCorp has filed with the Commission a Registration Statement on Form S-4
under the Securities Act with respect to the DocuCorp Class A Common Stock and
DocuCorp Class B Common Stock offered hereby. This Joint Proxy
Statement/Prospectus does not contain all information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. The Registration Statement may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 as well as at the
Commission's regional offices located at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can be obtained from the Commission by
mail at prescribed rates. Requests should be directed to the Commission's
Public Reference Branch located at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may also be accessed electronically by
means of the Commission's web site on the Internet (http://www.sec.gov).
Statements contained herein concerning the provisions of any documents are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement.

REPORTS TO SECURITY HOLDERS

DocuCorp intends to distribute to its stockholders annual reports containing
audited financial statements and will make available copies of quarterly
reports for the first three quarters of each fiscal year containing unaudited
interim financial information.

86
<PAGE>

INDEX TO FINANCIAL STATEMENTS

IMAGE SCIENCES, INC.

<TABLE>
<S> <C>
Report of Independent Accountants........................................ F-2
Statements of Operations for each of the three years ended July 31,
1996.................................................................... F-3
Balance Sheets as of July 31, 1995, 1996................................. F-4
Statements of Cash Flows for each of the three years ended July 31,
1996.................................................................... F-5
Statements of Changes in Stockholders' Equity for each of the three years
ended July 31, 1996..................................................... F-6
Notes to Financial Statements............................................ F-7
Statements of Operations (Unaudited) for the three months ended October
31, 1995 and 1996....................................................... F-14
Balance Sheet (Unaudited) as of October 31, 1996......................... F-15
Statements of Cash Flows (Unaudited) for the three months ended October
31, 1995 and 1996....................................................... F-16
Notes to Interim Financial Statements (Unaudited) for the three months
ended October 31,
1995 and 1996........................................................... F-17
FORMMAKER SOFTWARE, INC.
Report of Coopers & Lybrand L.L.P., Independent Accountants.............. F-18
Consolidated Balance Sheets at December 31, 1995 and 1996................ F-19
Consolidated Statements of Operations for the years ended December 31,
1994, 1995 and 1996..................................................... F-20
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1994, 1995 and 1996........................................ F-21
Consolidated Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996..................................................... F-22
Notes to Consolidated Financial Statements............................... F-23
MICRO DYNAMICS LTD.
Report of Deloitte & Touche LLP, Independent Accountants ................ F-33
Balance Sheets as of December 31, 1994 and 1995.......................... F-34
Statements of Operations for the years ended December 31, 1994 and 1995.. F-35
Statements of Stockholders' Equity for the years ended December 31, 1994
and 1995................................................................ F-36
Statements of Cash Flows for the years ended December 31, 1994 and 1995.. F-37
Notes to Financial Statements............................................ F-38
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Image Sciences, Inc.

In our opinion, the accompanying statements of operations, balance sheets,
statements of cash flows and changes in stockholders' equity present fairly,
in all material respects, the financial position of Image Sciences, Inc. at
July 31, 1995 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended July 31, 1996, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Dallas, Texas
September 20, 1996, except as to Note 10,
which is as of January 15, 1997

F-2
<PAGE>

IMAGE SCIENCES, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED JULY 31
------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Professional services................... $ 548,700 $ 587,118 $ 819,034
License................................. 5,608,210 4,806,888 4,793,031
Maintenance............................. 4,717,450 5,419,945 5,858,256
----------- ----------- -----------
Total revenues........................ 10,874,360 10,813,951 11,470,321
----------- ----------- -----------
Expenses
Professional services................... 529,116 429,888 605,504
Product development and support......... 3,425,570 3,560,421 3,981,156
Selling and marketing................... 1,676,301 1,833,866 1,568,129
General and administrative.............. 1,697,034 1,832,004 1,899,156
----------- ----------- -----------
Total expenses........................ 7,328,021 7,656,179 8,053,945
----------- ----------- -----------
Operating income...................... 3,546,339 3,157,772 3,416,376
Other income (expense).................. (146,869) 28,148 239,904
----------- ----------- -----------
Income before income taxes............ 3,399,470 3,185,920 3,656,280
Provision for income taxes.............. 1,230,000 1,183,000 1,335,000
----------- ----------- -----------
Net income............................ $ 2,169,470 $ 2,002,920 $ 2,321,280
=========== =========== ===========
Net income per share of common stock...... $ 0.38 $ 0.35 $ 0.43
=========== =========== ===========
Weighted average number of shares of
common stock and common stock equivalents
used in calculating earnings per share... 5,728,461 5,741,572 5,468,941
=========== =========== ===========
</TABLE>

See accompanying notes to financial statements

F-3
<PAGE>

IMAGE SCIENCES, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
JULY 31
-----------------------
1995 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................ $ 2,289,980 $ 1,909,016
Short-term investments............................... 3,000,000 5,308,806
Accounts receivable, net of allowance of $325,000 and
$350,000, respectively.............................. 4,108,521 4,105,652
Current portion of deferred taxes.................... 343,355 399,468
Income tax refund receivable......................... 222,033 --
Other current assets................................. 143,375 187,193
----------- -----------
Total current assets............................. 10,107,264 11,910,135
Fixed assets, net of accumulated depreciation of
$1,901,581 and $1,419,206, respectively............... 791,242 783,328
Software, net of amortization of $3,652,682 and
$4,466,514, respectively.............................. 2,221,862 1,941,679
Other assets........................................... 24,762 55,586
----------- -----------
$13,145,130 $14,690,728
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable..................................... $ 419,983 $ 323,044
Accrued liabilities
Accrued compensation............................... 545,791 700,050
Other.............................................. 361,415 278,857
Income taxes payable................................. 590,231 655,264
Current portion of subordinated debentures........... 255,737 --
Current portion of obligations under capital leases.. 56,390 45,967
Deferred revenue..................................... 3,828,272 4,267,113
----------- -----------
Total current liabilities........................ 6,057,819 6,270,295
Subordinated debentures................................ 1,278,693 --
Obligations under capital leases....................... 45,965 --
Deferred taxes......................................... 156,912 383,070
Stockholders' equity
Preferred stock--3,000,000 shares authorized at $.10
par value, $1.00 liquidation value, 1,963,433 shares
issued and outstanding.............................. 196,343 196,343
Common stock--20,000,000 shares authorized at $.01
par value, 2,015,771 and 2,335,082 shares issued and
outstanding, respectively........................... 20,158 23,351
Additional paid-in capital........................... 1,214,116 1,321,265
Retained earnings.................................... 4,175,124 6,496,404
----------- -----------
Total stockholders' equity....................... 5,605,741 8,037,363
----------- -----------
$13,145,130 $14,690,728
=========== ===========
</TABLE>

See accompanying notes to financial statements

F-4
<PAGE>

IMAGE SCIENCES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED JULY 31
-------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income............................ $ 2,169,470 $ 2,002,920 $ 2,321,280
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization....... 259,488 324,699 363,931
Amortization of capitalized
software........................... 706,277 736,224 813,832
Stock option compensation expense... 44,161 53,271 49,988
Increase in allowance for doubtful
accounts........................... 75,000 -- 25,000
Changes in assets and liabilities:
(Increase) decrease in accounts
receivable......................... (1,591,857) 52,304 (22,131)
Decrease in notes receivable........ 136,422 48,052 --
(Increase) decrease in income tax
refund receivable.................. (396,500) 174,467 222,033
(Increase) decrease in deferred tax
assets............................. 495,000 121,390 (56,113)
(Increase) decrease in other
assets............................. 25,199 (49,667) (74,642)
Increase (decrease) in accounts
payable............................ 94,197 (91,648) (96,939)
Increase (decrease) in accrued
liabilities........................ 230,258 (370,201) 71,701
Increase (decrease) in income taxes
payable............................ (277,000) 440,231 65,033
Increase (decrease) in deferred
revenue............................ 692,013 (272,983) 438,841
Increase in deferred tax
liabilities........................ -- 156,912 226,158
----------- ----------- -----------
Total adjustments................. 492,658 1,323,051 2,026,692
----------- ----------- -----------
Net cash provided by operating
activities....................... 2,662,128 3,325,971 4,347,972
----------- ----------- -----------
Cash flows from investing activities
Purchase of short-term investments,
net of maturities.................... (1,500,000) (1,500,000) (2,308,806)
Purchase of fixed assets.............. (438,512) (333,073) (356,017)
Development of software............... (599,479) (667,924) (533,649)
----------- ----------- -----------
Net cash used in investing
activities....................... (2,537,991) (2,500,997) (3,198,472)
----------- ----------- -----------
Cash flows from financing activities
Repayment of notes payable............ (800,000) -- --
Repayment of subordinated debentures.. (256,176) (258,801) (1,534,430)
Principal payments under capital lease
obligations.......................... (115,717) (91,128) (56,388)
Purchase of tendered stock, warrants
and options.......................... -- (84,375) --
Proceeds from exercise of warrants and
options.............................. 5,133 89,369 45,432
Tax benefit related to exercise of
non-qualified stock options.......... -- -- 14,922
----------- ----------- -----------
Net cash used in financing
activities....................... (1,166,760) (344,935) (1,530,464)
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................ (1,042,623) 480,039 (380,964)
Cash and cash equivalents at beginning
of year................................ 2,852,564 1,809,941 2,289,980
----------- ----------- -----------
Cash and cash equivalents at end of
year................................... $ 1,809,941 $ 2,289,980 $ 1,909,016
=========== =========== ===========
</TABLE>

See accompanying notes to financial statements

F-5
<PAGE>

IMAGE SCIENCES, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
PREFERRED COMMON TREASURY PAID-IN RETAINED
STOCK STOCK STOCK CAPITAL EARNINGS TOTAL
--------- ------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 31,
1993................... $186,343 $16,859 $(281,602) $1,401,458 $ 2,734 $1,325,792
Exercise of warrants to
purchase 258,271
shares of common
stock................. 2,583 2,583
Exercise of stock
options to purchase
254,950 shares of
common stock.......... 2,550 2,550
Issuance of 100,000
shares of preferred
stock................. 10,000 (10,000) --
Compensation expense
related to non-
qualified stock
options............... 44,161 44,161
Net income............. 2,169,470 2,169,470
-------- ------- --------- ---------- ---------- ----------
Balance at July 31,
1994................... 196,343 21,992 (281,602) 1,435,619 2,172,204 3,544,556
Exercise of warrants to
purchase 13,901 shares
of common stock....... 139 139
Exercise of stock
options to purchase
272,500 shares of
common stock.......... 2,725 86,505 89,230
Purchase and retirement
of 67,500 shares of
common stock.......... (675) (83,700) (84,375)
Retirement of 402,288
shares of treasury
stock................. (4,023) 281,602 (277,579) --
Compensation expense
related to non-
qualified stock
options............... 53,271 53,271
Net income............. 2,002,920 2,002,920
-------- ------- --------- ---------- ---------- ----------
Balance at July 31,
1995................... 196,343 20,158 -- 1,214,116 4,175,124 5,605,741
Exercise of warrants to
purchase 190,211
shares of common
stock................. 1,902 1,902
Exercise of stock
options to purchase
129,100 shares of
common stock.......... 1,291 42,239 43,530
Compensation expense
related to non-
qualified stock
options............... 49,988 49,988
Tax benefit related to
exercise of non-
qualified stock
options............... 14,922 14,922
Net income............. 2,321,280 2,321,280
-------- ------- --------- ---------- ---------- ----------
Balance at July 31,
1996................... $196,343 $23,351 $ -- $1,321,265 $6,496,404 $8,037,363
======== ======= ========= ========== ========== ==========
</TABLE>

See accompanying notes to financial statements

F-6
<PAGE>

IMAGE SCIENCES, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Image Sciences, Inc. (the "Company") was incorporated in Texas in 1982. The
Company's business includes developing and marketing computer software
designed to automate the process of storing, managing, and printing business
forms and documents. The majority of the Company's business is derived from
companies in the insurance industry.

Revenue recognition

Revenue from licensing of standard software is recognized upon delivery of
the software. Service revenue is unbundled from license revenue and recognized
as services are performed.

Revenue from software licenses which include a cancellation clause is
recognized upon expiration of the cancellation period. Revenue derived from
the development and installation of software packages under long-term
contracts is recognized on a percentage-of-completion basis. Revenue related
to products still in the testing phase is deferred until formal acceptance of
the product by the purchaser. Anticipated losses, if any, on uncompleted
contracts are recognized in the period in which such losses are determined.

Revenue from maintenance contracts, and maintenance revenue that is packaged
with license fees, is recognized ratably over the term of the agreements. The
Company records deferred revenue for maintenance amounts invoiced prior to
revenue recognition.

Cash equivalents

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents, including
certificates of deposit, repurchase agreements and treasury bills. Cash
equivalents are stated at cost, which approximates fair market value.

Short-term investments

The Company has the intent and ability to hold short-term investments to
maturity; consequently, such investments are carried at cost which
approximates fair market value as determined by the stated interest rates. As
of July 31, 1996, all short-term investments consisted of commercial paper
investments and treasury bills with original terms of 180 days. Interest
income from such investments was $134,510 and $227,113 in 1995 and 1996,
respectively.

Accounts receivable

Included in accounts receivable at July 31, 1995 and 1996 are unbilled
amounts of $1,737,259 and $1,833,640, respectively. Such amounts have been
recognized as revenue under the percentage of completion method or upon
execution of the contract and shipment of the software, but prior to required
payment terms.

Fixed assets, depreciation, and amortization

Property and equipment are carried at cost, less accumulated depreciation.
Depreciation and amortization are computed over the estimated service lives
using the straight line method for all assets. Amortization of assets recorded
under capital leases is included in depreciation expense. Estimated service
lives are as follows:

<TABLE>
<S> <C>
Computer equipment.......................................... 4-5 years
Furniture and fixtures...................................... 5 years
Leasehold improvements...................................... life of lease
Leased equipment under capital leases....................... 3-5 years
</TABLE>

F-7
<PAGE>

IMAGE SCIENCES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Repairs and maintenance are expensed as incurred. Major renewals and
betterments are capitalized and depreciated over the assets estimated service
life. Upon retirement or sale of an asset, the cost and accumulated
depreciation are removed from the accounts with any resulting gain or loss
included in income.

Software

Costs of internally developed software are capitalized after the
technological feasibility of the software has been established. The cost of
capitalized software is amortized on a straight-line basis over its estimated
useful life, generally five years for mainframe-based software and four years
for client/server-based software, or the ratio of current revenues to current
and anticipated revenues from the software, whichever provides the greater
amortization.

Income taxes

Income taxes are presented pursuant to Statement of Financial Accounting
Standard No. 109, "Accounting for Income Taxes" (see also Note 8).

Earnings per share

Earnings per share are computed using the weighted average number of shares
of common stock and common stock equivalents outstanding during the period.
The earnings per share computation is based on the assumption that outstanding
options and warrants were exercised and the proceeds were used to repurchase
outstanding common stock.

Management Estimates

The preparation of the Company's financial statements, in accordance 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 July 31,
1995 and 1996, and the reported amounts of revenues and expenses for the
periods then ended. Actual results could differ from those estimates.

Recent Accounting Pronouncements

NOTE 2--FIXED ASSETS

Fixed asset balances at July 31, 1995 and 1996 are as follows:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Computer equipment.................................... $ 2,421,640 $ 1,948,066
Furniture and fixtures................................ 241,569 179,619
Leasehold improvements................................ 29,614 74,849
----------- -----------
2,692,823 2,202,534
Less accumulated depreciation......................... (1,901,581) (1,419,206)
----------- -----------
$ 791,242 $ 783,328
=========== ===========
</TABLE>

F-8
<PAGE>

IMAGE SCIENCES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Depreciation expense on fixed assets for the years ended July 31, 1994,
1995, and 1996 totaled $259,488, $324,699, and $363,931, respectively.

NOTE 3--LEASE COMMITMENTS

The Company leases computer equipment under noncancelable leases which are
classified as capital leases and included in fixed assets at July 31, 1995 and
1996 as follows:

<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Computer equipment........................................ $ 214,852 $ 214,852
Less accumulated depreciation............................. (136,536) (190,249)
--------- ---------
$ 78,316 $ 24,603
========= =========
</TABLE>

Certain other equipment leases and the Company's obligation under leases for
office space are treated as operating leases and the rentals are expensed as
incurred. Rent expense on these operating leases for the years ended July 31,
1994, 1995, and 1996 totaled $368,998, $343,010, and $383,438, respectively.
Generally, the Company's leases provide for renewals for various periods at
stipulated rates.

Future minimum lease obligations on leases in effect at July 31, 1996 are as
follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ----------
<S> <C> <C>
1997....................................................... $47,640 $ 334,295
1998....................................................... -- 334,339
1999....................................................... -- 334,339
2000....................................................... -- 333,541
2001....................................................... -- 331,945
Thereafter................................................. -- 1,244,795
------- ----------
Minimum lease payments..................................... 47,640 $2,913,254
==========
Less amount representing interest.......................... (1,673)
-------
Present value of minimum lease payments.................... $45,967
=======
</TABLE>

The future minimum lease obligations for operating leases assumes that the
Company does not exercise its option to terminate its office lease in 2000. If
the office lease is terminated in 2000, a penalty is due at that time and no
further obligations would exist after the year ended July 31, 2000.

There were no capital lease agreements executed during the years ended July
31, 1995 and 1996.

NOTE 4--NOTES PAYABLE

In 1993, a bank granted the Company a $1,000,000 irrevocable line of credit.
The line of credit was renewed in 1994 and is available to the Company until
it expires in November 1996. The line of credit is secured by the Company's
accounts receivable, software license agreements, maintenance agreements and
certain furniture and equipment. The line of credit bears interest at prime
rate plus 1%, or 9.75% and 9.25% at July 31, 1995 and 1996, respectively. The
line of credit is unused as of July 31, 1995 and 1996.

F-9
<PAGE>

IMAGE SCIENCES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 5--SUBORDINATED DEBENTURES

Subordinated debentures totaling $990,000 were issued to Xerox Corporation
("Xerox") in 1991 pursuant to a securities purchase agreement between Xerox
and the Company. $1,059,407 of subordinated debentures were also issued in
1991 to tendering stockholders pursuant to a tender offer to existing
stockholders.

The debentures paid interest at an annual rate of 10%. Principal payments
were due in eight equal annual installments. The third scheduled principal
payment was made in January 1996. The remaining five installments were due
annually on January 1, together with interest on the unpaid principal balance;
however, the Company repaid the subordinated debentures on March 1, 1996. The
debentures were unsecured obligations of the Company and were subordinated to
all senior debt. The Company made interest payments, primarily related to
subordinated debentures, totaling $259,087, $235,407, and $183,508 for the
years ended July 31, 1994, 1995, and 1996, respectively.

NOTE 6--STOCKHOLDERS' EQUITY

Holders of preferred stock are entitled to elect a number of directors of
the Company equal to the percentage of the total number of shares of Company
stock owned by the holders of preferred stock. Holders of preferred stock are
not entitled to vote in the election of other directors of the Company.
Holders of preferred stock are entitled to vote, together with the holders of
common stock, on all other matters. Preferred stock is convertible to common
stock on a one for one basis. In the event of liquidation, holders of
preferred stock are entitled to receive, prior to any distribution to the
holders of common stock, an amount equal to $1.00 per share plus any declared,
but unpaid dividends.

Warrants to purchase 191,715 shares of common stock were outstanding as of
July 31, 1995. During 1996, warrants to purchase 190,211 shares of common
stock were exercised, and the remaining warrants to purchase 1,504 shares of
common stock expired. These warrants were exercisable at $.01 per share of
common stock.

NOTE 7--STOCK OPTIONS

In 1983, the Company established an incentive stock option plan for certain
officers and key employees. Under this plan, 965,000 shares of common stock
were authorized for issuance. As of July 31, 1996, options to purchase 756,300
shares of common stock have been exercised and options to purchase 5,000
shares of common stock are outstanding. The remaining options to purchase
203,700 shares of common stock expired.

Stock option activity under the incentive stock option plan is summarized as
follows:

<TABLE>
<CAPTION>
EXERCISE
NUMBER OF PRICE PER
SHARES SHARE AGGREGATE
UNDER UNDER EXERCISE
OPTION OPTION PRICE
--------- --------- ---------
<S> <C> <C> <C>
Outstanding at July 31, 1993.................... 387,000 $198,175
Expired in 1994................................. (7,000) 1.25 (8,750)
-------- --------
Outstanding at July 31, 1994.................... 380,000 189,425
Exercised in 1995............................... (237,000) .375 (88,875)
Expired in 1995................................. (52,000) .50-1.25 (51,750)
-------- --------
Outstanding at July 31, 1995.................... 91,000 48,800
Exercised in 1996............................... (86,000) .50 (43,000)
-------- --------
Outstanding at July 31, 1996.................... 5,000 $ 5,800
======== ========
</TABLE>

F-10
<PAGE>

IMAGE SCIENCES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In the event of termination of employment, unexercised incentive stock
options expire three months from date of employment termination. All
outstanding options to purchase shares of common stock are fully vested as of
July 31, 1996. All options expire ten years from the date of grant.

The Company established a non-qualified stock option plan for all employees
and officers in 1991. Under the plan, the Board of Directors authorized the
issuance of options to purchase up to 2,000,000 shares of common stock. In
August 1994, the Board of Directors authorized the issuance of additional
options to purchase up to 150,000 shares of common stock. All such options
granted prior to July 31, 1994 are exercisable at $.01 per share. Non-
qualified options granted subsequent to July 31, 1994 are exercisable at
prices ranging from $1.00 to $1.50 per share. The exercise price of all non-
qualified options granted in the future will be determined by the Board of
Directors at the time of grant. Compensation expense related to granted non-
qualified stock options is the excess market price over the option price, and
is recognized ratably over the vesting period.

During 1996, non-qualified options to purchase 43,100 shares of common stock
were exercised, options to purchase 230,600 shares of common stock expired,
and options to purchase 194,000 shares of common stock were granted. As of
July 31, 1996, non-qualified options to purchase 521,500 shares of common
stock have been exercised, options to purchase 1,525,400 shares of common
stock are outstanding, and options to purchase 103,100 shares of common stock
are available for future grant. Non-qualified options to purchase 1,132,100
shares of common stock are fully vested as of July 31, 1996. The remaining
outstanding non-qualified options to purchase 393,300 shares of common stock
become exercisable at a rate of 20% per annum from the date of grant.

Non-qualified stock options to purchase 70,000 shares of common stock were
granted to each of the three outside members of the Company's Board of
Directors during 1993. The options are exercisable at $.70 per share and are
fully vested.

NOTE 8--INCOME TAXES

The provision for income taxes charged to operations was as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Current tax expense:
U.S. federal................................. $ 620,000 $ 778,000 $1,048,000
State, local & foreign....................... 115,000 75,000 125,000
---------- ---------- ----------
Total current.............................. 735,000 853,000 1,173,000
---------- ---------- ----------
Deferred tax expense:
U.S. federal................................. 495,000 330,000 162,000
State, local & foreign....................... 0 0 0
Total deferred............................. 495,000 330,000 162,000
---------- ---------- ----------
Total provision................................ $1,230,000 $1,183,000 $1,335,000
========== ========== ==========
</TABLE>

F-11
<PAGE>

IMAGE SCIENCES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Deferred tax assets (liabilities) are comprised of the following at July 31:

<TABLE>
<CAPTION>
1994 1995 1996
---------- --------- ---------
<S> <C> <C> <C>
Gross deferred tax assets:
Deferred revenue............................ $ 511,163 $ 387,222 $ 261,500
Loss carryforwards.......................... 168,415 0 0
Tax credit carryforwards.................... 422,312 419,129 247,531
Accounts receivable allowance............... 110,500 110,500 119,000
Other....................................... 31,010 82,484 136,316
---------- --------- ---------
1,243,400 999,335 764,347
---------- --------- ---------
Gross deferred tax liabilities:
Capitalized software........................ (778,655) (755,433) (660,171)
Other....................................... 0 (57,459) (87,778)
---------- --------- ---------
(778,655) (812,892) (747,949)
---------- --------- ---------
$ 464,745 $ 186,443 $ 16,398
========== ========= =========
</TABLE>

The provision for income taxes differs from the amount of income taxes
determined by applying the applicable U.S. statutory federal income tax rate
to pre-tax income as a result of the following differences:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ----------
<S> <C> <C> <C>
Statutory U.S. tax rates.. $1,155,820 $1,083,213 $1,243,135
Increase (decrease) in
rates resulting from:
Nondeductible items..... 21,479 34,550 16,173
State, local and foreign
taxes (net)............ 76,000 49,500 82,500
Other................... (23,299) 15,737 (6,808)
---------- ---------- ----------
Effective tax rates..... $1,230,000 $1,183,000 $1,335,000
========== ========== ==========
</TABLE>

Income taxes currently payable for the years ended July 31, 1994, 1995, and
1996 were reduced by approximately $170,000 each year through the utilization
of loss and tax credit carryforwards.

The Company has approximately $247,000 of research and development tax
credit, investment tax credit, and alternative minimum tax credit
carryforwards which expire in various amounts from 1998 to 2011. As a result
of an ownership change in 1991, the Company's utilization of tax credits
generated in periods prior to the ownership change is limited to approximately
$170,000 annually.

The Company made estimated and regular income tax payments of $1,411,000,
$290,000, and $700,000 during the years ended July 31, 1994, 1995, and 1996,
respectively. Income taxes payable at July 31, 1996 consist of unpaid federal,
state and foreign taxes.

In September 1994, the Company received a favorable Internal Revenue Service
(IRS) tax ruling that allows it to defer software and maintenance revenues for
tax purposes in conformity with financial statement presentation. The Company
is required to recognize the retroactive effect of this ruling over a six year
period commencing with fiscal year 1993. The impact of the favorable tax
ruling resulted in a federal income tax refund receivable of $222,033 as of
July 31, 1995, which was received during the year ended July 31, 1996.

F-12
<PAGE>

IMAGE SCIENCES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 9--RELATED PARTY TRANSACTIONS

Revenues aggregating $170,953, $122,340, and $160,150 in fiscal years 1994,
1995, and 1996, respectively, were earned from Xerox. These revenues relate
primarily to commissions earned for assisting in the marketing of Xerox
printers.

Included in accounts receivable at July 31, 1995 and 1996 are $19,676 and
$63,800, respectively, representing amounts due the Company from Xerox.

NOTE 10--SUBSEQUENT EVENT

On January 15, 1997, the Company entered into an Agreement and Plan of
Merger with FormMaker Software, Inc. ("FormMaker"), pursuant to which the
stockholders of the Company and FormMaker will exchange their shares for
common stock of a newly created holding company, DocuCorp, Inc. In addition,
the Company will distribute $8,000,000 concurrent with the closing of the
merger via (i) a tender offer to its common stock holders and certain holders
of options to purchase common stock, and (ii) a dividend to its preferred
stock holder. The merger is scheduled to be completed during the third quarter
of fiscal 1997 and is subject to approval by the stockholders of the Company
and FormMaker, and by certain governmental agencies and subject to other
customary conditions. The merger is expected to qualify as a tax-free
reorganization and to be accounted for as a purchase.

F-13
<PAGE>

IMAGE SCIENCES, INC.

STATEMENTS OF OPERATIONS
UNAUDITED

<TABLE>
<CAPTION>
SIX MONTHS ENDED JANUARY 31
---------------------------
1996 1997
------------- -------------
<S> <C> <C>
Revenues
Professional services........................... $ 310,870 $ 371,656
License......................................... 1,910,487 2,042,849
Maintenance..................................... 2,826,946 3,210,650
------------- -------------
Total revenues................................ 5,048,303 5,625,155
------------- -------------
Expenses
Professional services........................... 238,301 281,775
Product development and support................. 1,963,785 2,031,316
Selling and marketing........................... 732,975 792,599
General and administrative...................... 874,435 1,079,291
------------- -------------
Total expenses................................ 3,809,496 4,184,981
------------- -------------
Operating income.............................. 1,238,807 1,440,174
Other income (expense).......................... 101,285 205,739
------------- -------------
Income before income taxes.................... 1,340,092 1,645,913
Provision for income taxes...................... 489,000 601,000
------------- -------------
Net income.................................... $ 851,092 $ 1,044,913
============= =============
Net income per share of common stock.............. $ 0.15 $ 0.19
============= =============
Weighted average number of shares of common stock
and common stock equivalents used in calculating
earnings per share............................... 5,602,432 5,415,683
============= =============
</TABLE>

See accompanying notes to interim financial statements

F-14
<PAGE>

IMAGE SCIENCES, INC.

BALANCE SHEET
UNAUDITED

<TABLE>
<CAPTION>
JANUARY 31,
1997
-----------
<S> <C>
ASSETS
Current assets
Cash and cash equivalents........................................ $ 6,531,562
Short-term investments........................................... 2,974,882
Accounts receivable, net of allowance of $350,000................ 2,920,265
Current portion of deferred taxes................................ 299,367
Other current assets............................................. 180,296
-----------
Total current assets......................................... 12,906,372
Fixed assets, net of accumulated depreciation of $1,606,701........ 774,722
Software, net of amortization of $4,854,430........................ 1,845,904
Other assets....................................................... 16,209
-----------
$15,543,207
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable................................................. $ 162,831
Accrued liabilities
Accrued compensation........................................... 343,624
Other.......................................................... 361,136
Income taxes payable............................................. 178,516
Deferred revenue................................................. 4,832,356
-----------
Total current liabilities.................................... 5,878,463
Deferred taxes..................................................... 557,969
Stockholders' equity
Preferred stock--3,000,000 shares authorized at $.10 par value,
$1.00 liquidation value,
1,963,433 shares issued and outstanding......................... 196,343
Common stock--20,000,000 shares authorized at $.01 par value,
2,335,082 shares issued and outstanding......................... 23,351
Additional paid-in capital....................................... 1,345,764
Retained earnings................................................ 7,541,317
-----------
Total stockholders' equity................................... 9,106,775
-----------
$15,543,207
===========
</TABLE>

See accompanying notes to interim financial statements

F-15
<PAGE>

IMAGE SCIENCES, INC.

STATEMENTS OF CASH FLOWS
UNAUDITED

<TABLE>
<CAPTION>
SIX MONTHS ENDED JANUARY 31,
------------------------------
1996 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities
Net income.................................... $ 851,092 $ 1,044,913
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization............... 179,889 196,483
Amortization of capitalized software........ 423,146 387,916
Stock option compensation expense........... 25,912 24,499
Increase (decrease) in allowance for
doubtful accounts.......................... 10,000 0
Changes in assets and liabilities:
(Increase) decrease in accounts receivable.. 513,555 1,185,387
(Increase) decrease in income tax refund
receivable................................. 222,033 0
(Increase) decrease in deferred tax assets.. 14,892 100,101
(Increase) decrease in other assets......... (27,297) 46,274
Increase (decrease) in accounts payable..... (125,971) (160,213)
Increase (decrease) in accrued liabilities.. (144,357) (274,147)
Increase (decrease) in income taxes
payable.................................... (508,000) (476,748)
Increase (decrease) in deferred revenue..... 209,276 565,243
Increase in deferred tax liabilities........ 247,108 174,899
-------------- -------------
Total adjustments......................... 1,040,186 1,769,694
-------------- -------------
Net cash provided by operating
activities............................... 1,891,278 2,814,607
-------------- -------------
Cash flows from investing activities
Purchase of short-term investments, net of
maturities................................... (1,226,311) 2,333,924
Purchase of fixed assets...................... (155,472) (187,877)
Development of software....................... (254,942) (292,141)
-------------- -------------
Net cash (used in) provided by investing
activities............................... (1,636,725) 1,853,906
-------------- -------------
Cash flows from financing activities
Repayment of subordinated debentures.......... (255,739) 0
Principal payments under capital lease
obligations.................................. (27,528) (45,967)
Proceeds from exercise of warrants and
options...................................... 2,087 0
-------------- -------------
Net cash used in financing activities..... (281,180) (45,967)
-------------- -------------
Net increase (decrease) in cash and cash
equivalents.................................... (26,627) 4,622,546
Cash and cash equivalents at beginning of year.. 2,289,980 1,909,016
-------------- -------------
Cash and cash equivalents at end of year........ $ 2,263,353 $ 6,531,562
============== =============
</TABLE>

See accompanying notes to interim financial statements

F-16
<PAGE>

IMAGE SCIENCES

NOTES TO INTERIM FINANCIAL STATEMENTS

SIX MONTHS ENDED JANUARY 31, 1996 AND 1997
UNAUDITED

NOTE 1--BASIS OF PRESENTATION

The unaudited financial statements included herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying unaudited
financial statements reflect all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation of the company's
financial condition at January 31, 1997 and for the six month periods ended
January 31, 1996 and 1997. These financial statements should be read in
conjunction with the audited financial statements of the company and notes
related thereto included elsewhere herein. The interim results presented
herein are not necessarily representative of the results that may be expected
for the fiscal year ended July 31, 1997 or for any future period.

NOTE 2--PROPOSED MERGER WITH FORMMAKER SOFTWARE, INC.

On January 15, 1997, the Company entered into an Agreement and Plan of
Merger with FormMaker Software, Inc. ("FormMaker"), pursuant to which the
stockholders of the Company and FormMaker will exchange their shares for
common stock of a newly created holding company, DocuCorp, Inc. In addition,
the Company will distribute $8,000,000 concurrent with the closing of the
merger via (i) a tender offer to its common stock holders and certain holders
of options to purchase common stock, and (ii) a dividend to its preferred
stock holder. The consummation of the proposed merger is subject to obtaining
stockholder approval and certain other conditions. Accordingly, there can be
no assurance that the merger will be completed.

F-17
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of FormMaker Software, Inc.:

We have audited the accompanying consolidated balance sheets of FormMaker
Software, Inc. as of December 31, 1995 and 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of FormMaker
Software, Inc. as of December 31, 1995 and 1996, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.

Coopers & Lybrand, L.L.P.

Atlanta, Georgia
January 30, 1997

F-18
<PAGE>

FORMMAKER SOFTWARE, INC.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 2,163,548 $ 4,925
Receivables, net................................... 2,678,508 4,935,067
Notes receivable................................... 66,591 85,864
Prepaid expenses................................... 119,743 302,584
Other current assets............................... 59,868 212,452
----------- -----------
Total current assets............................. 5,088,258 5,540,892
Property and equipment, net.......................... 2,174,891 2,599,439
Computer software development costs, net of
accumulated amortization
of $1,456,781 and $2,591,020 at December 31, 1995
and
1996, respectively.................................. 2,422,521 4,777,732
Deferred income tax asset............................ 420,000 420,000
Goodwill, net of accumulated amortization of
$282,445............................................ -- 4,282,281
Other assets......................................... 31,164 80,687
----------- -----------
Total assets..................................... $10,136,834 $17,701,031
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to a bank............................ $ -- $ 6,083,703
Current portion of notes payable to stockholder.... -- 225,000
Current portion of capital lease obligations....... 633,512 610,648
Accounts payable................................... 808,508 1,434,659
Other accrued liabilities.......................... 833,338 1,333,029
Accrued salaries................................... 165,234 770,983
Payable to customer................................ 2,100,000 89,989
Income taxes payable............................... -- 329,464
Deferred revenue................................... 293,308 895,006
----------- -----------
Total current liabilities........................ 4,833,900 11,772,481
Notes payable to stockholder, less current portion... -- 400,000
Capital lease obligations, less current portion...... 875,999 258,540
Other liabilities.................................... 403,044 506,708
----------- -----------
Total liabilities................................ 6,112,943 12,937,729
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01 per share;
20,000,000 shares authorized, no shares issued and
outstanding at December 31, 1995 and 1996
Common stock, par value $.01 per share; 20,000,000
shares authorized, 5,499,795 and 6,229,511 shares
issued and outstanding at December 31, 1995 and
1996, respectively................................ 54,998 62,295
Common stock warrants.............................. 783,053 783,053
Additional paid-in capital......................... 4,307,322 6,529,463
Accumulated deficit................................ (1,050,307) (2,540,334)
Notes receivable--stockholders..................... (71,175) (71,175)
----------- -----------
Total stockholders' equity....................... 4,023,891 4,763,302
----------- -----------
Total liabilities and stockholders' equity....... $10,136,834 $17,701,031
=========== ===========
</TABLE>

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

F-19
<PAGE>

FORMMAKER SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996

<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Software licenses..................... $ 1,699,718 $ 3,196,613 $ 4,533,276
Maintenance and other recurring....... 418,152 787,466 2,066,801
Processing services................... 3,039,177 4,645,420 4,555,189
Professional services and other....... 2,262,145 5,699,287 8,713,797
----------- ----------- -----------
Total revenues...................... 7,419,192 14,328,786 19,869,063
----------- ----------- -----------
Operating expenses:
Processing services................... 2,614,660 4,148,732 4,316,891
Professional services and other....... 1,580,199 4,222,986 7,247,600
Research and product development...... 549,531 1,253,833 2,238,897
Sales and marketing................... 843,046 1,578,304 3,294,496
General and administrative............ 924,062 3,485,702 3,560,405
Goodwill amortization................. 282,445
----------- ----------- -----------
Total operating expenses............ 6,511,498 14,689,557 20,940,734
----------- ----------- -----------
Operating income (loss)............. 907,694 (360,771) (1,071,671)
Interest expense, net................... (216,659) (324,726) (418,356)
----------- ----------- -----------
Income (loss) before income tax
benefit............................ 691,035 (685,497) (1,490,027)
Income tax benefit--deferred............ 160,000 260,000
----------- ----------- -----------
Net income (loss)................... $ 851,035 $ (425,497) $(1,490,027)
=========== =========== ===========
</TABLE>

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

F-20
<PAGE>

FORMMAKER SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
COMMON
STOCK COMMON ADDITIONAL
-------------------- STOCK PAID-IN ACCUMULATED NOTES STOCKHOLDERS'
SHARES AMOUNT WARRANTS CAPITAL DEFICIT RECEIVABLE EQUITY
---------- -------- -------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1993................... 4,475,069 $ 44,751 $1,238,082 $(1,475,845) $ (193,012)
One-for-two reverse
common stock split, no
change in par value,
retroactively stated.. (2,237,534) (22,375) 22,375
Stock options
exercised............. 70,250 702 703 1,405
Net income............. 851,035 851,035
---------- -------- -------- ---------- ----------- --------- ----------
Balance, December 31,
1994................... 2,307,785 23,078 1,261,160 (624,810) 659,428
Stock options
exercised............. 575,619 5,756 249,992 255,748
Stock warrant
exercised............. 1,585,435 15,854 479,146 495,000
Common stock and common
stock warrants
issued................ 1,030,956 10,310 $783,053 2,317,024 3,110,387
Notes receivable issued
in conjunction with
common stock options
exercised............. $ (71,175) (71,175)
Net loss............... (425,497) (425,497)
---------- -------- -------- ---------- ----------- --------- ----------
Balance, December 31,
1995................... 5,499,795 54,998 783,053 4,307,322 (1,050,307) (71,175) 4,023,891
Stock options
exercised............. 40,836 408 3,988 4,396
Common stock issued.... 688,880 6,889 2,218,153 2,225,042
Net loss............... (1,490,027) (1,490,027)
---------- -------- -------- ---------- ----------- --------- ----------
Balance, December 31,
1996................... 6,229,511 $ 62,295 $783,053 $6,529,463 $(2,540,334) $ (71,175) $4,763,302
========== ======== ======== ========== =========== ========= ==========
</TABLE>

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

F-21
<PAGE>

FORMMAKER SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income.................... $ 851,035 $ (425,497) $ (1,490,027)
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Bad debt expense..................... 8,500 151,853
(Gain) loss on disposal of property
and equipment....................... (533) 2,030
Depreciation and amortization of
property and equipment.............. 221,822 505,876 924,208
Amortization of computer software
development costs................... 311,841 518,989 1,134,239
Deferred income taxes................ (160,000) (260,000)
Amortization of goodwill............. 282,444
Long-term deferred rent liability.... 398,908 79,240
Compensation expense associated with
common stock grant.................. 14,500
Changes in operating assets and
liabilities:
(Increase) in receivables............ (1,302,135) (1,150,855) (2,154,995)
(Increase) in prepaid expenses....... (44,524) (74,930) (26,793)
(Increase) decrease in other current
assets.............................. 2,215 (25,102) (219,030)
(Increase) decrease in other assets.. 29,550 (19,352) (49,523)
Increase in accounts payable......... 207,199 442,341 570,041
(Decrease) increase in other accrued
liabilities......................... 458,074 356,475 (384,827)
(Decrease) increase in accrued
salaries............................ (4,049) 95,623 605,749
(Decrease) increase in payable to
customer............................ 2,100,000 (2,010,011)
(Decrease) increase in deferred
revenue............................. 23,826 217,329 (12,351)
(Decrease) increase in other
liabilities......................... (4,512) 25,864
----------- ----------- ------------
Net cash (used in) provided by
operating activities............... 602,821 2,843,676 (2,725,772)
----------- ----------- ------------
Cash flows from investing activities:
Proceeds from disposition of property
and equipment....................... 7,298 68,883
Expenditures for property and
equipment........................... (194,955) (428,781) (1,228,188)
Capitalization of computer software
development costs................... (813,478) (1,366,308) (2,413,788)
Acquisition of Micro Dynamics, Ltd.,
net of cash acquired................ (959,379)
----------- ----------- ------------
Net cash used in investing
activities......................... (1,001,135) (1,726,206) (4,601,355)
----------- ----------- ------------
Cash flows from financing activities:
Principal repayments of capital lease
obligations......................... (85,401) (490,023) (640,323)
Proceeds from borrowings on notes
payable to bank..................... 13,962,703
Principal repayments of notes payable
to a bank........................... (500,000) (8,139,000)
Proceeds from borrowings on note
payable to stockholder.............. 1,061,000 355,000
Principal repayments on note payable
to stockholder...................... (381,000) (2,348,011)
Advances to stockholders............. (172,000)
Principal repayments on note due from
stockholder......................... 274,000
Advances to employees................ (66,591) (19,273)
Issuance of common stock and
warrants............................ 1,405 3,638,003
Issuance of common stock under stock
option plans........................ 184,573 4,397
Repurchase of common stock........... (47,116)
----------- ----------- ------------
Net cash provided by financing
activities......................... 424,004 999,835 5,168,504
----------- ----------- ------------
(Decrease) increase in cash........... 25,690 2,117,305 (2,158,623)
Cash and cash equivalents at beginning
of the year.......................... 20,553 46,243 2,163,548
----------- ----------- ------------
Cash and cash equivalents at end of
the year............................. $ 46,243 $ 2,163,548 $ 4,925
=========== =========== ============
Supplemental disclosure of cash flow
information:
Cash paid for interest............... $ 84,622 $ 516,282 $ 406,293
Noncash investing activities:
Execution of capitalized leases...... $ 839,000 $ 1,131,507
Noncash financing activities:
Issuance of common stock to satisfy
an accrued expense obligation....... $ 125,000
Issuance of common stock for notes
receivable.......................... $ 71,175
Issuance of common stock relating to
the acquisition of Micro Dynamics,
Ltd................................. $ 1,893,800
</TABLE>

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

F-22
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BACKGROUND:

FormMaker Software, Inc. (the "Company") is engaged in developing, marketing
and supporting multi-platform document automation and imaging software for use
in document intensive industries. The Company also provides third-party
processing and professional services.

The Company is headquartered, and also operates a processing facility, in
Atlanta, Georgia.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Consolidation

The consolidated financial statements include the accounts of FormMaker
Software, Inc. and its majority owned subsidiary, Micro Dynamics, Ltd.
("MDL"). As further discussed in Note 3, the Company acquired MDL on May 17,
1996. All significant intercompany accounts and transactions have been
eliminated.

Revenue Recognition

The Company recognizes software licensing and maintenance revenue in
accordance with the American Institute of Certified Public Accountants
Statement of Position No. 91-1, "Software Revenue Recognition" ("SOP 91-1").
Under SOP 91-1, the Company recognizes software license revenue upon product
delivery and contract signing provided that no significant obligations remain
and collection of related receivables is determined by management to be
probable. Revenue from maintenance contracts and maintenance revenue that is
packaged with license fees is recognized ratably over the term of the
agreements. Revenue related to third-party processing and professional
services, such as training and consulting, is recognized as the services are
performed.

Capitalized Computer Software Development Costs

Research and product development expenditures, except as described below,
are charged to expense as incurred. Development costs of software to be sold
are charged to research and product development expense until technological
feasibility is established, after which, remaining computer software
development costs are capitalized and amortized in accordance with Statement
of Financial Accounting Standards No. 86, "Accounting for Costs of Computer
Software to be Sold, Leased or Otherwise Marketed" (SFAS 86). Management
periodically evaluates the recoverability of the computer software development
costs based on a comparison of undiscounted projected license revenues to the
capitalized computer software development costs, net of amortization. The
excess of capitalized costs, net of amortization, over undiscounted projected
license revenues are expensed at the time of determination by management.
Computer software development costs are amortized using the more rapid of the
straight-line method over four years or the ratio of current to future gross
revenues method as set forth in SFAS 86.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid investments
purchased with original maturities of three months or less.

Property and Equipment

Property and equipment is stated at cost and depreciated on a straight-line
basis over the estimated useful lives of the assets. Property and equipment
under capital lease is recorded at the lower of present value of future
minimum lease payments or fair value at the inception of the lease and
amortized on a straight-line basis over

F-23
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

the term of the lease or the asset's estimated useful life, whichever is
shorter. When property and equipment is retired or otherwise disposed of, the
related cost and accumulated depreciation are removed from the accounts and
any related gain or loss is recognized. Repairs and maintenance are expensed
as incurred. Major renewals and betterments are capitalized and depreciated
over the assets' estimated service life.

Goodwill

The excess of the purchase price of MDL over the fair value of identifiable
assets and liabilities, totaling $4,564,726, was assigned to goodwill.
Goodwill is being amortized on a straight-line basis over ten years. Goodwill
is evaluated for impairment based on the historic and estimated future
profitability of the business unit to which it relates.

Income Taxes

The benefit for income taxes and corresponding balance sheet accounts are
determined in accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" (SFAS 109). Under SFAS 109, deferred tax
liabilities and assets are determined based on the temporary differences
between the tax bases of certain assets and liabilities and their carrying
amounts for financial reporting purposes.

Preferred Stock

At December 31, 1996, 20,000,000 shares of preferred stock are authorized
with no preferred shares outstanding. The Board of Directors of the Company is
authorized to issue preferred stock at any time, in one or more series and to
determine all of the designations, preferences, and rights of such stock.

Common Stock Split

In May 1996, a meeting of the stockholders was held authorizing a one-for-
two reverse common stock split. No changes in common stock par value or
authorized shares were effected as a result of this split. For all years
presented herein, all share and per share data, including stock options and
stock warrants, have been restated to reflect this stock split.

Financial Instruments

The carrying amounts reported in the balance sheet for cash and cash
equivalents, accounts receivable, notes payable and accounts payable at
December 31, 1996 approximate their fair value because of the short-term
maturity of the financial instruments or because of the variable interest
rates with respect to notes payable.

Reclassifications

Certain prior year balances have been reclassified to conform to the current
year's financial statement presentation.

Estimates

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

3. SIGNIFICANT TRANSACTIONS:

Recapitalization of the Company

On December 20, 1995, the Company entered into a transaction with a group of
new stockholders: Safeguard Scientifics, Inc. ("SSI"), Technology Leaders II,
L.P. and Technology Leaders II Offshore C.V. (all

F-24
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

three entities referred to collectively herein as the "New Stockholders"). In
exchange for $3,333,333 of cash, 955,956 new shares of the Company's common
stock and seven-year common stock warrants allowing the holder to purchase an
additional 465,747 shares of the Company's common stock were issued. (See Note
13 for further information regarding the seven-year common stock warrants.) In
addition, the New Stockholders acquired 785,335 shares of the Company's common
stock from existing stockholders. The New Stockholders also purchased a common
stock warrant from an existing stockholder and immediately exercised the
warrant to receive 1,585,435 shares of the Company's common stock in exchange
for $495,000. At December 31, 1996, the New Stockholders owned 62% of the
Company's outstanding common stock. At December 31, 1996, SSI owned 46% of the
Company's outstanding common stock.

Acquisition of Micro Dynamics, Ltd.

On May 17, 1996, the Company acquired 99.89% of the outstanding shares of
common stock of Micro Dynamics, Ltd. ("MDL"). The Company issued 653,033
shares of common stock valued at $2.90 per share in exchange for 4,029,417
shares of MDL stock valued at $0.47 per share. The Company also paid cash of
$947,232 in exchange for 2,015,388 shares of MDL common stock. Also, in
connection with this transaction the Company issued options for 234,604 shares
of the Company's common stock to former MDL optionholders. This transaction
was accounted for under the purchase method of accounting. Accordingly, the
results of MDL's operations are included in the consolidated statements of
operations of the Company for the period from May 17, 1996 through December
31, 1996. Prior to this transaction, approximately 52% of the outstanding
capital stock of MDL was owned by SSI. SSI did not receive any cash in this
transaction, only shares.

The following unaudited pro forma information presents a summary of
consolidated results of operations of the Company and MDL as if the
acquisition had occurred on January 1 of each year presented.

<TABLE>
<CAPTION>
1995 1996
----------- ------------
<S> <C> <C>
Revenues.......................................... $18,675,151 $ 20,704,698
Net loss.......................................... $ (658,145) $ (2,678,044)
</TABLE>

Such pro forma amounts are not necessarily indicative of what the actual
results might have been had the acquisition occurred at the beginning of each
year.

4. RECEIVABLES:

Receivables at December 31, 1995 and 1996 consist of the following:

<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Trade accounts receivable............................ $2,755,929 $4,415,567
Unbilled receivables................................. 46,802 575,380
Other receivables.................................... 25,777 25,306
---------- ----------
2,828,508 5,016,253
Less allowance for doubtful accounts................. (150,000) (81,186)
---------- ----------
$2,678,508 $4,935,067
========== ==========
</TABLE>

Bad debt expense was $8,500, $151,853 and $0 for 1994, 1995 and 1996,
respectively.

F-25
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. PROPERTY AND EQUIPMENT:

Property and equipment at December 31, 1995 and 1996, consists of the
following:

<TABLE>
<CAPTION>
DEPRECIABLE
1995 1996 LIVES IN YEARS
----------- ----------- --------------
<S> <C> <C> <C>
Computer equipment and purchased
software............................ $ 851,202 $ 1,634,816 3
Office furniture and equipment....... 304,084 869,226 7
Computer equipment under capital
lease............................... 1,638,388 1,638,388 3-5
Office furniture and equipment under
capital lease....................... 445,324 445,324 7
----------- -----------
3,238,998 4,587,754
Less accumulated depreciation and
amortization........................ (1,064,107) (1,988,315)
----------- -----------
$ 2,174,891 $ 2,599,439
=========== ===========
</TABLE>

The Company executed capital leases with values of $839,000, $1,131,507 and
$0 in 1994, 1995 and 1996, respectively, representing noncash financing
activities. Accumulated amortization on computer equipment under capital lease
was $483,776 and $988,701 at December 31, 1995 and 1996, respectively.
Accumulated amortization on office furniture and equipment under capital lease
was $31,809 and $95,426 at December 31, 1995 and 1996, respectively.
Substantially all of the Company's property and equipment is pledged as
collateral under various borrowing arrangements.

Depreciation and amortization expense for 1994, 1995 and 1996, including
amortization on property and equipment under capital lease, was $221,822,
$505,876 and $924,208, respectively.

As of December 1, 1995, the Company reevaluated its computer equipment and
purchased software and changed their estimated useful lives to approximately
three years from five years.

6. COMPUTER SOFTWARE DEVELOPMENT COSTS:

During 1994, 1995 and 1996, the Company charged to expense $311,841,
$518,989 and $1,134,239, respectively, relating to the amortization of
capitalized computer software development costs. Such amortization is included
in research and product development on the consolidated statements of
operations. As of December 1, 1995, the Company reevaluated its amortization
policy for capitalized computer software development costs and changed the
amortization period for these costs to four years from five years.

During 1994, 1995 and 1996, the Company charged to expense $57,037, $418,097
and $632,222, respectively, in research and development costs. Such expense is
included in research and product development on the consolidated statements of
operations.

7. NOTES PAYABLE TO A BANK:

On December 20, 1995, the Company entered into a new revolving credit
facility with a bank (the "Lender"). The maximum amount available under this
credit arrangement is $10,000,000. As of December 31, 1995 and 1996, $0 and
$6,083,703 of this credit arrangement was utilized, respectively. Amounts
outstanding under this credit arrangement bear interest at variable rates
determined by various provisions of the credit arrangement. These rates
generally approximate or equal the Lender's Prime Rate or the London Interbank
Rate (LIBOR). At December 31, 1996, the balance consisted of $4,083,703
outstanding on a line of credit bearing interest at 8.25% and two $1,000,000
LIBOR notes, each bearing interest at 7.50%. The weighted average interest
rate on the revolving credit facility was 8% at December 31, 1996.

F-26
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Interest is payable monthly. The revolver has a provision allowing for the
Company to convert the obligation as of December 20, 1997 into a term loan
provided that the Company has given the Lender thirty-days written notice, has
not defaulted, and has not experienced a material and adverse change to its
business and operations. The principal balance of the term loan shall be
repaid in twenty-four consecutive installments due the first day of each
month, beginning January 1, 1998. The first twenty-three such installments
shall each be in an amount equal to 1/36th of the initial principal balance of
the term loan and the final installment shall be equal to the remaining
principal balance of the term loan.

Amounts outstanding under this credit arrangement are collateralized by
substantially all of the Company's assets and repayment is guaranteed by the
New Stockholders.

8. NOTE PAYABLE TO STOCKHOLDER:

In connection with the acquisition of MDL, as discussed in Note 3, the
Company assumed notes payable to SSI in the amounts of $350,000 and $275,000.
At December 31, 1996, these notes bear interest at 9.25%. During 1996, the
Company incurred $37,475 in interest expense on these notes. These notes were
amended on January 10, 1997. Under the amended terms, an initial payment of
$50,000 was made in January 1997. Monthly principal payments of approximately
$16,000 plus accrued interest are due for thirty-six months commencing
February 1, 1997. These notes bear interest at prime plus 1%.

9. INCOME TAXES:

The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities at December 31, 1995 and 1996 are as
follows:

<TABLE>
<CAPTION>
1995 1996
---------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward................. $1,415,009 $ 2,603,766
Research and development credit carryforward.... 160,802 212,102
Other........................................... 244,357 255,095
---------- -----------
Total deferred tax assets..................... 1,820,168 3,070,963
---------- -----------
Deferred tax liabilities:
Capitalized computer software costs............. 920,558 1,424,954
Property and equipment depreciation
differences.................................... 57,075 39,949
---------- -----------
Total deferred tax liabilities................ 977,633 1,464,903
---------- -----------
Net deferred tax assets, before valuation
allowance........................................ 842,535 1,606,060
Less: valuation allowance......................... (422,535) (1,186,060)
---------- -----------
Net deferred tax asset............................ $ 420,000 $ 420,000
========== ===========
</TABLE>

At December 31, 1996, the Company had net operating loss carryforwards for
U.S. tax purposes of approximately $6,350,000. The net operating loss
carryforwards generally expire in the years ending 2000 through 2011. At
December 31, 1996, the Company had Research and Development (R&D) credit
carryforwards of approximately $212,000. The R&D credit carryforwards will
generally expire in the years ending 2006 through 2011. Due to ownership
changes, a portion of the Company's net operating loss carryforwards and R&D
credit is subject to an annual cumulative limitation with respect to the
amount which may be utilized in any one year. The Company believes realization
of the net deferred tax asset to be more likely than not.

During 1994, the Company recognized an income tax benefit of $160,000 on
income before income tax benefit of $691,035. This benefit resulted from the
recognition of net operating loss carryforwards.

F-27
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

10. DEFINED CONTRIBUTION PENSION PLAN:

The Company sponsors a defined contribution 401(k) pension plan covering
substantially all employees of the Company. Employees can contribute a maximum
of 15% of their salary to the plan. Employer matches are made at the Company's
discretion. The Company recognized expense under the 401(k) plan of
approximately $0, $19,754 and $59,027 during 1994, 1995 and 1996,
respectively.

11. COMMITMENTS AND CONTINGENCIES:

The Company leases office space and equipment under noncancelable capital
and operating lease agreements. The aggregate minimum noncancelable lease
payments at December 31, 1996 are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- ------------
<S> <C> <C>
1997............................................ $ 675,890 $ 2,006,000
1998............................................ 263,313 2,089,000
1999............................................ 2,185,000
2000............................................ 1,865,000
2001............................................ 1,291,000
Thereafter...................................... 1,191,000
--------- ------------
Total minimum lease payments.................... 939,203 $ 10,627,000
============
Less amount representing interest............... 70,015
---------
Present value of net minimum capital lease
payments....................................... 869,188
Less current portion of capital lease
obligations.................................... 610,648
---------
Noncurrent portion of capital lease
obligations.................................... $ 258,540
=========
</TABLE>

The capital leases principally carry a weighted-average imputed interest
rate of 10.50%. Rent expense for the years ended December 31, 1994, 1995 and
1996 was $216,844, $891,502 and $940,799, respectively.

12. COMMON STOCK OPTIONS:

The Company has adopted two non-qualified common stock option plans and one
incentive stock option plan: FormMaker Software, Inc. 1989 Non-Qualified Stock
Option Plan for Key Employees (the "1989 Plan"), FormMaker Software, Inc. 1990
Non-Qualified Stock Option Plan for Non-Employee Directors ("the 1990 Plan"),
and the FormMaker Software, Inc. 1996 Equity Compensation Plan ("the 1996
Plan") for the benefit of certain employees and directors of the Company.

Options are granted at the discretion of the Board of Directors, its
committee or the plan administrator as stated in the plan documents. Each
option granted under the Plans entitles the optionee to purchase one share of
the Company's common stock.

FormMaker Software, Inc. 1989 Non-Qualified Stock Option Plan for Key
Employees

The 1989 Plan authorized the issuance, pursuant to the exercise of options
granted, of up to 750,000 shares of common stock. Options granted under the
1989 Plan vested equally over the three year period following the date of
grant. At the date of issuance, the options' exercise price equaled or
exceeded the estimated fair value of the Company's common shares. A total of
583,750 options granted under the 1989 Plan have been exercised. At December
31, 1996, 166,250 options were outstanding under the 1989 Plan. The maximum
term of options granted under this plan is 10 years.

F-28
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FormMaker Software, Inc. 1990 Non-Qualified Stock Option Plan for Non-
Employee Directors

The 1990 Plan authorized the issuance, pursuant to the exercise of options
granted, of up to 250,000 shares of common stock. Options granted under the
1990 plan were fully vested at the time of grant. At the date of issuance, the
options' exercise price equaled or exceeded the estimated fair value of the
Company's common shares. A total of 105,000 options granted under the 1990
Plan have been exercised. At December 31, 1996, no options were outstanding
under the 1990 Plan.

FormMaker Software, Inc. 1996 Equity Compensation Plan

The 1996 Plan authorized the issuance, pursuant to the exercise of options
granted, of up to 1,066,206 shares of common stock. The options issued under
the 1996 Plan generally vest equally over a four year period. At the date of
issuance, the options' exercise price equaled or exceeded the estimated fair
value of the Company's common shares, except for 141,649 options issued to
former MDL optionholders in connection with the Company's acquisition of MDL.
The exercise price of options issued under the 1996 Plan ranged from $0.62 to
$4.63. At December 31, 1996, 755,189 options were outstanding under the 1996
Plan; 141,664 of which were exercisable. The maximum term of options granted
under this plan is 10 years.

Other outstanding options

The company issued an additional 92,955 stock options during 1996 in
connection with the Micro Dynamics, Ltd. acquisition that are not covered
under the existing stock option plans. All of these options are fully vested
and have an exercise price ranging from $2.47 to $6.17. In addition, 5,000
stock options are outstanding that were issued in connection with a 1988
business acquisition. These options are fully vested and have an exercise
price of $0.20 per share and do not expire.

At December 31, 1996, the Company has three stock-based compensation plans,
as described above. The Company applies APB Opinion 25 and related
interpretations in accounting for its plans. No compensation cost has been
recognized for its fixed stock option plans. Had compensation cost for the
Company's stock-based plans been determined based on the fair value at the
grant dates, consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net loss would have been increased by a pro forma
amount of $0 and $75,647 in 1995 and 1996, respectively, to a net loss of
$425,497 and $1,565,674, respectively. For purposes of computing these pro
forma amounts, the Black-Scholes option-pricing model was used with a risk-
free interest rate assumption of 5.2% for 1995 and 6.2% to 6.5% for 1996, and
an estimated option life assumption of five years for both 1995 and 1996.

F-29
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

A summary of the status of the Company's three fixed stock option plans as
of December 31, 1994, 1995 and 1996 and changes during the years ending on
those dates is presented below.

<TABLE>
<CAPTION>
1996 PLAN 1990 PLAN 1989 PLAN
------------------- ------------------ -------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
-------- --------- ------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at December
31, 1993............... 95,000 $0.02 564,334 $0.51
Granted................ 10,000 $0.02
Exercised.............. (70,000) $0.02
Forfeited or expired... (108,334) $0.51
------- --------
Outstanding at December
31, 1994............... 35,000 $0.02 456,000 $0.51
Granted................ 163,000 $3.48
Exercised.............. (448,750) $0.51
Forfeited or expired... (2,500) $0.50
------- --------
Outstanding at December
31, 1995............... 35,000 $0.02 167,750 $3.41
Granted................ 967,383 $3.20
Exercised.............. (35,000) $0.02 (1,500) $0.50
Forfeited or expired... (212,194) $3.26
-------- ------- --------
Outstanding at December
31, 1996............... 755,189 $3.18 -- $ -- 166,250 $3.42
======== ======= ========
Options Exercisable at
December 31, 1996...... 141,664 166,250
</TABLE>

The weighted-average grant-date fair value of options granted was $0 and
$0.71 for the years ended December 31, 1995 and 1996, respectively.

The following table summarizes information about fixed stock options
outstanding at December 31, 1996:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------- ---------------------
WEIGHTED-
AVERAGE WEIGHTED- NUMBER WEIGHTED-
NUMBER REMAINING AVERAGE EXERCISABLE AVERAGE
OUTSTANDING CONTRACTUAL EXERCISE AT EXERCISE
EXERCISE PRICES AT 12/31/96 LIFE PRICE 12/31/96 PRICE
- --------------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1996 Plan
$0.62................ 86,706 9.38 $0.62 86,706 $0.62
$3.48................ 648,871 9.17 $3.48 47,371 $3.48
$4.63................ 19,612 9.38 $4.63 7,587 $4.63
------- -------
755,189 141,664
======= =======
1989 Plan
$0.50................ 3,250 5.27 $0.50 3,250 $0.50
$3.48................ 163,000 8.98 $3.48 163,000 $3.48
------- -------
166,250 166,250
======= =======
</TABLE>

13. COMMON STOCK WARRANTS:

In June 1991, the Company issued a Warrant to Purchase Common Stock (the
"Warrant") to a stockholder in connection with the stockholder's pledge of
securities to collateralize a revolving credit facility with a bank. The
Warrant entitled the stockholder to acquire, for $495,000, the number of
shares of common stock, which, when combined with the shares of common stock
previously issued to the stockholder, would equal immediately following the
exercise in full of the Warrant a 40% interest in the common stock of the
Company pursuant to the terms and conditions set forth in the Warrant
document.

F-30
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

On December 20, 1995, the Warrant was sold by N.G. Wade Investment Company
to SSI for approximately $5,517,000 or $3.48 per share. The Warrant was
immediately exercised and SSI received 1,585,435 of the Company's common stock
in exchange for $495,000.

Under the terms of the Company's recapitalization, the Company issued seven-
year warrants to the New Stockholders. These warrants originally allowed the
New Stockholders to purchase an aggregate of 372,823 shares of common stock,
exercisable at a purchase price of $.01 per share. Subsequent to December 31,
1995, a portion of the warrants allowing the New Stockholders to purchase
57,076 shares of common stock were exchanged for new warrants allowing the New
Stockholders to purchase 150,000 shares of common stock at a purchase price of
$3.48 per share. This transaction was effective as of the date of the
recapitalization and has been given retroactive treatment in the 1995
financial statements.

14. RELATED PARTY TRANSACTIONS:

The Company maintains a service agreement with SSI whereby the Company
receives various administrative and consulting services in exchange for a fee.
During 1996, the Company paid a total of $74,661 to SSI for these services. At
December 31, 1996, the Company had $11,430 in accounts receivable and $253,396
in accounts payable and accrued expenses with respect to SSI. Other related
party transactions are also described elsewhere in the Notes to these
consolidated financial statements.

15. RISK CONCENTRATIONS:

The Company has entered into various agreements with a major customer
("Policy Management Systems Corporation" or "PMSC") to provide certain third-
party processing services and to grant PMSC certain rights to market the
Company's proprietary software. Revenue for 1994, 1995 and 1996 includes
$3,039,117, $4,645,420 and $4,555,189, respectively, from providing third-
party processing services to PMSC. Additionally, revenue of $3,233,233,
$5,630,735 and $8,357,216 has been recognized by the Company in 1994, 1995 and
1996, respectively, as a result of sublicensing by PMSC of the Company's
proprietary software and related implementation services. At December 31, 1995
and 1996, $2,096,000 and $1,438,247, respectively, due from PMSC was included
in trade accounts receivable. At December 31, 1995 and 1996, $2,100,000 and
$89,989, respectively, due to PMSC was included in payable to customer.

In January 1997, the Company and PMSC amended their marketing agreement,
whereby, beginning January 1, 1998, PMSC can unilaterally terminate the
marketing agreement for any reason whatsoever by providing 90 days' prior
written notice to the Company. In addition, PMSC may terminate the agreement
as a result of the merger transaction expected to close in April 1997 (see
Note 16) by providing 10 days' prior written notice to the Company. Unless
renewed or terminated at an earlier date, the marketing agreement will
terminate on December 31, 1999.

On October 13, 1995, the Company and PMSC entered into an amendment to their
marketing agreement, whereby, PMSC purchased software licenses for inventory
and prospective sublicensing to end users in the amount of $2 million. Under
this Amendment PMSC was to receive credit in the amount of $2.6 million
against amounts which would otherwise have been due the Company on future
licenses. The Company recorded $2 million in license fee revenue with respect
to this transaction.

On December 31, 1995, the Company and PMSC agreed to further amend their
marketing agreement generally to provide for (a) the return of $1 million in
inventory purchased as the result of the October 13, 1995 amendment and the
elimination of the related $600,000 credit, (b) the elimination of PMSC's
"exclusive" right to market and sublicense the Company's software within a
particular segment of an industry and (c) the elimination of $750,000 in
credits which were to be applied against future service billings. As a result
of this amendment the Company paid $2.1 million to PMSC on January 3, 1996.
The Company recorded, in its 1995

F-31
<PAGE>

FORMMAKER SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

financial statements, the $1 million in returned inventory as a reduction in
revenue and a charge to general and administrative expense in the amount of
$1.1 million as a result of this latter amendment.

For the foreseeable future, it is anticipated that a significant portion of
the Company's revenues will be derived from the licensing and maintaining of
its software products. Certain of the Company's document automation
competitors may have greater financial, technical, marketing and other
resources than the Company. The Company believes that its line of products
currently have distinctive features which make these products competitive.
However, the Company's failure to compete effectively could have a material
adverse effect on its financial condition and results of operations.

The Company's software development is largely dependent upon certain key
employees. Loss of services of these key employees could have a material
adverse effect on the Company's business and prospects.

Substantially all of the end users of the Company's software and services
are in the insurance industry.

16. SUBSEQUENT EVENT:

On January 15, 1997, the Company and Image Sciences, Inc. ("ISI") entered
into an Agreement and Plan of Merger ("Merger Agreement"). The Merger
Agreement contemplates the merger of the Company and ISI into a newly formed
holding company, DocuCorp, Inc. ("DocuCorp") via a stock-for-stock
transaction. Under the merger, ISI stockholders would receive approximately
52% of DocuCorp's shares and the Company's stockholders would receive the
remaining 48% of DocuCorp's shares. Completion of the merger is subject to
certain conditions and is expected to close in April 1997. The merger would be
recorded under the purchase method of accounting, and ISI would be treated as
the accounting acquiror.

F-32
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
Micro Dynamics Ltd.
Silver Spring, Maryland

We have audited the accompanying balance sheets of Micro Dynamics Ltd. as of
December 31, 1995 and 1994, and the related statements of operations,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1995 and
1994, and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.

Deloitte & Touche LLP

McLean, Virginia
January 25, 1996
(February 2, 1996 as to Note 9)

F-33
<PAGE>

MICRO DYNAMICS, LTD.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash............................................... $ 49,479 $ 97,390
Accounts receivable................................ 833,346 1,122,561
Inventory.......................................... 10,664 52,456
Prepaid expenses and other......................... 34,232 16,037
----------- -----------
Total current assets............................. 927,721 1,288,444
----------- -----------
Property and equipment:
Computer and other equipment....................... 732,653 935,487
Furniture and fixtures............................. 123,353 122,305
----------- -----------
Total property and equipment..................... 856,006 1,057,792
Less accumulated depreciation...................... (577,433) (679,210)
----------- -----------
Net property and equipment....................... 278,573 378,582
Deferred software development costs, net of
accumulated amortization of $935,618 in 1995 and
$529,490 in 1994.................................... 1,423,886 1,450,224
----------- -----------
$ 2,630,180 $ 3,117,250
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank line of credit................................ $ 170,000 $ --
Notes payable to related party..................... -- 275,000
Accounts payable and accrued expenses.............. 601,276 833,375
Deferred revenue and customer deposits............. 716,082 642,070
----------- -----------
Total current liabilities........................ 1,487,358 1,750,445
----------- -----------
Long term note payable to related party.............. 275,000 --
----------- -----------
Total liabilities................................ 1,762,358 1,750,445
----------- -----------
Commitments and Contingencies
Stockholders' equity
Common stock, Class A, $.01 par value, authorized
12,000,000 shares; 5,938,803 and 5,855,970 shares
issued and outstanding in 1995 and 1994,
respectively...................................... 59,389 58,560
Common stock, Class B, $.01 par value, authorized
1,600,000 shares; none issued and outstanding..... -- --
Additional paid-in capital......................... 2,654,697 2,647,242
Accumulated deficit................................ (1,846,264) (1,338,997)
----------- -----------
Total stockholders' equity....................... 867,822 1,366,805
----------- -----------
$ 2,630,180 $ 3,117,250
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-34
<PAGE>

MICRO DYNAMICS, LTD.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Revenues.............................................. $4,346,365 $6,545,788
Cost of products and services......................... 1,082,272 2,462,009
----------- -----------
Gross profit...................................... 3,264,093 4,083,779
----------- -----------
Expenses:
Selling, general and administrative expense......... 2,242,089 2,479,396
Research and development expense.................... 1,323,373 1,236,710
Depreciation........................................ 183,858 204,059
----------- -----------
Total expenses.................................... 3,749,320 3,920,165
----------- -----------
Operating (loss) income........................... (485,227) 163,614
Other income.......................................... 6,906 3,537
Interest expense...................................... (28,946) (25,586)
----------- -----------
Net (loss) profit................................. $ (507,267) $ 141,565
=========== ===========
</TABLE>

See accompanying notes to financial statement.

F-35
<PAGE>

MICRO DYNAMICS, LTD.

STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1995 AND 1994

<TABLE>
<CAPTION>
CLASS A COMMON STOCK ADDITIONAL TOTAL
----------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES PAR VALUE CAPITAL (DEFICIT) EQUITY
----------- --------------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1,
1994................... 5,733,595 $57,336 $2,636,228 $(1,480,562) $1,213,002
Exercise of stock
options.............. 122,375 1,224 11,014 12,238
Net income............ 141,565 141,565
----------- --------- ---------- ----------- ----------
Balance December 31,
1994................... 5,855,970 58,560 2,647,242 (1,338,997) 1,366,805
Exercise of stock
options.............. 82,833 829 7,455 8,284
Net loss.............. (507,267) (507,267)
----------- --------- ---------- ----------- ----------
Balance, December 31,
1995................... 5,938,803 $59,389 $2,654,697 $(1,846,264) $ 867,822
=========== ========= ========== =========== ==========
</TABLE>

See accompanying notes to financial statements.

F-36
<PAGE>

MICRO DYNAMICS, LTD.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................... $ (507,267) $ 141,565
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization...................... 735,651 491,481
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable........ 289,215 (247,685)
Decrease in inventory............................. 41,792 59,668
Increase in prepaid expenses and other............ (18,195) (2,732)
Increase (decrease) in accounts payable and
accrued expenses................................. (232,099) 229,139
Increase in deferred revenue and customer
deposits......................................... 74,012 96,596
Decrease in other noncurrent liabilities.......... -- (17,145)
----------- -----------
Net cash provided by operating activities........ 383,109 750,887
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment.................. (83,849) (80,595)
Capitalized software development costs.............. (525,455) (535,900)
----------- -----------
Net cash used by investing activities............ (609,304) (616,495)
----------- -----------
Cash flows from financing activities:
Proceeds from bank line of credit................... 170,000 --
Repayment of note payable to related party.......... -- (143,750)
Proceeds from exercise of stock options............. 8,284 12,238
----------- -----------
Net cash used in financing activities............ 178,284 (131,512)
----------- -----------
Net increase (decrease) in cash.................. (47,911) 2,880
Cash, beginning of year.............................. 97,390 94,510
----------- -----------
Cash, end of year.................................... $ 49,479 $ 97,390
=========== ===========
Supplemental disclosure of cash flows information:
Cash paid during the year for interest.............. $ 28,284 $ 29,950
</TABLE>

See accompanying notes to financial statements.

F-37
<PAGE>

MICRO DYNAMICS, LTD.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994

(1) DESCRIPTION OF OPERATIONS

Micro Dynamics, Ltd. (the Company) is a developer and provider of document
imaging systems. The Company combines state-of-the-art, off-the-shelf hardware
with its own multi-user software to provide complete, integrated solutions.

Incorporated in 1985, the Company is headquartered in Silver Spring,
Maryland, with a regional sales office in California. The Company's primary
customers are Fortune 500 companies and the U.S. Government.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Revenue Recognition

The Company's principal sources of revenue are from software license fees
and sales of hardware components and accessories. The Company recognizes
revenue from software license fees at the time the software is delivered to
and accepted by the customer. Revenue on sales of computer hardware is
recognized at the time merchandise is shipped.

Revenue from consulting and other software related services is recognized as
services are rendered. Revenue from post-contract customer support (PCS or
maintenance) agreements and software upgrade agreements is deferred and
recognized ratably over the term of the agreements.

(b) Deferred Software Development Costs

The Company owns certain proprietary rights to computer software systems
that the Company licenses to customers. Deferred software development costs
consist of costs incurred to develop software. Capitalization of internally
developed software begins upon the establishment of technological feasibility.
The ongoing assessment of recoverability of capitalized software development
costs requires considerable judgment by management with respect to certain
external factors including, but not limited to, technological feasibility,
anticipated future gross revenue, estimated economic life and changes in
software and hardware technologies. Capitalization of computer software costs
ceases when the product is available for general release to customers.

Amortization is recorded on a product by product basis. The annual
amortization amount is computed using the straight-line method over the
remaining estimated economic life of the product, generally three years.
Amortization expense for the years ended December 31, 1995 and 1994 was
approximately $551,800 and $287,000 respectively.

Inventory consists principally of computer hardware components and is stated
at the lower of cost or market. Cost is determined using the first-in, first-
out (FIFO) method.

(d) Property and Equipment

Property and equipment are recorded at cost. Depreciation is calculated
using straight-line or accelerated methods over the estimated useful lives of
the related equipment, which range from 5 to 7 years.

F-38
<PAGE>

MICRO DYNAMICS, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(e) Deferred Revenue and Customer Deposits

Deferred revenue consists principally of amounts received in advance for
software upgrades and maintenance contracts. Customer deposits represent
amounts received from customers, principally at signing of the sales contract,
in advance of system delivery.

(f) Income Taxes

Income taxes are accounted for under Statement of Financial Accounting
Standards (SFAS) No. 109 "Accounting for Income Taxes," which utilizes the
asset and liability method of accounting for income taxes. Under the asset and
liability method, deferred income taxes are recognized for the future tax
consequences of "temporary differences" by applying enacted statutory tax
rates applicable to future years to differences between the financial
statement carrying amounts and the tax basis of existing assets and
liabilities.

(3) NOTES PAYABLE

Notes payable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Bank line of credit.................................... $ 170,000 $ --
Note payable to related party.......................... 275,000 250,000
Demand note payable to related party................... -- 25,000
--------- ---------
445,000 275,000
Current portion........................................ (170,000) (275,000)
--------- ---------
Long term.............................................. $ 275,000 $ --
========= =========
</TABLE>

During 1995, the Company secured a line of credit with a bank in the amount
of $750,000, which is subject to a borrowing base limitation utilizing
eligible accounts receivable. The line which bears interest at the prevailing
prime rate (7.5%), is guaranteed up to $500,000 by the majority stockholder,
and is due August 31, 1996. The line which is secured by accounts receivable
requires, among other provisions, the maintenance of certain operating ratios
and certain other covenants. Borrowings in excess of $500,000 are subject to
additional bank covenants.

During 1995, the demand note and the note payable to related party, the
majority shareholder, were combined into one promissory note. This note bears
interest at the prime rate of interest plus 1% which was 8.5% at December 31,
1995 and is due January 31, 1997.

Subsequent to December 31, 1995, the Company secured an additional $350,000
line of credit with the majority shareholder, which expires in June 1996.

(4) PROFIT-SHARING PLAN

The Company has a defined contribution profit-sharing plan with a 401(k)
feature. All employees become eligible to participate in the plan after
completing one year of service. Employees' voluntary contributions may not
exceed 15 percent of their respective compensation or $9,240. Under this plan,
all employer contributions are at the Company's discretion. No employer
contributions were made for 1995 and 1994.

F-39
<PAGE>

MICRO DYNAMICS, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(5) INCOME TAXES

There is no provision for income taxes for the year ended December 31, 1994
due to the utilization of net operating loss carryforwards and for 1995
because of the net loss for the year.

The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities are presented as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1995 1994
---------- ----------
<S> <C> <C>
Deferred tax assets:
Deferred revenue..................................... $ 29,233 $ 155,148
Deferred rent benefits............................... -- 2,669
Accounts payable..................................... 38,620 38,620
Loss carryforward.................................... 974,521 849,648
---------- ----------
Gross deferred tax assets.......................... 1,042,374 1,046,085
Less valuation allowance......................... (460,750) (448,141)
---------- ----------
Net deferred tax assets............................ 581,624 597,944
Deferred tax liabilities:
Property and equipment, due to differences in
depreciation........................................ (31,719) (37,867)
Deferred software development costs.................. (549,905) (560,077)
---------- ----------
Gross deferred tax liabilities..................... (581,624) (597,944)
---------- ----------
Net deferred tax assets (liabilities).................. $ -- $ --
========== ==========
</TABLE>

At December 31, 1995, the Company has operating loss carryforwards of
approximately $2,517,000, subject to certain limitations. If not used to
offset future taxable income, the loss carryforwards will begin to expire in
2007. In the event of a significant change in the ownership of the Company,
the utilization of such loss carryforwards could be substantially limited.

(6) STOCK OPTIONS

During 1990, the Company issued options to purchase 477,800 shares of Class
A common stock with an exercise price of $1.00 per share which was the
Company's estimate of fair market value of the shares at the time the options
were issued. These options were immediately exercisable, but no options have
been exercised to date.

During 1993, the Company adopted a stock option plan providing for the
issuance, at fair market value, of qualified and non qualified stock options
under Section 422A of the Internal Revenue Code. The options granted will
expire in a period not to exceed ten years after the date of grant. Options
granted under the plan may not be transferred by the holder. The plan is
currently authorized to issue 1,788,523 options which can be exercised to
purchase one share of Class A common stock per option. The Company has
reserved 1,788,523 of its authorized shares for this plan.

An additional 716,000 shares have been offered to participants of the plan
by other stockholders of the Company, which accumulates to 2,504,523 shares to
be offered under the plan. During 1995, 2,500 of these options were exercised.

F-40
<PAGE>

MICRO DYNAMICS, LTD.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

A summary of employee stock options issued under the 1994 plan is as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Outstanding at beginning of year....................... 1,915,333 2,327,000
Granted.............................................. 129,500 208,000
Exercised............................................ (85,333) (122,375)
Expired.............................................. (470,500) (497,292)
--------- ---------
Outstanding at end of year............................. 1,489,000 1,915,333
========= =========
Exercisable at end of year............................. 897,000 863,165
Price range of options outstanding..................... $.10-$.75 $.10-$.75
</TABLE>

(7) RELATED PARTIES TRANSACTIONS

The majority shareholder provides management advisory services to the
Company pursuant to an operating agreement, and is compensated at 1% of net
sales from products and services. During 1995 and 1994 the company incurred
$43,464 and $60,132, respectively, in management fees for services rendered.
Included in accounts payable and accrued expenses is $100,000 due to
stockholders, who were former employees, that is payable upon the occurrence
of certain future events.

(8) COMMITMENTS AND CONTINGENCIES

Leases--Rent expense on operating leases related to office space was
$258,019 and $247,663 for the years ended December 31, 1995 and 1994,
respectively. The lease on the Company's headquarters has expired and was
renewed for a four month term, until April 1996. Equipment lease expense was
$50,799 and $52,357 for the years ended December 31, 1995 and 1994,
respectively.

Litigation--The Company has filed a lawsuit against a former customer, and
the customer has filed counter-claims in the case. The case is in the
preliminary stages of discovery and the outcome of this litigation is not
currently predictable. The Company believes that the results of this
litigation will not have a material effect on the results of the operations or
the financial position of the Company.

(9) SUBSEQUENT EVENT

Subsequent to December 31, 1995, the Company has entered into a non-binding
agreement that would allow for the sale of up to 100% of the Company's common
stock.

F-41
<PAGE>

APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

AGREEMENT AND PLAN OF MERGER

AMONG

DOCUCORP, INC.
(A DELAWARE CORPORATION),

ISI MERGER CORP.
(A TEXAS CORPORATION),

FORMMAKER ACQUISITION CORP.
(A GEORGIA CORPORATION),

IMAGE SCIENCES, INC.
(A TEXAS CORPORATION)

AND

FORMMAKER SOFTWARE, INC.
(A GEORGIA CORPORATION)

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<C> <C> <S> <C>
1. Definitions......................................................... A-2
2. Plan of Merger...................................................... A-9
2.1 Surviving Corporation......................................... A-9
2.2 Effective Time................................................ A-9
2.3 Effects of the Merger......................................... A-9
2.4 Name of the Surviving Texas Corporation and the Surviving
Georgia Corporation;
Articles of Incorporation and Bylaws.......................... A-9
2.5 Directors and Officers........................................ A-9
2.6 Conversion of Image Sciences Securities....................... A-9
2.7 Conversion of FormMaker Securities............................ A-10
2.8 Capital Stock of Texas Sub and Georgia Sub.................... A-11
2.9 Approval by Shareholders...................................... A-11
2.10 Merger Closing................................................ A-12
2.11 Dissenting Shares............................................. A-12
2.12 Exchange of Converted Shares, Image Sciences Options,
FormMaker Options and FormMaker Warrants...................... A-12
2.13 No Further Transfer of Shares................................. A-13
3. Closing............................................................. A-13
3.1 Location, Date................................................ A-13
3.2 Deliveries.................................................... A-13
4. Representations and Warranties of Image Sciences.................... A-14
4.1 Corporate Status.............................................. A-14
4.2 Authorization................................................. A-14
4.3 Consents and Approvals........................................ A-14
4.4 Capitalization and Stock Ownership............................ A-14
4.5 Financial Statements.......................................... A-14
4.6 Title to Assets and Related Matters........................... A-15
4.7 Real Property................................................. A-15
4.8 Certain Personal Property..................................... A-15
4.9 Non-Real Estate Leases........................................ A-16
4.10 Accounts Receivable........................................... A-16
4.11 Inventory..................................................... A-16
4.12 Liabilities................................................... A-16
4.13 Taxes......................................................... A-16
4.14 Subsidiaries.................................................. A-16
4.15 Legal Proceedings and Compliance with Law..................... A-16
4.16 Contracts..................................................... A-17
4.17 Insurance..................................................... A-18
4.18 Intellectual Property and Software Products................... A-18
4.19 Employee Relations............................................ A-19
4.20 ERISA......................................................... A-19
4.21 Corporate Records............................................. A-21
4.22 Absence of Certain Changes.................................... A-21
4.23 Previous Sales; Warranties.................................... A-21
4.24 Customers..................................................... A-21
4.25 Finder's Fees................................................. A-21
4.26 Additional Information........................................ A-21
4.27 Accuracy of Information....................................... A-22
4.28 Hart-Scott-Rodino Act......................................... A-22
</TABLE>

A-ii
<PAGE>

<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<C> <C> <S> <C>
5. Representations and Warranties of FormMaker......................... A-22
5.1 Corporate Status.............................................. A-22
5.2 Authorization................................................. A-22
5.3 Consents and Approvals........................................ A-22
5.4 Capitalization and Stock Ownership............................ A-23
5.5 Financial Statements.......................................... A-24
5.6 No Company, Texas Sub or Georgia Sub Assets, Liabilities or
Business...................................................... A-24
5.7 Title to Assets and Related Matters........................... A-24
5.8 Real Property................................................. A-24
5.9 Certain Personal Property..................................... A-25
5.10 Non-Real Estate Leases........................................ A-25
5.11 Accounts Receivable........................................... A-25
5.12 Inventory..................................................... A-25
5.13 Liabilities................................................... A-25
5.14 Taxes......................................................... A-25
5.15 Subsidiaries.................................................. A-26
5.16 Legal Proceedings and Compliance with Law..................... A-26
5.17 Contracts..................................................... A-26
5.18 Insurance..................................................... A-27
5.19 Intellectual Property and Software Products................... A-27
5.20 Employee Relations............................................ A-28
5.21 ERISA......................................................... A-29
5.22 Corporate Records............................................. A-30
5.23 Absence of Certain Changes.................................... A-30
5.24 Previous Sales; Warranties.................................... A-30
5.25 Customers..................................................... A-31
5.26 Finder's Fees................................................. A-31
5.27 Additional Information........................................ A-31
5.28 Accuracy of Information....................................... A-31
5.29 Hart-Scott-Rodino Act......................................... A-31
6. Joint Covenants..................................................... A-31
6.1 Registration Statement........................................ A-31
6.2 Financial Statements.......................................... A-32
6.3 Due Diligence................................................. A-32
7. Covenants of FormMaker and the Company.............................. A-32
7.1 Fulfillment of Closing Conditions............................. A-32
7.2 Conduct of the Business....................................... A-33
7.3 Access to Information......................................... A-33
7.4 No Solicitation............................................... A-33
7.5 The FormMaker Special Meeting................................. A-33
7.6 Rule 145 Affiliates........................................... A-33
7.7 Stock Option Plan............................................. A-34
7.8 Expenses...................................................... A-34
7.9 Indemnification............................................... A-34
7.10 New Bank Loan................................................. A-34
7.11 Related Parties............................................... A-34
8. Covenants of Image Sciences......................................... A-34
8.1 Fulfillment of Closing Conditions............................. A-34
8.2 Conduct of the Business....................................... A-35
</TABLE>

A-iii
<PAGE>

<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<C> <C> <S> <C>
8.3 Access to Information........................................... A-35
8.4 No Solicitation................................................. A-35
8.5 Image Sciences Special Meeting.................................. A-35
8.6 Rule 145 Affiliates............................................. A-35
8.7 Expenses........................................................ A-35
8.8 Image Sciences Closing Transactions............................. A-36
9. Conditions Precedent to Obligations of All Parties.................... A-36
9.1 Legality........................................................ A-36
9.2 Registration Statement.......................................... A-36
9.3 Merger.......................................................... A-36
9.4 Approval by Shareholders........................................ A-36
9.5 Appointment of Directors and Officers........................... A-36
9.6 Administrative Services Agreements.............................. A-36
10. Conditions Precedent to Obligations of Image Sciences................. A-36
10.1 Representations and Warranties.................................. A-36
10.2 Agreements, Conditions and Covenants............................ A-37
10.3 Certificates.................................................... A-37
10.4 Financial Performance........................................... A-37
10.5 Required Consents............................................... A-37
10.6 Ancillary Documents............................................. A-37
10.7 Legal Opinion................................................... A-37
11. Conditions Precedent to Obligations of FormMaker...................... A-37
11.1 Representations and Warranties.................................. A-37
11.2 Agreements, Conditions and Covenants............................ A-37
11.3 Certificates.................................................... A-37
11.4 Financial Performance........................................... A-37
11.5 Required Consents............................................... A-37
11.6 Ancillary Documents............................................. A-37
11.7 Legal Opinion................................................... A-38
12. Termination........................................................... A-38
13. Survival of Representations, Warranties and Covenants................. A-39
14. Public Announcements.................................................. A-39
15. Contents of Agreement................................................. A-39
16. Amendment, Parties in Interest, Assignment, Etc....................... A-39
17. Interpretation........................................................ A-39
18. Notices............................................................... A-40
19. Governing Law; Venue.................................................. A-40
20. Counterparts.......................................................... A-40
</TABLE>

A-iv
<PAGE>

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER is made as of January 15, 1997 by and
among DocuCorp, Inc., a Delaware corporation (the "Company"), ISI Merger
Corp., a Texas corporation and a wholly-owned subsidiary of the Company (the
"Texas Sub"), FormMaker Acquisition Corp., a Georgia corporation and a wholly-
owned subsidiary of the Company (the "Georgia Sub"), Image Sciences, Inc., a
Texas corporation ("Image Sciences"), and FormMaker Software, Inc., a Georgia
corporation ("FormMaker"). Certain other terms are used herein as defined
below in Section 1 or elsewhere in this Agreement.

BACKGROUND

This Agreement sets forth the terms and conditions under which (a) the Texas
Sub will merge with and into Image Sciences and (b) the Georgia Sub will merge
with and into FormMaker (collectively, the "Merger").

The Parties intend that, upon completion of the Transactions (defined
below), (a) Image Sciences will be a wholly-owned subsidiary of the Company,
(b) FormMaker will be a wholly-owned subsidiary of the Company and (c) for
federal income tax purposes, the Merger shall constitute a tax-free
transaction under the Internal Revenue Code of 1986, as amended (the "Code"),
with respect to the conversion of shares of capital stock of FormMaker and
Image Sciences into shares of stock of the Company.

Contemporaneously with the execution of this Agreement, Xerox Corporation, a
New York corporation ("Xerox"), Michael D. Andereck, an individual, Joe A.
Rose, an individual, Samuel M. Wilkes, an individual, Arthur R. Spector, an
individual, Safeguard Scientifics (Delaware), Inc., a Delaware corporation
("Safeguard Delaware"), Technology Leaders II L.P., a Delaware limited
partnership ("TL II"), and Technology Leaders II Offshore C.V., a Netherlands
Antilles limited partnership ("TL Offshore," and together with Safeguard
Delaware and TL II, the "SG/TL Stockholders"), shall have entered into Voting
and Lockup Agreements with respect to shares they hold in Image Sciences or
FormMaker, as the case may be, providing for, among other things, the voting
of such shares in favor of the Merger (the "Voting Agreements").

Contemporaneously with the execution of this Agreement, Safeguard
Scientifics, Inc., a Pennsylvania corporation ("Safeguard"), the SG/TL
Stockholders and the Company are entering into an agreement (the "Liquidity
Agreement") in which (i) Safeguard covenants to use commercially reasonable
efforts to conduct a Qualified Rights Offering (defined below) by September
30, 1997, (ii) the SG/TL Stockholders agree to purchase a certain number of
shares of Company Class A Common Stock (defined below) and to guarantee the
New Bank Loan of the Company or to continue to guarantee an existing line of
credit of FormMaker and (iii) the Company grants to the SG/TL Stockholders
certain warrants to purchase securities of the Company. A "Qualified Rights
Offering" means a bona fide, stand-by commitment for an underwritten public
offering by JP Morgan & Co. or Hambrecht & Quist LLC, or a nationally
recognized investment bank of similar stature, or Tucker Anthony Incorporated
if such first named investment banks are not available, of Company Rights
(defined below) in which the managing underwriter values the equity of the
Company immediately prior to the offering, at $62.1 million or more (subject
to increase based upon equity issuances by the Company other than as
contemplated hereby or by the Liquidity Agreement).

Contemporaneously with the execution of this Agreement, the Company has
entered into employment agreements with Michael D. Andereck and Samuel M.
Wilkes (the "Employment Agreements").

A-1
<PAGE>

WITNESSETH

NOW, THEREFORE, in consideration of the respective covenants contained
herein and intending to be legally bound hereby, the Parties hereto agree as
follows:

1. DEFINITIONS.

For convenience, certain terms used in more than one part of this Agreement
are listed in alphabetical order and defined or referred to below (such terms
as well as any other terms defined elsewhere in this Agreement shall be
equally applicable to both the singular and plural forms of the terms
defined).

"Accounts Receivable" mean as of any date any trade accounts receivable,
notes receivable, bid or performance deposits, employee advances and other
miscellaneous receivables included in the Assets of Image Sciences or
FormMaker, as indicated by the context in which used.

"Affiliates" means, with respect to a particular Party, persons or entities
controlling, controlled by or under common control with that Party, as well as
any officers, directors and majority-owned entities of that Party and of its
other Affiliates. For the purposes of the foregoing, ownership, directly or
indirectly, of 20% or more of the voting stock or other equity interest shall
be deemed to constitute control.

"Agreement" means this Agreement and the Exhibits and Disclosure Schedules
hereto.

"Acquisition Proposal" is defined in Section 7.4.

"Articles of Merger" is defined in Section 2.2.

"Assets" means with respect to a particular Party all of the assets,
properties, goodwill and rights of every kind and description, real and
personal, tangible and intangible, wherever situated and whether or not
reflected in such Party's most recent Financial Statements, that are owned or
possessed by such Party.

"Balance Sheet Date" is defined in Section 4.5.

"Benefit Plan" means (i) as to employees employed in the US, any (y)
"employee benefit plan" as defined in Section 3(3) of ERISA, and (z)
supplemental retirement, bonus, deferred compensation, severance, incentive
plan, program or arrangement or other employee fringe benefit plan, program or
arrangement; and (ii) as to employees employed outside the US, all employee
benefit, health, welfare, supplemental unemployment benefit, bonus, pension,
profit sharing, deferred compensation, stock compensation, stock purchase,
retirement, hospitalization insurance, medical, dental, legal, disability and
similar plans or arrangements or practices, but any such plan, program or
arrangement specified in clauses (i) or (ii) shall be included in this
definition only to the extent that it shall have existed, or any employee
shall have had any rights thereunder, within the three years immediately prior
to the date hereof.

"Business" means with respect to a particular Party its entire business,
operations and facilities.

"Certificates" is defined in Section 2.12.

"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement,
certificate of limited partnership, joint venture agreement or similar
document governing the entity.

"Closing" is defined in Section 3.1.

"Closing Common Shares" means the shares of Company Class A Common Stock to
be issued pursuant to Section 2 to the FormMaker Shareholders and the shares
of Company Class B Common Stock to be issued pursuant to Section 2 to the
Image Sciences Shareholders.

A-2
<PAGE>

"Closing Date" is defined in Section 3.1.

"Code" is defined above in the Background.

"Common Controlled Entity" is defined in Section 4.20(d).

"Common Stock Dividend" means the cash dividend to holders of Image Sciences
Common Stock as part of the Image Sciences Closing Transactions.

"Company" is defined above in the preamble.

"Company Certificate of Incorporation" means the certificate of
incorporation of DocuCorp, Inc.

"Company Class A Common Stock" means the Class A Common Stock, par value
$0.01 per share, of the Company.

"Company Class B Common Stock" means the Class B Common Stock, par value
$0.01 per share, of the Company.

"Company Options" means options to purchase Company Class A Common Stock or
Company Class B Common Stock, as the case may be.

"Company Rights" means rights to purchase not more than 3,000,000 but not
less than 2,000,000 shares of Company Class A Common Stock pursuant to a
Qualified Rights Offering.

"Company Securities" means the Company Class A Common Stock, the Company
Class B Common Stock, the Company Warrants and the Company Options.

"Company Warrants" means warrants to purchase Company Class A Common Stock.

"Confidential Information" means any confidential information or trade
secrets of Image Sciences or FormMaker, as indicated by the context in which
used, including personnel information, know-how and other technical
information, customer lists, customer information and supplier information.

"Confidentiality Agreement" is defined in Section 4.18(e).

"Contract" means any written or oral contract, agreement, lease, instrument,
or other commitment that is binding on any person or its property under
applicable law.

"Converted Shares" is defined in Section 2.6(a).

"Copyrights" means registered copyrights, copyright applications and
unregistered copyrights.

"Corporate Party" is defined in Section 6.1(a).

"Court Order" means any judgment, decree, injunction, order or ruling of any
federal, state, local or foreign court or governmental or regulatory body or
authority that is binding on any person or its property under applicable law.

"Default" means (a) a breach, default or violation, (b) the occurrence of an
event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation or (c) with respect to
any Contract, the occurrence of an event that with or without the passage of
time or the giving of notice, or both, would give rise to a right of
termination, renegotiation or acceleration or a payment obligation for
material damages, penalties or otherwise.

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"Disclosure Schedules" means the Image Sciences Disclosure Schedule and the
FormMaker Disclosure Schedule, as indicated by the context in which used.

"Dissenting Shares" is defined in Section 2.11.

"Distributor Licenses" is defined in Section 4.18.

"Effective Time" is defined in Section 2.2.

"Employment Agreements" is defined above in the Background.

"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest,
except for Permitted Encumbrances.

"End-User Licenses" is defined in Section 4.18.

"Environmental Law" means all Laws and Court Orders relating to Hazardous
Substances, pollution or protection of the environment as well as any
principles of common law under which a Party may be held liable for the
release or discharge of any materials into the environment.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"FormMaker" is defined above in the preamble.

"FormMaker Balance Sheet" is defined in Section 5.5.

"FormMaker Common Stock" means the common stock, par value $0.01 per share,
of FormMaker.

"FormMaker Companies" means FormMaker and MicroDynamics.

"FormMaker Companies Assets" means the Assets of FormMaker and
MicroDynamics.

"FormMaker Companies Business" means the Business of FormMaker and
MicroDynamics.

"FormMaker Companies Environmental Condition" is defined in Section 5.16(b).

"FormMaker Companies Non-Real Estate Leases" is defined in Section 5.10.

"FormMaker Companies Real Estate Leases" is defined in Section 5.8.

"FormMaker Companies Real Property" is defined in Section 5.8.

"FormMaker Companies Software Products" is defined in Section 5.19.

"FormMaker Disclosure Schedule" means the Disclosure Schedule containing
information relating to FormMaker pursuant to Section 5 and other provisions
hereof that has been provided to the other Parties on the date hereof.

"FormMaker Financial Statements" is defined in Section 5.5.

"FormMaker's knowledge" or "knowledge of FormMaker" means the actual
knowledge of any director or officer of FormMaker.

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"FormMaker Optionholder" means a holder of FormMaker Options.

"FormMaker Options" means any options to acquire shares of FormMaker Common
Stock that are outstanding, whether or not then exercisable, immediately prior
to the Closing.

"FormMaker Representative" is defined in Section 8.3.

"FormMaker Required Consents" is defined in Section 5.3.

"FormMaker Securities" means the FormMaker Common Stock, the FormMaker
Options and the FormMaker Warrants.

"FormMaker Shareholder" means a holder of FormMaker Common Stock.

"FormMaker Special Meeting" is defined in Section 2.9(b).

"FormMaker Warrants" means any warrants to purchase FormMaker Common Stock
that are outstanding and exercisable immediately prior to the Closing.

"Form S-4 Registration Statement" is defined in Section 6.1(a).

"GAAP" means U.S. generally accepted accounting principles.

"GBCC" means the Georgia Business Corporation Code, as amended.

"Georgia Sub" is defined above in the preamble.

"Governmental Permits" means all governmental permits, licenses,
registrations, certificates of occupancy, approvals and other governmental
authorizations.

"Hazardous Substances" means any gaseous, liquid or solid material or waste
that may or could pose a hazard to the environment or human health or safety
including (i) any "hazardous substances" as defined by the federal
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. (S)(S) 9601 et seq., (ii) any "extremely hazardous substance,"
"hazardous chemical," or "toxic chemical" as those terms are defined by the
federal Emergency Planning and Community Right-to-Know Act, 42 U.S.C. (S)(S)
11001 et seq., (iii) any "hazardous waste," as defined under the federal Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act,
42 U.S.C. (S)(S) 6901 et seq., (iv) any "pollutant," as defined under the
federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et seq., as any of
such laws in clauses (i) through (iv) may be amended from time to time, and
(v) any regulated substance or waste under any Laws or Court Orders that
currently exist or that may be enacted, promulgated or issued in the future by
any federal, state or local governmental authorities concerning protection of
the environment.

"Holders" is defined in Section 2.12(a).

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

"Image Sciences" is defined above in the preamble.

"Image Sciences Assets" means the Assets of Image Sciences.

"Image Sciences Balance Sheet" is defined in Section 4.5.

"Image Sciences Business" means the Business of Image Sciences.

"Image Sciences Closing Transactions" means the Tender Offer, the Preferred
Stock Dividend and the Common Stock Dividend.

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"Image Sciences Common Stock" means the common stock, par value $0.01 per
share, of Image Sciences.

"Image Sciences Disclosure Schedule" means the Disclosure Schedule
containing information relating to Image Sciences pursuant to Section 4 and
other provisions hereof that has been provided to the other Parties on the
date hereof.

"Image Sciences Environmental Condition" is defined in Section 4.15(b).

"Image Sciences Financial Statements" is defined in Section 4.5.

"Image Sciences' knowledge" or "knowledge of Image Sciences" means the
actual knowledge of any director or officer of Image Sciences.

"Image Sciences Non-Real Estate Leases" is defined in Section 4.9.

"Image Sciences Optionholder" means a holder of Image Sciences Options.

"Image Sciences Options" means any options to acquire shares of Image
Sciences Common Stock that are outstanding, whether or not then exercisable,
immediately prior to the Closing.

"Image Sciences Preferred Stock" means the convertible preferred stock, par
value $0.10 per share, of Image Sciences.

"Image Sciences Real Estate Leases" is defined in Section 4.7.

"Image Sciences Real Property" is defined in Section 4.7.

"Image Sciences Representative" is defined in Section 7.3.

"Image Sciences Required Consents" is defined in Section 4.3.

"Image Sciences Securities" means the Image Sciences Common Stock, the Image
Sciences Preferred Stock and the Image Sciences Options.

"Image Sciences Shareholder" means a holder of Image Sciences Common Stock
or Image Sciences Preferred Stock.

"Image Sciences Software Products" is defined in Section 4.18.

"Image Sciences Special Meeting" is defined in Section 2.9(a).

"Immaterial Lease" is defined in Section 4.9.

"Intellectual Property" means any Copyrights, Patents, Trademarks,
technology rights and licenses, any Software Products (including any related
source or object codes therefore or documentation relating thereto), trade
secrets, franchises, know-how, inventions and other intellectual property.

"Inventory" means all inventory, including raw materials, supplies, work in
process and finished goods.

"Law" means any statute, law, ordinance, regulation, order or rule of any
federal, state, local, foreign or other governmental agency or body or of any
other type of regulatory body, including those covering environmental, energy,
safety, health, transportation, bribery, recordkeeping, zoning,
antidiscrimination, antitrust, wage and hour, and price and wage control
matters.

"Letter of Transmittal" is defined in Section 2.12(a).

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"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement
of or by any person, absolute or contingent, accrued or unaccrued, due or to
become due, liquidated or unliquidated.

"Liquidity Agreement" is defined above in the Background.

"Litigation" means any lawsuit, action, arbitration, administrative or other
proceeding, criminal prosecution or governmental investigation or inquiry.

"Material Adverse Effect" means a material adverse effect on the Business of
Image Sciences, FormMaker or the Company, as indicated by the context in which
used, including the Assets, financial condition, results of operations,
liquidity, products, competitive position, customers and customer relations
thereof, and when used with respect to representations, warranties or
conditions, means the individual effect of the situation to which it relates
and also the aggregate effect of all similar situations unless the context
indicates otherwise.

"Merger" is defined above in Background.

"Merger Consideration" is defined in Section 2.6(a).

"MicroDynamics" means MicroDynamics, Ltd., a Delaware corporation and
majority-owned subsidiary of FormMaker.

"MicroDynamics Financial Statements" is defined in Section 5.5.

"Minor Contract" means any Contract that has terminated or is terminable by
a party on not more than 30 days' notice without any Liability and any
Contract under which the executory obligation of a party involves an amount of
less than $10,000.

"Nasdaq National Market" means the Nasdaq National Market of The Nasdaq
Stock Market, Inc.

"New Bank Loan" is defined in Section 7.10.

"New Companies" means the Company, the Texas Sub and the Georgia Sub.

"New Option Plan" is defined in Section 7.7.

"Ordinary course" or "ordinary course of business" means the ordinary course
of business that is consistent with past practices.

"Party" means each of FormMaker, Image Sciences, the Company, the Texas Sub
and the Georgia Sub.

"Patents" means all patents and patent applications.

"PBGC" is defined in Section 4.20(e).

"Permitted Encumbrance" means, with respect to tangible or intangible
property other than capital stock or other securities of FormMaker or Image
Sciences, (i) any Encumbrance for Taxes not yet due or delinquent or being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP, (ii) any statutory Encumbrance
arising in the ordinary course of business by operation of Law with respect to
a Liability that is not yet due or delinquent and (iii) any minor imperfection
of title or similar Encumbrance that individually or in the aggregate with
other such Encumbrances could not reasonably be expected to materially
adversely affect the Business of the applicable Party.

"Person" means any natural person, corporation, partnership, proprietorship,
association, trust or other legal entity.

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"Plan of Merger" is defined in Section 2.1.

"Preferred Stock Dividend" means the cash dividend by Image Sciences to the
holder of Image Sciences Preferred Stock as part of the Image Sciences Closing
Transactions.

"Prime Rate" means the prime lending rate as announced from time to time in
The Wall Street Journal.

"Qualified Rights Offering" is defined above in the Background.

"Registered Securities" is defined in Section 6.1.

"Registration Statement" is defined in Section 6.1(a).

"Safeguard" is defined above in the Background.

"Safeguard Delaware" is defined above in the Background.

"SEC" means the Securities and Exchange Commission.

"Second Stage Due Diligence Materials" is defined in Section 6.3.

"Securities Act" means the Securities Act of 1933, as amended.

"Securities Act Affiliates" is defined in Section 7.6.

"Securityholder Documents" is defined in Section 2.12(a).

"SG/TL Stockholders" is defined above in the Background.

"Software Products" means the Image Sciences Software Products or the
FormMaker Software Products, as indicated by the context in which used.

"Stockholders' Agreement" means the Stockholders' Agreement among the
Company, the SG/TL Stockholders and Xerox, in the form agreed to by such
parties as of the date hereof.

"Surviving Georgia Corporation" is defined in Section 2.1.

"Surviving Texas Corporation" is defined in Section 2.1.

"Taxes" means all taxes, duties, charges, fees, levies or other assessments
imposed by any taxing authority including, without limitation, income, gross
receipts, value-added, excise, withholding, personal property, real estate,
sale, use, ad valorem, license, lease, service, severance, stamp, transfer,
payroll, employment, customs, duties, alternative, add-on minimum, estimated
and franchise taxes (including any interest, penalties or additions
attributable to or imposed on or with respect to any such assessment).

"TBCA" means the Texas Business Corporation Act, as amended.

"Tender Offer" means the offer to purchase by Image Sciences to holders of
Image Sciences Common Stock and Image Sciences Options as part of the Image
Sciences Closing Transactions.

"Termination Date" is defined in Section 12.1.

"Texas Sub" is defined above in the preamble.

"TL II" is defined above in the Background.

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"TL II Offshore" is defined above in the Background.

"Trademarks" means registered trademarks, registered service marks,
trademark and service mark applications and unregistered trademarks and
service marks.

"Transaction Documents" means this Agreement, the Employment Agreements, the
Voting Agreements, the Liquidity Agreement and the Stockholders' Agreement.

"Transactions" means the Merger, the exchange of the Image Sciences Options
for Company Options, the exchange of FormMaker Warrants and FormMaker Options
for Company Warrants and Company Options, respectively, and the other
transactions contemplated by the Transaction Documents.

"US" means the United States of America.

"Voting Agreements" is defined above in the Background.

"Welfare Plan" is defined in Section 4.20(g).

2. PLAN OF MERGER.

2.1 Surviving Corporation. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the TBCA and the
GBCC, the Texas Sub shall be merged with and into Image Sciences and the
Georgia Sub shall be merged with and into FormMaker in accordance with the
Plan of Merger set forth in this Section 2 (the "Plan of Merger") as soon as
practicable, but in any event within three business days following the
satisfaction or waiver of the conditions set forth in Sections 9, 10 and 11.
Following the Merger, Image Sciences shall continue as the surviving Texas
corporation (the "Surviving Texas Corporation") and shall continue its
existence under the laws of the State of Texas, and the separate corporate
existence of the Texas Sub shall cease, and FormMaker shall continue as the
surviving Georgia Corporation (the "Surviving Georgia Corporation") and shall
continue its existence under the laws of the State of Georgia, and the
separate corporate existence of the Georgia Sub shall cease.

2.2 Effective Time. The Merger shall be consummated by filing with the
Secretary of State of the State of Georgia and with the Secretary of State of
the State of Texas articles of merger (the "Articles of Merger") that set
forth the Plan of Merger and are otherwise in such form as may be required
under, and are executed in accordance with, the relevant provisions of the
TBCA and the GBCC. The Merger shall be effective at the time of such filing in
the State of Georgia and as of the issuance of a certificate of merger by the
Secretary of State of the State of Texas (but in no event prior to the Image
Sciences Closing Transactions), the later of which times is referred to herein
as the "Effective Time."

2.3 Effects of the Merger. The Merger shall have the effects set forth in
Section 5.06 of the TBCA and Section 14-2-1106 of the GBCC.

2.4 Name of the Surviving Texas Corporation and the Surviving Georgia
Corporation; Articles of Incorporation and Bylaws. At the Effective Time, the
name of the Surviving Texas Corporation shall remain Image Sciences, Inc. and
the name of the Surviving Georgia Corporation shall remain FormMaker Software,
Inc. The Articles of Incorporation of Image Sciences and FormMaker shall be
the Articles of Incorporation of the Surviving Texas Corporation and the
Surviving Georgia Corporation, respectively. The Bylaws of Image Sciences and
FormMaker shall be the Bylaws of the Surviving Texas Corporation and the
Surviving Georgia Corporation, respectively.

2.5 Directors and Officers. Schedule 2.5 sets forth the names of the Persons
who shall be the directors and officers of the Surviving Texas Corporation and
the Surviving Georgia Corporation at the Effective Time.

2.6 Conversion of Image Sciences Securities.

(a) Each share of Image Sciences Common Stock issued and outstanding
immediately prior to the Effective Time (but after giving effect to the Tender
Offer) shall, by virtue of the Merger and without any action on the

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part of the Holder thereof, be converted into the right to receive that number
of shares of Company Class B Common Stock (rounded to the nearest whole share)
determined in accordance with Section 2.6(d). Any shares of Image Sciences
Common Stock held in the treasury of Image Sciences shall be cancelled. The
securities to be issued pursuant to this Section 2.6 and Section 2.7 are
referred to as the "Merger Consideration," and shares of Image Sciences Common
Stock, Image Sciences Preferred Stock and FormMaker Common Stock that are
issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares, as defined in Section 2.11) are referred to herein
collectively as the "Converted Shares."

(b) Each share of Image Sciences Preferred Stock issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the Holder thereof, be converted into the
right to receive 1.029 shares of Company Class B Common Stock (rounded to the
nearest whole share). Any shares of Image Sciences Preferred Stock held in the
treasury of Image Sciences shall be cancelled.

(c) Each vested Image Sciences Option that is outstanding immediately prior
to the Effective Time (but after giving effect to the Tender Offer and the
acceleration of a portion of the vesting schedule for certain Image Sciences
Options) shall, by virtue of the Merger and with the consent of the Holder
thereof, be converted into a Company Option under which the Holder will have
the right to purchase that number of shares of Company Class B Common Stock
(rounded to the nearest whole share) determined in accordance with Section
2.6(d) for each share of Image Sciences Common Stock issuable under the Image
Sciences Option being converted at an exercise price that is proportionally
equivalent to the exercise price under the related Image Sciences Option. Each
unvested Image Sciences Option that is outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and with the consent of the
Holder thereof, be converted into a Company Option under which the Holder will
have the right to purchase that number of shares of Company Class A Common
Stock (rounded to the nearest whole share) determined in accordance with
Section 2.6(d) at an exercise price that is proportionally equivalent to the
exercise price under the related Image Sciences Option.

(d) The number of shares of Company Class B Common Stock or Company Class A
Common Stock, as the case may be, to be issued under this Section 2.6 for each
share of Image Sciences Common Stock, and the number of shares of Company
Class B Common Stock or Company Class A Common Stock, as the case may be, to
be issued under this Section 2.6 for each share of Image Sciences Common Stock
issuable upon exercise of an Image Sciences Option, shall be equal to the
quotient obtained by dividing (i) 4,350,943 by (ii) the total number of shares
of Image Sciences Common Stock issued and outstanding immediately prior to the
Effective Time (but after giving effect to the Tender Offer) plus the total
number of shares of Image Sciences Common Stock issuable upon exercise of all
the Image Sciences Options (but after giving effect to the Tender Offer)
issued and outstanding immediately prior to the Effective Time.

(e) The Surviving Texas Corporation shall deliver the Merger Consideration
specified in this Section 2.6 upon the surrender of the certificates and other
documentation specified in Section 2.12.

(f) The Company shall take all steps necessary to provide the Surviving
Texas Corporation with the Company Securities, as of the Effective Time, in an
amount sufficient to issue all of the securities contemplated by this Section
2.6 at the Effective Time in accordance with Section 2.12.

2.7 Conversion of FormMaker Securities.

(a) Each share of FormMaker Common Stock issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the Holder thereof, be converted into the right to
receive that number of shares of Company Class A Common Stock (rounded to the
nearest whole share) determined in accordance with Section 2.7(d). Any shares
of FormMaker Common Stock held in the treasury of FormMaker shall be
cancelled.

(b) Each FormMaker Warrant that is outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and pursuant to the terms
thereof, be converted into a Company Warrant under which the holder

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will have the right to purchase that number of shares of Company Class A
Common Stock (rounded to the nearest whole share) determined in accordance
with Section 2.7(d) for each share of FormMaker Common Stock issuable under
the FormMaker Warrant being converted at an exercise price that is
proportionally equivalent to the exercise price under the related FormMaker
Warrant.

(c) Each FormMaker Option that is outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and pursuant to the terms
thereof, be converted into a Company Option under which the holder will have
the right to purchase that number of shares of Company Class A Common Stock
(rounded to the nearest whole share) determined in accordance with Section
2.7(d) for each share of FormMaker Common Stock issuable under the FormMaker
Option being converted at an exercise price that is proportionally equivalent
to the exercise price under the related FormMaker Option.

(d) The number of shares of Company Class A Common Stock to be issued under
this Section 2.7 for each share of FormMaker Common Stock, and the number of
shares of Company Class A Common Stock to be issued under this Section 2.7 for
each share of FormMaker Common Stock issuable upon exercise of a FormMaker
Option or a FormMaker Warrant, shall be equal to the quotient obtained by
dividing (i) 5,598,684 shares of Company Class A Common Stock by (ii) the
total number of shares of FormMaker Common Stock issued and outstanding
immediately prior to the Effective Time plus the total number of shares of
FormMaker Common Stock issuable upon (A) the exercise of all the FormMaker
Options issued and outstanding immediately prior to the Effective Time and (B)
the exercise of all the FormMaker Warrants issued and outstanding immediately
prior to the Effective Time.

(e) The Surviving Georgia Corporation shall deliver the Merger Consideration
specified in this Section 2.7 upon the surrender of the certificates and other
documentation specified in Section 2.12.

(f) The Company shall take all steps necessary to provide the Surviving
Georgia Corporation with the Company Securities as of the Effective Time, in
an amount sufficient to issue all of the securities contemplated by this
Section 2.7 at the Effective Time in accordance with Section 2.12.

2.8 Capital Stock of Texas Sub and Georgia Sub. Each share of capital stock
of the Texas Sub and Georgia Sub issued and outstanding immediately prior to
the Effective Time shall be converted into a share of Image Sciences Common
Stock and FormMaker Common Stock, respectively.

2.9 Approval by Shareholders.

(a) Consistent with applicable law, Image Sciences shall cause a meeting of
its shareholders to be duly called and held as soon as reasonably practicable
for the purpose of considering and taking action upon the Merger (the "Image
Sciences Special Meeting"). If the Board of Directors of Image Sciences so
desires, it may present the Merger to its shareholders for consideration by
soliciting their written consent in accordance with applicable requirements of
the TBCA. If such a consent is solicited, the references herein to the "Image
Sciences Special Meeting" shall be deemed to be the process of soliciting such
consent unless the context indicates otherwise. The Board of Directors of
Image Sciences will recommend that its shareholders approve the Merger.

(b) Consistent with applicable law, FormMaker shall cause a meeting of its
shareholders to be duly called and held as soon as reasonably practicable for
the purpose of considering and taking action upon the Merger (the "FormMaker
Special Meeting"). If the Board of Directors of FormMaker so desires, it may
present the Merger to its shareholders for consideration by soliciting their
written consent in accordance with applicable requirements of the GBCC. If
such a consent is solicited, the references herein to the "FormMaker Special
Meeting" shall be deemed to be the process of soliciting such consent unless
the context indicates otherwise. The Board of Directors of FormMaker will
recommend that its shareholders approve the Merger.

(c) The shareholder vote required for the adoption of this Agreement and the
Merger by Image Sciences and the Texas Sub shall be the vote required by the
TBCA, and the vote required for the adoption of this Agreement and the Merger
by FormMaker and the Georgia Sub shall be the vote required by the GBCC.

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2.10 Merger Closing. At the Closing, (a) the Texas Sub, the Georgia Sub,
Image Sciences and FormMaker shall deliver to the Secretary of State of each
of the State of Texas and the State of Georgia a duly executed and verified
copy of the Articles of Merger, as required by the TBCA and the GBCC, and (b)
the Parties shall take all such other and further actions as may be required
by the TBCA and the GBCC and any other applicable Law to make the Merger
effective upon the terms and subject to the conditions hereof. In addition, at
the Closing, the Surviving Texas Corporation or the Surviving Georgia
Corporation shall deliver the Merger Consideration to those Holders who shall
have delivered the appropriate documents under Section 2.12.

2.11 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of Image Sciences Common Stock, Image Sciences Preferred
Stock or FormMaker Common Stock as the case may be, that are issued and
outstanding immediately prior to the Effective Time and that are held by a
shareholder who did not vote in favor of the Merger and who complies with all
of the relevant provisions of Section 5.12 of the TBCA or Sections 14-2-1321
and 14-2-1323 of the GBCC, respectively (the "Dissenting Shares"), shall not
be converted into the right to receive the Merger Consideration, unless and
until such Holder shall have failed to perfect or shall have effectively
withdrawn or lost such Holder's rights to appraisal under the TBCA or the
GBCC; and any such Holder shall have only such rights in respect of the
Dissenting Shares owned by such Holder as are provided by Sections 5.11 and
5.12 of the TBCA or Sections 14-2-1321 and 14-2-1323 of the GBCC, as the case
may be. If any such Holder shall have failed to perfect or shall have
effectively withdrawn or lost such rights, such Holder's Dissenting Shares
shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive the Merger
Consideration without any interest thereon, pursuant to the terms of Section
2.6 or Section 2.7, as the case may be.

2.12 Exchange of Converted Shares, Image Sciences Options, FormMaker Options
and FormMaker Warrants.

(a) At and after the Effective Time, the Surviving Texas Corporation or the
Surviving Georgia Corporation shall issue to each record holder (a "Holder"),
as of the Effective Time, of (i) an outstanding certificate or certificates
that immediately prior to the Effective Time represented Converted Shares (the
"Certificates"), (ii) a FormMaker Warrant, (iii) a FormMaker Option or (iv) an
Image Sciences Option, upon the Holder's delivery of the Securityholder
Documents, the respective Merger Consideration specified for such Holder under
Section 2.6 or Section 2.7. The documents to be delivered by Holders of
Converted Shares, Image Sciences Options, FormMaker Options or FormMaker
Warrants by and after the Effective Time (the "Securityholder Documents")
shall be (x) in the case of Converted Shares, the Certificates representing
the Converted Shares and a duly executed Letter of Transmittal in the form
provided by the Company (the "Letter of Transmittal"), (y) in the case of the
FormMaker Options and Image Sciences Options, the document constituting the
FormMaker Option and the Image Sciences Option and the Letter of Transmittal,
and (z) in the case of the FormMaker Warrants, the document constituting
FormMaker Warrants and the Letter of Transmittal. Image Sciences and FormMaker
shall respectively send the Letter of Transmittal to the owners of the Image
Sciences Securities or the FormMaker Securities along with the notice of the
Image Sciences or FormMaker Special Meeting and shall request the return of an
executed Letter of Transmittal from each such securityholder at the time of
the Image Sciences Special Meeting or FormMaker Special Meeting. All
surrendered Certificates, Image Sciences Options, FormMaker Options, and
FormMaker Warrants shall be cancelled upon their delivery. Except as provided
in Section 2.12(c), the Surviving Texas Corporation and the Surviving Georgia
Corporation shall pay any applicable transfer or similar taxes required by
reason of the exchange of Converted Shares, Image Sciences Options, FormMaker
Options and FormMaker Warrants.

(b) With respect to each Certificate not so surrendered at the Closing, the
Surviving Texas Corporation with respect to Holders of Image Sciences
Securities, or the Surviving Georgia Corporation with respect to Holders of
FormMaker Securities, shall promptly thereafter mail to the Holder thereof a
Letter of Transmittal (which shall specify that delivery shall be effected,
and risk of loss of title to such Certificate shall pass, only upon proper
delivery of the Certificate and such Letter of Transmittal to the Surviving
Texas Corporation or the Surviving Georgia Corporation, as the case may be)
and instructions for delivering such Certificate in exchange for delivery of
the Merger Consideration. Upon delivery to the Surviving Texas Corporation or
the Surviving Georgia

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Corporation of such Certificate, together with such Letter of Transmittal, the
Company, the Surviving Texas Corporation or the Surviving Georgia Corporation
shall deliver to the Holder of the Certificate in exchange therefor the Merger
Consideration to which such Holder is entitled hereunder, and such Certificate
shall then be cancelled. The Company, the Surviving Texas Corporation and the
Surviving Georgia Corporation shall follow a similar procedure with respect to
any Image Sciences Option, FormMaker Option or FormMaker Warrants to the
extent that the respective Securityholder Documents shall not have been
delivered at the Effective Time.

(c) No interest will be paid or accrued on the Merger Consideration to be
delivered upon the surrender of the Securityholder Documents. If delivery is
to be made to a Person other than the Person in whose name a Certificate,
FormMaker Warrant, Image Sciences Option or FormMaker Option surrendered is
registered, it shall be a condition of payment that the Certificate, Image
Sciences Option, FormMaker Option or FormMaker Warrant so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the Person
requesting such payment shall pay any transfer or similar taxes required by
reason of the payment to a Person other than the Holder of the Certificate,
Image Sciences Option, FormMaker Option or FormMaker Warrant surrendered or
shall establish to the satisfaction of the Surviving Texas Corporation or the
Surviving Georgia Corporation, as the case may be, that such tax has been paid
or is not applicable. Until surrendered in accordance with the provisions of
this Section 2.12, each Certificate (other than Certificates evidencing
Dissenting Shares), Image Sciences Option, FormMaker Option and FormMaker
Warrant shall represent for all purposes solely the right to receive the
respective Merger Consideration specified in Section 2.6 or Section 2.7 with
respect to such Converted Shares, Image Sciences Options, FormMaker Options or
FormMaker Warrants.

(d) The Company, the Surviving Texas Corporation or the Surviving Georgia
Corporation, as the case may be, shall not be liable to any Holder of
Converted Shares, Image Sciences Options, FormMaker Options or FormMaker
Warrants for any Merger Consideration delivered by the Company, the Surviving
Texas Corporation or the Surviving Georgia Corporation in good faith to a
public official pursuant to an applicable abandoned property, escheat or
similar law.

2.13 No Further Transfer of Shares. After the Effective Time, there shall be
no transfers of Converted Shares that were outstanding immediately prior to
the Effective Time on the stock transfer books of the Surviving Texas
Corporation or the Surviving Georgia Corporation. If, after the Effective
Time, Certificates are presented to the Surviving Texas Corporation or the
Surviving Georgia Corporation for transfer, they shall be cancelled and
exchanged for the respective Merger Consideration specified in Section 2.6 or
Section 2.7. At the Effective Time, the stock ledgers of Image Sciences and
FormMaker shall be closed.

3. CLOSING.

3.1 Location, Date. The closing for the Transactions (the "Closing") shall
be held at Morgan, Lewis & Bockius LLP in Philadelphia as promptly as
practicable (and in any event within three business days) after satisfaction
or waiver of the conditions to the consummation of the Transactions set forth
in Sections 9, 10 and 11 hereof, unless the Parties hereto agree in writing to
another date or place. The date on which the Closing occurs is referred to
herein as the "Closing Date."

3.2 Deliveries. At the Closing,

(a) the Surviving Texas Corporation and the Surviving Georgia Corporation
shall deliver or mail the respective Merger Consideration to the Holders who
have complied with Section 2.12, with such Merger Consideration all registered
in the names of the respective Holders or their designees, and in due and
proper form;

(b) the Texas Sub, the Georgia Sub, Image Sciences and FormMaker shall
consummate the Merger as provided in Section 2.10; and

(c) the Parties shall also deliver to each other the respective agreements,
legal opinions and other documents and instruments specified with respect to
them in Sections 9, 10 and 11 and such other items as may be reasonably
requested.

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4. REPRESENTATIONS AND WARRANTIES OF IMAGE SCIENCES.

Image Sciences hereby represents and warrants to FormMaker, except as
otherwise set forth in the IMAGE SCIENCES DISCLOSURE SCHEDULE or the updated
IMAGE SCIENCES DISCLOSURE SCHEDULE to be delivered pursuant to Section 6.3, as
follows:

4.1 Corporate Status. Image Sciences is a corporation duly organized,
validly existing and in good standing under the Laws under which it was
organized and is qualified to do business as a foreign corporation in any
jurisdiction where it is required to be so qualified except where the failure
to so qualify would not have a Material Adverse Effect. The Charter Documents
and bylaws of Image Sciences that have been delivered to FormMaker as of the
date hereof are effective under applicable Laws and are current, correct and
complete.

4.2 Authorization. Image Sciences has the requisite power and authority to
own its Assets and to carry on its Business. Image Sciences has the requisite
power and authority to execute and deliver the Transaction Documents to which
it is a party and to perform the Transactions performed or to be performed by
it. Such execution, delivery and performance by Image Sciences has been duly
authorized by all necessary corporate action, other than approval by the
shareholders of Image Sciences. Each Transaction Document executed and
delivered by Image Sciences has been duly executed and delivered by, and
constitutes a valid and binding obligation of Image Sciences, enforceable
against Image Sciences in accordance with its terms.

4.3 Consents and Approvals. Except for (a) any consents specified in the
IMAGE SCIENCES DISCLOSURE SCHEDULE (the "Image Sciences Required Consents"),
(b) the approval of the Merger by the shareholders of Image Sciences, (c) the
filing of the Articles of Merger in accordance with Section 2 and (d) any
approvals or filings required by the SEC and by state securities law agencies
in connection with the Registration Statement, neither the execution and
delivery by Image Sciences of the Transaction Documents to which it is a
party, nor the performance of the Transactions performed or to be performed by
Image Sciences, require any filing, consent or approval or constitute a
Default under (i) any Law or Court Order to which Image Sciences is subject,
(ii) the Charter Documents or bylaws of Image Sciences or (iii) any Contract,
Governmental Permit or other document to which Image Sciences is a party or by
which the properties or other assets of Image Sciences may be subject.

4.4 Capitalization and Stock Ownership. The total authorized capital stock
of Image Sciences consists of (a) 20,000,000 shares of Image Sciences Common
Stock, of which (i) 2,335,082 shares are issued and outstanding and (ii)
3,687,433 shares of Image Sciences Common Stock are reserved for issuance upon
conversion of the issued and outstanding shares of Image Sciences Preferred
Stock and upon exercise of the issued and outstanding Image Sciences Options,
and (b) 3,000,000 shares of Image Sciences Preferred Stock, of which 1,963,433
shares are issued and outstanding. Except for the rights under the Image
Sciences Preferred Stock and the Image Sciences Options listed in the IMAGE
SCIENCES DISCLOSURE SCHEDULE, there are no existing options, warrants, calls,
commitments or other rights of any character (including conversion or
preemptive rights) relating to the acquisition of any issued or unissued
capital stock or other securities of Image Sciences. All of the shares of
Image Sciences Common Stock and Image Sciences Preferred Stock are, and all of
the shares of Image Sciences Common Stock issuable upon conversion or exercise
of the Image Sciences Preferred Stock and the Image Sciences Options in
accordance with the terms thereof will be, duly and validly authorized and
issued, fully paid and non-assessable. The IMAGE SCIENCES DISCLOSURE SCHEDULE
lists all of the record owners of the Image Sciences Common Stock, the Image
Sciences Preferred Stock and the Image Sciences Options. Image Sciences has
delivered to FormMaker correct and complete copies of the forms of the Image
Sciences Option agreements.

4.5 Financial Statements. Image Sciences has delivered to FormMaker correct
and complete copies of unaudited monthly financial statements for Image
Sciences consisting of a balance sheet as of the end of each month from August
1996 through November 30, 1996 and the related statements of income, changes
to shareholders' equity and cash flows for the periods then ended. Image
Sciences has also delivered to FormMaker correct and complete copies of
financial statements consisting of a balance sheet of Image Sciences as of
July 31, 1994, 1995 and 1996 and the related statements of income for the
fiscal years then ended, which were audited

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by the firm of Price Waterhouse LLP. All such unaudited and audited financial
statements are referred to herein collectively as the "Image Sciences Pre-
Signing Financial Statements." The unaudited financial statements of Image
Sciences to be delivered in connection with the Registration Statements are
referred to herein as the "Image Sciences Post-Signing Financial Statements,"
and, together with the Image Sciences Pre-Signing Financial Statements, as the
"Image Sciences Financial Statements." The Image Sciences Pre-Signing
Financial Statements are, and the Image Sciences Post-Signing Financial
Statements will be, consistent in all material respects with the books and
records of Image Sciences, and there have not been and will not be any
material transactions that have not been or will not be recorded in the
accounting records underlying such Financial Statements. Except as disclosed
in the IMAGE SCIENCES DISCLOSURE SCHEDULE, the Image Sciences Pre-Signing
Financial Statements have been, and the Image Sciences Post-Signing Financial
Statements will be, prepared in accordance with GAAP consistently applied, and
the Image Sciences Pre-Signing Financial Statements present, and the Image
Sciences Post-Signing Financial Statements will present, fairly the financial
position and assets and liabilities of Image Sciences as of the dates thereof,
and the results of its operations for the periods then ended, subject to
normal recurring year-end adjustments and the absence of notes in the case of
unaudited Financial Statements. The balance sheet of Image Sciences as of
November 30, 1996 that is included in the Financial Statements is referred to
herein as the "Image Sciences Balance Sheet," and the date thereof is referred
to as the "Balance Sheet Date."

4.6 Title to Assets and Related Matters. Image Sciences has good and
marketable title to, valid leasehold interests in or valid licenses to use,
all of the material Image Sciences Assets, free from any Encumbrances except
those specified in the IMAGE SCIENCES DISCLOSURE SCHEDULE. The use of the
Image Sciences Assets is not subject to any Encumbrances (other than those
specified in the preceding sentence), and such use does not materially
encroach on the property or rights of anyone else. All Image Sciences Real
Property and tangible personal property (other than Inventory) included in the
Image Sciences Assets are suitable for the purposes for which they are used,
in good working condition, reasonable wear and tear excepted, and are free
from any known defects, except such minor defects that would not have a
Material Adverse Effect.

4.7 Real Property. The IMAGE SCIENCES DISCLOSURE SCHEDULE describes all real
estate used in the operation of the Image Sciences Business as well as any
other real estate that is in the possession of or leased by Image Sciences and
the improvements (including buildings and other structures) located on such
real estate (collectively, the "Image Sciences Real Property"), and lists any
leases under which any such Image Sciences Real Property is possessed (the
"Image Sciences Real Estate Leases"). Image Sciences does not have any
ownership interest in any real property. The IMAGE SCIENCES DISCLOSURE
SCHEDULE also describes any other real estate previously owned, leased or
otherwise operated by Image Sciences or any predecessor thereof and the time
periods of any such ownership, lease or operation. All of the Image Sciences
Real Property (a) is usable in the ordinary course of business and (b)
conforms in all material respects with any applicable Laws relating to its
construction, use and operation. The Image Sciences Real Property complies
with applicable zoning Laws. To the knowledge of Image Sciences, Image
Sciences or the landlord of any Image Sciences Real Property leased by Image
Sciences has obtained all licenses and rights-of-way from governmental
entities or private parties that are necessary to ensure vehicular and
pedestrian ingress and egress to and from the Image Sciences Real Property.

4.8 Certain Personal Property. The IMAGE SCIENCES DISCLOSURE SCHEDULE
describes all items of tangible personal property that were included in the
Image Sciences Balance Sheet at a carrying value of at least $50,000. Except
as specified in the IMAGE SCIENCES DISCLOSURE SCHEDULE, since the Balance
Sheet Date, Image Sciences has not acquired any items of tangible personal
property that have a carrying value in excess of $50,000, or an aggregate
carrying value of $300,000. All of such personal property included in the
Image Sciences Disclosure Schedule is, and any such personal property acquired
after the date hereof in accordance with Section 8.2 will be, usable in the
ordinary course of business, and all such personal property included in the
IMAGE SCIENCES DISCLOSURE SCHEDULE conforms, and all of such personal property
acquired after the date hereof will conform, in all material respects with any
applicable Laws relating to its construction, use and operation. Except for
those items subject to the Image Sciences Non-Real Estate Leases or the
Immaterial Leases or those items listed in the

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IMAGE SCIENCES DISCLOSURE SCHEDULE, no Person other than Image Sciences owns
any vehicles, equipment or other tangible assets located on the Image Sciences
Real Property that have been used in the Image Sciences Business or that are
necessary for the operation of the Image Sciences Business.

4.9 Non-Real Estate Leases. The IMAGE SCIENCES DISCLOSURE SCHEDULE lists all
assets and property (other than Image Sciences Real Property) that are
possessed by Image Sciences under an existing lease, including all trucks,
automobiles, forklifts, machinery, equipment, furniture and computers, except
for any lease under which the aggregate annual payments are less than $25,000
(each, an "Immaterial Lease"). The IMAGE SCIENCES DISCLOSURE SCHEDULE also
lists the leases under which such assets and property listed in the IMAGE
SCIENCES DISCLOSURE SCHEDULE are possessed. All of such leases (excluding
Immaterial Leases) are referred to herein as the "Image Sciences Non-Real
Estate Leases."

4.10 Accounts Receivable. The Accounts Receivable included in the Image
Sciences Assets are bona fide Accounts Receivable created in the ordinary
course of business. Except for Accounts Receivable for which reserves have
been established, all of the Accounts Receivable included in the Image
Sciences Assets are collectible in the ordinary course of business. Image
Sciences does not know of any facts or circumstances (other than general
economic conditions) that are likely to result in any material increase in the
uncollectability of such Accounts Receivable in excess of any reserves
therefor set forth in the Image Sciences Balance Sheet.

4.11 Inventory. The Inventory included in the Image Sciences Assets consists
of items of good, usable and merchantable quality in all material respects and
does not include obsolete or discontinued items. Such Inventory is recorded in
the Image Sciences Financial Statements at the lower of average cost or market
value determined in accordance with GAAP.

4.12 Liabilities. Image Sciences does not have any Liabilities, except (a)
as specified in the IMAGE SCIENCES DISCLOSURE SCHEDULE, (b) as contemplated by
the Image Sciences Balance Sheet (except as heretofore paid or discharged),
(c) Liabilities incurred in the ordinary course since the Balance Sheet Date,
or (d) Liabilities under any Contracts included in the Image Sciences Assets
that are specifically disclosed in the IMAGE SCIENCES DISCLOSURE SCHEDULE (or
not required to be disclosed because of the term or amount involved) that were
not required under GAAP to have been specifically disclosed or reserved for on
the Image Sciences Balance Sheet.

4.13 Taxes. Except as set forth in the IMAGE SCIENCES DISCLOSURE SCHEDULE,
Image Sciences has duly filed all returns for Taxes that are required to be
filed and has paid all material Taxes shown as being due pursuant to such
returns or pursuant to any assessment received. All Taxes that Image Sciences
has been required by Law to withhold or to collect have been duly withheld and
collected and have been paid over to the proper governmental authorities or
are properly held by Image Sciences for such payment. There are no proceedings
or other actions, nor is there any basis for any proceedings or other actions,
for the assessment and collection of additional Taxes of any kind with respect
to Image Sciences for any period for which returns have or should have been
filed.

4.14 Subsidiaries. Image Sciences does not own, directly or indirectly, any
interest or investment (whether equity or debt) in any corporation,
partnership, limited liability company, trust, joint venture or other legal
entity.

4.15 Legal Proceedings and Compliance with Law.

(a) Except as set forth in the IMAGE SCIENCES DISCLOSURE SCHEDULE, there is
no Litigation that is pending or, to Image Sciences's knowledge, threatened
against Image Sciences. There has been no Default under any Laws applicable to
Image Sciences, including Laws relating to pollution or protection of the
environment, except for any Defaults that would not have a Material Adverse
Effect, and Image Sciences has not received any notices from any governmental
entity regarding any alleged Defaults under any Laws. There has been no
Default with respect to any Court Order applicable to Image Sciences.

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(b) Without limiting the generality of Section 4.15(a), there has not been
any Image Sciences Environmental Condition (i) at the premises at which the
Image Sciences Business has been conducted, (ii) at any property owned, leased
or operated at any time by Image Sciences, any Person controlled by Image
Sciences or any predecessor of any of them, or (iii) at any property at which
wastes have been released, deposited or disposed by or at the behest or
direction of any of the foregoing, nor has Image Sciences received written
notice of any such Image Sciences Environmental Condition. "Image Sciences
Environmental Condition" means any condition or circumstance, including the
presence or release of Hazardous Substances, whether created by Image Sciences
or any third party, at or relating to any such property or premises that (i)
requires investigation, monitoring, abatement or correction under an
Environmental Law, (ii) gives rise to any civil or criminal liability on the
part of Image Sciences under an Environmental Law, or (iii) has created a
public or private nuisance.

(c) Image Sciences has delivered to FormMaker complete copies of any written
reports, studies or assessments in the possession or control of Image Sciences
that relate to any Image Sciences Environmental Condition and to the Image
Sciences Business or any Image Sciences Assets.

(d) Except in those cases where the failure would not have a Material
Adverse Effect, (i) Image Sciences has obtained and is in full compliance with
all Governmental Permits, all of which are listed in the IMAGE SCIENCES
DISCLOSURE SCHEDULE along with their respective expiration dates, that are
required for the complete operation of the Image Sciences Business as
currently operated, (ii) all of such Governmental Permits are currently valid
and in full force and (iii) Image Sciences has filed such timely and complete
renewal applications as may be required with respect to its Governmental
Permits. To Image Sciences' knowledge, no revocation, cancellation or
withdrawal thereof has been threatened.

4.16 Contracts.

(a) The IMAGE SCIENCES DISCLOSURE SCHEDULE lists all Contracts of the
following types to which Image Sciences is a party or by which it is bound,
except for Minor Contracts:

(i) Contracts with any present or former shareholder, director, officer,
employee, partner or consultant of Image Sciences or any Affiliate thereof.

(ii) Contracts for the future purchase of, or payment for, supplies or
products, or for the lease of any Asset from or the performance of services
by a third party, in excess of $150,000 in any individual case, or any
Contracts for the sale of products that involve an amount in excess of
$25,000 with respect to any one supplier or other party;

(iii) Contracts to sell or supply products or to perform services that
involve an amount in excess of $250,000 in any individual case;

(iv) Contracts to lease to or to operate for any other party any asset
that involve an amount in excess of $150,000 in any individual case;

(v) Any notes, debentures, bonds, conditional sale agreements, equipment
trust agreements, letter of credit agreements, reimbursement agreements,
loan agreements or other Contracts for the borrowing or lending of money
(including loans to or from officers, directors, partners, shareholders or
Affiliates of Image Sciences or any members of their immediate families),
agreements or arrangements for a line of credit or for a guarantee of, or
other undertaking in connection with, the indebtedness of any other Person;

(vi) Any Contracts under which any Encumbrances exist; and

(vii) Any other Contracts (other than Minor Contracts and those described
in any of (i) through (vi) above) not made in the ordinary course of
business.

(b) The Contracts listed in the IMAGE SCIENCES DISCLOSURE SCHEDULE and the
Contracts excluded from the IMAGE SCIENCES DISCLOSURE SCHEDULE based on the
term or amount thereof are referred to herein as the "Image Sciences
Contracts." Image Sciences is not in Default under any Image Sciences
Contracts (including any Image Sciences Real Estate Leases and Image Sciences
Non-Real Estate Leases), which Default could result in a Liability on the part
of Image Sciences in excess of $25,000 in any individual case, and the
aggregate Liabilities

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that could result from all such Defaults do not exceed $50,000. Image Sciences
has not received any communication from, or given any communication to, any
other party indicating that Image Sciences or such other party, as the case
may be, is in Default under any Image Sciences Contract where such Default
could have a Material Adverse Effect. To the knowledge of Image Sciences, none
of the other parties in any such Image Sciences Contract is in Default
thereunder.

4.17 Insurance. The IMAGE SCIENCES DISCLOSURE SCHEDULE lists all policies or
binders of insurance held by or on behalf of Image Sciences, specifying with
respect to each policy the insurer, the amount of the coverage, the type of
insurance, the risks insured, the expiration date, the policy number and any
pending claims thereunder. There is no Default with respect to any such policy
or binder, nor has there been any failure to give any notice or present any
claim under any such policy or binder in a timely fashion or in the manner or
detail required by the policy or binder, except for any of the foregoing that
would not have a Material Adverse Effect. There is no notice of nonrenewal or
cancellation with respect to, or disallowance of any claim under, any such
policy or binder that has been received by Image Sciences, except for any of
the foregoing that would not have a Material Adverse Effect.

4.18 Intellectual Property and Software Products.

(a) Image Sciences does not currently use nor has it previously used in the
development, production or marketing of its products and services any
Copyrights, Patents or Trademarks except for those listed in the IMAGE
SCIENCES DISCLOSURE SCHEDULE. Image Sciences owns or has the lawful right to
use all material Intellectual Property that is used in the operation of the
Business in the ordinary course or otherwise. All of the Intellectual Property
listed in the IMAGE SCIENCES DISCLOSURE SCHEDULE is owned by Image Sciences
free and clear of any Encumbrances, or used pursuant to an agreement that is
described in the IMAGE SCIENCES DISCLOSURE SCHEDULE. Except in such cases that
would not have a Material Adverse Effect, Image Sciences does not infringe
upon or unlawfully or wrongfully use any Intellectual Property rights owned or
claimed by another Person, and Image Sciences is not in Default, and has not
received any notice of any claim of infringement or any other claim or
proceeding, with respect to any such Intellectual Property. Except for any
rights under written licenses or other written Contracts, no current or former
employee of Image Sciences and no other Person owns or has any proprietary,
financial or other interest, direct or indirect, in whole or in part, and
including any right to royalties or other compensation, in any of the
Intellectual Property, or in any application therefor.

(b) The IMAGE SCIENCES DISCLOSURE SCHEDULE contains a complete list of all
of the computer software products sold, licensed, distributed, marketed, used
or under development by Image Sciences (the "Image Sciences Software
Products"). Each of the Image Sciences Software Products performs
substantially in accordance with the specifications, documentation and other
written material used in connection with the sale, license, distribution,
marketing or use thereof and is free of defects in programming and operation
except such defects as would not materially and adversely affect the use of
the respective Image Sciences Software Products for their intended purposes.

(c) Except as specified in the IMAGE SCIENCES DISCLOSURE SCHEDULE, all
right, title and interest in and to the Image Sciences Software Products is
owned by Image Sciences, free and clear of all Encumbrances. No government
funding was utilized in the development of any of the Image Sciences Software
Products. Except for such violations that would not have a Material Adverse
Effect, the sale, license, distribution, marketing or use of the Image
Sciences Software Products by Image Sciences does not violate any rights of
any other Person, and Image Sciences has not received any communication
alleging such a violation. Except as specified in the IMAGE SCIENCES
DISCLOSURE SCHEDULE, Image Sciences does not have any obligation to compensate
any Person for the sale, license, distribution, marketing or use of the Image
Sciences Software Products. Other than as set forth in the IMAGE SCIENCES
DISCLOSURE SCHEDULE, Image Sciences has not granted to any other Person any
license, option or other right in or to any of the Image Sciences Software
Products, except for non-exclusive, royalty-bearing, end-user licenses (the
"End-User Licenses") and distributor licenses under which the distributor has
a right to relicense ("Distributor Licenses") granted by Image Sciences
pursuant to license agreements.

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(d) Except as specified in the IMAGE SCIENCES DISCLOSURE SCHEDULE, Image
Sciences does not have any obligation owing to any Person to maintain, modify,
improve or upgrade any of the Image Sciences Software Products, except for any
such obligation set forth in an End-User License, a Distributor License or
under a customer-specific services agreement and such other obligations as
would not have a Material Adverse Effect.

(e) All employees and consultants of Image Sciences who are involved in the
design, review, evaluation or development of Intellectual Property have
executed a nondisclosure and assignment of inventions agreement (a
"Confidentiality Agreement"). To Image Sciences' knowledge, (i) none of the
Confidential Information has been used, divulged or appropriated (A) for the
benefit of any Person other than Image Sciences or a customer thereof or (B)
otherwise to the detriment of Image Sciences, (ii) except as specified in the
IMAGE SCIENCES DISCLOSURE SCHEDULE, none of such employees or consultants of
Image Sciences is subject to any contractual or legal restrictions that might
interfere with the use of his or her best efforts to promote the interests of
Image Sciences, (iii) no employee or consultant of Image Sciences has used any
other Persons' trade secrets or other information that is confidential in the
course of his or her work for Image Sciences, and (iv) no employee or
consultant of Image Sciences is, or is currently expected to be, in Default
under any term of any employment contract, agreement or arrangement relating
to the Intellectual Property, or any Confidentiality Agreement or any other
Contract or any restrictive covenant relating to the Intellectual Property, or
the development or exploitation thereof.

(f) Image Sciences has kept secret and has not disclosed the source codes
for the Image Sciences Software Products to any Person other than to those
Persons identified in the Image Sciences Disclosure Schedule and to certain
employees of Image Sciences.

4.19 Employee Relations. Image Sciences is not (a) except as specified in
the IMAGE SCIENCES DISCLOSURE SCHEDULE, a party to, involved in or, to Image
Sciences's knowledge, threatened by, any labor dispute or unfair labor
practice charge, or (b) currently negotiating any collective bargaining
agreement. Image Sciences has not experienced during the last three years any
work stoppage. Image Sciences has delivered to FormMaker a complete and
correct list of the names and salaries, bonus and other cash compensation of
all employees (including officers) of Image Sciences whose cash compensation
was for 1995 or is expected to be for 1996 at least $80,000.

4.20 ERISA.

(a) The IMAGE SCIENCES DISCLOSURE SCHEDULE contains a complete list of all
Benefit Plans sponsored or maintained by Image Sciences or under which Image
Sciences is obligated. Image Sciences has delivered to FormMaker (i) accurate
and complete copies of all such Benefit Plan documents and all other material
documents relating thereto, including (if applicable) all summary plan
descriptions, summary annual reports and insurance contracts, (ii) accurate
and complete detailed summaries of all unwritten Benefit Plans, (iii) accurate
and complete copies of the most recent financial statements and actuarial
reports with respect to all such Benefit Plans for which financial statements
or actuarial reports are required or have been prepared and (iv) accurate and
complete copies of all annual reports for all such Benefit Plans (for which
annual reports are required) prepared within the last three years. Each such
Benefit Plan providing benefits that are funded through a policy of insurance
is indicated by the word "insured" placed by the listing of the Benefit Plan
in the IMAGE SCIENCES DISCLOSURE SCHEDULE.

(b) All such Benefit Plans conform (and at all times have conformed) in all
material respects to, and are being administered and operated (and have at all
times been administered and operated) in material compliance with, the
requirements of ERISA, the Code and all other applicable Laws. All returns,
reports and disclosure statements required to be made under ERISA and the Code
with respect to all such Benefit Plans have been timely filed or delivered.
There have not been any "prohibited transactions," as such term is defined in
Section 4975 of the Code or Section 406 of ERISA involving any of the Benefit
Plans, that could subject Image Sciences to any material penalty or tax
imposed under the Code or ERISA.

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(c) Except as is set forth in the IMAGE SCIENCES DISCLOSURE SCHEDULE, any
such Benefit Plan that is intended to be qualified under Section 401(a) of the
Code and exempt from tax under Section 501(a) of the Code has been determined
by the Internal Revenue Service to be so qualified or an application for such
determination is pending. Any such determination that has been obtained
remains in effect and has not been revoked, and with respect to any
application that is pending, Image Sciences has no reason to suspect that such
application for determination will be denied. Nothing has occurred since the
date of any such determination, or if there has been no such determination,
there is no occurrence that is reasonably likely to affect adversely the
qualification or the tax exempt status of the plan and the related trust, or
result in the imposition of excise taxes or income taxes on unrelated business
income under the Code or ERISA with respect to any such Benefit Plan.

(d) Neither Image Sciences nor any person or entity that, together with
Image Sciences, is treated as a single employer under Section 414(b), (c), (m)
or (o) of the Code or Section 4001(a)(14) or 4001(b) of ERISA (a "Common
Controlled Entity"), sponsors a defined benefit plan subject to Title IV of
ERISA, or has a current or contingent obligation to contribute to any multi
employer plan (as defined in Section 3(37) of ERISA) and neither they nor
their predecessor have ever contributed to a multiemployer plan. Image
Sciences does not have any liability with respect to any employee benefit plan
(as defined in Section 3(3) of ERISA) other than with respect to such Benefit
Plans.

(e) There are no pending or, to the knowledge of Image Sciences, threatened
claims by or on behalf of any such Benefit Plans, or by or on behalf of any
individual participants or beneficiaries of any such Benefit Plans, alleging
any breach of fiduciary duty on the part of Image Sciences or any of its
officers, directors or employees under ERISA or any other applicable
regulations, or claiming benefit payments (other than those made in the
ordinary operation of such plans), nor is there, to the knowledge of Image
Sciences, any basis for such claim. The Benefit Plans are not the subject of
any pending (or to the knowledge of Image Sciences, any threatened)
investigation or audit by the Internal Revenue Service, the Department of
Labor or the Pension Benefit Guaranty Corporation ("PBGC").

(f) Image Sciences has timely made all required contributions under such
Benefit Plans including the payment of any premiums payable to the PBGC and
other insurance premiums.

(g) With respect to any such Benefit Plan that is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) (a "Welfare Plan")
and except as specified in the IMAGE SCIENCES DISCLOSURE SCHEDULE, (i) each
Welfare Plan for which contributions are claimed by Image Sciences as
deductions under any provision of the Code is in material compliance with all
applicable requirements pertaining to such deduction, (ii) with respect to any
welfare benefit fund (within the meaning of Section 419 of the Code) related
to a Welfare Plan, there is no disqualified benefit (within the meaning of
Section 4976(b) of the Code) that would result in the imposition of a tax
under Section 4976(a) of the Code, (iii) any Benefit Plan that is a group
health plan (within the meaning of Section 4980B(g)(2) of the Code) complies,
and in each and every case has complied, with all of the applicable material
requirements of Section 4980B of the Code, ERISA, Title XXII of the Public
Health Service Act and the Social Security Act, and (iv) all Welfare Plans may
be amended or terminated at any time on or after the Closing Date. Except as
specified in the Image Sciences Disclosure Schedule, no Benefit Plan provides
any health, life or other welfare coverage to employees of Image Sciences
beyond termination of their employment with Image Sciences by reason of
retirement or otherwise, other than coverage as may be required under Section
4980B of the Code or Part 6 of ERISA, or under the continuation of coverage
provisions of the laws of any state or locality.

(h) Except as otherwise set forth in the IMAGE SCIENCES DISCLOSURE SCHEDULE,
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (i) result in any payment to be made
by Image Sciences or a Common Controlled Entity (including, without
limitation, severance, unemployment compensation, golden parachute (as defined
in Code Section 280G or otherwise)) becoming due to any employee or former
employee, officer or director, or (ii) increase or vest any benefits payable
under any Benefit Plan.

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(i) Except as otherwise set forth in the IMAGE SCIENCES DISCLOSURE SCHEDULE,
any amount that could be received (whether in cash or property or the vesting
of property) as a result of any of the transactions contemplated by this
Agreement by any employee, officer or director of Image Sciences or any of its
subsidiaries who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Benefit Plan
currently in effect would not be characterized as an "excess parachute
payment" (as such term is defined in Section 280(b)(1) of the Code).

4.21 Corporate Records. The minute books of Image Sciences contain complete,
correct and current copies of its Charter Documents and bylaws and of all
minutes of meetings, resolutions and other proceedings of its Board of
Directors and shareholders. The stock record books of Image Sciences are
complete, correct and current.

4.22 Absence of Certain Changes. Except as contemplated by this Agreement,
since the Balance Sheet Date, Image Sciences has conducted the Image Sciences
Business in the ordinary course and there has not been with respect to the
Image Sciences Business:

(a) any change that has had or is reasonably likely to have a Material
Adverse Effect;

(b) any distribution or payment declared or made in respect of its
capital stock by way of dividends, purchase or redemption of shares or
otherwise except for the Image Sciences Closing Transactions;

(c) any increase in the compensation payable or to become payable to any
director, officer, employee or agent, except for increases for non-officer
employees made in the ordinary course of business, nor any other change in
any employment or consulting arrangement;

(d) any sale, assignment or transfer of material Assets, or any additions
to or transactions involving any Assets, other than those made in the
ordinary course of business;

(e) other than in the ordinary course of business, any waiver or release
of any claim or right or cancellation of any debt held; or

(f) any payments to any Affiliate of Image Sciences, except as specified
in the IMAGE SCIENCES DISCLOSURE SCHEDULE.

4.23 Previous Sales; Warranties. Image Sciences has not breached any express
or implied warranties in connection with the sale or distribution of goods or
the performance of services, except for breaches that would not have a
Material Adverse Effect.

4.24 Customers. Image Sciences has used its reasonable business efforts to
maintain and currently maintains, good working relationships with all of its
customers. The IMAGE SCIENCES DISCLOSURE SCHEDULE contains with respect to
each of the fiscal years ended July 31, 1994, 1995, 1996 and the four month
period ended November 30, 1996, a list of the ten customers (with names
omitted) that were the largest dollar volume customers of products or
services, or both, sold by Image Sciences for each such fiscal year. Except as
specified in the IMAGE SCIENCES DISCLOSURE SCHEDULE, none of such customers
has given Image Sciences notice terminating, canceling or threatening to
terminate or cancel any Contract or relationship with Image Sciences.

4.25 Finder's Fees. No Person retained by Image Sciences is or will be
entitled to any commission or finder's or similar fee in connection with the
Transactions.

4.26 Additional Information. The IMAGE SCIENCES DISCLOSURE SCHEDULE
accurately lists the following:

(a) the names of all officers and directors of Image Sciences;

(b) the names and addresses of every bank or other financial institution
in which Image Sciences maintains an account (whether checking, saving or
otherwise), lock box or safe deposit box, and the account numbers and names
of Persons having signing authority or other access thereto;

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(d) the names of any Persons holding powers of attorney from Image
Sciences and a summary statement of the terms thereof; and

(e) all names under which Image Sciences has conducted any part of its
Business or which it has otherwise used at any time during the past five
years.

4.27 Accuracy of Information. No representation or warranty by Image
Sciences in any Transaction Document, and no information contained herein or
therein or otherwise delivered by or on behalf of Image Sciences to FormMaker
in connection with the Transactions, including the Image Sciences Financial
Statements, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances under which such
statements were made.

4.28 Hart-Scott-Rodino Act. Neither (i) Image Sciences nor (ii) any Person
that may be considered an "ultimate parent" of Image Sciences has (x) annual
net sales exceeding $100 million as of the last annual statement of income and
expense, or (y) total assets exceeding $100 million in value as stated on the
last regularly prepared balance sheet.

5. REPRESENTATIONS AND WARRANTIES OF FORMMAKER.

FormMaker hereby represents and warrants to Image Sciences, except as set
forth in the FORMMAKER DISCLOSURE SCHEDULE or the updated FORMMAKER DISCLOSURE
SCHEDULE to be delivered pursuant to Section 6.3, as follows:

5.1 Corporate Status. Each of the FormMaker Companies and the New Companies
is a corporation duly organized, validly existing and in good standing under
the Laws of the jurisdiction of its organization, and is qualified to do
business as a foreign corporation in any jurisdiction where it is required to
be so qualified except where the failure to so qualify would not have a
Material Adverse Effect. The Charter Documents and bylaws of each of the
FormMaker Companies and each of the New Companies that have been delivered to
Image Sciences as of the date hereof are effective under applicable Laws and
are current, correct and complete.

5.2 Authorization. Each of the FormMaker Companies and the New Companies has
the requisite power and authority to own its Assets and to carry on its
Business. Each of FormMaker and the New Companies has the requisite power and
authority to execute and deliver the Transaction Documents to which it is a
party and to perform the Transactions performed or to be performed by it. Such
execution, delivery and performance by FormMaker or any New Company has been
duly authorized by all necessary corporate action, other than approval by the
shareholders of FormMaker. Each Transaction Document executed and delivered by
FormMaker and any New Company has been duly executed and delivered by such
Party and constitutes a valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms.

5.3 Consents and Approvals. Except for (a) any consents specified in the
FORMMAKER DISCLOSURE SCHEDULE (the "FormMaker Required Consents"), (b) the
approval of the Merger by the FormMaker shareholders, (c) the filing of the
Articles of Merger in accordance with Section 2 and (d) any approvals or
filings required by the SEC and by state securities laws or agencies in
connection with the Registration Statement, neither the execution and delivery
by FormMaker or any New Company of the Transaction Documents to which it is a
party, nor the performance of the Transactions performed or to be performed by
it, require any filing, consent or approval or constitute a Default under (i)
any Law or Court Order to which the FormMaker Companies or any new Company is
subject, (ii) the Charter Documents or bylaws of FormMaker or MicroDynamics or
(iii) any Contract, Governmental Permit or other document to which FormMaker
or any New Company is a party or by which the properties or other assets of
such Party may be subject.

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5.4 Capitalization and Stock Ownership.

(a) The total authorized capital stock of FormMaker consists of 20,000,000
shares of FormMaker Common Stock, of which (i) 6,229,511 shares are issued and
outstanding and (ii) 1,602,157 shares of FormMaker Common Stock are reserved
for issuance upon exercise of the issued and outstanding FormMaker Options and
FormMaker Warrants. Except for the rights under the FormMaker Options and
FormMaker Warrants listed in the FORMMAKER DISCLOSURE SCHEDULE, there are no
existing options, warrants, calls, commitments or other rights of any
character (including conversion or preemptive rights) relating to the
acquisition of any issued or unissued capital stock or other securities of
FormMaker. All of the shares of FormMaker Common Stock are, and all of the
shares of FormMaker Common Stock issuable upon exercise of the FormMaker
Options and the FormMaker Warrants in accordance with the terms thereof will
be, duly and validly authorized and issued, fully paid and non-assessable. The
FORMMAKER DISCLOSURE SCHEDULE lists all of the record owners of the FormMaker
Common Stock, the FormMaker Options and the FormMaker Warrants. FormMaker has
delivered to Image Sciences correct and complete copies of the forms of the
FormMaker Option agreements and the FormMaker Warrant agreements.

(b) The total authorized capital stock of the Company consists of (i)
20,000,000 shares of Company Class A Common Stock, 7,000,000 shares of Company
Class B Common Stock and 1,000,000 shares of Company Preferred Stock, par
value $0.01 per share, of which (a) no shares are issued and outstanding on
the date hereof and also as of immediately prior to the Effective Time and (b)
as of the consummation of the Closing and the issuance of the Closing Common
Shares, the total number of shares issued and outstanding plus the total
number of shares issuable upon the exercise of issued and outstanding Company
Options and Company Warrants shall not exceed 12,580,000 shares of Company
Class A Common Stock and Company Class B Common Stock. Except for the rights
under the Company Options and the Company Warrants to be issued at the
Closing, there are no existing options, warrants, calls, commitments or other
rights of any character (including conversion or preemptive rights) relating
to the acquisition of any issued or unissued capital stock or other securities
of the Company. All of the Closing Common Shares that will be issued and
outstanding immediately following consummation of the Merger, and all of the
shares of Company Class A Common Stock or Company Class B Common Stock
issuable upon exercise of the Company Options and the Company Warrants upon
issuance in accordance with the terms thereof, will be duly and validly
authorized and issued, fully paid and non-assessable. As of the Effective
Time, the Form S-4 Registration Statement will be effective in accordance with
the Securities Act with respect to the Closing Common Shares, and such
securities will be issued in compliance with the Securities Act and the rules
and regulations thereunder.

(c) The total authorized capital stock of the Texas Sub consists of 1,000
shares of Common Stock, par value $0.01 per share, of which 100 shares are
issued and outstanding on the date hereof and will be issued and outstanding
as of the Closing. There are no existing options, warrants, calls, commitments
or other rights of any character (including conversion or preemptive rights)
relating to the acquisition of any issued or unissued capital stock or other
securities of the Texas Sub. All of such shares are duly and validly
authorized and issued, fully paid and non-assessable. The Company owns all of
such shares of the Texas Sub.

(d) The total authorized capital stock of the Georgia Sub consists of 1,000
shares of Common Stock, par value $0.01 per share, of which 100 shares are
issued and outstanding on the date hereof and will be issued and outstanding
as of the Closing. There are no existing options, warrants, calls, commitments
or other rights of any character (including conversion or preemptive rights)
relating to the acquisition of any issued or unissued capital stock or other
securities of the Georgia Sub. All of such shares are duly and validly
authorized and issued, fully paid and non-assessable. The Company owns all of
such shares of the Georgia Sub.

(e) The total authorized capital stock of MicroDynamics consists of
8,000,000 shares of Common Stock, par value $0.01 per share, of which
6,051,305 shares are issued and outstanding on the date hereof, and 1,600,000
shares of Preferred Stock, par value $0.01 per share, of which no shares are
issued and outstanding on the date hereof. All shares of MicroDynamics Common
Stock are duly and validly authorized and issued, fully paid and non-
assessable. FormMaker owns 6,044,805 shares of MicroDynamics Common Stock free
and clear of all Encumbrances.

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5.5 Financial Statements. FormMaker has delivered to Image Sciences correct
and complete copies of unaudited monthly financial statements for FormMaker
consisting of a balance sheet as of the end of each month from January 1996
through November 30, 1996 and the related statements of income, changes to
shareholders' equity and cash flows for the periods then ended. FormMaker has
also delivered to Image Sciences correct and complete copies of financial
statements consisting of a balance sheet of FormMaker as of December 31, 1993,
1994 and 1995 and the related statements of income for the years then ended,
the financial statements for the two most recent years were audited by the
firm of Coopers & Lybrand LLP. All such unaudited and audited financial
statements are referred to herein collectively as the "FormMaker Pre-Signing
Financial Statements." The unaudited financial statements of FormMaker to be
delivered in connection with the Registration Statements are referred to
herein as the "FormMaker Post-Signing Financial Statements," and, together
with the Pre-Signing Financial Statements, as the "FormMaker Financial
Statements." The FormMaker Pre-Signing Financial Statements are, and the
FormMaker Post-Signing Financial Statements will be, consistent in all
material respects with the books and records of FormMaker, and there have not
been and will not be any material transactions that have not been or will not
be recorded in the accounting records underlying such Financial Statements.
The FormMaker Pre-Signing Financial Statements have been, and the FormMaker
Post-Signing Financial Statements will be, prepared in accordance with GAAP
consistently applied, and the FormMaker Pre-Signing Financial Statements
present, and the FormMaker Post-Signing Financial Statements will present,
fairly the financial position and assets and liabilities of FormMaker as of
the dates thereof, and the results of its operations for the periods then
ended, subject to normal recurring year-end adjustments and the absence of
notes in the case of unaudited Financial Statements. The balance sheet of
FormMaker as of November 30, 1996 that is included in the Financial Statements
is referred to herein as the "FormMaker Balance Sheet." FormMaker has also
delivered to Image Sciences correct and complete copies of financial
statements consisting of a balance sheet of MicroDynamics as of December 1993,
1994 and 1995 and the related statements of income for the years then ended
and unaudited monthly financial statements for MicroDynamics consisting of a
balance sheet as of the end of each month from January 1996 through November
30, 1996 and the related statements of income, changes to shareholders equity
and cash flow for the periods then ended (the "MicroDynamics Financial
Statements"). The MicroDynamics Financial Statements are consistent in all
material respects with the books and records of MicroDynamics, and there have
not been and will not be any material transaction that have not been recorded
in the accounting records underlying such MicroDynamics Financial Statements.

5.6 No Company, Texas Sub or Georgia Sub Assets, Liabilities or
Business. Except for any rights and Liabilities that the Company, the Texas
Sub and the Georgia Sub may have with respect to this Agreement and the
Company's ownership of the capital stock of the Texas Sub and the Georgia Sub,
neither the Company, the Texas Sub or the Georgia Sub has any Assets or
Liabilities, nor has either the Company, the Texas Sub or the Georgia Sub
conducted any Business other than in connection with the Transactions.

5.7 Title to Assets and Related Matters. Each of the FormMaker Companies has
good and marketable title to, valid leasehold interests in or valid licenses
to use, all of its material FormMaker Companies Assets, free from any
Encumbrances except those specified in the FORMMAKER DISCLOSURE SCHEDULE. The
use of the FormMaker Companies Assets are not subject to any Encumbrances
(other than those specified in the preceding sentence), and such use does not
materially encroach on the property or rights of anyone else. All FormMaker
Companies Real Property and tangible personal property (other than Inventory)
included in the FormMaker Companies Assets are suitable for the purposes for
which they are used, in good working condition, reasonable wear and tear
excepted, and are free from any known defects, except such minor defects that
would not have a Material Adverse Effect.

5.8 Real Property. The FORMMAKER DISCLOSURE SCHEDULE describes all real
estate used in the operation of the FormMaker Companies Business as well as
any other real estate that is in the possession of or leased by the FormMaker
Companies and the improvements (including buildings and other structures)
located on such real estate (collectively, the "FormMaker Companies Real
Property"), and lists any leases under which any such FormMaker Companies Real
Property is possessed (the "FormMaker Companies Real Estate Leases").
FormMaker does not have any ownership interest in any real property. The
FORMMAKER DISCLOSURE SCHEDULE

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also describes any other real estate previously owned, leased or otherwise
operated by the FormMaker Companies or any predecessor thereof and the time
periods of any such ownership, lease or operation. All of the FormMaker
Companies Real Property (a) is usable in the ordinary course of business and
(b) conforms in all material respects with any applicable Laws relating to its
construction, use and operation. The FormMaker Companies Real Property
complies with applicable zoning Laws. To the knowledge of FormMaker, the
FormMaker Companies or the landlord of any FormMaker Companies Real Property
leased by the FormMaker Companies has obtained all licenses and rights-of-way
from governmental entities or private parties that are necessary to ensure
vehicular and pedestrian ingress and egress to and from the FormMaker
Companies Real Property.

5.9 Certain Personal Property. The FORMMAKER DISCLOSURE SCHEDULE describes
all items of tangible personal property that were included in the FormMaker
Balance Sheet at a carrying value of at least $50,000. Except as specified in
the FORMMAKER DISCLOSURE SCHEDULE, since the Balance Sheet Date, FormMaker has
not acquired any items of tangible personal property that have a carrying
value in excess of $50,000, or an aggregate carrying value of $300,000. All of
such personal property included in the FORMMAKER DISCLOSURE SCHEDULE is, and
any such personal property acquired after the date hereof in accordance with
Section 7.2 will be, usable in the ordinary course of business, and all such
personal property included in the FORMMAKER DISCLOSURE SCHEDULE conforms, and
all of such personal property acquired after the date hereof will conform, in
all material respects with any applicable Laws relating to its construction,
use and operation. Except for those items subject to the FormMaker Companies
Non-Real Estate Leases or the Immaterial Leases or those items listed in the
FORMMAKER DISCLOSURE SCHEDULE, no Person other than the FormMaker Companies
owns any vehicles, equipment or other tangible assets located on the FormMaker
Real Property that have been used in the FormMaker Companies Business or that
are necessary for the operation of the FormMaker Companies Business.

5.10 Non-Real Estate Leases. The FORMMAKER DISCLOSURE SCHEDULE lists all
assets and property (other than FormMaker Real Property) that are possessed by
the FormMaker Companies under an existing lease, including all trucks,
automobiles, forklifts, machinery, equipment, furniture and computers, except
for Immaterial Leases. The FORMMAKER DISCLOSURE SCHEDULE also lists the leases
under which such assets and property listed in the FORMMAKER DISCLOSURE
SCHEDULE are possessed. All of such leases (excluding Immaterial Leases) are
referred to herein as the "FormMaker Companies Non-Real Estate Leases."

5.11 Accounts Receivable. The Accounts Receivable included in the FormMaker
Companies Assets are bona fide Accounts Receivable created in the ordinary
course of business. Except for Accounts Receivable for which reserves have
been established, all of the Accounts Receivable included in the FormMaker
Companies Assets are collectible in the ordinary course of business. FormMaker
does not know of any facts or circumstances (other than general economic
conditions) that are likely to result in any material increase in the
uncollectability of such Accounts Receivable in excess of any reserves
therefor set forth in the FormMaker Balance Sheet.

5.12 Inventory. The Inventory included in the FormMaker Companies Assets
consists of items of good, usable and merchantable quality in all material
respects and does not include obsolete or discontinued items. Such Inventory
is recorded in the FormMaker Financial Statements at the lower of cost or
market value determined in accordance with GAAP.

5.13 Liabilities. The FormMaker Companies do not have any Liabilities,
except (a) as specified in the FORMMAKER DISCLOSURE SCHEDULE, (b) as
contemplated by the FormMaker Balance Sheet (except as heretofore paid or
discharged), (c) Liabilities incurred in the ordinary course since the Balance
Sheet Date, or (d) Liabilities under any Contracts included in the FormMaker
Companies Assets that are specifically disclosed in the FORMMAKER DISCLOSURE
SCHEDULE (or not required to be disclosed because of the term or amount
involved) that were not required under GAAP to have been specifically
disclosed or reserved for on the FormMaker Balance Sheet.

5.14 Taxes. The FormMaker Companies have duly filed all returns for Taxes
that are required to be filed and has paid all material Taxes shown as being
due pursuant to such returns or pursuant to any assessment

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received. All Taxes that the FormMaker Companies have been required by Law to
withhold or to collect have been duly withheld and collected and have been
paid over to the proper governmental authorities or are properly held by the
FormMaker Companies for such payment. There are no proceedings or other
actions, nor is there any basis for any proceedings or other actions, for the
assessment and collection of additional Taxes of any kind with respect to the
FormMaker Companies for any period for which returns have or should have been
filed.

5.15 Subsidiaries. FormMaker does not own, directly or indirectly, any
interest or investment (whether equity or debt) in any corporation,
partnership, limited liability company, trust, joint venture or other legal
entity, except for its investment in MicroDynamics and the New Companies.

5.16 Legal Proceedings and Compliance with Law.

(a) Except as set forth in the FORMMAKER DISCLOSURE SCHEDULE, there is no
Litigation that is pending or, to FormMaker's knowledge, threatened against
the FormMaker Companies. There has been no Default under any Laws applicable
to the FormMaker Companies, including Laws relating to pollution or protection
of the environment, except for any Defaults that would not have a Material
Adverse Effect, and the FormMaker Companies have not received any notices from
any governmental entity regarding any alleged Defaults under any Laws. There
has been no Default with respect to any Court Order applicable to the
FormMaker Companies.

(b) Without limiting the generality of Section 5.16(a), there has not been
any FormMaker Environmental Condition (i) at the premises at which the
FormMaker Companies Business has been conducted, (ii) at any property owned,
leased or operated at any time by the FormMaker Companies, any Person
controlled by the FormMaker Companies or any predecessor of any of them, or
(iii) at any property at which wastes have been released, deposited or
disposed by or at the behest or direction of any of the foregoing, nor have
the FormMaker Companies received written notice of any such FormMaker
Companies Environmental Condition. "FormMaker Environmental Condition" means
any condition or circumstance, including the presence or release of Hazardous
Substances, whether created by the FormMaker Companies or any third party, at
or relating to any such property or premises that (i) requires investigation,
monitoring, abatement or correction under an Environmental Law, (ii) gives
rise to any civil or criminal liability on the part of the FormMaker Companies
under an Environmental Law, or (iii) has created a public or private nuisance.

(c) FormMaker has delivered to Image Sciences complete copies of any written
reports, studies or assessments in the possession or control of the FormMaker
Companies that relate to any the FormMaker Companies Environmental Condition
and to the FormMaker Business or any FormMaker Assets.

(d) Except in those cases where the failure would not have a Material
Adverse Effect, (i) the FormMaker Companies have obtained and are in full
compliance with all Governmental Permits, all of which are listed in the
FORMMAKER DISCLOSURE SCHEDULE along with their respective expiration dates,
that are required for the complete operation of the FormMaker Companies
Business as currently operated, (ii) all of such Governmental Permits are
currently valid and in full force and (iii) the FormMaker Companies have filed
such timely and complete renewal applications as may be required with respect
to its Governmental Permits. To FormMaker's knowledge, no revocation,
cancellation or withdrawal thereof has been threatened.

5.17 Contracts.

(a) The FORMMAKER DISCLOSURE SCHEDULE lists all Contracts of the following
types to which the FormMaker Companies are a party or by which it is bound,
except for Minor Contracts:

(i) Contracts with any present or former shareholder, director, officer,
employee, partner or consultant of FormMaker or any Affiliate thereof.

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(iii) Contracts to sell or supply products or to perform services that
involve an amount in excess of $250,000 in any individual case;

(iv) Contracts to lease to or to operate for any other party any asset
that involve an amount in excess of $150,000 in any individual case;

(v) Any notes, debentures, bonds, conditional sale agreements, equipment
trust agreements, letter of credit agreements, reimbursement agreements,
loan agreements or other Contracts for the borrowing or lending of money
(including loans to or from officers, directors, partners, shareholders or
Affiliates of FormMaker or any members of their immediate families),
agreements or arrangements for a line of credit or for a guarantee of, or
other undertaking in connection with, the indebtedness of any other Person;

(vi) Any Contracts under which any Encumbrances exist; and

(vii) Any other Contracts (other than Minor Contracts and those described
in any of (i) through (vi) above) not made in the ordinary course of
business.

(b) The Contracts listed in the FORMMAKER DISCLOSURE SCHEDULE and the
Contracts excluded from the FORMMAKER DISCLOSURE SCHEDULE based on the term or
amount thereof are referred to herein as the "FormMaker Companies Contracts."
FormMaker Companies are not in Default under any FormMaker Companies Contracts
(including any FormMaker Companies Real Estate Leases and FormMaker Companies
Non-Real Estate Leases), which Default could result in a Liability on the part
of the FormMaker Companies in excess of $25,000 in any individual case, and
the aggregate Liabilities that could result from all such Defaults do not
exceed $50,000. The FormMaker Companies have not received any communication
from, or given any communication to, any other party indicating that the
FormMaker Companies or such other party, as the case may be, is in Default
under any the FormMaker Companies Contract where such Default could have a
Material Adverse Effect. To the knowledge of FormMaker, none of the other
parties in any such FormMaker Companies Contract is in Default thereunder.

5.18 Insurance. The FORMMAKER DISCLOSURE SCHEDULE lists all policies or
binders of insurance held by or on behalf of the FormMaker Companies,
specifying with respect to each policy the insurer, the amount of the
coverage, the type of insurance, the risks insured, the expiration date, the
policy number and any pending claims thereunder. There is no Default with
respect to any such policy or binder, nor has there been any failure to give
any notice or present any claim under any such policy or binder in a timely
fashion or in the manner or detail required by the policy or binder, except
for any of the foregoing that would not have a Material Adverse Effect. There
is no notice of nonrenewal or cancellation with respect to, or disallowance of
any claim under, any such policy or binder that has been received by the
FormMaker Companies, except for any of the foregoing that would not have a
Material Adverse Effect.

5.19 Intellectual Property and Software Products.

(a) The FormMaker Companies do not currently use nor have they previously
used in the development, production or marketing of their products and
services any Copyrights, Patents or Trademarks except for those listed in the
FORMMAKER DISCLOSURE SCHEDULE. The FormMaker Companies own or have the lawful
right to use all material Intellectual Property that is used in the operation
of the Business in the ordinary course or otherwise. All of the Intellectual
Property listed in the FORMMAKER DISCLOSURE SCHEDULE is owned by the FormMaker
Companies free and clear of any Encumbrances, or used pursuant to an agreement
that is described in the FORMMAKER DISCLOSURE SCHEDULE. Except in such cases
that would not have a Material Adverse Effect, the FormMaker Companies do not
infringe upon or unlawfully or wrongfully use any Intellectual Property rights
owned or claimed by another Person, and the FormMaker Companies are not in
Default, and have not received any notice of any claim of infringement or any
other claim or proceeding, with respect to any such Intellectual Property.
Except for any rights under written licenses or other written Contracts, no
current or former employee of the FormMaker Companies and no other Person owns
or has any proprietary, financial or other interest, direct or indirect, in
whole or in part, and including any right to royalties or other compensation,
in any of the Intellectual Property, or in any application therefor.

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(b) The FORMMAKER DISCLOSURE SCHEDULE contains a complete list of all of the
computer software products sold, licensed, distributed, marketed, used or
under development by the FormMaker Companies (the "FormMaker Companies
Software Products"). Each of the FormMaker Companies Software Products
performs substantially in accordance with the specifications, documentation
and other written material used in connection with the sale, license,
distribution, marketing or use thereof and is free of defects in programming
and operation except such defects as would not materially and adversely affect
the use of the respective FormMaker Companies Software Products for their
intended purposes.

(c) Except as specified in the FORMMAKER DISCLOSURE SCHEDULE, all right,
title and interest in and to the FormMaker Companies Software Products is
owned by the FormMaker Companies, free and clear of all Encumbrances. No
government funding was utilized in the development of any of the FormMaker
Companies Software Products. Except for such violations that would not have a
Material Adverse Effect, the sale, license, distribution, marketing or use of
the FormMaker Companies Software Products by the FormMaker Companies do not
violate any rights of any other Person, and the FormMaker Companies have not
received any communication alleging such a violation. Except as specified in
the FORMMAKER DISCLOSURE SCHEDULE, the FormMaker Companies do not have any
obligation to compensate any Person for the sale, license, distribution,
marketing or use of the FormMaker Companies Software Products. Other than as
set forth in the FORMMAKER DISCLOSURE SCHEDULE, the FormMaker Companies have
not granted to any other Person any license, option or other right in or to
any of the FormMaker Companies Software Products, except for End-User Licenses
and Distributor Licenses granted by the FormMaker Companies pursuant to
license agreements. Correct and complete copies of such Distributor Licenses
have been or will be delivered to Image Sciences in Second Stage Due
Diligence.

(d) Except as specified in the FORMMAKER DISCLOSURE SCHEDULE, the FormMaker
Companies do not have any obligation owing to any Person to maintain, modify,
improve or upgrade any of the FormMaker Software Products, except for any such
obligation set forth in an End-User License, a Distributor License or under a
customer-specific services agreement and such other obligations as would not
have a Material Adverse Effect.

(e) All employees and consultants of the FormMaker Companies who are
involved in the design, review, evaluation or development of Intellectual
Property have executed a Confidentiality Agreement. To FormMaker's knowledge,
(i) none of the Confidential Information has been used, divulged or
appropriated (A) for the benefit of any Person other than the FormMaker
Companies or a customer thereof or (B) otherwise to the detriment of the
FormMaker Companies, (ii) except as specified in the FORMMAKER DISCLOSURE
SCHEDULE, none of such employees or consultants of the FormMaker Companies are
subject to any contractual or legal restrictions that might interfere with the
use of his or her best efforts to promote the interests of the FormMaker
Companies, (iii) no employee or consultant of FormMaker has used any other
Persons' trade secrets or other information that is confidential in the course
of his or her work for FormMaker, and (iv) no employee or consultant of the
FormMaker Companies are, or are currently expected to be, in Default under any
term of any employment contract, agreement or arrangement relating to the
Intellectual Property, or any Confidentiality Agreement or any other Contract
or any restrictive covenant relating to the Intellectual Property, or the
development or exploitation thereof.

(f) The FormMaker Companies have kept secret and has not disclosed the
source codes for the FormMaker Companies Software Products to any Person other
than to those Persons identified in the FORMMAKER DISCLOSURE SCHEDULE and to
certain employees of the FormMaker Companies.

5.20 Employee Relations. The FormMaker Companies are not (a) except as
specified in the FORMMAKER DISCLOSURE SCHEDULE, a party to, involved in or, to
FormMaker's knowledge, threatened by, any labor dispute or unfair labor
practice charge, or (b) currently negotiating any collective bargaining
agreement. The FormMaker Companies have not experienced during the last three
years any work stoppage. FormMaker has delivered to Image Sciences a complete
and correct list of the names and salaries, bonus and other cash compensation
of all employees (including officers) of the FormMaker Companies whose cash
compensation was for 1995 or is expected to be for 1996 at least $80,000.

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5.21 ERISA.

(a) The FORMMAKER DISCLOSURE SCHEDULE contains a complete list of all
Benefit Plans sponsored or maintained by the FormMaker Companies or under
which the FormMaker Companies are obligated. FormMaker has delivered to Image
Sciences (i) accurate and complete copies of all such Benefit Plan documents
and all other material documents relating thereto, including (if applicable)
all summary plan descriptions, summary annual reports and insurance contracts,
(ii) accurate and complete detailed summaries of all unwritten Benefit Plans,
(iii) accurate and complete copies of the most recent financial statements and
actuarial reports with respect to all such Benefit Plans for which financial
statements or actuarial reports are required or have been prepared and (iv)
accurate and complete copies of all annual reports for all such Benefit Plans
(for which annual reports are required) prepared within the last three years.
Each such Benefit Plan providing benefits that are funded through a policy of
insurance is indicated by the word "insured" placed by the listing of the
Benefit Plan in the FORMMAKER DISCLOSURE SCHEDULE.

(b) All such Benefit Plans conform (and at all times have conformed) in all
material respects to, and are being administered and operated (and have at all
times been administered and operated) in material compliance with, the
requirements of ERISA, the Code and all other applicable Laws. All returns,
reports and disclosure statements required to be made under ERISA and the Code
with respect to all such Benefit Plans have been timely filed or delivered.
There have not been any "prohibited transactions," as such term is defined in
Section 4975 of the Code or Section 406 of ERISA involving any of the Benefit
Plans, that could subject FormMaker to any material penalty or tax imposed
under the Code or ERISA.

(c) Except as is set forth in the FORMMAKER DISCLOSURE SCHEDULE, any such
Benefit Plan that is intended to be qualified under Section 401(a) of the Code
and exempt from tax under Section 501(a) of the Code has been determined by
the Internal Revenue Service to be so qualified or an application for such
determination is pending. Any such determination that has been obtained
remains in effect and has not been revoked, and with respect to any
application that is pending, the Company has no reason to suspect that such
application for determination will be denied. Nothing has occurred since the
date of any such determination, or if there has been no such determination,
there is no occurrence that is reasonably likely to affect adversely such
qualification or the tax exempt status of the plan and the related trust, or
result in the imposition of excise taxes or income taxes on unrelated business
income under the Code or ERISA with respect to any such Benefit Plan.

(d) Neither the FormMaker Companies nor any person or entity that, together
with the FormMaker Companies, is treated as a Common Controlled Entity,
sponsors a defined benefit plan subject to Title IV of ERISA, or has a current
or contingent obligation to contribute to any multiemployer plan (as defined
in Section 3(37) of ERISA) and neither they nor their predecessors have ever
contributed to a multiemployer plan. The FormMaker Companies do not have any
liability with respect to any employee benefit plan (as defined in Section
3(3) of ERISA) other than with respect to such Benefit Plans.

(e) There are no pending or, to the knowledge of FormMaker, threatened
claims by or on behalf of any such Benefit Plans, or by or on behalf of any
individual participants or beneficiaries of any such Benefit Plans, alleging
any breach of fiduciary duty on the part of the FormMaker Companies or any of
their officers, directors or employees under ERISA or any other applicable
regulations, or claiming benefit payments (other than those made in the
ordinary operation of such plans), nor is there, to the knowledge of
FormMaker, any basis for such claim. The Benefit Plans are not the subject of
any pending (or to the knowledge of FormMaker, any threatened) investigation
or audit by the Internal Revenue Service, the Department of Labor or the PBGC.

(f) The FormMaker Companies have timely made all required contributions
under such Benefit Plans including the payment of any premiums payable to the
PBGC and other insurance premiums.

(g) With respect to any such Benefit Plan that is a Welfare Plan and except
as specified in the FORMMAKER DISCLOSURE SCHEDULE, (i) each Welfare Plan for
which contributions are claimed by the FormMaker Companies as deductions under
any provision of the Code is in material compliance with all applicable
requirements

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pertaining to such deduction, (ii) with respect to any welfare benefit fund
(within the meaning of Section 419 of the Code) related to a Welfare Plan,
there is no disqualified benefit (within the meaning of Section 4976(b) of the
Code) that would result in the imposition of a tax under Section 4976(a) of
the Code, (iii) any Benefit Plan that is a group health plan (within the
meaning of Section 4980B(g)(2) of the Code) complies, and in each and every
case has complied, with all of the applicable material requirements of Section
4980B of the Code, ERISA, Title XXII of the Public Health Service Act and the
Social Security Act, and (iv) all Welfare Plans may be amended or terminated
at any time on or after the Closing Date. Except as specified in the FORMMAKER
DISCLOSURE SCHEDULE, no Benefit Plan provides any health, life or other
welfare coverage to employees of the FormMaker Companies beyond termination of
their employment with the FormMaker Companies by reason of retirement or
otherwise, other than coverage as may be required under Section 4980B of the
Code or Part 6 of ERISA, or under the continuation of coverage provisions of
the laws of any state or locality.

(h) Except as otherwise set forth in the FORMMAKER DISCLOSURE SCHEDULE,
neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (i) result in any payment to be made
by the FormMaker Companies or a Common Controlled Entity (including, without
limitation, severance, unemployment compensation, golden parachute (as defined
in Code Section 280G or otherwise)) becoming due to any employee or former
employee, officer or director, or (ii) increase or vest any benefits payable
under any Benefit Plan.

(i) Except as otherwise set forth in the FORMMAKER DISCLOSURE SCHEDULE, any
amount that could be received (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this
Agreement by any employee, officer or director of the FormMaker Companies or
any of its subsidiaries who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or Benefit Plan currently in effect would not be characterized as an "excess
parachute payment" (as such term is defined in Section 280(b)(1) of the Code).

5.22 Corporate Records. The minute books of each of the FormMaker Companies
contain complete, correct and current copies of its Charter Documents and
bylaws and of all minutes of meetings, resolutions and other proceedings of
its Board of Directors and shareholders. The stock record books of the
FormMaker Companies are complete, correct and current.

5.23 Absence of Certain Changes. Except as contemplated by this Agreement,
since the Balance Sheet Date, the FormMaker Companies have conducted the
FormMaker Companies Business in the ordinary course and there has not been
with respect to the FormMaker Companies Business:

(a) any change that has had or is reasonably likely to have a Material
Adverse Effect;

(b) any distribution or payment declared or made in respect of its
capital stock by way of dividends, purchase or redemption of shares or
otherwise;

(d) any sale, assignment or transfer of material Assets, or any additions
to or transactions involving any Assets, other than those made in the
ordinary course of business;

(e) other than in the ordinary course of business, any waiver or release
of any claim or right or cancellation of any debt held; or

(f) any payments to any Affiliate of the FormMaker Companies, except as
specified in the FORMMAKER DISCLOSURE SCHEDULE.

5.24 Previous Sales; Warranties. The FormMaker Companies have not breached
any express or implied warranties in connection with the sale or distribution
of goods or the performance of services, except for breaches that,
individually and in the aggregate, would not have a Material Adverse Effect.

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5.25 Customers. The FormMaker Companies have used their reasonable business
efforts to maintain and currently maintains, good working relationships with
all of their customers. The FORMMAKER DISCLOSURE SCHEDULE contains with
respect to each of the years ended December 31, 1993, 1994, 1995 and the
eleven month period ended November 30, 1996 a list of the ten customers (with
names omitted) that were the largest dollar volume customers of products or
services, or both, sold by the FormMaker Companies for each such year. Except
as specified in the FORMMAKER DISCLOSURE SCHEDULE, none of such customers has
given the FormMaker Companies notice terminating, canceling or threatening to
terminate or cancel any Contract or relationship with the FormMaker Companies.

5.26 Finder's Fees. No Person retained by FormMaker is or will be entitled
to any commission or finder's or similar fee in connection with the
Transactions.

5.27 Additional Information. The FORMMAKER DISCLOSURE SCHEDULE accurately
lists the following:

(a) the names of all officers and directors of FormMaker;

(b) the names and addresses of every bank or other financial institution
in which FormMaker maintains an account (whether checking, saving or
otherwise), lock box or safe deposit box, and the account numbers and names
of Persons having signing authority or other access thereto;

(d) the names of any Persons holding powers of attorney from FormMaker
and a summary statement of the terms thereof; and

(e) all names under which FormMaker has conducted any part of its
Business or which it has otherwise used at any time during the past five
years.

5.28 Accuracy of Information. No representation or warranty by FormMaker in
any Transaction Document, and no information contained therein or otherwise
delivered by or on behalf of FormMaker to Image Sciences in connection with
the Transactions, including the FormMaker Financial Statements, contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which such statements were
made.

5.29 Hart-Scott-Rodino Act. Neither (i) FormMaker nor (ii) any Person that
may be considered an "ultimate parent" of FormMaker for purposes of the HSR
Act, has (x) annual net sales exceeding $100 million as of the last annual
statement of income and expense, or (y) total assets exceeding $100 million in
value as stated on the last regularly prepared balance sheet.

6. JOINT COVENANTS.

6.1 Registration Statement.

(a) The Company shall prepare and file with the SEC as soon as reasonably
practicable after the date hereof (i) a registration statement on Form S-4
under the Securities Act for purposes of registering the Closing Common Shares
and the shares of Company Class A Common Stock and Company Class B Common
Stock issuable upon exercise of the Company Options and the Company Warrants
received by Holders in the Merger (the "Registered Securities") and (ii) a
joint proxy statement to be distributed by Image Sciences and FormMaker in
connection with the Image Sciences Special Meeting and the FormMaker Special
Meeting (the "Joint Proxy Statement"). Such registration statement on Form S-4
and any amendments or supplements thereto are referred to herein as the "Form
S-4 Registration Statement" or the "Registration Statement." The Company will
use commercially reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing, and Image Sciences and FormMaker shall use commercially
reasonable efforts to cooperate with the Company to cause the Registration
Statement to be declared effective. The Company, FormMaker, Image Sciences,
the Texas Sub, the Georgia Sub and Image Sciences (the "Corporate

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Parties") shall also take such action as may be reasonably required to cause
the Registered Securities to be registered or to obtain an exemption from
registration under applicable state "blue sky" or securities laws. In
connection with the foregoing, Image Sciences and FormMaker will furnish to
the Company all information concerning Image Sciences and FormMaker as the
Company or its counsel may reasonably request for inclusion in the
Registration Statement.

(b) The Company covenants that the Registration Statement (i) will comply in
all material respects with the applicable provisions of the Securities Act and
the rules and regulations promulgated thereunder and (ii) will not at the time
such document is filed with the SEC and at all times after it becomes
effective under the Securities Act and until the Closing contain any untrue
statement of any material fact or omit 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
necessary to correct any statement in any earlier filing with the SEC of the
Registration Statement; provided, however, that no representation, covenant or
agreement is made by the Company with respect to information supplied by or on
behalf of Image Sciences for inclusion in the Registration Statement.

(c) Each of Image Sciences and FormMaker covenants that the Registration
Statement as it relates to them (i) will comply in all material respects with
the applicable provisions of the Securities Act and the rules and regulations
promulgated thereunder and (ii) will not at the time such document is filed
with the SEC and at all times after it becomes effective under the Securities
Act and until the Closing, contain any untrue statement of any material fact
or omit 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 necessary to correct any statement in
any earlier filing with the SEC of the Registration Statement.

6.2 Financial Statements. Each of FormMaker and Image Sciences shall deliver
to the other party financial statements prepared in accordance with GAAP
consistently applied for the twelve-month period ending December 31, 1996.

6.3 Due Diligence. Each of FormMaker and Image Sciences shall deliver to the
other party all the information listed in Schedule 6.3 not previously provided
to such other party (the "Second Stage Due Diligence Materials") on the day
following the date of this Agreement and shall deliver an updated Disclosure
Schedule incorporating information from such Second Stage Due Diligence
Materials. If either FormMaker or Image Sciences believes in good faith that
any information contained in such Second Stage Due Diligence Materials reveals
matters which could have a Material Adverse Effect on the combined entity
following the Merger, then such party shall have the right to terminate this
Agreement as provided in Section 12.1(d).

7. COVENANTS OF FORMMAKER AND THE COMPANY.

7.1 Fulfillment of Closing Conditions. At and prior to the Closing,
FormMaker shall use commercially reasonable efforts to fulfill, and to cause
the Company to fulfill, the conditions specified in Sections 9 and 10 to the
extent that the fulfillment of such conditions is within its control, except
that FormMaker shall not be required to pay or expend any material amount of
funds that may be necessary to correct any Default under the representations
and warranties of the Company or FormMaker or to fulfill any of such
conditions. In connection with the foregoing, FormMaker will, and will cause
the Company to, (a) refrain from any actions that would cause any of its
representations and warranties to be inaccurate in any material respect as of
the Closing, (b) execute and deliver the agreements and other documents
referred to in Section 10, (c) comply in all material respects with all
applicable Laws in connection with its execution, delivery and performance of
this Agreement and the Transactions, (d) use commercially reasonable efforts
to obtain in a timely manner all necessary waivers, consents and approvals
required under any Laws, Contracts or otherwise, including any FormMaker
Required Consents, and (e) use commercially reasonable efforts to take, or
cause to be taken, all other actions and to do, or cause to be done, all other
things reasonably necessary, proper or advisable to consummate and make
effective as promptly as practicable the Transactions. FormMaker shall give
Image Sciences prompt written notice of any event or development that occurs
or fails to occur (and that is known to FormMaker) that gives FormMaker

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reason to believe that the conditions set forth in Sections 9 and 10 will not
be satisfied prior to the Termination Date.

7.2 Conduct of the Business. Except as disclosed in the FormMaker Disclosure
Schedule, FormMaker shall not, and shall cause the Company, not to, do any of
the following prior to the Closing unless waived by Image Sciences in writing:
amend its Charter Documents or bylaws; merge or consolidate with, or purchase
substantially all of the assets of, or otherwise acquire any business of, any
corporation, partnership or other business organization or business division
thereof; split, combine or reclassify its outstanding capital stock or issue
any additional capital stock (except for capital stock issuable upon
conversion or exercise of currently outstanding securities, or options,
warrants or other rights to purchase capital stock, or securities convertible
into capital stock; pay any dividends or redeem any of its outstanding capital
stock; enter into any Contract or otherwise incur any Liability outside the
ordinary course of business unless the executory obligation on the part of
FormMaker in any such individual case is less than $100,000; incur any
additional indebtedness for borrowed money outside the ordinary course of
business; discharge or satisfy any Encumbrance or pay or satisfy any material
Liability except pursuant to the terms thereof; compromise, settle or
otherwise adjust any material claim or litigation unless such compromise,
settlement or adjustment involves a sum of not more than $100,000 in excess of
reserves; make capital expenditures of more than $100,000 in the aggregate; or
modify existing benefit plans or enter into new employment agreements. Nothing
contained in this Agreement shall give Image Sciences, directly or indirectly,
the right to control or direct FormMaker's operations prior to the Effective
Time.

7.3 Access to Information. FormMaker shall, and shall cause the Company to,
give Image Sciences and its representatives (including Image Sciences'
accountants, counsel and employees, each, an "Image Sciences Representative"),
upon reasonable notice and during normal business hours, full access to the
properties, contracts, books, records and affairs of FormMaker and the
Company. FormMaker shall cause its officers and employees, and the officers
and employees of the Company, to furnish to Image Sciences all documents,
records and information as Image Sciences may reasonably request.

7.4 No Solicitation. From and after the date hereof, FormMaker, without the
prior written consent of Image Sciences, will not, and will not authorize or
permit any of the FormMaker Representatives to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) or
take any other action to facilitate knowingly any inquiries or the making of
any proposal that constitutes or may reasonably be expected to lead to an
Acquisition Proposal from any Person, or engage in any discussion or
negotiations relating thereto or accept any Acquisition Proposal. FormMaker
shall notify Image Sciences orally and in writing of any such inquiries,
offers or proposals (including the terms and conditions of any such proposal
and the identity of the person making it), within 24 hours of the receipt
thereof, shall keep Image Sciences informed of the status and details of any
such inquiry, offer or proposal. As used herein, "Acquisition Proposal" means
a proposal or offer (other than pursuant to this Agreement) for a tender or
exchange offer, merger, consolidation or other business combination involving,
or any proposal to acquire in any manner a substantial equity interest in, or
all or substantially all of the assets of, (i) FormMaker, in the case of this
Section 7.4, and (ii) Image Sciences, in the case of Section 8.4.

7.5 The FormMaker Special Meeting. In connection with the FormMaker Special
Meeting, FormMaker shall (a) deliver to its shareholders as promptly as
practicable the Joint Proxy Statement and all other materials for such
meeting, (b) use all reasonable efforts to obtain the necessary approvals of
its shareholders for the Merger and this Agreement and (c) otherwise comply
with all legal requirements applicable to such meeting.

7.6 Rule 145 Affiliates. Prior to the Closing, FormMaker shall identify in a
letter to the Company all Persons who might, at the time of the FormMaker
Special Meeting, be deemed to be "affiliates" of the Company for the purposes
of Rule 145 under the Securities Act (the "Securities Act Affiliates").
FormMaker shall use commercially reasonable efforts to cause each Person who
is identified as a possible Securities Act Affiliate to enter into prior to
the Effective Time an agreement in form and substance reasonably acceptable to
the Company pursuant to which each such Person acknowledges such Person's
responsibilities as a Securities Act Affiliate.

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7.7 Stock Option Plan. The Company will adopt an employee stock option plan
(the "New Option Plan") substantially identical to the stock option plan that
was approved by the Parties on the date hereof covering 400,000 shares of
Company Class A Common Stock. The Company will file a Registration Statement
on Form S-8 under the Securities Act for purposes of registering shares of
Company Class A Common Stock issuable upon exercise of Company Options as
promptly as practicable following consummation of the Qualified Rights
Offering.

7.8 Expenses. FormMaker (or the Company if the Merger becomes effective)
shall pay all of the legal, accounting and other expenses incurred by
FormMaker and the New Companies in connection with the Transactions, including
the following: fees and other costs payable with respect to the Registration
Statement (including printing); fees and expenses of Price Waterhouse LLP for
work related to FormMaker and the New Companies; any fees and expenses of
legal counsel to FormMaker and the New Companies; and fees of the Company's
transfer agent (if any).

7.9 Indemnification. For a period of 5 years from the Effective Date, the
Company shall maintain in effect Image Sciences' and FormMaker's current
directors' and officers' liability insurance covering those officers and
directors who are currently covered on the date of this Agreement by such
policies; provided, however, that the Company may substitute, for such Image
Sciences or FormMaker policies, policies with at least the same coverage
containing terms and conditions which are no less advantageous to the officers
and directors and provided that said substitution does not result in any gaps
or lapses in coverage with respect to matters occurring prior to the Effective
Date. For a period of 5 years, the Company shall not amend any provision of
FormMaker's or Image Sciences' Charter Documents providing for indemnification
of officers of directors and shall also assume the indemnification obligations
of Image Sciences and FormMaker with respect to such matters. The provisions
of this Section 7.9 are intended to be for the benefit of, and shall be
enforceable by, each officer and director and his or her heirs and
representatives.

7.10 New Bank Loan. The Company shall use commercially reasonable efforts to
obtain a line of credit from a bank for $10 million (the "New Bank Loan") on
terms substantially similar to the existing FormMaker line of credit with
NationsBank of Georgia, National Association. If the Company cannot obtain the
New Bank Loan on such terms, FormMaker shall use commercially reasonable
efforts to amend its line of credit, or obtain appropriate waivers, to permit
the Transactions and to allow the Company to draw on the entire line of credit
for working capital purposes.

7.11 Related Parties. FormMaker shall cause the Company to perform its
obligations hereunder and under any other Transaction Document.

8. COVENANTS OF IMAGE SCIENCES.

8.1 Fulfillment of Closing Conditions. At and prior to the Closing, Image
Sciences shall use commercially reasonable efforts to fulfill the conditions
specified in Sections 9 and 11 to the extent that the fulfillment of such
conditions is within its control, except that Image Sciences shall not be
required to pay or expend any material amount of funds that may be necessary
to correct any Default under the representations and warranties of Image
Sciences or to fulfill any of such conditions. In connection with the
foregoing, Image Sciences will (a) refrain from any actions that would cause
any of its representations and warranties to be inaccurate in any material
respect as of the Closing, (b) execute and deliver the agreements and other
documents referred to in Section 11, (c) comply in all material respects with
all applicable Laws in connection with its execution, delivery and performance
of this Agreement and the Transactions, (d) use commercially reasonable
efforts to obtain in a timely manner all necessary waivers, consents and
approvals required under any Laws, Contracts or otherwise, including any Image
Sciences Required Consents, and (e) use commercially reasonable efforts to
take, or cause to be taken, all other actions and to do, or cause to be done,
all other things reasonably necessary, proper or advisable to consummate and
make effective as promptly as practicable the Transactions. Image Sciences
shall give FormMaker prompt written notice of any event or development that
occurs or fails to occur (and that is known to Image Sciences) that gives
Image Sciences reason to believe that the conditions set forth in Sections 9
and 11 will not be satisfied prior to the Termination Date.

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8.2 Conduct of the Business. Except as disclosed in the Image Sciences
Disclosure Schedule, Image Sciences shall not do any of the following prior to
the Closing unless waived by FormMaker in writing: amend its Charter Documents
or bylaws; merge or consolidate with, or purchase substantially all of the
assets of, or otherwise acquire any business of, any corporation, partnership
or other business organization or business division thereof; split, combine or
reclassify its outstanding capital stock or issue any additional capital stock
(except for capital stock issuable upon conversion or exercise of currently
outstanding securities) or options, warrants or other rights to purchase
capital stock or securities convertible into capital stock; pay any dividends
or redeem any of its outstanding capital stock; enter into any Contract or
otherwise incur any Liability outside the ordinary course of business unless
the executory obligation on the part of Image Sciences in any such individual
case is less than $100,000; incur any additional indebtedness for borrowed
money outside the normal course of business; discharge or satisfy any
Encumbrance or pay or satisfy any material Liability except pursuant to the
terms thereof; compromise, settle or otherwise adjust any material claim or
litigation unless such compromise, settlement or adjustment involves a sum of
not more than $100,000 in excess of reserves; or make any capital expenditures
of more than $100,000 in the aggregate; or modify existing benefit plans or
enter into new employment agreements. Nothing contained in this Agreement
shall give FormMaker, directly or indirectly, the right to control or direct
Image Sciences' operations prior to the Effective Time.

8.3 Access to Information. Image Sciences shall give FormMaker and its
representatives (including FormMaker's accountants, counsel and employees,
each, a "FormMaker Representative"), upon reasonable notice and during normal
business hours, full access to the properties, contracts, books, records and
affairs of Image Sciences. Image Sciences shall cause its officers and
employees to furnish to FormMaker all documents, records and information as
FormMaker may reasonably request.

8.4 No Solicitation. From and after the date hereof, Image Sciences, without
the prior written consent of FormMaker, will not, and will not authorize or
permit any of the Image Sciences Representatives to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) or
take any other action to facilitate knowingly any inquiries or the making of
any proposal that constitutes or may reasonably be expected to lead to an
Acquisition Proposal from any Person, or engage in any discussion or
negotiations relating thereto or accept any Acquisition Proposal. Image
Sciences shall notify FormMaker orally and in writing of any such inquiries,
offers or proposals (including the terms and conditions of any such proposal
and the identity of the person making it), within 24 hours of the receipt
thereof, shall keep FormMaker informed of the status and details of any such
inquiry, offer or proposal, and shall give FormMaker five days' advance notice
of any agreement to be entered into with, or any information to be supplied
to, any Person making such inquiry, offer or proposal.

8.5 Image Sciences Special Meeting. In connection with the Image Sciences
Special Meeting, Image Sciences shall (a) deliver to its shareholders as
promptly as practicable the Joint Proxy Statement and all other materials
required for such meeting, (b) use all reasonable efforts to obtain the
necessary approvals by its shareholders of the Merger and this Agreement and
(c) otherwise comply with all legal requirements applicable to such meeting.

8.6 Rule 145 Affiliates. Prior to the Closing, Image Sciences shall identify
in a letter to the Company all Persons who might, at the time of the Image
Sciences Special Meeting, be deemed to be Securities Act Affiliates. Image
Sciences shall use its commercially reasonable efforts to cause each Person
who is identified as a possible Securities Act Affiliate to enter into prior
to the Effective Time an agreement in form and substance reasonably acceptable
to the Company pursuant to which each such Person acknowledges such Person's
responsibilities as a Securities Act Affiliate.

8.7 Expenses. Image Sciences, or the Company if the Merger becomes
effective, shall pay all of the legal, accounting and other expenses incurred
by Image Sciences in connection with the Transactions, including the
following: fees and other costs payable with respect to providing information
for inclusion in the Registration Statement; fees and expenses of Price
Waterhouse LLP for work related to Image Sciences; and fees and expenses of
legal counsel to Image Sciences.

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8.8 Image Sciences Closing Transactions. Image Sciences shall not distribute
to its stockholders and option holders more than $8,000,000 in connection with
the Image Sciences Closing Transactions.

9. CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES.

All obligations of the Parties to consummate the Transactions are subject to
the satisfaction of each of the following conditions:

9.1 Legality. No Law or Court Order shall have been enacted, entered,
promulgated or enforced by any court or governmental authority that is in
effect and has the effect of (a) making the Merger illegal or otherwise
prohibiting the consummation of the Merger or (b) creating a Material Adverse
Effect on Image Sciences or FormMaker.

9.2 Registration Statement. The Registration Statement shall have become
effective, no stop order suspending the effectiveness of the Registration
Statement shall then be in effect, and no proceedings for that purpose shall
then be threatened by the SEC or shall have been initiated by the SEC and not
concluded or withdrawn. All state securities or blue sky permits or approvals
required to carry out the Transactions shall have been received.

9.3 Merger. The Merger shall be effective in the States of Texas and
Georgia.

9.4 Approval by Shareholders.

(a) The Merger shall have been approved by the Image Sciences Shareholders
in accordance with the TBCA and Dissenting Shares shall not represent more
than 8% of the total Image Sciences Common Stock outstanding immediately prior
to the Effective Time.

(b) The Merger shall have been approved by the FormMaker Shareholders in
accordance with the GBCC and Dissenting Shares shall not represent more than
8% of the total FormMaker Common Stock outstanding immediately prior to the
Effective Time.

9.5 Appointment of Directors and Officers. The Company, FormMaker and Image
Sciences shall each have (a) caused its Board of Directors to consist of a
total of seven members, (b) obtained any necessary resignations of incumbent
directors or officers, (c) elected the following persons to the respective
Boards of Directors of the Company, FormMaker and Image Sciences: three
persons designated by Image Sciences, three persons designated by the SG/TL
Stockholders, and one independent person designated mutually by Image Sciences
and the SG/TL Stockholders; and (d) appointed the following persons to the
following offices: Michael D. Andereck--President and Chief Executive Officer,
Arthur R. Spector--Chairman of the Board.

9.6 Administrative Services Agreements. The administrative services
agreements between Safeguard and FormMaker and Safeguard and MicroDynamics
shall have been terminated.

10. CONDITIONS PRECEDENT TO OBLIGATIONS OF IMAGE SCIENCES.

All obligations of Image Sciences to consummate the Transactions are subject
to the satisfaction (or waiver by Image Sciences) prior thereto of each of the
following conditions:

10.1 Representations and Warranties. The representations and warranties of
FormMaker contained in this Agreement shall be true and correct on the date
hereof and (except to the extent such representations and warranties speak as
of an earlier date) shall also be true and correct on and as of the Closing
Date, except for changes permitted under Section 7.2 hereof or otherwise
contemplated by this Agreement, with the same force and effect as if made on
and as of the Closing Date; provided, however, that for purposes of this
Section 10.1 only, such representations and warranties shall be deemed to be
true and correct unless the failure or failures of such representations and
warranties to be so true and correct (without regard to materiality qualifiers
contained therein) results or would reasonably be expected to result in a
Material Adverse Effect on the Company.

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10.2 Agreements, Conditions and Covenants. FormMaker shall have performed or
complied in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied with by it on
or before the Effective Time.

10.3 Certificates. Image Sciences shall have received a certificate of an
executive officer of FormMaker to the effect set forth in Sections 10.1 and
10.2.

10.4 Financial Performance. FormMaker shall have delivered to Image Sciences
an income statement in accordance with Section 6.2 that shows for the period
covered thereby before income taxes a loss of not more than $1,251,000 and
revenues of not less than $20,000,000.

10.5 Required Consents. FormMaker shall have obtained the FormMaker Required
Consents unless the failure to have obtained any such consent would not result
or reasonably be expected to result in a Material Adverse Effect on the
Company.

10.6 Ancillary Documents. FormMaker and the New Companies shall have
tendered executed copies of the respective Transaction Documents to which they
are intended to be parties. The Company and the SG/TL Stockholders shall have
tendered executed copies of the Stockholders' Agreement.

10.7 Legal Opinion. FormMaker shall have tendered a legal opinion of Morgan,
Lewis & Bockius LLP, counsel to FormMaker, in the form of that agreed to as of
the date hereof.

11. CONDITIONS PRECEDENT TO OBLIGATIONS OF FORMMAKER.

All obligations of FormMaker to consummate the Transactions are subject to
the satisfaction (or waiver by FormMaker) prior thereto of each of the
following conditions:

11.1 Representations and Warranties. The representations and warranties of
Image Sciences contained in this Agreement shall be true and correct on the
date hereof and (except to the extent such representations and warranties
speak as of an earlier date) shall also be true and correct on and as of the
Closing Date, except for changes permitted under Section 8.2 hereof or
otherwise contemplated by this Agreement, with the same force and effect as if
made on and as of the Closing Date; provided, however, that for purposes of
this Section 11.1 only, such representations and warranties shall be deemed to
be true and correct unless the failure or failures of such representations and
warranties to be so true and correct (without regard to materiality qualifiers
contained therein) results or would reasonably be expected to result in a
Material Adverse Effect on the Company.

11.2 Agreements, Conditions and Covenants. Image Sciences shall have
performed or complied in all material respects with all agreements, conditions
and covenants required by this Agreement to be performed or complied with by
them on or before the Effective Time.

11.3 Certificates. FormMaker shall have received a certificate of an
executive officer of Image Sciences to the effect set forth in Sections 11.1
and 11.2 with respect to Image Sciences.

11.4 Financial Performance. Image Sciences shall have delivered to FormMaker
an income statement in accordance with Section 6.2 that shows for the period
covered thereby before income taxes income of not less than $3,200,000 and
revenues of not less than $11,000,000.

11.5 Required Consents. Image Sciences shall have obtained, without any
modification that FormMaker deems unacceptable, the Image Sciences Required
Consents unless the failure to have obtained any such consent would not result
or reasonably be expected to result in a Material Adverse Change on the
Company.

11.6 Ancillary Documents. Image Sciences shall have tendered executed copies
of the Transaction Documents to which it is intended to be a party. Xerox
shall have tendered an executed copy of the Stockholders' Agreement.

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11.7 Legal Opinion. Image Sciences shall have tendered a legal opinion of
Crouch & Hallett, counsel to Image Sciences, in the form of that agreed to as
of the date hereof.

12. TERMINATION.

12.1 Grounds for Termination. This Agreement may be terminated at any time
before the Effective Time, in each case as authorized by the respective Board
of Directors of Image Sciences and FormMaker:

(a) By mutual written consent of each of Image Sciences and FormMaker;

(b) By either Image Sciences or FormMaker if the Merger shall not have
been consummated on or before June 30, 1997 (the "Termination Date");
provided, however, that the right to terminate this Agreement under this
Section 12.1(b) shall not be available to any Party whose failure to
fulfill any obligation under this Agreement has been the substantial cause
of, or substantially resulted in, the failure of the Effective Time to
occur on or before the Termination Date;

(c) By either Image Sciences or FormMaker if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a Court Order (which Court Order the Parties
shall use commercially reasonable efforts to lift) that permanently
restrains, enjoins or otherwise prohibits the Transactions, and such Court
Order shall have become final and nonappealable;

(d) By either Image Sciences or FormMaker upon notice in writing to the
other party prior to the tenth business day following delivery to such
other party of the Second Stage Due Diligence Materials that such materials
have revealed matters which could have a Material Adverse Effect on the
combined entity as provided in Section 6.3.

(e) By Image Sciences if FormMaker or any New Company shall have
breached, or failed to comply with, any of its obligations under this
Agreement or any representation or warranty made by FormMaker shall have
been incorrect when made, and such breach, failure or misrepresentation is
not cured within 20 days after notice thereof, and in either case, any such
breaches, failures or misrepresentations result or would reasonably be
expected to result in a Material Adverse Effect on the Company;

(f) By FormMaker if Image Sciences shall have breached, or failed to
comply with, in any material respect, any of its obligations under this
Agreement or any representation or warranty made by it shall have been
incorrect in any material respect when made, and such breach, failure or
misrepresentation is not cured within 20 days after notice thereof, and in
either case, any such breaches, failures or misrepresentations result or
would reasonably be expected to result in a Material Adverse Effect on the
Company.

12.2 Effect of Termination.

(a) If this Agreement is terminated under Section 12.1 hereof, and
subject to the provisions of Section 12.1, this Agreement shall become void
and there shall be no Liability on the part of any of the Parties, except
as set forth in this Section 12.2.

(b) If this Agreement is terminated by Image Sciences under Section
12.1(e) as a result of any breach by FormMaker or any New Company,
FormMaker shall pay to Image Sciences an amount equal to all of the
expenses incurred by Image Sciences in connection with the Transactions up
to a maximum of $100,000, except in the case of a termination due to a
wilful breach by FormMaker, FormMaker shall pay to Image Sciences $500,000.

(c) If this Agreement is terminated by FormMaker under Section 12.1(f) as
a result of any breach by Image Sciences, Image Sciences shall pay to
FormMaker an amount equal to all of the expenses incurred by FormMaker in
connection with the Transactions up to a maximum of $100,000, except in the
case of a termination due to a wilful breach by Image Sciences, Image
Sciences shall pay to FormMaker $500,000.

(d) If this Agreement is terminated by Image Sciences or FormMaker under
Section 12.1(b) as a result of the failure of Image Sciences to obtain all
required approvals for the Merger by its shareholders, Image

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Sciences shall pay to FormMaker an amount equal to all of the expenses
incurred by FormMaker in connection with the Transactions up to a maximum
of $100,000.

(e) If this Agreement is terminated by Image Sciences or FormMaker under
Section 12.1(b) as a result of the failure of FormMaker to obtain all
required approvals for the Merger by its shareholders, FormMaker shall pay
to Image Sciences an amount equal to all of the expenses incurred by Image
Sciences in connection with the Transactions up to a maximum of $100,000.

(f) The agreements contained in Sections 12.2(b), (c), (d) and (e) are an
integral part of the Transactions and constitute liquidated damages and not
a penalty. If one Party fails to promptly pay to the other any amounts due
under such Sections 12.2(b), (c), (d) and (e), the defaulting Party shall
pay the costs and expenses (including reasonable legal fees and expenses)
in connection with any action, including the filing of any lawsuit or other
legal action, taken to collect payment, together with interest on the
amount of any unpaid fee at the Prime Rate from the date such fee was
required to be paid.

13. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.

Except for any agreements to be performed at least in part after the
Effective Time, the representations, warranties, covenants and other
agreements contained herein and in any certificate delivered pursuant hereto
shall not survive the Effective Time.

14. PUBLIC ANNOUNCEMENTS.

The Parties hereto will consult with each other before issuing any press
release or making any public statement with respect to this Agreement and the
Transactions and, except as may be required by applicable law or any stock
exchange regulations, no Party shall issue any such press release or make any
such public statement without the consent of the other parties hereto.

15. CONTENTS OF AGREEMENT.

This Agreement, together with the other Transaction Documents, sets forth
the entire understanding of the Parties hereto with respect to the
Transactions and supersedes all prior agreements or understandings among the
Parties regarding those matters.

16. AMENDMENT, PARTIES IN INTEREST, ASSIGNMENT, ETC.

This Agreement may be amended, modified or supplemented only by a written
instrument duly executed by each of the Parties hereto. If any provision of
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never
been contained herein. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective heirs, legal representatives,
successors and permitted assigns of the parties hereto. No Party hereto shall
assign this Agreement or any right, benefit or obligation hereunder. Any term
or provision of this Agreement may be waived at any time by the Party entitled
to the benefit thereof by a written instrument duly executed by such Party.
The parties hereto shall execute and deliver any and all documents and take
any and all other actions that may be deemed reasonably necessary by their
respective counsel to complete the Transactions.

17. INTERPRETATION.

Unless the context of this Agreement clearly requires otherwise, (a)
references to the plural include the singular, the singular the plural, the
part the whole, (b) references to any gender include all genders, (c) "or" has
the inclusive meaning frequently identified with the phrase "and/or," (d)
"including" has the inclusive meaning frequently identified with the phrase
"but not limited to" and (e) references to "hereunder" or "herein" relate to
this Agreement. The section and other headings contained in this Agreement are
for reference purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any respect. Section,
subsection, Schedule, Disclosure Schedule and Exhibit references are to this
Agreement

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unless otherwise specified. Each accounting term used herein that is not
specifically defined herein shall have the meaning given to it under GAAP.

18. NOTICES.

All notices that are required or permitted hereunder shall be in writing and
shall be sufficient if personally delivered or sent by mail, facsimile message
or Federal Express or other delivery service. Any notices shall be deemed
given upon the earlier of the date when received at, or the third day after
the date when sent by registered or certified mail or the day after the date
when sent by Federal Express to, the address or fax number set forth below,
unless such address or fax number is changed by notice to the other Party
hereto:

If to Image Sciences:

Image Sciences, Inc.
5910 North Central Expressway
Suite 800
Dallas, Texas 75206
FAX: (214) 891-6678
Attention: Michael D. Andereck, President

with a required copy to:

Crouch & Hallett
717 No. Harwood, Suite 1400
Dallas, TX 75201
FAX: 214-922-4129
Attention: Bruce Hallett, Esquire

If to FormMaker:

2300 Windy Ridge Parkway
Suite 400 North
Atlanta, GA 30339
FAX: 770-859-0216
Attention: Arthur Spector, Chairman

with a required copy to:

Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
FAX: 215-963-5299
Attention: Thomas J. Sharbaugh, Esquire

19. GOVERNING LAW; VENUE.

This Agreement shall be construed and interpreted in accordance with the
laws of the State of Delaware without regard to its provisions concerning
conflict of laws. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of any court of competent jurisdiction in the State of
Delaware and the United States District Court for the District of Delaware and
any other court of the State of Delaware and the United States with
jurisdiction to hear appeals from any such courts.

20. COUNTERPARTS.

This Agreement may be executed in two or more counterparts, each of which
shall be binding as of the date first written above, and all of which shall
constitute one and the same instrument. Each such copy shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.

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[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as
of the day and year first written above.

DocuCorp, Inc.

By: /s/ Michael D. Andereck
----------------------------------
Title: President

ISI Merger Corp.

By: /s/ Arthur R. Spector
----------------------------------
Title: Chairman of the Board of
Directors

FormMaker Acquisition Corp.

By: /s/ Arthur R. Spector
----------------------------------
Title: Chairman of the Board of
Directors

Image Sciences, Inc.

By: /s/ Michael D. Andereck
----------------------------------
Title: President

FormMaker Software, Inc.

By: /s/ Arthur R. Spector
----------------------------------
Title: Chairman of the Board of
Directors

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APPENDIX B

TEXAS BUSINESS CORPORATION ACT

ARTICLES 5.11, 5.12 AND 5.13 RELATING TO DISSENTERS' RIGHTS

5.11 RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF CERTAIN CORPORATE
ACTIONS.

A. Any shareholder of a domestic corporation shall have the right to dissent
from any of the following corporate actions:

(1) Any plan of merger to which the corporation is a party if shareholder
approval is required by Article 5.03 or 5.16 of this Act and the
shareholder holds shares of a class or series that was entitled to vote
thereon as a class or otherwise;

(2) Any sale, lease, exchange or other disposition (not including any
pledge, mortgage, deed of trust or trust indenture unless otherwise
provided in the articles of incorporation) of all, or substantially all,
the property and assets, with or without good will, of a corporation
requiring the special authorization of the shareholders as provided by this
Act;

(3) Any plan of exchange pursuant to Article 5.02 of this Act in which
the shares of the corporation of the class or series held by the
shareholder are to be acquired.

B. Notwithstanding the provisions of Section A of this Article, a
shareholder shall not have the right to dissent from any plan of merger in
which there is a single surviving or new domestic or foreign corporation, or
from any plan of exchange, if (1) the shares held by the shareholder are part
of a class shares of which are listed on a national securities exchange, or
are held of record by not less than 2,000 holders, on the record date fixed to
determine the shareholders entitled to vote on the plan of merger or the plan
of exchange, and (2) the shareholder is not required by the terms of the plan
of merger or the plan of exchange to accept for his shares any consideration
other than (a) shares of a corporation that, immediately after the effective
time of the merger or exchange, will be part of a class or series of shares of
which are (i) listed, or authorized for listing upon official notice of
issuance, on a national securities exchange, or (ii) held of record by not
less than 2,000 holders, and (b) cash in lieu of fractional shares otherwise
entitled to be received.

5.12 PROCEDURE FOR DISSENT BY SHAREHOLDERS AS TO SAID CORPORATE ACTION.

A. Any shareholder of any domestic corporation who has the right to dissent
from any of the corporate actions referred to in Article 5.11 of this Act may
exercise that right to dissent only by complying with the following
procedures:

(1)(a) With respect to proposed corporate action that is submitted to a
vote of shareholders at a meeting, the shareholder shall file with the
corporation, prior to the meeting, a written objection to the action,
setting out that the shareholder's right to dissent will be exercised
if the action is effective and giving the shareholder's address, to
which notice thereof shall be delivered or mailed in that event. If the
action is effected and the shareholder shall not have voted in favor of
the action, the corporation, in the case of action other than a merger,
or the surviving or new corporation (foreign or domestic) or other
entity that is liable to discharge the shareholder's right of dissent,
in the case of a merger, shall, within ten (10) days after the action
is effected, deliver or mail to the shareholder written notice that the
action has been effected, and the shareholder may, within ten (10) days
from the delivery or mailing of the notice, make written demand on the
existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, for payment of the fair value of the
shareholder's shares. The fair value of the shares shall be the value
thereof as of the day immediately preceding the meeting, excluding any
appreciation or depreciation in anticipation of the proposed action.
The demand shall state the number and class of the shares owned by the
shareholder and the fair value of the shares as estimated by the
shareholder. Any shareholder failing to make demand within the ten (10)
day period shall be bound by the action.

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(b) With respect to proposed corporate action that is approved
pursuant to Section A of Article 9.10 of this Act, the corporation, in
the case of action other than a merger, and the surviving or new
corporation (foreign or domestic) or other entity that is liable to
discharge the shareholder's right of dissent, in the case of a merger,
shall, within ten (10) days after the date the action is effected, mail
to each shareholder of record as of the effective date of the action
notice of the fact and date of the action and that the shareholder may
exercise the shareholder's right to dissent from the action. The notice
shall be accompanied by a copy of this Article and any articles or
documents filed by the corporation with the Secretary of State to
effect the action. If the shareholder shall not have consented to the
taking of the action, the shareholder may, within twenty (20) days
after the mailing of the notice, make written demand on the existing,
surviving, or new corporation (foreign or domestic) or other entity, as
the case may be, for payment of the fair value of the shareholder's
shares. The fair value of the shares shall be the value thereof as of
the date the written consent authorizing the action was delivered to
the corporation pursuant to Section A of Article 9.10 of this Act,
excluding any appreciation or depreciation in anticipation of the
action. The demand shall state the number and class of shares owned by
the dissenting shareholder and the fair value of the shares as
estimated by the shareholder. Any shareholder failing to make demand
within the twenty (20) day period shall be bound by the action.

(2) Within twenty (20) days after receipt by the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be,
of a demand for payment made by a dissenting shareholder in accordance with
Subsection (1) of this Section, the corporation (foreign or domestic) or
other entity shall deliver or mail to the shareholder a written notice that
shall either set out that the corporation (foreign or domestic) or other
entity accepts the amount claimed in the demand and agrees to pay that
amount within ninety (90) days after the date on which the action was
effected, and, in the case of shares represented by certificates, upon the
surrender of the certificates duly endorsed, or shall contain an estimate
by the corporation (foreign or domestic) or other entity of the fair value
of the shares, together with an offer to pay the amount of that estimate
within ninety (90) days after the date on which the action was effected,
upon receipt of notice within sixty (60) days after that date from the
shareholder that the shareholder agrees to accept that amount and, in the
case of shares represented by certificates, upon the surrender of the
certificates duly endorsed.

(3) If, within sixty (60) days after the date on which the corporate
action was effected, the value of the shares is agreed upon between the
shareholder and the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, payment for the shares shall
be made within ninety (90) days after the date on which the action was
effected and, in the case of shares represented by certificates, upon
surrender of the certificates duly endorsed. Upon payment of the agreed
value, the shareholder shall cease to have any interest in the shares or in
the corporation.

B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, do
not so agree, then the shareholder or the corporation (foreign or domestic) or
other entity may, within sixty (60) days after the expiration of the sixty
(60) day period, file a petition in any court of competent jurisdiction in the
county in which the principal office of the domestic corporation is located,
asking for a finding and determination of the fair value of the shareholder's
shares. Upon the filing of any such petition by the shareholder, service of a
copy thereof shall be made upon the corporation (foreign or domestic) or other
entity, which shall, within ten (10) days after service, file in the office of
the clerk of the court in which the petition was filed a list containing the
names and addresses of all shareholders of the domestic corporation who have
demanded payment for their shares and with whom agreements as to the value of
their shares have not been reached by the corporation (foreign or domestic) or
other entity. If the petition shall be filed by the corporation (foreign or
domestic) or other entity, the petition shall be accompanied by such a list.
The clerk of the court shall give notice of the time and place fixed for the
hearing of the petition by registered mail to the corporation (foreign or
domestic) or other entity and to the shareholders named on the list at the
addresses therein stated. The forms of the notices by mail shall be approved
by the court. All shareholders thus notified and the corporation (foreign or
domestic) or other entity shall thereafter be bound by the final judgment of
the court.

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C. After the hearing of the petition, the court shall determine the
shareholders who have complied with the provisions of this Article and have
become entitled to the valuation of and payment for their shares, and shall
appoint one or more qualified appraisers to determine that value. The
appraisers shall have power to examine any of the books and records of the
corporation the shares of which they are charged with the duty of valuing, and
they shall make a determination of the fair value of the shares upon such
investigation as to them may seem proper. The appraisers shall also afford a
reasonable opportunity to the parties interested to submit to them pertinent
evidence as to the value of the shares. The appraisers shall also have such
power and authority as may be conferred on Masters in Chancery by the Rules of
Civil Procedure or by the order of their appointment.

D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled
to payment for their shares and shall direct the payment of that value by the
existing, surviving, or new corporation (foreign or domestic) or other entity,
together with interest thereon, beginning 91 days after the date on which the
applicable corporate action from which the shareholder elected to dissent was
effected to the date of such judgment, to the shareholders entitled to
payment. The judgment shall be payable to the holders of uncertificated shares
immediately but to the holders of shares represented by certificates only
upon, and simultaneously with, the surrender to the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, of
duly endorsed certificates for those shares. Upon payment of the judgment, the
dissenting shareholders shall cease to have any interest in those shares or in
the corporation. The court shall allow the appraisers a reasonable fee as
court costs, and all court costs, shall be allotted between the parties in the
manner that the court determines to be fair and equitable.

E. Shares acquired by the existing, surviving, or new corporation (foreign
or domestic) or other entity, as the case may be, pursuant to the payment of
the agreed value of the shares or pursuant to payment of the judgment entered
for the value of the shares, as in this Article provided, shall, in the case
of a merger, be treated as provided in the plan of merger and, in all other
cases, may be held and disposed of by the corporation as in the case of other
treasury shares.

F. The provisions of this Article shall not apply to a merger if, on the
date of the filing of the articles of merger, the surviving corporation is the
owner of all the outstanding shares of the other corporations, domestic or
foreign, that are parties to the merger.

G. In the absence of fraud in the transaction, the remedy provided by this
Article to a shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the recovery of the value
of his shares or money damages to the shareholder with respect to the action.
If the existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, complies with the requirements of this Article,
any shareholder who fails to comply with the requirements of this Article
shall not be entitled to bring suit for the recovery of the value of his
shares or money damages to the shareholder with respect to the action.

5.13 PROVISIONS AFFECTING REMEDIES OF DISSENTING SHAREHOLDERS.

A. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act shall not thereafter be entitled
to vote or exercise any other rights of a shareholder except the right to
receive payment for his shares pursuant to the provisions of those articles
and the right to maintain an appropriate action to obtain relief on the ground
that the corporate action would be or was fraudulent, and the respective
shares for which payment has been demanded shall not thereafter be considered
outstanding for the purposes of any subsequent vote of shareholders.

B. Upon receiving a demand for payment from any dissenting shareholder, the
corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his

B-3
<PAGE>

shares in accordance with either Article 5.12 or 5.16 of this Act, each holder
of certificates representing shares so demanding payment shall submit such
certificates to the corporation for notation thereon that such demand has been
made. The failure of holders of certificated shares to do so shall, at the
option of the corporation, terminate such shareholder's rights under Articles
5.12 and 5.16 of this Act unless a court of competent jurisdiction for good
and sufficient cause shown shall otherwise direct. If uncertificated shares
for which payment has been demanded or shares represented by a certificate on
which notation has been so made shall be transferred, any new certificate
issued therefor shall bear similar notation together with the name of the
original dissenting holder of such shares and a transferee of such shares
shall acquire by such transfer no rights in the corporation other than those
which the original dissenting shareholder had after making demand for payment
of the fair value thereof.

C. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act may withdraw such demand at any
time before payment for his shares or before any petition has been filed
pursuant to Article 5.12 or 5.16 of this Act asking for a finding and
determination of the fair value of such shares, but no such demand may be
withdrawn after such payment has been made or, unless the corporation shall
consent thereto, after any such petition has been filed. If, however, such
demand shall be withdrawn as hereinbefore provided, or if pursuant to Section
B of this Article the corporation shall terminate the shareholder's rights
under Article 5.12 or 5.16 of this Act, as the case may be, or if no petition
asking for a finding and determination of fair value of such shares by a court
shall have been filed within the time provided in Article 5.12 or 5.16 of this
Act, as the case may be, or if after the hearing of a petition filed pursuant
to Article 5.12 or 5.16, the court shall determine that such shareholder is
not entitled to the relief provided by those articles, then, in any such case,
such shareholder and all persons claiming under him shall be conclusively
presumed to have approved and ratified the corporate action from which he
dissented and shall be bound thereby, the right of such shareholder to be paid
the fair value of his shares shall cease, and his status as a shareholder
shall be restored without prejudice to any corporate proceedings which may
have been taken during the interim, and such shareholder shall be entitled to
receive any dividends or other distributions made to shareholders in the
interim.

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<PAGE>

APPENDIX C

GEORGIA BUSINESS CORPORATION CODE

14-2-1302 RIGHT TO DISSENT.

(a) A record shareholder of the corporation is entitled to dissent from, and
obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:

(1) Consummation of a plan of merger to which the corporation is a party:

(A) If approval of the shareholders of the corporation is required
for the merger by Code Section 14-2-1103 or the articles of
incorporation and the shareholders is entitled to vote on the merger;
or

(B) If the corporation is a subsidiary that is merged with its parent
under Code Section 14-2-1104;

(2) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;

(3) Consummation of a sale or exchange of all or substantially all of the
property of the corporation if a shareholder vote is required on the sale
or exchange pursuant to Code Section 14-2-1202, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one year after the date of sale;

(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:

(A) Alters or abolishes a preferential right of the shares;

(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;

(D) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights;

(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be
acquired for cash under Code Section 14-2-604; or

(F) Cancels redeems, or repurchases all or part of the shares of the
class;

(5) Any corporate action taken pursuant to a shareholder vote to the
extent that Article 9 of this chapter, the articles of incorporation,
bylaws, or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.

(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the corporate action fails to comply with procedural
requirement of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporation action
was obtained by fraudulent and deceptive means, regardless of weather the
shareholder have exercised dissenter's rights.

(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series
which, at the record date fixed to determine the shareholders entitled to
receive notice of and to vote at a meeting at which a plan of merger or share
exchange or a sale of exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:

(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or
share exchange to accept for their shares anything except share of the
surviving corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either listed on a
national securities exchange or held of record by more than 2,000
shareholders, except for script or cash payments in lieu of fractional
shares; or

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(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise. (Last amended by
Act 567, L'89, eff.7-1-89.)

14-2-1303 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.

A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose behalf
he asserts dissenters' rights. The rights of a partial dissenter under this
Code section are determined as if the shares as to which he dissents and his
other shares were registered in the names of different shareholders.

PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS

14-2-1320 NOTICE OF DISSENTERS' RIGHTS.

(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert
dissenters' rights under this article and be accompanied by a copy of this
article.

(b) If corporate action creating dissenters' rights under Code Section 14-2-
1302 is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in Code Section 14-2-
1322 no later than ten days after the corporate action was taken. (Last
amended by Act 526, L. 93, eff. 7-1-93.)

14-2-1321 NOTICE OF INTENT TO DEMAND PAYMENT.

(a) If proposed corporate action creating dissenters' right under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a record
shareholder who wishes to assert dissenters' rights:

(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed
action is effectuated; and

(2) Must not vote his shares in favor of the proposed action.

(b) A record shareholder who does not satisfy the requirements of subsection
(a) of this Code section is not entitled to payment for his shares under this
article.

14-2-1322 DISSENTERS' NOTICE.

(a) If proposed corporate action creating dissenters' rights under Code
section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied
the requirements of Code Section 14-2-1321.

(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must:

(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited.

(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;

(3) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than 30 or more than 60 days after the date the
notice required in subsection (a) of this Code section is delivered; and

(4) Be accompanied by a copy of this article.

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<PAGE>

14-2-1323 DUTY TO DEMAND PAYMENT.

(a) A record shareholder sent a dissenters' notice described in Code Section
14-2-1322 must demand payment and deposit his certificates in accordance with
the terms of the notice.

(b) A record shareholder who demand payment and deposits his shares under
subsection (a) of this Code section retains all other right of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.

(c) A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice,
is not entitled to payment for his shares under this article.

14-2-1324 SHARE RESTRICTIONS.

(a) The corporation may restrict the transfer of uncertified shares form the
date of the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Code Section 14-2-1326.

(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action.

14-2-1325 OFFER OF PAYMENT.

(a) Except as provided in Code Section 14-2-1327, within ten days of the
later of the date the proposed corporate action is taken or receipt of a
payment demand, the corporation shall by notice to each dissenter who complied
with Code Section 14-2-1323 offer to pay to such dissenter the amount the
corporation estimates to be the fair value of his or her shares, plus accrued
interest.

(b) The offer of payment must be accompanied by:

(1) The corporation's balance sheet as of the end of a fiscal year ending
not more than 16 months before the date of payment, an income statement for
that year, a statement of changes in shareholders' equity for that year,
and the latest available interim financial statements, if any;

(2) A statement of the corporation's estimate of the fair value of the
shares;

(3) An explanation of how the interest was calculated;

(4) A statement of the dissenter's right to demand payment under Code
Section 14-2-1327; and

(5) A copy of this article.

(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer or is deemed to
have accepted such offer by failure to respond within said 30 days, payment
for his or her shares shall be made within 60 days after the making of the
offer or the taking of the proposed corporate action, whichever is later.
(Last amended by Act 526, L. "93, eff. 7-1-93.)

14-2-1326 FAILURE TO TAKE ACTION.

(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the
transfer restrictions imposed on uncertificated shares.

(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure. (Last amended by Act 965, L. "90, eff. 3-22-90.)

14-2-1327 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.

(a) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate of the fair value of his shares and interest due, if:

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<PAGE>

(1) The dissenter believes that the amount offered under Code Section 14-
2-1325 is less than the fair value of his shares or that the interest due
is incorrectly calculated; or

(2) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.

(b) A dissenter waives his or her right to demand payment under this Code
section and is deemed to have accepted the corporation's offer unless he or
she notifies the corporation of his or her demand in writing under subsection
(a) of this Code section within 30 days after the corporation offered payment
for his or her shares, as provided in Code Section 14-2-1325.

(1) The shareholder may demand the information required under subsection
(b) of Code Section 14-2-1325, and the corporation shall provide the
information to the shareholder within ten days after receipt of a written
demand for the information; and

(2) The shareholder may at any time, subject to the limitations period of
Code Section 14-2-1332, notify the corporation of his own estimate of the
fair value of his shares and the amount of interest due and demand payment
of his estimate of the fair value of his shares and interest due. (Last
amended by Act 526, L. '93, eff. 7-1-93.)

14-2-1330 COURT ACTION.

(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the
proceeding within the 60 day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.

(b) The corporation shall commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the registered
office of the domestic corporation merged with or whose shares were acquired
by the foreign corporation was located.

(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided
by law for the service of a summons and complaint, and upon each nonresident
dissenting shareholder either by registered or certified mail or by
publication, or in any other manner permitted by law.

(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) of this Code section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers
described in the order appointing them or in any amendment to it. Except as
otherwise provided in this chapter, Chapter 11 of Title 9, known as the
"Georgia Civil Practice Act," applies to any proceeding with respect to
dissenters' rights under this chapter.

(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount which the court finds to be the fair value of his shares, plus
interest to the date of judgment. (Last amended by ct 526, L. '93, eff. 7-1-
93.)

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<PAGE>

14-2-1331 COURT COSTS AND COUNSEL FEES.

(a) The court in an appraisal proceeding commenced under Code Section 14-2-
1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective
parties. The court shall assess the costs against the corporation, except that
the court may assess the costs against all or some of the dissenters, in
amounts the court finds equitable, to the extent the court finds the
dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under Code Section 14-2-1327.

(b) The court may also assess the fees and expenses of attorneys and experts
for the respective parties, in amounts the court finds equitable:

(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2-1320 through 14-2-1327; or

(2) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this article.

(c) If the court finds that the services of attorneys for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these attorneys reasonable fees to be paid out of the
amounts awarded the dissenters who were benefited.

14-2-1332 LIMITATION OF ACTIONS.

No actions by any dissenter to enforce dissenters' rights shall be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given
by the corporation in compliance with the provisions of Code Section 14-2-1320
and Code Section 14-2-1322.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

A. Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, agents and controlling persons
of a corporation under certain conditions and subject to certain limitations.
Section 145 empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was a director,
officer or agent of the corporation or another enterprise if serving at the
request of the corporation. Depending on the character of the proceeding, a
corporation may indemnify against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding if the person
indemnified acted in good faith and in a manner the person reasonably believed
to be in or not opposed to, the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful. In the case of an action by or in
the right of the corporation, no indemnification may be made with respect to
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the court of
chancery or the court in which such action or suit was brought shall determine
that despite the adjudication of liability such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Section 145 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including
attorneys' fees) actually or reasonably incurred by such person in connection
therewith.

B. As permitted by the Delaware General Corporation Law, DocuCorp has
included a provision in its Certificate of Incorporation (Exhibit 3.1 hereto)
that, subject to certain limitations, eliminates the ability of DocuCorp and
its stockholders to recover monetary damages from a director of DocuCorp for
breach of fiduciary duty as a director. Article VII of DocuCorp's Bylaws
(Exhibit 3.2 hereto) provides for indemnification of DocuCorp's directors and
officers and advancement of expenses to the extent permitted by Section 145.

C. As authorized by Section 145 of the Delaware General Corporation Law and
Article VII of DocuCorp's Bylaws, DocuCorp intends to apply for, on behalf of
its directors and officers, insurance protection against certain liabilities
arising out of the discharge of their duties, as well as insurance covering
DocuCorp for indemnification payments made to its directors and officers for
certain liabilities, to be effective contemporaneously with the consummation
of the Merger. The premiums for such insurance are to be paid by DocuCorp.

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<PAGE>

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

The following is a list of exhibits filed as part of this Registration
Statement.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of January 15, 1997, among the
Registrant, Image Sciences, Inc., FormMaker Software, Inc., ISI
Merger Corp. and FormMaker Acquisition Corp. is Appendix A to the
Joint Proxy Statement/Prospectus included in Part I and is
incorporated herein by reference.
3.1 Certificate of Incorporation.
3.2 Bylaws.
5** Opinion of Morgan, Lewis & Bockius LLP regarding legality of the
shares of DocuCorp Common Stock being registered.
8** Opinion of Steptoe & Johnson, Special Tax Counsel, regarding tax
matters.
10.1** Marketing Agreement between FormMaker Software, Inc. and Policy
Management Systems Corporation effective January 1, 1997.
10.2 Cooperative Marketing Agreement between Image Sciences, Inc. and Xerox
Corporation August 16, 1994.
10.3 Liquidity Agreement among the Registrant, Safeguard Scientifics
(Delaware), Inc., Safeguard Scientifics, Inc., Technology Leaders II
L.P. and Technology Leaders II Offshore C.V. dated January 15, 1997.
10.4 Voting and Lockup Agreement among Xerox Corporation, Michael D.
Andereck, Safeguard Scientifics (Delaware), Inc., Safeguard
Scientifics, Inc., Technology Leaders II L.P., Technology Leaders II
Offshore C.V., Joe A. Rose, Samuel M. Wilkes and Arthur R. Spector
dated January 15, 1997.
10.5 Form of Stockholders' Agreement.
10.6 Director Designation Agreement between Michael D. Andereck and Xerox
Corporation dated January 15, 1997.
10.7 Co-Sale Agreement among Safeguard Scientifics (Delaware), Inc.,
Technology Leaders II L.P., Technology Leaders II Offshore C.V. and
Samuel M. Wilkes dated January 15, 1997.
10.8+ Employment Agreement between Michael D. Andereck and the Registrant.
10.9+ Employment Agreement between Samuel M. Wilkes and the Registrant.
10.10 Credit Agreement between FormMaker Software, Inc. and NationsBank of
Georgia, National Association, dated as of December 20, 1995.
10.11** License Agreement between FormMaker Software, Inc. and Policy
Management Systems Corporation effective October 29, 1993.
10.12** Addendum No. 1 to the License Agreement between FormMaker Software,
Inc. and Policy Management Systems Corporation effective January 1,
1997.
11* Statement re: Computation of Per Share Earnings.
21 Subsidiaries of the Registrant.
23.1* Consent of Price Waterhouse LLP.
23.2* Consent of Coopers & Lybrand L.L.P.
23.3** Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed
as Exhibit 5 hereto).
23.4** Consent of Steptoe & Johnson (included in its opinion filed as Exhibit
8 hereto).
23.5* Consent of Deloitte & Touche LLP.
24.1 Power of Attorney.
</TABLE>
- --------
* Filed herewith.
** To be filed by amendment.
+ Compensation plans and arrangements for executives and others.

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<PAGE>

(b) Financial Statement Schedules.

The following financial statement schedules not included in the prospectus
appear on the following pages of this Registration Statement:

<TABLE>
<CAPTION>
PAGE SCHEDULE
---- --------
<S> <C>
S-1 Schedule II - Valuation and Qualifying Accounts of Image Sciences, Inc.
S-2 Report of Coopers & Lybrand L.L.P., Independent Accountants
S-3 Schedule II-Valuation and Qualifying Accounts of FormMaker Software, Inc.
</TABLE>

All other schedules are omitted as the required information is included in
the Image Sciences or FormMaker consolidated financial statements or the
related notes or such schedules are not applicable.

ITEM 22. UNDERTAKINGS.

A. The undersigned registrant hereby undertakes:

(1) to file during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

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

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

(4) That prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.

(5) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment 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.

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<PAGE>

B. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the 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, 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.

C. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the Registration Statement through the date of responding to the request.

D. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when in became effective.

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<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN DALLAS, TEXAS ON
MARCH 26, 1997.

DocuCorp, Inc.

By /s/ Michael D. Andereck
--------------------------------
MICHAEL D. ANDERECK
CHIEF EXECUTIVE OFFICER AND
PRESIDENT

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- ----
<S> <C> <C>
/s/ Michael D. Andereck Chief Executive
- ------------------------------------- Officer and April 1, 1997
MICHAEL D. ANDERECK President
(principal
executive officer)
and Director

Todd A. Rognes* Senior Vice April 1, 1997
- ------------------------------------- President of
TODD A. ROGNES Finance (principal
financial and
accounting officer)

Arthur R. Spector* Chairman of the April 1, 1997
- ------------------------------------- Board of Directors
ARTHUR R. SPECTOR

Milledge A. Hart, III* Director April 1, 1997
- -------------------------------------
MILLEDGE A. HART, III

John D. Loewenberg* Director April 1, 1997
- -------------------------------------
JOHN D. LOEWENBERG

Warren V. Musser* Director April 1, 1997
- -------------------------------------
WARREN V. MUSSER
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
NAME CAPACITY DATE
---- -------- -----
<S> <C> <C>

- ------------------------------------- Director April 1, 1997
SIDNEY B. LANDMAN

*By: /s/ Michael D. Andereck
----------------------------------
MICHAEL D. ANDERECK
ATTORNEY-IN-FACT
</TABLE>

<PAGE>

IMAGE SCIENCES, INC
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED JULY 31, 1994, 1995, AND 1996

<TABLE>
<CAPTION>
ADDITIONS
---------------------------
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND CHARGED TO OTHER BALANCE AT END
DESCRIPTION PERIOD EXPENSES ACCOUNTS (A) DEDUCTIONS OF PERIOD
- ----------- ------------ ---------- ---------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Reserve for bad debts-
accounts:
1994.................. $250,000 $277,000 $(202,000) $ -- $325,000
1995.................. 325,000 271,000 (271,000) -- 325,000
1996.................. 325,000 350,131 (325,131) -- 350,000
</TABLE>

- --------
(a) Such amounts relate to the utilization of the valuation and qualifying
accounts to specific items for which they were established in the accounts
receivable accounts.

S-1
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of FormMaker Software, Inc.:

In connection with our audits of the consolidated financial statements of
FormMaker Software, Inc. as of December 31, 1996 and 1995, and for each of the
three years in the period ended December 31, 1996, which financial statements
are included in this Registration Statement on Form S-4, we have also audited
the financial statement schedules listed in Item 21(b) herein.

In our opinion, these financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly,
in all material respects, the information required to be included herein.

Coopers & Lybrand L.L.P.

Atlanta, Georgia January 30, 1997

S-2
<PAGE>

FORMMAKER SOFTWARE, INC.

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31

<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER DEDUCTIONS AT END
CLASSIFICATION OF YEAR EXPENSES ACCOUNTS (A) OF YEAR
-------------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
1996
Allowances reducing the
assets in the balance
sheet:
Doubtful accounts
receivable.............. $150,000 $ -- $ -- $ (68,814) $ 81,186
Deferred tax assets...... 422,535 -- 763,525 -- 1,186,060
-------- -------- -------- --------- ----------
Total................... $572,535 $ -- $763,525 $ (68,814) $1,267,246
======== ======== ======== ========= ==========
1995
Allowances reducing the
assets in the balance
sheet:
Doubtful accounts
receivable.............. $ 16,000 $151,853 $ -- $ (17,853) $ 150,000
Deferred tax assets...... 180,000 -- 242,535 -- 422,535
-------- -------- -------- --------- ----------
Total................... $196,000 $151,853 $242,535 $ (17,853) $ 572,535
======== ======== ======== ========= ==========
1994
Allowances reducing the
assets in the balance
sheet:
Doubtful accounts
receivable.............. $ 7,500 $ 8,500 $ -- $ -- $ 16,000
Deferred tax assets...... 486,000 -- -- (306,000) 180,000
-------- -------- -------- --------- ----------
Total................... $493,500 $ 8,500 $ -- $(306,000) $ 196,000
======== ======== ======== ========= ==========
</TABLE>
- --------
(a) The reductions in the allowance for doubtful accounts receivable relate
principally to charges for which reserves were provided, net of
recoveries. The reduction in the valuation allowance for deferred tax
assets represents the reduction of a valuation allowance on deferred tax
net operating loss carryforward assets for which realization became more
likely than not during 1994.

S-3
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
SEQUENTIAL SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
---------- ----------- -----------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as of January 15,
1997, among the Registrant, Image Sciences, Inc.,
FormMaker Software, Inc., ISI Merger Corp. and
FormMaker Acquisition Corp. is Appendix A to the
Joint Proxy Statement/Prospectus included in Part I
and is incorporated herein by reference.
3.1 Certificate of Incorporation.
3.2 Bylaws.
5** Opinion of Morgan, Lewis & Bockius LLP regarding
legality of the shares of DocuCorp Common Stock
being registered.
8** Opinion of Steptoe & Johnson, Special Tax Counsel,
regarding tax matters.
10.1** Marketing Agreement between FormMaker Software, Inc.
and Policy Management Systems Corporation effective
January 1, 1997.
10.2 Cooperative Marketing Agreement between Image
Sciences, Inc. and Xerox Corporation August 16,
1994.
10.3 Liquidity Agreement among the Registrant, Safeguard
Scientifics (Delaware), Inc., Safeguard Scientifics,
Inc., Technology Leaders II L.P. and Technology
Leaders II Offshore C.V. dated January 15, 1997.
10.4 Voting and Lockup Agreement among Xerox Corporation,
Michael D. Andereck, Safeguard Scientifics
(Delaware), Inc., Safeguard Scientifics, Inc.,
Technology Leaders II L.P., Technology Leaders II
Offshore C.V., Joe A. Rose, Samuel M. Wilkes and
Arthur R. Spector dated January 15, 1997.
10.5 Form of Stockholders' Agreement.
10.6 Director Designation Agreement between Michael D.
Andereck and Xerox Corporation dated January 15,
1997.
10.7 Co-Sale Agreement among Safeguard Scientifics
(Delaware), Inc., Technology Leaders II L.P.,
Technology Leaders II Offshore C.V. and Samuel M.
Wilkes dated January 15, 1997.
10.8+ Employment Agreement between Michael D. Andereck and
the Registrant dated January 15, 1997.
10.9+ Employment Agreement between Samuel M. Wilkes and the
Registrant dated January 15, 1997.
10.10 Credit Agreement between FormMaker Software, Inc. and
NationsBank of Georgia, National Association dated
as of December 20, 1995.
10.11** License Agreement between FormMaker Software, Inc.
and Policy Management Systems Corporation effective
October 29, 1993.
10.12** Addendum No. 1 to the License Agreement between
FormMaker Software, Inc. and Policy Management
Systems Corporation effective January 1, 1997.
11* Statement re: Computation of Per Share Earnings.
21 Subsidiaries of the Registrant.
23.1* Consent of Price Waterhouse LLP.
23.2* Consent of Coopers & Lybrand L.L.P.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
SEQUENTIAL SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
---------- ----------- -----------
<C> <S> <C>
23.3** Consent of Morgan, Lewis & Bockius LLP (included in
its opinion filed as Exhibit 5 hereto).
23.4** Consent of Steptoe & Johnson, Special Tax Counsel
(included in its opinion filed as Exhibit 8 hereto).
23.5* Consent of Deloitte & Touche LLP.
24.1 Power of Attorney.
</TABLE>
- --------
* Filed herewith.
** To be filed by amendment.
+ Compensation plans and arrangements for executives and others.

<PAGE>

EXHIBIT 11

IMAGE SCIENCES, INC.

COMPUTATION OF PER SHARE EARNINGS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED JULY 31, JANUARY 31,
------------------------------- -----------------
1994 1995 1996 1996 1997
---------- --------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
IMAGE SCIENCES
Net earnings................. $ 2,169 $ 2,003 $2,321 $ 851 $1,045
======= ======= ====== ====== ======
Average common shares
outstanding................. 3,760 3,979 4,299 4,185 4,299
Average common share
equivalents:
Options and warrants....... 1,968 1,763 1,170 1,417 1,117
------- ------- ------ ------ ------
Average number of common
shares and common share
equivalents outstanding..... 5,728 5,742 5,469 5,602 5,416
======= ======= ====== ====== ======
Earnings per common share.... $ 0.38 $ 0.35 $ 0.43 $ 0.15 $ 0.19
======= ======= ====== ====== ======
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
JULY 31, JANUARY 31,
1996 1997
------------ -----------
<S> <C> <C>
PRO FORMA COMBINED(1)
Net earnings................. $ 451 $ 486
======= =======
Average common shares
outstanding(2).............. 9,154 9,154
Average common share
equivalents:
Options and warrants....... 1,948 1,948
------- -------
Average number of common
shares and common share
equivalents outstanding..... 11,102 11,102
======= =======
Earnings per common share.... $ 0.04 $ 0.04
======= =======
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
FORMMAKER HISTORICAL
Net earnings................. $(1,490)
=======
Average common shares
outstanding(3).............. 5,963
Average common share
equivalents:
Options and warrants....... 373
-------
Average number of common
shares and common share
equivalents outstanding..... 6,336
=======
Earnings per common share.... $ (0.25)
=======
</TABLE>
- --------

(1) Computation is based on the DocuCorp Class B Common Stock being included
in the earnings per share computation. If such shares are excluded from
the computation, earnings per share is $.07 for the year ended July 31,
1996 and $.08 for the six months ended January 31, 1997.

(2) Includes shares represented by DocuCorp Class B Common Stock.

(3) FormMaker had a net loss for the year; thus, common equivalent shares are
anti-dilutive. Only weighted-average common shares outstanding of 5,963
are used in the calculation of earnings per share.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of DocuCorp, Inc. of our report dated
September 20, 1996, relating to the financial statements of Image Sciences,
Inc., which appear in such Prospectus. We also consent to the application of
such report to the Financial Statement Schedule for the three years ended July
31, 1996 listed under Item 21(b) of this Registration Statement when such
schedule is read in conjunction with the financial statements referred to in
our report. We also consent to the references to us under the headings
"Experts" and "Selected Financial Data" in such Prospectus. However, it should
be noted that Price Waterhouse LLP has not prepared or certified such
"Selected Financial Data."

PRICE WATERHOUSE LLP

Dallas, Texas

April 1, 1997

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Amendment No. 1 to the Registration
Statement on Form S-4 (File No. 333-22225) of our reports dated January 30,
1997, on our audits of the consolidated financial statements and financial
statement schedules of FormMaker Software, Inc. We also consent to the
reference to our firm under the caption "Experts."

Coopers & Lybrand L.L.P.

Atlanta, Georgia

April 1, 1997

<PAGE>

EXHIBIT 23.5

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 1 to the Registration Statement
No. 333-22225 of DocuCorp, Inc. on Form S-4 of our report dated January 25,
1996 (February 2, 1996 as to Note 9) with respect to the balance sheets of
Micro Dynamics Ltd. as of December 31, 1995 and 1994, and the related
statements of operations, stockholders' equity, and cash flows for the years
then ended, appearing in the Prospectus, which is a part of this Registration
Statement, and to the references to us under the heading "Experts" in such
Prospectus.

DELOITTE & TOUCHE LLP

McLean, Virginia

April 1, 1997